Philippines and Vietnam Economy Essay Example

in the actual number of individuals living in poverty during this time period. Poverty had a greater impact on rural areas than urban areas and there were noticeable regional differences in poverty rates, particularly among small farmers who cultivated crops such as rice, coconut, and sugarcane. Nonetheless, economic reforms introduced since the mid-80s have had a positive influence on the economy.

Vietnam and other Southeast Asian economies are facing challenges such as increasing external debt, speculative capital inflow, and heavy reliance on imported raw materials for non-traditional exports. These issues are concerning for Vietnam. Additionally, there are unfavorable conditions for the poor population including urban bias, preference for capital-intensive industries, and continued dominance of wealthy landowners in rural areas.

Despite these difficulties, Vietnam has successfully transitioned from a controlled to a market-oriented economy. However, it remains one of Asia's least developed countries with an estimated per capita income of only US $200 per year. Nevertheless, the country has achieved impressive economic growth in recent years, particularly since the mid-80s, with an annual GNP growth rate of around 10 percent.

Population growth in Vietnam is currently declining by 2 percent annually. The country's rapid economic growth has led to gradual structural transformations. For instance, the agricultural workforce decreased marginally from 73 percent in 1980 to 71 percent in 1990, while there has been a noticeable change in agriculture's contribution to the Gross National Product (GNP). Moreover, the Vietnamese economy has effectively reduced inflation from 70 percent to 15 percent.

In the Philippines, significant progress has been made thanks to various measures. These include granting long-term land leases to farmers, implementing macroeconomic adjustments, eliminating distorted incentive systems, adopting export-oriented policies, attracting

foreign capital, and most importantly, improving agricultural productivity. As a result of these efforts, the population of the country increased by 94,013% in 2011. In contrast, Vietnam's population is 85.85% lower than that of the Philippines. Moreover, Vietnam exceeds the Philippines in terms of geographical size.

The Philippines initially had a higher growth rate than Vietnam, but it decreased by 2% from 1990 to 1994, while Vietnam's rate remained steady at 2.1%. In 1993, the gross national product of the Philippines was approximately 85% greater than Vietnam's. However, both countries experienced growth improvements in 1994. The Philippines had a negative annual growth rate of -0.6% from 1980 to 1983, but it increased by 1.1% in the following two years. The growth rate for Vietnam during this period is unspecified.

The concept of food security encompasses both adequate availability and stability in the supply of food, as well as access to food. Along with measuring calorie intake, the qualitative aspect of nutritional adequacy is considered. Food availability is typically assessed at a macro level, usually at the nation-state level. However, food security is ultimately determined at the household level and specifically within individual members of the household. Nonetheless, food availability at the national level plays a crucial role in ensuring food security among households. This macro perspective of food supplies can reveal the nature of food issues and identify areas that require public intervention. In terms of food availability and calorie intake, if food adequacy is measured at 2300 kcal per person per day, all Southeast Asian countries except Vietnam have already met the adequacy standards.

Between 1990-1992, the calorie intake per capita per day varied from 2203 in

Vietnam to 2888 in Malaysia. These countries have shown consistent improvement in their calorie intake over the past decade. In the previous decade (1980-82), the Philippines, Thailand, and Vietnam did not meet calorie requirements. However, it is not only the increase in calories that is important; the composition of the diet also plays a crucial role. There have been significant changes in where these calories come from, with a larger proportion now coming from animal sources rather than vegetables.

The origins of vegetables and foodgrains underwent a noticeable change, shifting from cereal to non-cereal sources. Additionally, there was a transition from starchy roots and tubers to higher-quality cereals like rice and wheat. This transformation was observed in all selected countries, although the pace of progress varied.

Improvements in domestic production were the primary cause of the rise in calorie consumption. In nations where domestic production fell short of food demands, the gap was closed by increasing agricultural exports. The agriculture sector played a direct or indirect role in ensuring food security. For instance, Indonesia attained self-sufficiency in rice and saw an uptick in non-rice agricultural exports. Malaysia witnessed an increase in imports of food and animal products while also enhancing its export performance for non-food agricultural goods. Likewise, Thailand observed a decline in rice exports but a surge in other agricultural commodity exports.

Vietnam went through a rapid change, transitioning from a net rice importer to a significant rice exporter. This transformation also extended to other agricultural products like fish and fish products, cocoa, vegetable oils, fruits, and vegetables, resulting in a surplus available for export. In contrast, the Philippines did not follow this pattern as its food

imports increased while its capacity to produce an exportable surplus in agricultural goods declined significantly.

Except for Malaysia, all countries experienced an increase in domestic agricultural production and a decrease in population growth. Consequently, there was a significant rise in per-capita agricultural production, although not necessarily per capita food production. Indonesia specifically achieved an annual agricultural growth rate of 4.4 percent from 1980 to 1994 while simultaneously having a yearly population growth rate of 1.1 percent. Notably, the growth rate for rice production reached an impressive 3.3 percent annually.

Over the reference period, there was a significant increase in the growth rate of non-cereal foods. This increase is important for ensuring a well-balanced diet. Sugar experienced an annual growth rate of 4.8 percent, while vegetable oils had an even higher growth rate of 7.3 percent. Furthermore, animal products such as milk, meat, and eggs also showed satisfactory growth despite starting from a low initial level. Malaysia's agricultural production has played a crucial role in its development over the past decades and has shown improvement.

Although all sectors experienced growth in production, rice was the only sector that did not see any increase. In Thailand, both absolute and per capita agricultural production saw a rapid rise. Similarly, Vietnam had a consistent annual growth rate of 3.9 percent in per capita food production, while its population grew at a rate of 2.2 percent each year. However, the Philippines stood out as an exception with negative growth rates of -0.74 percent annually for both agricultural and food grain production on a per capita basis. It is important to note that changes in crop patterns have a significant impact on food security.

Thailand

experienced an increase in soybean production due to the rising demand for cattle feed. Similarly, certain countries saw a rise in wheat demand and production as urbanization grew. Unfortunately, these changes adversely affected the production of pulses, which are vital sources of protein for impoverished communities.

One notable accomplishment in the area of food security in Southeast Asia (SEA) was the steady availability of food. This stability was observed across different years in most countries. The level of stability was measured by examining the variation in food availability from year to year. Poor households, in particular, prioritize stability in food supply from season to season rather than across years. Limited evidence suggests that in many countries, there is a decrease in food availability shortly before the main food crop is harvested.

, rice is a significant staple food that undergoes improvement post-harvest. This improvement is evident in the prevalence of underweight children, which shows a distinct seasonality effect every two months. In terms of long-term consistency, the accessibility of food has become more stable overall. Furthermore, the availability of both vegetable food and livestock products has shown increased stability. On a country-specific level, the unpredictability of cereal availability, especially rice, and milk has decreased.

In 1984, the overall instability in milk availability was 5.0%, which later decreased to 3.7% by 1992. During the early 1990s, food availability instability reached a low of 2.5%. Malaysia consistently experienced low food availability instability, even during the 1980s, and this trend continued into the 1990s. However, there was more instability in the availability of foodgrains when compared to animal products.

The Philippines witnessed a rise in food availability instability from the early 80s

to recent years (2.3% in 1981 to 4.7% in 1992). Vegetable food experienced higher instability compared to livestock products, while instability in livestock products was high but decreasing. In Thailand, total food availability had low instability but was on the rise, whereas animal products showed high but declining instability.

The main cause of instability in food availability is trade, not domestic food production. As a result, trade policy has failed to ensure consistent access to food. In Vietnam, stability in food availability has improved due to reduced volatility in domestic food production. This positive change can be seen across various types of foods, including vegetables, animals-based products, cereals and non-cereal items. Overall, all countries in the region have experienced improved access to food.

Enhancements in the stability of the food supply have had a positive impact on improving food security. However, it is essential to take into account the capacity of households to acquire an adequate amount and quality of food as the primary factor in ensuring food security. Regrettably, there is a scarcity of dependable time-series data regarding consumption patterns among various demographic groups, which makes it difficult to ascertain whether households are experiencing increased or decreased levels of food security within a specific timeframe (except for the SUSENAS in Indonesia). To bridge this data deficit, this report utilizes poverty data as an indicator of food insecurity.

One drawback of using poverty figures to discuss food insecurity is that it assumes all poor individuals are experiencing food insecurity, which may be a reasonable assumption. However, it also assumes that all non-poor individuals are food secure, which is questionable, particularly in terms of the quality of their food.

Poverty is typically assessed by measuring the number of calories consumed per person per day or the purchasing power required to access a specific level of food intake. This narrow perspective fails to consider other deprivations that affect food security.

Nevertheless, when relevant data is unavailable, poverty figures are utilized as an approximate indicator of overall food insecurity in certain countries. The proportion of impoverished households and potentially food insecure households among all households has declined in these nations.

While poverty reduction in Indonesia and Malaysia happened quickly, Thailand had a slower decline. On the other hand, the Philippines and Vietnam saw a gradual decrease. It is important to note that these general numbers do not provide specific details as they only show the percentage of people classified as poor or non-poor without indicating the intensity of poverty.

Households in some countries, including Indonesia, often gather near the poverty line. This indicates that while a household may not be officially labeled as impoverished, it still faces vulnerability to the potential of falling into poverty.

It should be noted that direct comparisons cannot be made between headcount ratios due to the use of different poverty norms. When considering food security, it is important to consider these limitations of aggregate data. However, there are still certain trends evident. In addition to an overall decline in the percentage of impoverished households, there are noteworthy similarities. Notably, rural areas exhibit a higher proportion of poor households compared to urban areas.

Underdeveloped regions, such as Malaysia and the Philippines, face the issue of concentrated poverty which entraps many households in a perpetual cycle of impoverishment. This is particularly evident among farmers involved in low-value subsistence

farming and rural youth with limited education. Moreover, there exists significant inequality within households across all countries in the region regarding food consumption, revealing a distinct prejudice against women.

The reduction in poverty has not resulted in adequate food security for many individuals, including both men and women. Although there has been significant progress in terms of food availability and calorie intake in every country in the region, the quality of food consumed remains a concern. Deficiencies in essential micronutrients like calcium, thiamine, and riboflavin contribute to the prevalence of nutrition-related diseases such as goiter, beriberi, and anemia. Simple measures can be implemented to address these issues.

Fortifying food items such as salt, sugar, and wheat flour can greatly improve the situation of malnutrition. Malnutrition is more common among the poor, particularly children and pregnant or lactating mothers. In Indonesia, for instance, rural poor individuals consume 30-40 percent fewer calories and half the protein compared to the well-off on a per capita basis.

The prevalence of malnutrition is a significant issue among children, as evidenced by the high mortality rate of infants under the age of five. A considerable portion of children in the specified countries are below the recommended weight. The percentage ranges from 23 percent in Malaysia to 45 percent in Vietnam. Regional variations exist within each country, including Thailand's northern region where a notable tribal population resides. Fortunately, there has been a decline in the proportion of underweight children in these countries as of late.

This is particularly true for severely underweight children, such as those who are "stunting" or "wasting". In certain circumstances, a rapidly growing economy can have a "trickle-down" effect, benefiting the

poor as well. The experience of different countries suggests that the "trickle-down" effect is more noticeable when:

1. The GDP growth rate is significantly higher than the population growth rate.
2. The GDP growth is sustained over a period of time, with well-developed infrastructure to facilitate the "spread effect".
3. The poor have access to resources, including productive assets, skills, and stamina, to respond to market stimuli.

Even with these favorable conditions, it is necessary to provide safety nets to protect the poor during the transitional period, particularly the most vulnerable segments, for a sustained period. The countries under review did fulfill these conditions to varying degrees.

Over a ten-year period, the GDP growth rate fluctuated between 6 and 8 percent. These economies had decent infrastructure and prioritized investment in human capital, specifically in education and health. However, their strategy, which involved excessive expansion of money supply, excessive reliance on foreign debt, and increasing budget deficits, left them vulnerable to periodic recessions or hyperinflation.

Occasionally, imbalances were triggered by external events like increases in oil prices for nations that import oil or significant declines in commodity prices for nations that export commodities. The situation worsens for the impoverished during times of instability or economic decline when markets are unreliable for informing resource allocation decisions. The poor bear the brunt of these distortions more severely. Even during "typical" periods, the impoverished require safety nets and assistance to adapt to changing circumstances.

In the selected countries, interventions were not implemented, leading to the burden of adjustment falling disproportionately on the poor. Although this was generally the case, each country approached poverty and food security issues differently. In the following paragraphs,

we will briefly discuss how these issues were addressed in the selected countries. Up until the mid-80s, the Philippines' economy displayed a highly unsatisfactory performance based on macroeconomic indicators. The current account imbalances reached 5-6% of GNP, external debt accounted for 90% of GNP, and the debt service ratio reached 25-30% of government revenue. Additionally, the country faced challenges due to a decline in export prices and demand for its primary exports.

In 1985, a serious foreign exchange crisis occurred due to an overvalued currency caused by the absence of a free exchange rate policy. To address this issue, liberalization measures were implemented, with a focus on reducing the fiscal deficit.

Despite the government's successful achievement of this objective to a significant degree, the growth in GNP was reduced and the trade deficit grew in the process. Nevertheless, the government remained committed to implementing reforms, which has resulted in some indications of recovery. Similar to its neighboring countries, the Philippines also observed the impact of these reforms on poverty. Additionally, the trend of focusing industrialization in Manila and its surrounding area persisted, contributing to a higher capital-output ratio that limited employment growth.

In terms of population growth and labor force, the country experienced the most significant increase compared to other countries in Southeast Asia (SEA). However, this led to a gradual decrease in poverty, especially in rural areas. Regions with limited resources, such as Cagayan Valley, Eastern Visayas, and Northern Mindanao, were particularly affected. The policies regarding the prices of agricultural inputs and outputs did not contribute to alleviating the situation. Additionally, the country's land reform policy did not effectively promote growth and equality in rural areas.

Vietnam commenced its economic reforms in the mid-1980s, with dedicated efforts beginning in 1989 when cultivators were granted land rights. Subsequently, reforms were gradually implemented in various sectors of the economy, ensuring a cautious and measured approach. This deliberate pace of reforms primarily aimed to prevent the upheaval experienced by other transitional economies that lacked prepared institutions to accommodate such changes. Vietnam is currently in the process of establishing these essential institutions in areas like credit, trade, and pricing. As a result of these reforms, an initial surge in production has been observed alongside increased levels of inequality.

In a socialist economy, it is uncommon to have a Gini coefficient of 0.35 for income distribution, especially when compared to Indonesia's coefficient of 0.31. Apart from the lack of institutions needed for a market-oriented economy, another weakness in this economy is the rapid accumulation of foreign debts. Currently, the country does not have any significant issues with its current account. However, if foreign investment and foreign capital continue to arrive at a fast pace, the country's ability to absorb these funds domestically could become a problem.

Despite the devastation caused by war, Vietnam had several advantages. It had a surplus of oil and a highly educated and disciplined population. Vietnam's early experience with reforms was similar to that of other Southeast Asian countries. While the overall poverty rate decreased, the significant contribution of remittances from overseas was also notable. Like other nations, Vietnam struggled to address the issue of regional inequalities.

However, unlike its neighboring countries, this particular country has prioritized agriculture and infrastructure development. Notably, a significant accomplishment in terms of poverty alleviation has been the remarkable drop

in inflation rates, from 70 percent in 1990-91 to just 15 percent in 1994-95. By effectively managing inflation, the country has contributed to improving the lives of the poor.