World Economy

World Bank: Fixing Mindanao Economy Key to Philippines Progress

World Bank: Fixing Mindanao Economy Key to Philippines ProgressWorld Bank: Fixing Mindanao Economy Key to Philippines Progress

Besides the pursuit of lasting peace in Mindanao, the World Bank sees initiatives supporting the agriculture sector as well as human development to create more jobs in the island.

In a report titled “Philippines Mindanao Jobs Report: A Strategy for Mindanao Regional Development” published in June, the World Bank said that in general, “economic progress in the Philippines will depend on the success of development in Mindanao”, Yahoo reported.

“Because Mindanao is the major center of conflict in the country, peace there means peace for the Philippines. Because Mindanao holds about a quarter of the country’s population but about a third of its poor, significantly reducing national poverty hinges on reducing poverty in Mindanao. Because Mindanao is the Philippines’ main source of agricultural products, enhancing production there could reduce food and input prices, improve welfare, and make Philippine products more competitive,” the World Bank explained.

“Unless there is development in Mindanao, it is hard to see how the Philippines can achieve sustained and inclusive growth,” the World Bank said.

However, in recent years, the World Bank noted that agricultural productivity in Mindanao regressed, resulting in the underdevelopment of the manufacturing and services sectors. “Agriculture is not very productive except for a few export crops, manufacturing is constrained by inadequate infrastructure, and the low-productivity, low-skill services sector has become the catch basin for excess agriculture workers who cannot find jobs in cities.

“Lack of competition in key sectors, insecure property rights, complex regulations, and severe underinvestment in infrastructure, education, and health—all exacerbated by the deficient institutions—have led to this anomalous growth pattern, which has left the majority of the Mindanawons without good jobs and has led to the emigration of many talented people. In addition, conflict arising from land disputes deters investment and job creation,” the World Bank said.

It also does not help that the island is suffering from decades of armed conflict, although, as a whole, a “narrow growth strategy” has afflicted the island, according to the World Bank.

“Economic growth is necessary but not sufficient for good job creation and poverty reduction. What also matters is how broad-based and pro-poor the growth is. Unlike Luzon and the Visayas, which had a more diversified, innovative, and labor-intensive economic structure, Mindanao’s economy was driven by plantation crops, forestry, mining, and heavy manufacturing to support an import substitution regime.

“Because these sectors were capital-intensive, involved little local processing, and reinvested little profit locally, they had low local multiplier effects. While they contributed to Mindanao’s high gross domestic product per capita in earlier years, they created few jobs and hence did little to reduce poverty,” the World Bank added.

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