Economics Case Study: Impacts of Trade on Poverty in the Philippines

This case study examines the intricate relationship between trade and poverty in the Philippines, focusing on the impact of international trade on the country's socio-economic landscape. It begins by outlining the background of poverty in the Philippines, particularly in rural areas, highlighting the complex and multifaceted nature of poverty and its connection to international markets. The study analyzes the drivers of poverty, including agricultural decline, unsustainable farming practices, and the exploitation of local resources by international trade. It explores how the open trade system enables overseas traders to exploit local populations. The study also delves into the government's role and the lack of effective policies. It provides a comprehensive analysis of the problem, including the country's low economic growth, population growth, and vulnerability to natural disasters. The study offers potential solutions, emphasizing sustainable development goals, job creation, education, and healthcare. The case study concludes with a valuable insight into the country's socio-economic condition and how free trade practices contribute to the proliferation of poverty. It addresses the government's shortcomings and offers viable strategies to overcome the crisis.

Running Head: CASE STUDY
Case Study
Name of Student
Name of University
Author note

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Introduction
The selected case study for the paper is an account of the trade and poverty issues in the
Philippines. The study overviews the situation and causes of poverty in the country by briefly
looking at the rural and economically backwards areas. The concluding section of the case study
reveals the relationship between trade, structural transformation (Anderson, Cockburn and
Martin 2011) and poverty in the economy of Philippines. The central focus of the study is trade
and how the openness of trade impacts the lower strata of the Philippine society. The paper will
analyze the developmental challenges addressed in the study following an outline of the relevant
literature of the topic. Finally, the paper will conclude with suitable solutions to the problem,
offering proposals for further research that will help to uncover potential avenues to addressing
the problem.
Background
The study establishes a connection between the two binary topics; that is poverty and
trade. It begins with the assertion that the driving factors of poverty are complex and manifold.
The content of the discussion focuses on the chief characteristics of the people living in poverty
line and how they do or do not interact with international markets. The authors of the study have
presented two ways of viewing the poverty scenario in the country. The first one uses the
national definition of poverty line while the second one looks at the situation of poverty by using
the concepts of international poverty lines. After surveying the rural areas in the Philippines it
was observed that despite the rapid growth of urbanization, more than half the population in the
country live in rural condition, the majority of this population suffer poverty and ill health
(Kawai, 2010). Although the larger share of the population belong from the rural areas, the
contribution of the rural economy to the national income is only 7% of the total revenue earned.

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The highest incidence rates in poverty is recorded among farmers and fishermen. While it must
be accepted that poverty is caused due to different reasons in rural areas, and vary widely in
terms of region; it can be denied that decline in agricultural production, loss-incurring operations
in farming and other unsustainable farming practices have to massive deforestation and depletion
of fishing waters. The central argument of the study is that international trade unfavorably
impacts the rural poor by exploiting the locals to secure high-profit trade opportunities. Majority
of the villages in Philippines do not have an all-season access to the primary transport system.
Despite having a standard employment rate and a relatively low unemployment rate, the
economic growth of the country is visibly slow. The country is known to utilize its labor
resources efficiently although the informal workers living in the rural areas are at high risk of
poverty. The working poor primarily consist of the rural workers and in-work poverty is a
dominant scenario which is pervasive in the Philippines. It might be caused due to low
productivity in labor: a consequence low education levels and training in the work field. The
poverty incidence of the unemployed group is lower than that of the employed and every one in
5 individuals is unemployed in Philippines (Habib et al, 2010). The fact that there are very few
job opportunities that require expert skills is the reason why workers do not feel encouraged to
invest in honing their skills. The irony is that lucrative jobs are not being created due to lack of
skilled labor. A reformation of the scenario by aligning the demand side of the labor market with
the supply side of the same. The open trade system of the Philippine government enables
overseas traders from economically affluent countries, exploit the local people for maximizing
their profit. Poor producers in the rural areas are willing to take advantage of the opportunities in
trade; they are ultimately exploited by the trade experts that take undue advantage of the poorly
built trade routes in the country and the naivety of local farmers (Williamson, 2011).

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Developmental progress is a far cry in the Philippines, although several programs aimed at
eliminating poverty have gained momentum in the recent years. The central argument of the
study is that international trade unfavorably impacts the rural poor by exploiting the locals to
secure high-profit trade opportunities. The majority of the poor population comprise of the self-
employed farmers, agricultural workers and fishermen.
Analysis of the problem
The obvious finding is the case study is that poverty in the Philippines is caused due to
multiple reasons, but international trade is responsible for perpetuating the crisis. The economic
growth of the company is extremely low compared to that of the neighboring countries in East
Asia. The population growth is low, which is an advantage for a country running on a high
poverty line. Poverty has direct impacts on the economic growth owing to the credit constraints,
income inequality, scarcity of assets, and underdevelopment of the finance market. This is a
country with limited resources, both financial and environmental; poverty is caused due to
exhaustion, mismanagement and depletion of these resources. The Government of Philippines is
had been visibly reckless in the management of poverty, which shows itself in the developmental
lack in both urban and rural areas.The urban areas of Philippines too have been witnessing a
slow yet visible rise in poverty rates (Ballesteros, 2010). A rapid rise in population growth is
another primary cause of poverty in the Philippines. The poor section in the society tend to have
bigger families since they are unable to access sex education and health services. The growth
pattern in the rural areas are common, but the urban areas are recently witnessing a rise in
poverty. The government has failed to provide the people with a well-paid employment so the
cities in the country are now experiencing an increase in the poverty rate. Besides this, it must
also be considered that Philippines is extremely vulnerable to natural disasters, which makes the

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rise is poverty rates all the more viable. Since 1993, Philippines have a recorded damage of 23
billion dollars due to natural disasters (Fabinyi, 2013). The natural occurrences such as volcanic
eruptions, typhoons and earthquakes cost the country malnutrition, severe illness, lives and even
denial in health services education. The farmers of Philippines are most vulnerable since natural
disasters like landslides and floods cause damage to their crops, affecting their income levels.
Natural disasters are also responsible for delaying the process of development in the country.
Additionally, there is a noticeable lack in the research of poverty causes and solutions. The
government and the policy makers are yet to implement effective policies that are instrumental in
the eradication of poverty in the country. This lack in research has also caused a deficiency in
targeting the poverty programs, resulting to unsuccessful processes in the present. The poverty
programs cannot be effective unless more advanced research is conducted for finding out the
ideal ways to tackle the trap in poverty (Romana and Lenordo, 2017). Compared to other
countries in Southeast Asia, Philippines had more population living below the poverty line and it
has also been estimated in year 2016 that babies born in the previous year died before their 7th
birthday.
In terms of human and economic and human development, Philippines has a long way to
go. A considerable part of the population is uneducated and the educated citizens are in want of
a sustaining employment. The economy has been crumbling with a growing pace since past few
years and the open trade systems continue to be instrumental in the process. The only
development the country has witnessed is in the field of agriculture and farming.
Solutions to the problem
Philippines must come up with some unique sustainable development goals to repair the
damage. Even the urban population of the country are increasingly under the threat of poverty

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and further ruin; the circumstance calls for an overall development. The SDGs must be aimed at
achieving quality education, gender equality, clean and affordable energy, economic growth and
decent work, responsible production and consumption and most importantly, a zero hunger
policy (Kurtiya and Kurosaki 2011). The creation of new jobs and industry, a raise in the
minimum wage for labor are two aspects the government must immediately look into. Besides
this, pay equity should be encouraged by all organizations in order to reduce the inequality in
income. Education is perhaps the primary driver in poverty education. The government of
Philippines must ensure that every child in the country has access to early education and become
eligible for jobs as adult citizens. Medical aids should be provided to every citizens to help them
combat diseases, which is a cause of poverty.
Conclusion
The selected case study offers a valuable insight into the socio-economic condition of the
country by presenting authentic data on the income structure of Philippines and how free trade
practices are contributing in the proliferation of poverty. A thorough analysis of the causes
suggest that poverty in Philippines is a consequence of the government’s nonchalance and lack
of planning that is required for an economy to function smoothly. The solutions provided in the
concluding section are effective in the sense that it addresses the heart of the matter and provides
with viable strategies to overcome the crisis.

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References and bibliography:
Anderson, K., Cockburn, J., & Martin, W. (Eds.). (2010). Agricultural price distortions,
inequality, and poverty. The World Bank.
Ballesteros, M. M. (2010). Linking poverty and the environment: Evidence from slums in
Philippine cities (No. 2010-33). PIDS Discussion Paper Series.
Fabinyi, M. (2013). Fishing for fairness: Poverty, morality and marine resource regulation in
the Philippines (p. 227). ANU Press.
Habib, B., Narayan, A., Olivieri, S., & Sanchez-Paramo, C. (2010). The impact of the financial
crisis on poverty and income distribution: Insights from simulations in selected
countries. Economic Premise, 7, 1-4.
Kurita, K., & Kurosaki, T. (2011). Dynamics of growth, poverty and inequality: A panel analysis
of regional data from Thailand and the Philippines. Asian Economic Journal, 25(1), 3-33.
Romana, S., & Leonardo, L. (2017). Trade and Poverty Issues: A Country Case Study of the
Philippines.
Williamson, J. G. (2011). Trade and poverty: when the Third World fell behind. MIT press.