NSCB - NSCB Releases Supplementary Notes on the 2003 Poverty Estimates

Explanatory Notes on the 2003 Poverty Estimates

F. GRDP not a welfare measure and should not be compared directly with poverty incidence without examining income patterns among households

It must be pointed out that the GRDP is a macro-level measure of the value added of each region to the total economy. It is not a measure of welfare since, for one, it does not give any indication of the distribution of income among households in a given region. In principle therefore, it should not be compared directly with poverty incidence without examining the income patterns among households, particularly those in the lower income groups.
Nonetheless, a comparison of the growth trends in per capita GRDP¹ and regional poverty incidence shows that they are consistent in all but two regions (Table 6)². In 11 regions (NCR and Regions I, III, IV-A, V, VI, VII, VIII, XII, CAR, and ARMM) where per capita GRDP increased from 2001 to 2003 with growth rates ranging from 2.2 percent in Region III to 12.8 percent in ARMM, poverty incidence among families also exhibited corresponding improvements, decreasing by as low as 0.4 percent in CALABARZON to as much as 8.7 percent in Region XII during the period 2000-2003. (The considerable increase of 42.6 percent in per capita GRDP in Region XII may largely be due to the sudden change in its regional composition.)

Table 6
Poverty Incidence and Per Capita GRDP by Region,
2000 and 2003

In four other regions (Regions IV-B, IX, XI, and Caraga), the decreases in per capita GRDP were accompanied by a worsening poverty situation. The decline in per capita GRDP ranged from 0.2 percent in Caraga to 2.5 percent in Region IV-B (the 24.7 percent contraction in Region XI may be partly attributed to the change in regional configuration). On the other hand, corresponding increase in poverty incidence among families varied from 0.4 percent in Region XI to 5.6 percent in Region IX.
In Region II, per capita GRDP in real terms decreased by 3.4 percent from PhP7,881 in 2001 to PhP7,610 in 2003. However, poverty incidence among families in the region also decreased from 25.2 percent in 2000 to 19.3 percent in 2003, representing a 5.9 percent decrease in poverty. While the simultaneous decline in the two indicators may be viewed by some economists as inconsistent, the decrease in poverty incidence may actually be explained by the increase in the average per capita income of the two lowest income groups where the region’s poor belongs (16.0 percent for both the first and second deciles at current prices, and 3.4 percent for the first decile and 3.3 percent for the second decile at constant prices using the CPI as deflator).
In Region X, on the other hand, per capita GRDP in real terms increased by 28.6 percent from PhP10,719 in 2001 to PhP13,782 in 2003, but poverty incidence among families also increased, although at a very slow rate of less than 0.1 percent, thereby pegging the poverty incidence at about 37.9 percent. The slight worsening of the region’s poverty situation may be attributed to the decline in the average per capita income (at constant prices using the CPI as deflator) of the four lowest income groups where the region’s poor population is concentrated, especially those closest to the poverty line.

¹ The 2001 per capita GRDP was compared with the corresponding figures for 2003 instead of those for the year 2000 since the per capita GRDP estimates for the earlier year were not linked with the 2003 figures due to the changes in the data series for the construction sector.

²It must likewise be noted that the GRDP data for 2001 and 2003 were estimated using different regional configurations in accordance with the new executive issuances on the country’s geographic distribution.

For these notes, inquiries may be made with Ms. Redencion M. Ignacio or
Ms. Glenita V. Amoranto at telefax number (632) 896-7981 or at their
e-mail addresses rm.ignacio@nscb.gov.ph / gv.amoranto@nscb.gov.ph.


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