Anatomy of Poverty during Adjustment: The Case of the Philippines

Abstract

Recent discussions of development policy have emphasized the need for macroeconomic adjustment programs that give attention to poverty and social concerns. Conventional adjustment programs applied in developing countries are considered to have no human face, as they focus almost exclusively on promoting economic efficiency and bringing an economy to a stable and sustainable growth path.' In particular, observers have claimed that the poor have disproportionately borne the pain of transitional costs of adjustment, especially when the transition has been longer than initially expected. Indeed, increases in poverty as well as sharp cuts in government expenditures on social services, including health, nutrition, education, and infrastructure programs benefiting the poor, have accompanied the implementation of adjustment policies in a number of less developed countries (LDCs). On the other hand, country cases where the transition apparently has not been antipoor, even in the short run, also exist. Indonesia's experience with adjustment in the 1980s, for example, appears to be one such case.2 In general, the available evidence indicates that changes in living conditions in the short run do not appear to be systematically related to the presence (or absence) of adjustment programs.3 The lack (or the poor quality) of data-especially on social and human development indicators-in LDCs hampers the analysis of the link between adjustment policies and poverty alleviation. Moreover, because the transition in many countries is an ongoing process, the impact of the adjustment is still in the making. Thus, available information gives only a partial, and possibly even misleading, picture of the full effects of adjustment policies on the poor's standard of living. Even when reliable data are available, the analysis has to move beyond simple correlations and establish counterfactual situations. Specifi-