Adverse impact of maldistribution and income inequality of wealth in

the Philippines

The problem arises when the inequality of outcomes is rooted in an inequality of

economic opportunities. This exists amid wide differences in the quality of education, a
general dearth of decent jobs, and an uneven economic environment that favors larger
firms while driving many smaller firms into informality.

Inequality of this type can lead to a more volatile and less efficient economic system.
The concentration of economic opportunities within the hands of a few is essentially the
“uneven playing field” that characterizes the Philippine economy today
Happening now…
TRAIN LAW

Inequality could worsen after TRAIN’s first package came into effect on January 1, 2018. TRAIN
reduced personal income tax, with the average worker set to gain P20,000 ($395) a year, but also
expanded the value-added tax (VAT) base and introduced new charges on alcohol, tobacco and sugar-
sweetened drinks. Inflation hit 4.3% in March 2018, exceeding the central bank’s 2-4% target (see
analysis).

High inflation is especially challenging for low-income Filipinos, but the government is working to
protect the most vulnerable: in February 2018 the Department of Finance announced plans to offer P200
($3.95) of monthly cash subsidies to 7.4m low-income families to offset TRAIN’s inflationary impact.
This is in addition to government investment in nationwide infrastructure projects, social programmes and
free university tuition at public universities and colleges that should help reduce inequalities in the
medium to long term. These measures should help mitigate the worst of the nearterm shocks, but rising
unemployment, limited credit access for consumers and small businesses, and rising levels of automation
remain significant challenges.

In January 2018 Ernesto Pernia, secretary of socio-economic planning and director-general of the
National Economic and Development Authority, lobbied the government to replace quantitative rice
import restrictions with tariffs to support investment in agricultural technology and post-production
innovation, boosting food self-sufficiency and agricultural income

REFERENCE:

Bautista, R. M. (1988). Impediments to trade liberalization in the Philippines (No. 54). Gower Publishing
Company.

Terasaki, Y. (1985). Income distribution and development policies in the Philippines. The Developing
Economies, 23(4), 368-390.

Balisacan, A. M. (2000). Growth, redistribution and poverty: is the Philippines an exception to the
standard Asian story?. Journal of the Asia Pacific Economy, 5(1-2), 125-140.