Higher spending needed on human capital – NEDA

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The Philippines is stepping up spending on health and education as part of economic reforms, cognizant that such investment is vital to reducing inequality and poverty in the country, the National Economic and Development Authority (NEDA) said in a statement released Wednesday.

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NEDA Director-General and Socioeconomic Planning Secretary Arsenio Balisacan said reforms being carried out call for such increase in spending, particularly under the government’s conditional cash transfer program.

“Our current fiscal space, which is a direct result of our institutional reforms, has allowed us to channel resources into human capital and support social protection programs,” he told the World Bank’s high-level panel on Shared Prosperity, Inequality, and Poverty in East Asia and the Pacific recently at the World Bank Headquarters in Washington D.C.

The World Bank session discussed how developing countries in the region could address the challenges of promoting shared prosperity, reducing inequality and eliminating poverty, highlighting some lessons they could pick up from past successes.

Balisacan said the Philippine government’s efforts to improve the quality of its regulatory structure presents a lot of opportunities for the local economy, especially in view of the upcoming Association of Southeast Asian Nations market integration in 2015.

“We have been moving up in [terms of]the ease of doing business and world competitiveness indicators quite significantly in the last couple of years and we have also substantially increased our investment in infrastructure. By increasing it from about 2 percent of GDP [gross domestic product]in 2012, to 5 percent by 2016, we are addressing one of the country’s biggest constraints to development and opening up for a bigger market,” he said.

The NEDA chief also mentioned the need to keep up with the rapidly changing labor market, which has become more skill-intensive across the various sectors. He cited the impact of technology, which has changed the mix of jobs and required better quality of education and skill content from the labor force.

“A much easier and faster way of addressing inequality is mobility and enhanced capacity of people to choose any sector or location of employment. This is why education is such a powerful equalizer. It explains why Filipinos are everywhere. When they can’t find opportunities near them, they move elsewhere if they have human capital,” he concluded.

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