October 1, 2006 · Posted in: Governance, In the News, The Economy

The Philippines now a ‘Second World’ country?

(UPDATED) A DAY before typhoon Milenyo struck and rendered Metro Manila and other parts of the country a virtual wasteland, Gloria Macapagal-Arroyo had proudly declared the Philippines a “Second World” country, trumpeting the supposed gains of the economy under her leadership, including a per capita income that is now worth $1,400 a year.

“Right now, we’re not Third World anymore,” Arroyo said. “At $1,400 we are now Second World, a middle class country, and we’ll be able to achieve, if we are able to continue the trajectory of (a) one-percent decline in the poverty level, we can reach hopefully the First World status by the year 2020.”

Under Arroyo, the country’s per capita income has grown to its present level from $1,040 in 2000 and $1,200 in 2004. As a measure of the wealth of the nation (in GDP terms) based on the income share of its citizens, per capita income however does not give an indication of the income distribution in the country — which has remained uneven as evidenced by widespread poverty.

But for Arroyo to refer to the country as “Second World” is quite a curiosity. In the first place, using the terms “First World,” Second World” and “Third World” harks back to the outdated model of the geopolitical world from the time of the cold war.

Three Worlds Map

“She’s a third-rate ‘president’ who doesn’t know that ‘Second World’ refers to communist countries,” says Charmaine Ramos, a development economist at the Institute for Popular Democracy.

After World War II, the three worlds model gained currency as a way of categorizing countries. Explains Nations Online, in the aftermath of the war, the world split into two large geopolitical blocs and spheres of influence with contrary views on government and the politically correct society.

The bloc of democratic-industrial countries within the American sphere of influence became known as the First World. The Eastern bloc of the communist-socialist states, on the other hand, was referred the Second World.

The remaining three-quarters of the world’s population, states not aligned with either bloc were regarded as the Third World. The term was first coined by a French demographer, Alfred Sauvy, in 1954 to describe the people of the world that are “unknown, exploited, and scorned.” (A third category, “Fourth World,” was coined in 1974 to refer to the poorest Third World countries that have “lagged behind” and still lack industrial infrastructure.)

With the collapse of the Soviet Union in 1991, the term Second World gradually ceased to be used. Only the term Third World — despite its criticism by some scholars as being colonialist, inaccurate and derogatory — remains in frequent usage to denote nations with a low UN Human Development Index (HDI), regardless of political status.

In the heady days of the cold war, though, the Second World encompassed nations within the Soviet Union’s sphere of influence, extending to countries that signed the Warsaw Pact to its allies such as Cuba and North Vietnam, and most of Eastern Europe. The term was also sometimes used to refer to communist countries that opposed Moscow’s leadership — Albania, the People’s Republic of China and Yugoslavia.

Alternatively, Second World was also used to denote countries with developed State-planned economies as opposed to the developed market economies of the First World.

The Philippines is definitely neither socialist nor communist, especially under Arroyo, who is an ardent adherent of neoliberal economics. Her antipathy towards the decades-old communist insurgency which she blames for hindering the country’s development, and for which she has set a one-year deadline for the military to crush, is also well known.

Clearly, in both cases, the Second World category — not to mention the fact that its out-of-touch connotation is no longer applicable to the times — doesn’t fit the Philippines.

“For a much flaunted economist like Arroyo, that seems strange,” quips Akbayan President Ronald Llamas. The term, he says, is rarely used these days, though it might pertain to any of the following: “middle income economies with a growing middle class; whatever is in between the Third World and First World; or developing economies of the Asia-Pacific, including China, India, Brazil, Chile, South Africa, etc.”

To Wilson Fortaleza, vice president of the Freedom from Debt Coalition, Arroyo’s promotion of the Philippines to “Second World” status could be a way of propping up the “magical description of her promised Enchanted Kingdom by 2020.”

“Perhaps she was describing the country’s halfway transition to it,” he says.

Fortaleza, however, says the devastation that typhoon Milenyo left in its wake should tell Arroyo “how we are still very much Third World.” Proof of which, he says, is that “we can’t even bring back the power supply in three days.”

18 Responses to The Philippines now a ‘Second World’ country?

Dean Michael

October 1st, 2006 at 3:55 pm

I’ve pretty much said everything I want to say in my blog entry but I think the president was trying to make it sound like we’re doing better off than before. Not to defend the president (I would like to think she knows what she’s doing) but there is some merit to the argument that the economy is improving.

However, I don’t think it’s because of her. I would rather like to think that it’s because of the entrepreneurs and the businessmen who have gone through great lengths to try and make something happen for the Philippines. It’s also a testament to how resillient the Filipino is, and how we get up from a huge blow (like the asian financial crisis, the estrada ouster, turmoil in the political arena) and “just keep walking”.

Somehow, the numbers defeat the idea because only a small percentage of the population is reaping the benefits of this “second world economy”. I’d like to see the bigger percentage of the population get a bigger piece of the pie than what they (or we) are currently getting.

naykika

October 1st, 2006 at 7:15 pm

I may not know and nobody does know the actual numbers, but how many people or percentage of the population are really getting the benefits of that average GNP of $1400? And what is the percentage making a hundred of thousand folds of that amount? If you average the GNP of People of Brunei , they could be perhaps in the First World, but the greedy Sultan is now one off the wealthiest man in the world. And a few Filipinos could be among some of them too. Don’t mind if they built their wealth the way Bill Gates and Buffets, but you and I know that they are taking of lot of percentage off the TOTAL GNP. And the guts to declare we are getting there.

Danilova

October 2nd, 2006 at 10:19 am

Food for thought

True, the World Bank and other international institutions classifies our country as a middle-income country. Even a look at the human development index shows this to be true. But there are pockets of poverty so deep – even right here in the middle of the city – that the quality of life for some Pinoys (a growing number) is no better than in some war-torn, sub-Saharan Africa. That’s what makes poverty here so appalling – (the fact that such poverty can actually be prevented and it’s largely just a matter of redistributing wealth…)

But then, much has already been said about the fact that stark income inequalities in our country negate much of the growth. All this has been said since the first quarter storm, in so many ways.

More objectively, a technical way to look at inequality is through the gini coefficient, the most commonly used indicator of income inequality.

This is a number that has a value between zero and one. As the value of the coefficient rises, the higher the degree of income inequality in a society becomes.

The gini coefficient represents an overall measure of the cumulative income share against the share of households in a population. It shows the degree of income disparity between different groups of households in the population. It also shows how disparity has changed over a period. So the gini coefficient can also help you see if inequality is increasing or decreasing in a country.

The Lorenz curve is used to illustrate the calculation of Gini coefficient. The line of perfect equality – which is a diagonal line – represents a perfectly equal income distribution in a society, where every household has the same income. The line of perfect inequality, which coincides with the horizontal and vertical axes, represents a perfectly unequal income distribution in a society where one household has all the income and everyone else has none. Sandwiched between the two lines is the Lorenz curve.

The Gini coefficient is popular among statisticians as a measure of inequality because it can be used to compare income distributions across countries or different population groups. It is also simple enough that it can be compared across countries and can be easily interpreted.

The gini coefficient can also show how income has changed for poor and rich. If the Gini coefficient is rising –as well as GDP – poverty may not be improving for the majority of the population. Of course, gini coefficients are subject to sampling errors.

At least in theory, the government is concerned with reducing the gap between the rich and the poor. The 1987 “Revolutionary” Constitutional states that: “The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic and political inequalities, and remove cultural inequities by equitably distributing wealth and political power for the common good. To this end, the State shall regulate the acquisition, ownership and disposition of property and its increments (Article XIII, Section I).”

Maybe this is why it comes out with a triennial Philippine Poverty Statistics report, which also uses the Gini coefficient as a measure of income disparity.

In its latest poverty estimates, the NCSB said that the Gini coefficient declined to 0.4660 in 2003 from 0.4814 in 2000. This had declines from 0.4881 in 1997.
So all in all, this indicates a movement towards more equitable income distribution.

While most developed European nations tend to have Gini coefficients between 0.24 and 0.36, the United States Gini coefficient is above 0.4.

Here are some interesting comparisons:

In Norway, which ranks number one in the UNDP’s HDI for 2000, the poorest ten percent have 3.9 percent of the income, the poorest 20 percent, 9.6 %, the richest 20 percent, 37.2%, and the richest 10 percent, 23.4. The gini index is 25.8.

The figures for the United States are: (poorest 10%) 1.9%, (poorest 20%) 5.4%, richest 20% (45.8%), richest 10% (29.9%). Gini index is 40.8.

Japan: (poorest 10%) 4.8, (poorest 20%) 10.6%, (richest 20%) 35.7; (richest 10%) 21.7%; gini index 24.9

Panama: (poorest 10%) 0.7, (poorest 20%) 2.4%, (richest 20%) 60.3, (richest 10%) 43.3 gini index 56.4

Kazakhstan: (poorest 10%) 3.4, (poorest 20%) 8.2, (richest 20%) 39.6, (richest 10%) 24.2, gini index 31.3

Philippines: (poorest 10%) 2.2, (poorest 20%) 5.4, (richest 20%) 52.3, (richest 10%) 36.3, gini index 46.1

Mali (close to the bottom of the HDI list): (poorest 10%) 1.8, (poorest 20%) 4.6, (richest 20%) 56.2, (richest 20%) 40.4.

http://hdr.undp.org/reports/global/2004/pdf/hdr04_HDI.pdf

ardythe

October 2nd, 2006 at 4:42 pm

I don’t know how we got promoted, considering the rate of poverty, unemployment, and bad education. Add that to the political instability, bad publicity, crimes and corruption, and discrimination that we experience everyday…

links for 2006-10-02 « aileron at wordpress.com

October 2nd, 2006 at 5:17 pm

[…] INSIDE PCIJ – The Philippines now a ‘Second World’ country? A DAY before typhoon Milenyo struck and rendered Metro Manila and other parts of the country a virtual wasteland, Gloria Macapagal-Arroyo had proudly declared the Philippines a ‘Second World’ country, trumpeting the supposed gains of the economy under (tags: philippines politics) […]

cvj

October 3rd, 2006 at 1:26 am

Danilova, thanks for your explanation on the Gini coefficient. I find it interesting that it has been decreasing at the same time as the economy has been growing. As for the HDI, there is a wide disparity in the rankings among the provinces in the Philippines as was explained here:

http://news.inq7.net/opinion/index.php?index=2&story_id=59207&col=110

Maguindanao is about 50 countries below Manila terms of ranking.

Ardythe, i think we’re considered ‘middle income’ because there are others who are much worse on the average. That is not to deny that the conditions that we see here compares with what is found in the other bottom dwellers.

Global Geopolitics News » Philippines - GMA learns from the masters

October 3rd, 2006 at 2:11 am

[…] The Philippines now a Second World country?Philippine Center for Investigative Journalism, Philippines – Oct 1, 2006… struck and rendered Metro Manila and other parts of the country a virtual wasteland, Gloria Macapagal-Arroyo had proudly declared the Philippines a Second … […]

Danilova

October 3rd, 2006 at 10:16 am

hi cvj,

… which means that the rich are getting richer… so much so that some are now members of the billionaire’s club of the world…

Manuel L. Quezon III: The Daily Dose » Blog Archive » The maggot strategy

October 3rd, 2006 at 1:50 pm

[…] Can someone tell me if Second World has a meaning most people are unaware of? Seems to me at the time the President received her training as an economist, “Second World” then meant what it does now. Freudian slip? Jet lag from visiting Socialist Cuba? We’re now a Gulag archipelago, perhaps? […]

ka lando

October 6th, 2006 at 6:51 pm

There is a wide gap between the extremes in the averaged GDP, so at $1400, the so-called economic growth is barely noticeable.

Plotting the XY coordinates in a line graph of the individual per capita income of all Filipinos, we won’t see a steady line going in an slightly upward motion that would represent progress. Instead, we will see a low-lying line, just slightly above the point of origin in the Y-coordinate denoting the per capital income of about 80% of the population. Occassinally, we would see some rhythmic surges in the line graph to denote the income of the few, yet extremely, wealthy Filipinos.

But the bottomline is, we’re still poor. And using the word “bottomline” in a more literal sense, the line graph representation of our income per capita is nothing but a crooked line just very slightly above the bottom of the graph.

Reading about the origins of the “First World”, “Second World”, and “Third World” terms offered new enlightenments to me. I wish the president had been enlightened also so that the next time she addresses this nation about our present economic state, it would be with confidence, and not with arrogance.

There are signs that actually prove her claims, but until we convert the crooked line at the bottom of the graph into sweet-flowing curve, that is, a fair distribution of our income per capita, a narrower gap between the rich and the poor, then regardless how she categorizes our country, it would be a good thing to hear.

tongue in, anew

October 7th, 2006 at 4:33 am

Pinas, a second world country (whatever that means)? I can only guess what she really means is that we’ve left the Third World on the way to the First.

Not when a huge slice of the population have families who do not even make US$1.00 a day. Or when a majority of the people are considered poor. What a fake!

Global Geopolitics News » Terrorism and Insurgency - The Philippines now a Second World country?

October 9th, 2006 at 10:15 pm

[…] The Philippines now a Second World country? Philippine Center for Investigative Journalism, Philippines – Oct 1, 2006 The Philippines is definitely neither socialist nor communist, especially under Arroyo Her antipathy towards the decades-old communist insurgency which she […]

JaimeA

November 19th, 2007 at 6:44 am

A couple of questions I’d like to raise to everybody and I dare you answer with utmost honesty. Looking back 10yrs ago, can you afford to buy a Php23,000 phone? Can you afford to travel to different places both in the Phils and outside? Can you buy a TV worth more than 50K? Because I could never have done/afforded those things back then, until recently. Of course I worked hard to reap whatever it is I have now, but I think a good national economy also paved way for this. Or else I would not be employed in a “sunshine industry” earning more than Php50K a month. I guess it should not be very hard to learn to give some consideration to the notion that – maybe our lives are really starting to get better, ey? (and the president maybe doing something good) 😉

goimon

November 22nd, 2007 at 2:27 pm

@jaime: the things you mentioned hardly existed 10years ago… we are not doing better just because we can buy crap like those now.. we are in a flaoting status which is far worse than being actually dirt poor.. we are in a stupid state and we dont even realize it

Current » Tidying up before the big push

November 19th, 2008 at 6:11 am

[…] of “attaining first world status by 2020,” and began classifying our country as a “Second World country,” and by now, the phrase has become yet another tired presidential propaganda line, except, of […]

Manuel L. Quezon III: The Daily Dose » Today's Dose » Tidying up before the big push

November 19th, 2008 at 6:22 am