She spent her first two years in college serving as one of the Culture Writers in the UPLB Perspective, the official university paper

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EFFECTS OF INFRASTRUCTURE DEVELOPMENTS ON POVERTY REDUCTION IN THE PHILIPPINES, 2000-2006

KAREN ISABELLE VALENCIA CASTRO

SUBMITTED TO THE FACULTY OF THE DEPARTMENT OF ECONOMICS COLLEGE OF ECONOMICS AND MANAGEMENT

UNIVERSITY OF THE PHILIPPINES LOS BAÑOS IN PARTIAL FULFILLMENT OF THE

REQUIREMENTS FOR THE DEGREE OF

BACHELOR OF SCIENCE IN ECONOMICS

APRIL 2009

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BIOGRAPHICAL SKETCH

Karen Isabelle Valencia Castro (Kukay/Kikay/Kuya) was born on 1 October 1987 in Mandaluyong City. She is the only child and heiress of Joey and Lina Castro.

She studied at Mater Ecclesiae School during her elementary years and successfully passed the entrance examinations at Muntinlupa Science High School. First year high school, she was sent to Hokkaido, Japan as one of the six Philippine representatives for the World Youth Festival. During her high schools days, she has been active in the Student Council for years, serving as 2^nd year representative during her second year, and serving for two years as the SC Treasurer. Realizing her potential and interest in journalism, she also served as layout editor and official photographer for the high schools paper during her fourth year.

Passing the UPCAT, she headed to UP Los Baños to pursue a Bachelor’s Degree in Economics. She spent her first two years in college serving as one of the Culture Writers in the UPLB Perspective, the official university paper.

Sophomore year, she joined the most prestigious organization in the College of Economics and Management, the UP Junior Executive Society which honed her leadership potentials for the last three years. She spent the first semester in her junior year as the Promotions Committee Head for the First UPJES National Youth Leadership Camp (UPJES NYLC). She was elected the Central Treasury Department Head as part of the UPJES Executive Council and was the Overall Project Chairperson of the 2^nd UPJES NYLC during her senior year. She was also one of the charter members of the Junior Jaycees Los Baños where she served auditor for two years, functioned as the Vice- Chairperson for Students for the Advancement of Global Entrepreneurship (SAGE), and spearheaded JJC Night V.2: Full Frontal.

In the future, Kukay plans to pursue a Master’s Degree in Journalism and work for NU 107, MTV Pilipinas, or MYX. She also plans to invest in a pastry business and make lots of dough (double entendre).

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ACKNOWLEDGEMENT

To my adviser, Dr. Yolanda Garcia: thank you for your efficient supervision, comments, edit marks, recommendations, and words of encouragement. I am grateful to have been one of your advisees.

To my reader, Ma’am Jhoana Alcalde: thank you for taking time to read my study. Thank you for your edit marks, suggestions, and comments to improve my thesis.

To Ma’am Abrinaand Ma’am Kim: thank you for your remarks during my manuscript defense. It helped a lot in improving my study.

I extend my gratitude to the staff of NSCBfor letting my Mom borrow the Philippine Countryside in Figures (Frontline use at that!).

Thank you to the staff of the National Irrigation Administration (NIA) for accommodating my data-gathering-needs.

To my brods and sisses in UPJES: thank you for giving me the opportunity to be built as a better person. May our organization (org fund as well) continue to flourish and prosper.

To my Bords in JJC: thank you for the fellowships and project management experiences. May we continue to confirm out principle that “service to humanity is the best work of life.”

To my EPBatchmates, Alou, Kel, Nicole, Kathleen, and Kris: thank you for all the encouragement and support. We made it this far!

To my co-advisees Osh, Joyce, and Jylle: we nailed it! We’re brothers and sisters in the microcosm of Econ 200. I will miss our Rm 4 experiences.

To Osh, Pam, Celica, Jason, Elei: let’s have lunch/brunch again!

To Jasonand Celica: thank you for developing the Noe-Kukay loveteam.

To the UPJES Execom 08-09: it has been a rollercoaster ride. But it wouldn’t have been any better if it weren’t you I took the ride with. Thank you!

To the JJC-LB Charter members and babies: after 10 years, JJC-LB, pray, will still exist in the recognized organizations list of SOAD.

To my 2^ndUPJES NYLC Team, Ria, Kristhel, Marlem, Mariel, and Celix: I hope we learned a lot from NYLC- haggard experience. We could always meet at Burger King and meet about non-NYLC agenda.

To my econ batchmates: our friendship will never slope downward, but will still increase at an increasing rate over time.

To my [P] family especially to Kim, Shinji, Yan, Rizza, Pam, Franco, Ginay, Migs, and Chantielle: thank you for all the memories of overnight pressworks and sessions.

To my MunSci familyin UPLB: alumni homecoming!!!

To my beloved all-time housemates, Vanne and Issa: saan tayo lilipat? Hehehe

For mommy: thank you for answering my queries and providing me with the data I need. You have been my pseudo- research assistant. Thank you for supporting and guiding me for all these years. You can retire in five years time (hehe). I love you.

For dad: thank you for all your prayers and support. I love you too.

To Noe: you also served as my pseudo-RA. Thank you for letting me use Qube whenever Pok loses out on me. Thank you for inspiring me to graduate and for making me a better person. I love you. <Burger>

And last but not the least, I would like to thank the Almighty Godfor showering me with endless blessings. This is the fruit of my labor I offer unto You. I hope this study could be of use in the future.

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CASTRO, KAREN ISABELLE V. Effects of Infrastructure Developments on Poverty Reduction in the Philippines, 2000-2006 University of the Philippines Los Baños (Undergraduate Thesis)

Adviser: Dr. Yolanda T. Garcia

This study was conducted to determine the effects of infrastructure developments in reducing poverty incidence, at the provincial level, in the Philippines for 2000, 2003, and 2006. The study used secondary data of roads, water, energy, telephone density, irrigation, barangay health stations and school infrastructure developments, provincial total financial resources, and provincial poverty incidence among families which were all obtained from the Philippine Countryside in Figures, an annual publication of the National Statistical Coordination Board (NSCB).

Linear regression of the log-transformed variables was used in estimating the statistical relationship between infrastructure developments and poverty incidence.

Results of the study showed that Batanes, Rizal, Bulacan, Laguna, Cavite, Bataan, Pampanga, Nueva Vizcaya, and Benguet have consistently been the more advantaged provinces in the Philippines. On the average, they have the most access to infrastructure developments. On the other hand, Masbate, Maguindanao, Tawi-tawi, and Zamboanga del Norte have been consistently among the poorest provinces. In stark contrast with the more affluent provinces, the poorest provinces have the least access to infrastructure developments.

Regression results showed that irrigation, health, and telecommunications infrastructure developments significantly reduced poverty incidence. Specifically, a percentage increase in irrigation and telecommunications infrastructure would decrease poverty incidence by 0.16%, respectively. Similarly, a percentage increase in health infrastructure would decrease poverty incidence by 0.25%. These imply that development of these infrastructures would prove more beneficial for the poorer constituents in the Philippines.

The observed provincial disparity in incomes and poverty could be addressed by enhancing and developing infrastructure developments with higher priority for the poorer provinces in the Philippines. Existing infrastructures that were already constructed for developed areas could be improved and maintained.

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TABLE OF CONTENTS

Page

TITLE PAGE i

ACCEPTANCE SHEET ii

BIOGRAPHICAL SKETCH iii

ACKNOWLEDGMENT iv

ABSTRACT v

TABLE OF CONTENTS vi

LIST OF TABLES viii

LIST OF FIGURES ix

LISS OF APPENDICES x INTRODUCTION

Background of the Study 1

Significance of the Study 9

Statement of the Problem 9

Objectives of the Study 11

REVIEW OF RELATED LITERATURE

Infrastructure Characterization 12

Road Infrastructures and Poverty 14

Irrigation Infrastructures and Poverty 16 Energy Infrastructures and Poverty 16

METHODOLOGY

Conceptual Framework 18

Nature and Sources of Data

Selected Variables 21

Analytical Procedure

Geographic Mapping 23

Regression Analysis 24

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RESULTS AND DISCUSSION

Poverty Incidence Situation in the Philippines 27

Road Infrastructure Situation in the Philippines 30

Water Infrastructure Situation in the Philippines 33

Energy Infrastructure Situation in the Philippines 36

Telecommunications Infrastructure Situation in the Philippines 39

School Infrastructure Situation in the Philippines 43

Irrigation Infrastructure Situation in the Philippines 44

Health Infrastructure Situation in the Philippines 45

Financial Resources per Capita 47

Top 10 Least Poor Provinces in the Philippines 48

Top 10 Poorest Provinces in the Philippines 49

Regression Analyses 52

SUMMARY AND CONCLUSION 56

REFERENCES 61

APPENDICES 64

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LIST OF TABLES

Table TITLE Page

1 Road densities and paved road ratios – Philippines and other

ASEAN Countries 3

2 Comparison of electricity access and other performance

measures 5

3 Comparison of teledensity figures in selected countries, 1995

and 2003 6

4 Regions and provinces of the Philippines 23

5 Top 10 least poor provinces for 2000, 2003, and 2006 48 6 Top 10 poorest provinces for 2000, 2003, and 2006 49 7 Matrix of Averaged Infrastructure Developments and

Averaged Poverty Incidence by Category, 2000 50 8 Matrix of Averaged Infrastructure Developments and

Averaged Poverty Incidence by Category, 2000 50 9 Matrix of Averaged Infrastructure Developments and

Averaged Poverty Incidence by Category, 2000 51

10 Regression Results for 2006 52

13 Summarized results of the model 55

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LIST OF FIGURES

Figure TITLE Page

1 Summary of infrastructure effects 19

2 Conceptual Framework 20

3 Map of the Philippines 22

4 Poverty incidence among families in the Philippines 27

5 Poverty incidence among families by province 28

6 Percentage of concrete national roads in the Philippines 30 7 Percentage of concrete national roads by province 31 8 Percentage of households with access to safe water supply 33 9 Percentage of households with access to safe water supply by

province 34

10 Percentage of energized barangays in the Philippines 36

11 Percentage of energized barangays by province 37

12 Telephone density per 1000 population in the Philippines 39 13 Number of subscribed and installed phone lines in the Philippines 40 14 Telephone density per 1000 population by province 41

15 Number of public schools in the Philippines 43

16 Percent share of irrigated areas for irrigated palay in the Philippines 44 17 Total number of barangay health stations in the Philippines 45 18 Percentage of barangay health stations to total barangays 46

19 Total provincial financial resources per capita 47

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LIST OF APPENDICES

Table TITLE Page

1 Matrix of infrastructure developments with poverty incidence,

2000 65

2003 69

2006 74