Research Setting

The research setting was the Philippines, providing the developing country context that was required to answer the research question. Like other developing countries in Asia, the Philippines manifests the phenomenon of worsening poverty despite economic growth. Data from the National Statistics Office (NSO) and the National Statistical Coordination Board (NSCB) show that from a baseline of 45.3% (28.1 million people) in 1991, poverty incidence in the country, measured in terms of income poverty, stopped declining at 30% in 2003 and from that point on proceeded to rise steadily up to 32.9% (27.6 million people) in 2006. Considering the impacts of the global crisis in 2008-2009 and the natural disasters of 2009, the poverty situation could only have gotten worse (Serrano, 2010). When the Philippines registered worsening poverty in 2006, Forbes magazine listed 3 Filipinos in its annual list of billionaires with their net worth ranging from US$ 2.3-2.6 billion each (Kroll, 2006). The 2008 National Nutrition Survey (NNS) revealed that 3 out of 10 children were undernourished, with the percentage of underweight children less than 5 years of age comparable to the United Nations Children Fund’s (UNICEF’s) 2006 estimates for Sub-Saharan Africa.

Between 1980 and 2010, the Philippines’ Human Development Index (HDI) rose by 0.7% annually from 0.523 to 0.638, which gives the country a rank of 97 out of 169 countries with comparable data. This places the country in the medium human development category. The HDI of East Asia and the Pacific as a region increased

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from 0.391 in 1980 to 0.650 in 2010, placing the Philippines below the regional average. Not only has the Philippines been lagging behind its neighbors in terms of human development, it may just mean there have been more countries that have been worse off. While its GDP per capita was US$ 3,600 in 2010, Philippine indicators for education and health were not encouraging. Public health spending was placed at 1.3% of GDP, which was very low compared to the 5% World Health Organization recommendation. On average, there were 32 children who died before age 5 per 1,000 live births. Public spending on education was 2.6% of GDP. About 80% of the population has had some form of schooling. The average number of years of adult enrollment was 8.7 in contrast to 11 years of expected schooling. Only 62 per 1,000

people had access to the Internet (UNDP, 2010).8

In terms of the Basic Capability Index (BCI), the Philippines scored 77 out of a perfect score of 100, belonging to the group of countries with a very low BCI category. These countries were characterized as having a very low level of achievement in terms of meeting the basic needs and facing very significant obstacles in achieving the well being of their population (Social Watch, 2008).

Despite the trend towards urbanization, poverty in the Philippines is still largely a rural phenomenon. In 2006, 75% of the poor were still found in the rural areas, up from 71% in 1991 (Balisacan et al., 2008). The poor are the landless, homeless, jobless, underemployed, uneducated, sick, malnourished, discriminated Filipinos. Many of them are women, Muslims, Indigenous Peoples, and tribal Filipinos (Serrano, 2010).

A 2005 study commissioned by the Asian Development Bank on Poverty in the Philippines: Income, Assets and Access detailed how poverty in the country was a deprivation of and lack of access to essential assets falling under the categories of human capital, physical capital, natural capital, financial capital, and social capital. The same study identified seven factors that were seen to be direct causes of poverty (Schelzig, 2005):

x Macroeconomic policies that have resulted to economic growth but have not reduced poverty;

x Unemployment and underemployment especially in agriculture, forestry and fishery;

x Unchecked population growth;

x Structural issues in the agricultural sector including a problematic agrarian reform program and ineffective policy and service support to small farmers; x Governance concerns including corruption and an ineffective state that is

unable to deliver basic services;

x Armed conflict especially in the poorest areas of Muslim Mindanao; and x Disability caused by malnutrition, unsanitary living conditions, accidents and

injuries, with most persons with disabilities living in poverty.

A fundamental cause of rural poverty in the Philippines is the distribution of land (World Bank, 1988; Balisacan and Pernia, 2002). Land reform, the main asset reform program of government, remains a major bottleneck with a large amount of land (1.4 million hectares) left that still needed to be distributed by the end of the government’s Comprehensive Agrarian Reform Program (CARP) in 2008. Despite CARP being adopted by various Philippine administrations, not much has been achieved. Bello et al., (2004) have assailed CARP as having failed to change the feudal landscape and to address the roots of land concentration in the hands of a few rural and urban elites. CARP has suffered from problems such as lack of funds, opposition from a landlord- dominated Congress, lackluster performance by the Department of Agrarian Reform (DAR), intense resistance from landlords, and legal hurdles (Schelzig, 2005).

The Philippine state’s failure to address poverty has created a robust civil society sector engaged in development work and advocacy over the years (Serrano, 2010). Within the business sector, most corporations and small and medium enterprises continue to do business as usual even as a growing number have started to practice various forms of corporate social responsibility. However, the dominant orientation of corporate social responsibility practice in the Philippines, especially among business firms in the agricultural sector, remains at the level of charity and public relations, rather than the integration of social objectives into company philosophy and strategy (Dacanay and Roy, 2007). In this context, social enterprises that have been set up to serve the poor have become important actors in poverty reduction and sustainable development.