Poverty and Middle-Income Traps in the Philippines. Definition, Analysis and Possible Solutions

Seminar paper from the year 2019 in the subject Economics - Case Scenarios, grade: 1.2, University of the Philippines (College of Social Sciences), course: Development Theory and Practice, language: English, abstract: This paper investigates the phenomenon of poverty and middle-income traps in the Philippines, through an examination of the empirical evidence afforded by economic and descriptive indices. Firstly, it explains the terms 'Poverty Trap' and 'Middle-Income Trap' and analyses these concepts with the aid of the Philippines as an example. Lastly, the paper presents possible solutions to change the situation in the Philippines. Historical data show that the economic development of countries has been, more or less, a long sequence of transitioning from a low-income economy to a high-income one. However, the ideal path of economic development in some countries may not be applicable to others. Numerous studies show that rapid economic growth has allowed a significant number of countries to achieve middle income status, yet they fail to make the additional leap needed to become high-income economies. This leads to the phenomenon of middle-income traps. In addition, some countries may be stuck in a poverty trap, characterized by low level of wealth and output. Ultimately, the poverty and middle-income traps continue to be hindrances for the effective and successful economic growth in the Philippines. In order to combat the dire effects of such traps, the government must create more feasible and concrete policies targeted at improving the life conditions of the poor, giving them more access and opportunities, and strengthening their capabilities to help them escape the vicious cycles of the traps.