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PHILIPPINES
POLITICAL ECONOMY ASSESSMENT REPORT
PHILIPPINES POLITICAL
ECONOMY ASSESSMENT REPORT
An assessment of the political economy factors that shape
the prioritisation and allocation of resources for essential
health services for women and children.
Acknowledgements
Contents
Special thanks go to Drs Willibald Zeck and Raoul Bermejo III in the UNICEF office, Manila
for their assistance in the conduct of the field work and preparation of this report.
Acknowledgements
Acronyms
Currencies and exchange rates
1 Executive Summary
2. Background
2.1 Background and purpose of this report
2.2 Methodology, frameworks used, and report structure
4 Structure and function of the health sector and RMNCH at national and
sub-national levels, and related analysis
5. Recommendations
References
Annex 1 Definitions of political economy
Annex 2 Approach and methodology
Annex 3 Inception Report for the Philippines
Annex 4 List of people interviewed in the Philippines
Annex 5 Strengths and weaknesses of the Philippines system of priority setting, planning and budgeting
Annex 6 Explanation of priority setting and planning by the National Economic and Development
Authority (NEDA) of the Philippines
Annex 7: Evidence based planning and budgeting in Davao City
Cover Picture
UNICEF/NYHQ2012-1684/xxxxxxx
Acronyms
1 Executive summary
AHA
Aquino Health Agenda
AIP
Annual Investment Plans
AOP
Annual Operational Plans
barangays village
BuB
Bottom up budgeting
CIPH
City-wide Investment Plan for Health
CPR
Contraceptive Prevalence Rate
Dependency ratio
The ratio of people below 15 and above 65 years of age to the
total population
DBM
Department of Budget and Management
DILG
Department of Interior and Local Government
DOH
Department of Health
EBaP
Evidence-based planning
Gini coefficient
A statistical estimate of inequality ranging from zero
(no inequality) to 1 (all wealth captured by one person).
LGUs
Local Government Units
LPRAP
Local Poverty Reduction Action Plans
MDGs
Millennium Development Goals
NEDA
National Economic Development Authority
NHA
National Health Accounts
NHIP
National Health Insurance Program
PPP
Public Private Partnership
PPP
Purchasing Power Parity
PhilHealth
Philippines Health Insurance Corporation
RMNCH
Reproductive, Maternal, Newborn and Child Health
SAM
Severe Acute Malnutrition (weight for height below 3 z scores
of the median WHO growth standard for age)
SBA
Skilled Birth Attendant
TFR
Total Fertility Rate
UHC
Universal Health Coverage
Situation analysis
2. Background
2.1 Background and purpose
of this report
Social and economic development processes involve
much more than technocratic approaches: political
economy1 factors usually determine the fate of
reforms. This finding is clear from the international
literature (1-12). More specifically, how - and why governments make and implement decisions; prioritise
the allocation of scarce financial and human resources;
resolve trade-offs; regulate the private sector; achieve
accountability; and interact with civil society and
development partners is an essential key to understanding
the process of international development. Understanding
how governments use or dont use evidence to
shape policies and prioritise the use of their own scarce
resources is also increasingly important. That is particularly
true as more and more countries achieve middle income
status2, albeit with large burdens of poverty (13) and aid
programs become progressively smaller.
Development partners need to increasingly
understand the political economy of decision making
and resource allocation if they are to have impact.
Traditional forms of Overseas Development Assistance
(ODA) have become relatively less important in much of
Asia as those economies expand and some development
partners withdraw. For example, total ODA in all sectors
now constitutes less than one per cent of government
expenditure in Indonesia. While ODA can be helpful and
catalytic in supporting reforms, the key to improved
outcomes will be how countries prioritise and use their
own resources. The country-driven development vision
of the Paris Declaration and Accra Agenda for Action
further point unmistakably to the importance of national
planning and budgeting, however uncomfortable that may
be for development partners increasingly seeking visibility,
quick wins and avoidance of corruption from their own
aid dollar. Development partners have their own political
economy incentives and drivers. Those partners wishing
to support more evidence-based priorities and resource
allocation decisions by developing country governments
must identify more sophisticated but legitimate entry
points of influence.
Some useful definitions of political economy as they apply to international development are set out in Annex One.
The World Bank classifies countries as middle income if they had a GNI per capita of more than $1045 but less than $12,746 in 2013. Within
the middle income category, those countries with a GNI per capita of less than $4125 are classified as lower middle income, while those
above are classified as upper middle income.
3
Originally AusAID and from 2013 the Department of Foreign Affairs and Trade (DFAT).
10
1
2
11
80
70
60
57
54.2
48.4
50
40
40
33.6
35.1
32
34
30
29
30
24
25
22
20
17.7
17.8
17
13
10
0
1990
1993
1998
Infant Mortalitiy
2003
Under Five Mortality
2006
16
2008
14
2011
2015
Neonatal Mortality
12
13
Chart 3. Slower rate of reducing poverty in the Philippines than comparable countries.
Chart 2. Unplanned / unwanted pregnancies in the Philippines, Indonesia and 39 other countries
Philippines
Percent of population
100
2
Average
41 countries
Indonesia
Figure 3.2
Indonesia,
80
Ave
as pe
at
12
60
Percent
60.
Moreover, the Philippines still has one of the h
countries in the region, with a Gini coefficient of around
the region have
had higherfrom
initial rates
of poverty, Gini leve
countries
in and
the
region ineither
started
lower
3.2 Political,
economic
they have been able to reduce poverty rates faster than
development
the Philippines. This
is apparent fromor
Chart
3 below.
income context
growth (e.g., Cambodia,
Vietnam),
managed
to lo
The latest Government report states that the incidence
Despite its potential,
the Philippines
has had a
of poverty
has reduced
over one third (34.4%)
Malaysia,
Thailand)
(Figure
3.3).
The from
countrys
high inlevel of
disappointing record of economic growth and
1991 to just over one quarter (25.2%) in 2012 (21). While
social development
since
Independence
in 1946.
welcome, this reduction
still well above
17.2%
high
ratio
of Filipino
billionaires
netisworth
totheGDP,
which
The Philippines has had, on average, lower economic
poverty rate that would have enabled the Philippines
growth, lower income
poverty reduction,
and higher inequity
to reach the MDG
1 target3.1).
on reducing poverty by half
countries
in the region
(Table
40
9
6
3
20
0
1
Philippines
China
Lao PDR
Thailand
It could be assumed that the CPR among women who are not married, including adolescents, is higher.
The Gini coefficient estimates the extent of inequality of income and wealth in a country. More formally, the World Bank states that the Gini
index measures the extent to which the distribution of income or consumption expenditure among individuals or households within an
economy deviates from a perfectly equal distribution. A score of one means one individual hypothetically owns all the wealth in the country.
A score of zero means there is no inequality in the dispersal of income and wealth in the country.
4
5
14
Cambodia
Indonesia
Malaysia
EAP (developing only)
Source: WDI
Note: EAP stands for East Asia and Pacific countries. Some
countries have missing values during certain years.
Source: WDI
Note: Some co
years.
15
100
2.7
60
40
76.5
60.7
60
50
40
Philippines
Indonesia
20
11
09
20
07
20
05
20
03
20
01
20
9
19
9
20
10
00
20
0
19
9
0
19
8
0
19
7
Population
38.7
0
0
92.3
48.1
19
6
70
2.4
1.9
27.1
3.1
2.4
20
80
19
9
2.9
Per cent
80
Per cent
Millions
Malasia
Thailand
Large numbers of unplanned children add to household costs among the poor, exacerbating household poverty. Under-nutrition in mothers,
infants, and children directly increases the susceptibility to disease and indirectly reduces income earning potential, thereby
exacerbating poverty.
In essence, a demographic dividend occurs when a large youth bulge finds good well-paying jobs in the formal sector that then generates
income, taxes and wealth that can be invested by the country for longer term social benefit. A demographic burden occurs when that youth
bulge is not able to be fully employed and so creates an additional burden on welfare and other services.
8
Those aged less than 15 years, and those aged older than 64 years (i.e. dependents) as a ratio of the total population. A higher per centage
means more people are dependent on the working age population to support them
16
17
18
19
20
It is unclear why the Arroyo administration increased health expenditure. All key stakeholders were asked during the field visits. Most were
unaware/surprised that budget expenditure rose so quickly under that administration. The UNICEF office in Manila is continuing research on
this question.
9
21
100
90
80
70
DOH expenditure
program, billions of
Philippines pesos
(current)
60
50
40
30
20
10
Total Doh
Salaries
2015
2014
2013
2011
2012
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
Capital outlay
2012
Education
2011
2012
2009
250,000
2009
2010
2011
200,000
Agriculture
150,000
Health
100,000
50,000
Agraian Reform
NG
LGU
NHIP
EC
OOP
Pvt Insurance
HMO
Pvt
Pvt
Schools
Estabilshments
Grants
50
100
150
200
250
NG National government; LGU Local Government Unit; NHIP National Health Insurance Program; EC Employees Compensation; OOP
out of pocket
11
22
23
A win-win for public health and public finance for the poor where the evidence base shifted from public
health to public economics The Philippines has traditionally had one of the lowest rates of tobacco taxation
and consequently one of the highest rates of tobacco use in the region. This is the result of strong lobbying by
international tobacco companies and member of Congress representing tobacco growing districts. The scientific
evidence that tobacco is a major cause of premature death and disability is well beyond dispute. The tobacco
industry therefore shifted ground away from the public health arguments across to public economic arguments.
They argued smuggling would increase; jobs and revenue would be lost; and the poor would suffer the most from
increased taxes on tobacco and alcohol. All such claims by the tobacco industry have been shown to be myths
(47, 48). President Aquino astutely steered a Sin Tax Law through Congress that shrewdly allocated additional
revenues from tobacco and alcohol to financing the Universal Health Care scale up. In a politically astute move,
President Aquino also ensured that the increased public revenue from the increased taxes was also used to
compensate tobacco farmers who may have lost production. The law eventually passed Congress by only one
vote and the original proposal to raise PHP 60 billion was halved to reduce political resistance.
40000
%INC/(DEC)
33.95
35000
Lifetime Member
29%
Indigent 16%
30000
Informal 72%
26.19
25000
Formal 16%
20000
15000
10000
5000
0
2013
2014
A person from the lowest quintile paying P50 VAT on any item will lose significantly more relative disposable income than a person from the
highest quintile paying the same P50 VAT on the same item.
13
The formal sector constitutes 40% of beneficiaries and special categories.
12
24
25
SOURCE OF FUNDS
Growth Rate
20111/
2012
84,139
86,423
2.7
National Government
51,940
53,176
2.4
Local Government
32,199
33,247
3.3
SOCIAL INSURANCE
39,209
51,863
32.3
39,104
51,750
32.3
Employees' Compensation
104
112
8.0
289,655
325,526
12.4
240,485
269,419
12.0
7,222
7,086
(1.9)
Health Maintenance
Organizations
28,944
33,181
14.6
Private Establishments
9,297
11,603
24.8
Private Schools
3,707
4,236
14.3
3,478
3,987
14.6
3,478
3,987
14.6
416,480
467,798
12.3
GOVERNMENT
PRIVATE SOURCES
Private Out-of-Pocket
Private Insurance
26
14
The screening criteria, including the sub-questions and weightings, is available on request.
27
Number of
indicators
15
28
The Philippines has long had one of the highest total fertility rates in the region, and highest levels of unmet
contraceptive need. The powerful Roman Catholic church consistently and vigorously opposed modern family
planning. Their power to affect politics was clear given that the Church had demonstrably been a critical player
in mobilising the overthrow of President Marcos in 1986. It could and would also specifically mobilise voters
to vote against candidates standing for Congress. Various Reproductive Health Bills have been languishing in
Congress for over 13 years. Although the scientific evidence about the health benefits of family planning never
changed, the political environment did. President Aquino used his political capital to strongly and astutely advocate
passage of Reproductive Health Bill (58). This was widely supported by the general public, and academics
including from the Roman Catholic Ateneo University. The Philippines now has a law funding the distribution
of free contraceptives, requiring government hospitals to provide reproductive health services, and mandating
public schools to teach sex education. Its not a perfect law. The delivery of RH services remains the primary
responsibility of the national government - not local government units - and optional for most private hospitals.
Except in special cases, minors need parental consent to access family planning methods. Sex education is also
optional for private schools. (58) Nevertheless this is a major change in the political and public health landscape
of the Philippines
Box 2: The Reproductive Health Bill: the scientific evidence remained the same, but the political
environment changed dramatically.
The six disorders tested for newborn screening are: congenital hypothyroidism; Congenital Adrenal Hyperplasia; Galactosemia;
Phenylketonuria; Glucose-6-phospate-dehydrogenase deficiency; Maple Syrup Urine Disease.
15
29
30
How it is presented?
o The EBaP graphs prepared by UNICEF during the
investment case work gave local stakeholders
confidence to communicate and advocate with
a wider and non-technical audience. Some local
mayors or politicians may only have a primary school
education. Complicated statistics and dense reports are
intimidating.
31
5. Recommendations
The preceding section analysed the current situation.
This Section makes observations and recommendations
about how the Philippines and its development partners
can build on the preceding analysis to further improve
development effectiveness. The aim of this Section is to
offer practical, actionable recommendations.
Development partners should understand the politics
of the Philippines but stay distant from it. Expenditure
on development programs can be a major arena for
corruption and politicking. The worst case outcome for
UNICEF or another development partner would be to cross
the line and have its evidence or approach captured by a
political process or be seen to be partisan, especially by
beneficiaries or other partners attempting to rise above
partisanship.
32
Regulation has both costs (compliance costs, red tape and opportunities for corruption) and benefits (quality assurance, protection against
exploitation). Costs can exceed benefits.
18
Muralidharan et al (2014) state that in India the cost of hiring enough inspectors to increase the probability of a school being inspected by 10
per centage points is Rs.448 million/year. However, the reduction in wasted salary from this investment in terms of reduced teacher absence
amounts to Rs.4.5 billion/year, suggesting that the returns to investing in better governance are ten times greater than the cost.
17
33
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Wild, L., Chambers, V., King, M. and Harris, D. (2012) Common Constraints and Incentive Problems in Service Delivery. Working
Paper 351. London: ODI.
19
20
38
39
Figure 1: Stages in political economy analysis (taken from Moncrieffe and Luttrell, 2005)
STAGE 1
BASIC COUNTRY ANALYSIS
HISTOROCAL / FOUNDATIONAL COUNTRY ANALYSIS
Figure 2: Problem-driven framework for applied political economy analysis (taken from Harris, D. 2013)
STAGE 2
1
STAGE 2B
STAGE 2C
DEFINING
THE SECTOR
INTRO-SECTOR
ANALYSIS
RELATIONSHIP
BETWEEN PLAYERS
DETERMINING SECTOR
BOUNDARIES
MAPPING THE PLAYERS
IN THE SECTOR
ROLE &
RESPONSIBILITIES
ORGANISATIONAL
STRUCTURE
MANAGEMENT &
LEADERSHIP
FINANCING & SPENDING
INCENTIVES &
MOTIVATION
CAPACITY
NATURE OR THE
RELATIONSHIP
BETWEEN PLAYERS
HOW PLAYER
INFLUENCE THE
POLICY PROCESS
POLICY FORMULATION,
& CHANNELS OF
ACCOUNTABILITY
3
STAGE 3
OPERATIONAL IMPLICATIONS
STAGE 3C
DEFINING
OBJECTIVES
AND
EXPECTATIONS
DETERMINING
ENTRY POINTS
IDENTIFYING
MODE OF
SUPPORT
Analysis of:
1. Relevant structural features, including demography,
geography (e.g. natural resource endowment),
geopolitics, culture and social structure, historical
legacies, climate change and technological progress.
2. The rules of the game: Relevant institutions,
including formal laws and regulations and
informal social political and cultural norms,
that shape power relations and, ultimately,
economic and political outcomes.
RESPONSIVENESS
STAGE 3B
Identification of:
1. Poor outcomes to which PE issues appear to
contribute (for example, persistently poor development
outcomes, repeated failure to adopt sector reforms);
2. Theory of change underpinning previous interventions
(if any) and their effectiveness.
NEGOTIATION &
IMPLEMENTATION
STAGE 3A
Reflection
What can be
done?
I n t e r a c i o n
STAGE 2A
Reflection
Problem
identification
Analysis of:
1. The motivations (financial, political, personal,
ideational, etc.) of relevant individuals and
organisations that shape their behaviour in ways
relevant to the problem and potential reform.
2. The types of relationships and balance of power
between those actors.
3. Relevant analytical concepts that provide some
insight into actors incentives and decision logics:
including credible commitment problems,
collective action problems, information asymmetries,
principal agent relationships, heuristics and blases, etc.
Key question:
Analysis of:
1. What is a plausible
pathway of change?
2. What actions can be
proposed that support that
pathway of change?
Swedish International Development Agency. (2006) Power Analysis Experience and Challenges
Clingendael Institute for the Netherlands Ministry of Foreign Affairs. (2007) Framework for Strategic Governance and Corruption Analysis
(SGACA): Designing strategic responses towards good governance
25
26
40
41
Bangladesh
61.8
96.6
Indonesia
62.1
76.3
Philippines
63.1
83.5
61.1
76.2
63.4
87.1
GNI is a better measure of economic wealth as, unlike Gross Domestic Product, GNI captures the effect of overseas remittances: key
issues in Asia.
27
42
28
A standard measure of inequality where 0 equals total equality and 100 is total inequality, with one person owning all income
43
250.0
200.0
Chart 2 Share of government expenditure allocated to the health sector
150.0
150.0
100.0
14.0
12.0
50.0
Bangladesh
Indonesia
Nepal
Philippines
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2012
0.0
2002
2.0
2001
LMICs globally
2000
LICs globally
4.0
1999
Philippines
6.0
1998
Nepal
8.0
1997
Indonesia
10.0
1996
Bangladesh
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
0.0
Health
expenditure
(public) as%
total government
expenditure
1995
Health
expenditure per
capita, PPP 2005,
International
dollars
LMICs globally
In essence, Purchasing Power Parity (PPP) is an estimate that seeks to avoid market exchange rate movements and takes into account the
fact that prices of goods and services may well be lower in developing countries. It expresses figures in notional International dollars or $ I
to distinguish the estimates from $US.
29
44
45
References
900
800
700
Bangladesh
Indonesia
600
Nepal
500
Philippines
400
300
200
100
0
1990
1995
2000
2005
2010
46
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48
49
Organisation/ individuals
name (in alphabetical order)
Title of individual
Organisation/ individuals
name (in alphabetical order)
Title of individual
PhilHealth
Leizel P. Lagrada
UNICEF
erviecalimag@gmail.com
May-I Fabros
Junice Melgar
Junice@likhaan.org
ananemenzo@yahoo.com
Regina Ingente
Floremae Lofranco
Budget Officer 11
Melchor V. Quitain
alicerhodora@yahoo.com
rbermejo@unicef.org
Augusto Rodriquez
arodriguez@unicef.org
pwee@unicef.org
Willibald Zeck
Wzweck@unicef.org
Bernardino Aldaba
Economist. Consultant
dinoaldaba@gmail.com
Ernesto Domingo
eochoadomingo@yahoo.com
Aleli Kraft
adpkraft@econ.upd.edu.ph
Marilyn Lorenzo
rppaterno@up.edu.ph
Carlo Panelo
capanelo@yahoo.com
Ramon Paterno
rppaterno@up.edu.ph
Orville Solon
Orville.solon@gmail.com
Janice_cerezo38@yahoo.com
metguiamadel@gmail.com
Fely Rabe
felyrabe@yahoo.com
Roma Atabug
rmatabug@neda.gov.ph
Erlinda Capones
emcapones@neda.gov.ph
Tom Javate
tpjavate@neda.gov.ph
50
51
Priority setting,
planning and
budgeting issue
Implementation
Monitoring and
evaluation
http://www1.dbm.gov.ph/?reform=performance-informed-budget
30
52
53
54
55
56
Actual
Actual
Actual
Adjusted
Program
2010
2011
2012
2013
2014
ECONOMIC SERVICES
25.88
23.17
26.80
25.38
26.02
SOCIAL SERVICES
28.23
34.48
32.38
34.87
37.16
DEFENSE
6.22
4.49
4.07
4.46
4.09
19.06
19.05
18.15
17.32
16.07
NET LENDING
0.63
1.14
1.50
1.32
1.10
DEBT SERVICE
19.98
17.66
17.10
16.65
15.55
100.00
100.00
100.00
100.00
100.00
57
In Quezon City UNICEF the EBaP approach focuses more on informal settlers, and in Puerto Princesa the EBaP focuses
more on reproductive, maternal, newborn and child health services.
32
58
59