Analyzing the effects of investments in public infrastructure on regional poverty reduction
Date
2006-04-10
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Abstract
Poverty remains to be one of the most pressing issues of the Philippine society. The government has resorted to different means in order to combat this problem, such as providing sources of income, shelter and healthcare. But one of the less visible ways by which the government attempts to reduce poverty is through its investments in public infrastructures, specifically in roads, electricity, education, irrigation and the Comprehensive Agrarian Reform Program. These infrastructures have both its direct effects on poverty alleviation, and indirect effects because it goes through certain channels, namely wages, agricultural employment and non-agricultural, which then have impacts on poverty. The aim of this study is to measure just how significant the investments of the government in these infrastructures are on regional poverty reduction.
Data from 1990 to 2005 on the amount of government expenditure on these infrastructures were gathered and regressed against poverty incidence and the channels. Regression results show that government spending on roads has the largest direct effect on poverty reduction. Both education and electricity have the largest indirect impact on improving the welfare of the poor through its effects on the three channels mentioned above.
These results suggest that the government should be wiser in deciding where to allocate resources if its main objective is to lift people out of poverty. It should be more flexible in imposing policies and ensure that the benefits are felt by the people.
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Public investment, Government expenditure, Regional poverty, Public infrastructure, Urban development, Urban planning