A PATH ANALYSIS OF THE COOPERATIVE’S TOTAL EFFECTS ON THE

PHILIPPINE ECONOMY

NAMES OF THE MEMBERS

1.0 Introduction
Cooperative companies are community-owned private enterprises in a democratic
governance system that integrates customers with owners and buyers with sellers.
Cooperatives are seen in many national and regional contexts as valuable organizational
resources to tackle social and economic problems and to assist in local communities’
growth and regeneration. This is because cooperatives bring people together to meet a
common need through the activity of a democratically controlled enterprise (Majee and
Hoyt, 2011:50). Cooperative production and growth as a functional tool helps to promote
self-reliance and mobilize people to achieve economic development and social justice.
Due to their democratic organization and economic focus, cooperatives make a
significant contribution to social integration, job creation and poverty reduction.
Therefore, cooperatives stabilize regional economic cycles and can generate regional jobs
(E. Castillo & M. Castillo). Hence, this paper aims at defining the total effect of
cooperative operation in the Philippine Economy by using path analysis.

Cooperatives remain as a vehicle for development in third world countries

because they are as promising as any other way of succeeding. Indeed, several countries
have concluded, particularly in rural areas, that cooperatives are desirable form of
business for the poor (Attwood, 1988: 2). Because of their involvement in the cooperative
movement, various economic groups have benefited (William, 2002:11). The various
business activities have demonstrated their significant economic and social contribution
in developing communities (Teves, 2002:1). The cooperative sector is making an
important socio-economic contribution in serving communities through sustainable
development initiatives in the Philippines, as many developing countries, as rapid
population growth puts extreme demands on government institutions (Deriada, 2005). In
the Philippine Constitution of 87, “the viability and growth of the cooperatives as
instruments of equality, social justice and economic development” was supported by the
Philippines (Philippine Const. art. XII, § 15). The Philippine government acknowledge
the critical role of cooperatives to the country’s overall development. Cooperatives are
expected to make a significant contribution to a speedy, relevant, and sustainable
economic development, financial inclusion, and poverty alleviation, in line with the
Philippine Development Plan (2011-2016). As of December 2015, CDA’s reporting
requirements were met by 9,826 cooperatives, including the submission of audited
financial statements. Of this figure, 54% were micro, 27% small, 15% medium, and 4%
large cooperatives. The micro cooperatives accounted for 2% in terms of asset holdings;
small, 7%; medium, 19%; and large, 72% of the cooperative movement’s total assets.
There is an inverse relationship between cooperatives size and holding of assets. The
micro cooperatives that made up 54% of the reporting cooperatives had only 2% of the
total assets while the large cooperatives that made up only 4% of the reporting
cooperatives, control 72% of the total assets. The figures show, among others, that micro
and small cooperatives would improve the social and economic development of the rural
and agricultural economy, in particular and the national economy, in general (E. Castillo
& M. Castillo).
Most reviewed literatures are more focused on the direct effect of Cooperatives
towards Economic Growth. This study aims to identify the total effect of Cooperatives to
the Philippine Economy through Poverty Level, Chuchu and Employment Rate.
This study will make use of the data gathered from Cooperative Development
Authority which are cooperative’s membership, net assets and net income as factors that
can affect the growth and development of the Philippine Economy.

2.0 CONCEPTUAL FRAMEWORK

The course of the whole study is anchored from the concepts and their
interrelationship as defined in the following schematic diagram.

Figure 1. The Conceptual Schematic Diagram

This diagram shows the selected aspects of a cooperative in identifying its total effect
to economic growth through poverty level, chuchu and employment rate as the scope of
this study; we are going to identify how cooperatives help

Cooperatives help in poverty reduction because they directly answer community

needs, adjusted to local concerns. They are anchors that distribute, recycle and multiply
local expertise, resources and capital. Autonomous cooperatives reach the poorest people
in the community, offering upward mobility and basic infrastructure ignored by large
businesses. Cooperatives create competition within local markets. Since services come at
a cost to members, pricing adjustments occur to benefit members and impact other
organizations in order to compete at the same efficiency. Purchasing cooperatives, in
particular, help businesses compete with large, national retailers. Cooperatives not only
provide positive outcomes for its members, but also excite local markets as a whole.
Employment is also one of the important factors in the development of the economy that
is offered by cooperatives. Multi-purpose and credit cooperatives provide small loans to
their members. These loans go to self-employment, offering an opportunity for better
wages through retail shopkeeping, farming or livestock. This allocation of funds can go
towards building needed community infrastructure projects and financing small
businesses that help local economies grow (Joseph Ventura, 2018).

3.0 METHODOLOGY

LACKING PA KAY GA WAIT MIS FINAL CF HEHE, BUT PATH ANALYSIS

NAJUD DAW ANG GAMITON BUT GI MAKE SURE PA NAMO NI SIR BORRES.

TOMORROW IS THE DEADLINE FOR THIS PAPER SIR, AND WE WILL BE

WORKING ON THIS TONIGHT AND TOMORROW FOR FINALIZING IT AND
PASS IT NA HEHE.