Role of Cooperative in
Economic
Development?
Part 5
Josefina B. Bitonio,DPA
IGPS – LNU
Dagupan City

Micro, small and medium
enterprises (MSMEs) have a very
important role in developing the
Philippine economy. They help reduce
poverty by creating jobs for the
country’s growing labor force. They
stimulate economic development in rural
and far-flung areas. They serve as
valuable partners to large enterprises as
suppliers and providers of support
services. They serve as breeding ground
for new entrepreneurs and large
corporations. A vibrant MSME sector is
thus an indication of a thriving and
growing economy.

Financial cooperatives are some of the
largest providers of microfinance
services to the poor.
Financial cooperatives thus play a
central role in the achievement of an
inclusive financial sector that
encompasses the poor.

Through their commitment to
servicing the poor and
underserved, financial
cooperatives are helping to
lessen the burden of
poverty. Financial cooperatives,
by providing savings products,
help to reduce members’
vulnerabilities to shocks such as
medical emergencies. commitment

Cooperatives have also
been instrumental in
promoting inclusive
development in rural areas,
helping to both strengthen
and diversify rural
economies.

Financial cooperatives provide access
to credit for members who might not
typically have access to the larger
savings and commercial banks. This is
significant in markets where financial
providers are absent owing to poor
revenue prospects, high risks, or high
transaction costs. This access to
financial services often supports the
formation of small and micro
businesses.

Cooperatives have also been able to
strengthen agricultural production and
improve access of poor farmers,
especially through engaging in fair trade
arrangements. Small farmers who
struggle to create and sustain businesses
of their own are able to increase farm
revenues, lower marketing and
information-gathering costs, as well as
enter into high-value supply chains that
they would not be able to do on their own.

Conclusion
• As governments around the world cut services
and withdraw from regulating markets,
cooperatives are being considered
useful mechanisms to manage risk for members
in agricultural or other similar cooperatives
• Strengthen the communities in which they
operate
• Cooperatives generally provide an economic
boost to the community as well.

In an era when many
people feel powerless to
change their lives,
cooperatives represent
a strong, vibrant, and
viable economic
alternative.

• Cooperatives are specifically seen as significant
tools for the creation of decent jobs and for the
mobilization of resources for income generation.
• They contribute to
sustainable human
development and
have an important
role to play in
combating social
exclusion.

• Achieving economy of size,
• Improving bargaining power when dealing with
other businesses providing them, among
others benefits, higher income and social
protection
• Purchasing in bulk to achieve lower prices,
• Obtaining products or services otherwise
unavailable
• Access or broadening market opportunities
• Improving product or service quality,
• Securing credit from financial institutions
• Increasing income
• Regardless of the type, size, geographical
location or purpose, cooperatives provide a
unique tool for achieving one or more
economic goals in an increasingly competitive
global economy.

The need to promote the business potential of
cooperatives so they can contribute to sustainable
development and decent employment, in the context of
the urgent need for social justice.
Empowering cooperatives to leverage their capacity to
contribute to social justice requires a sound policy and
legislative framework
How?

Raise awareness of the cooperative enterprise model
and its potential contributions to social development.

The sound governance of cooperatives
depends upon a well-informed and active
membership base, dedicated to cooperative
values and principles. To sustain the drive
of cooperatives for social justice, a strong
membership base, bound by the democratic
one-member-one-vote principle, is essential
to addressing weak or unethical
management, or other conflicts of interests
which could divert cooperatives from
addressing social justice issues.

To be effective it need to be comprised of nine principles. These
nine principles are:
1. Need to have a multi-faceted and comprehensive strategy
2. Need to strengthen community ownership
3. Need to secure access to credit for local businesses
4. Need to build human resources (leadership development, literacy
development, employment supports, etc.)
5. Need to build local capacity
6. Need to integrate social and economic goals
7. Need to empower a broad range of the community
8. Need to have sound financial management
9. The process needs to be guided by strategic planning and analysis
Bruce (2000)

23 Years old – Average working age
Assistance in :
Upskilling
Upscaling
Youth Development Program

Transition to Digital Economy
• The country has seen evident growth of e-
commerce and the digital economy during
the pandemic, as Filipinos turn to a safer
and more convenient methods of purchasing
goods, it was imperative for businesses to
integrate digitalization in their operations. E-
commerce companies and platforms
enabled the consumer market to thrive
during the pandemic. Filipino consumers
now adapting to a more digital way of life.
Coupled with the continued economic
growth, the Philippines is a major focus for
digital transformation.
Marcos administration to ensure economic recovery | Philippine News Agency (pna.gov.ph)

By virtue of the principles of co-
operatives, there is an integral
relationship between a
cooperative at its community.
Often not, cooperatives are
acknowledged as playing a role in
community economic
development, cooperatives are
essentially a response to
community development
opportunities or challenges.

ICA Vision 2020
These critical themes are:
1 Elevate participation within
membership and governance to a
new level
2 Position co-operatives as builders of
sustainability
3 Build the co-operative message and
secure the co-operative identity
4 Ensure supportive legal frameworks
for co-operative growth
5 Secure reliable co-operative capital
while guaranteeing member control

Cooperatives are already
playing a strong role in the
economies of local
communities.

Reference
• https://uncoopsyear.wordpress.com/category/cooperatives-in-social-
development/