Fernando Fajardo
Development used to be measured in terms of the size of the country’s national output or Gross Domestic Product and its per capita equivalent. Now the preferred measure of development is seen in terms of the reduction or elimination of poverty, inequality, and unemployment within the context of a growing economy.
Thus, for less developed or developing economies like the Philippines, a well-managed economy is one that succeeds in improving the well-being of its people measured in these terms. How have we fared in this regard?
The answer to the question is not much if we look back since our independence after the last war up to now. Here, we find that as of 2015, about a fifth of our population are still living in poverty.
This is due largely to the underutilization of labor and inequity that prevailed in the country for many decades since the last war.
Basing on the most recent data available, up to a fourth of our labor force are either underemployed, unemployed, or disguised unemployed.
And inequity is very high. The lower thirty percent of our total number of households barely have a fifth of the income of the upper thirty percent.
In 2015, we crossed the 100 million mark in our population. In this, we ranked number 12 among all the nations in the world. In size of the nominal Gross Domestic Product, we ranked number 39. In per capita income, we ranked number 123.
This is not impressive. In the same year, among the original five member nations of the ASEAN, our per capita income at $2,865 was the lowest.
Compared to ours, Indonesia had 1.2 times larger GDP per capita, Thailand, 2.0 times, Malaysia 3.3 times, and Singapore, 18.5 times.
China started with a per capita income very much smaller than ours in 1980 when it was just starting to shift to an economy based on the market system from the one based on command.
Growing its national output rapidly at 8% or more annually since 1980, China now has a per capita income almost three times than ours. Why the poor performance of the Philippine economy?
The answer was our lackluster economic growth coupled with our inability to control our fast growing population.
Our lackluster performance could not be blamed entirely on what Rizal called the indolence of the Filipinos as a product of the way we were run by the Spaniards for more than three centuries.
That was more than a century away already when the Spaniards left. There must be more than our indolence. If ever, the blame should be put on our own leaders who failed in their tasks of navigating our economy to higher level of development after we achieved independence. That is on their failure to make and implement the appropriate policies, programs, and needed to spur faster economic growth that is both equitable and sustainable.
If ever, the blame should be put on our own leaders who failed in their tasks of navigating our economy to higher level of development after we achieved independence. That is on their failure to make and implement the appropriate policies, programs, and needed to spur faster economic growth that is both equitable and sustainable.
Finding we are not doing well with our economy or in improving the lot of our people in the same pace that many of our close neighbors have done, not a few of us points to our presidential and unitary system of government as the culprit. I say it’s not so much the system but the officials who run the government for us that
I say it’s not so much the system but the officials who run the government for us that is wrong for they are known mostly to be either corrupt, inept, or both.
But then who placed these officials in the government. It all goes back to the people who elected them. We elected them and even persist in electing or replacing them with their own kind even if we find them unable to better our lives.
So why? One answer is our institutions. Institutions matters. Institutions are the established laws, practices, or customs.
Institutions define our thoughts and actions. In their paper, The Role of Institutions on Growth and Development, Daron Acemoglu and James Robinson, argue that the main determinant of differences in prosperity across countries are differences in economic institutions and that to solve the problem of development will entail reforming these institutions.
Unfortunately, however, Acemoglu and Robinson, opined that this is difficult because economic institutions are collective choices that are the outcome of a political process. According to them, the economic institutions of a society depend on the nature of political institutions and the distribution of political power in society and that for the moment we only have a highly preliminary understanding of the factors that lead a society into a political equilibrium which supports good economic institutions.
Unfortunately, however, Acemoglu and Robinson, opined that this is difficult because economic institutions are collective choices that are the outcome of a political process.
According to them, the economic institutions of a society depend on the nature of political institutions and the distribution of political power in society and that for the moment we only have a highly preliminary understanding of the factors that lead a society into a political equilibrium which supports good economic institutions.
The two also made it clear, however, that it is the political nature of an institutional equilibrium that makes it very difficult to reform economic institutions. There are so many challenges that confront those who would wish to solve the problem of development and poverty.
One mighty mention, for example, the presence of political dynasties in our country which allows the even the corrupt and the incompetents to remain in power for long because being in power makes it easy for them to influence the result of every election in their favor.
The authors conclude that better development policy will only come when we recognize this and understand these forces better.
This brings us to the current situation in the country. Where are we now? How good is our present political system?
Where exactly are we going? Do we know? With fake news and alternative facts that abound, it is hard to tell.
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