Read and weep

The Philippine economy grew by 7.2 percent in 2013. We are told that this growth rate is second only to China’s performance in the past year. Does this mean that we have finally gotten over the hump of slow growth and we can expect to continue at this pace over at least the medium term or to the end of P-Noy’s watch? Or is it just a fluke? Or even, are we as good as China?

Let me give the pluses first, or what’s going for us. We have a president who has one quality which overrides a lot of the flaws pointed out by the opposition (and which the opposition cannot match): He is not corrupt. There has not been one charge of corruption against him in the three years of his watch (there is talk about his executive secretary and noise about his sisters, but in the case of the latter, not one charge has stuck).

Not only is he not corrupt, he is also in earnest about getting rid of the corruption. Look at his internal revenue chief, who is as incorruptible as her boss. He is solidly behind her, no matter how many toes she has stepped on. And he has expressed full confidence in the Three Furies—Grace Tan, Conchita Morales, and Leila de Lima—and is not getting in their way.

Then we have the Supreme Court, which has thrown its weight against attempts of the executive and legislative branches to undermine the system of checks and balances that is at the core of our democracy. Its ruling on the Priority Development Assistance Fund and all attempts at pork barrel will be considered by future historians as a turning point in Philippine political and economic development.

The net effect of these two pluses is, at its most basic, more revenues and less wasteful expenditures, which augurs well for the economy and for the poor. It has also made the Philippines much more attractive to the international community, what with the government’s attempts at making the country more competitive.

What about the minuses? Well, for one, 7-percent growth rates have been hard to come by in the Philippines. We experienced it only twice—in 2010 (7.6 percent) and in 2013.  Which means twice in the past 38 years. And, yes, Reader, you are right. They were both election years, although 2010 was a presidential election year, and therefore a lot more money was spent.

We did experience growth rates above 8 percent in 1973 and 1975 (1974 was 3.5 percent), which led the dictator Ferdinand Marcos to proclaim that martial law was good for the country (martial law had nothing to do with it). But these growth rates are not comparable to the more recent growth rates (they have a different base year). In any case, we already know what happened in the 1980s. The economy collapsed because of the international debt crisis.

I am afraid not even the government thinks that 7-percent growth rates for 2014 are a realistic projection, although they are still sanguine about 2015. Of course, 2016 is a presidential election year. The National Statistical Coordination Board website has yet to update its Statistical Indicators on Philippine Development (StatDev), but the chances that it will hit its macroeconomic target of 7-8-percent growth average for 2011-2016 are not too good. Its growth rates for the past three years were 3.9 percent (2011), 6.8 percent (2012), and 7.2 percent (2013). To achieve its targeted 7-8-percent growth rate, it will have to grow at 8-9 percent for the next three years.

On the other hand, if P-Noy continues with his fight against corruption, and succeeds in making corruption the exception rather than the norm in the Philippines, and if the pork barrel doesn’t get resuscitated, I’m willing to give it a fighting chance. And even if the target is not met, the future performance of the Philippines will have changed its trajectory for the better.

Why? We all know how corruption is inimical to growth and development. But killing the pork barrel once and for all will remove the basic source of campaign funds and wealth of politicians and their dynasties. That, combined with government agencies cleansed of corruption, will kill all hope for using government resources for private gain. At the very least, dynasties will die.

What is the cost of having politicians whose ultimate goal is private gain even at the expense of the national good? I am assuming that the great majority of our politicians responsible for government decisions fall under that category.

Here are the statistics. Read and weep:

For the period 1960-2009, the Philippines’ per capita GDP (measured in 2005 PPP) grew by an average of 1.58 percent annually, which means that its 2009 per capita GDP was 2.18 times what it was in 1960.

How did Indonesia fare?  Its per capita income GDP growth rate was 3.69 percent, which means that by 2009, its per capita GDP was 5.88 times what it was in 1960. The statistics for Malaysia were 4.25 percent and 7.68 times. For Thailand it was 4.36 percent and 8.11 times. For South Korea it was 5.54 percent and 14.05 times. And for China it was 6.185 percent and 18.94 times.

Studies show that it is  government policy and institutions that exert the most influence in explaining the difference in growth rates between countries. Meaning, we could be sitting pretty now with per capita incomes of anywhere from 6 to 19 times what they were in 1960 rather than the 2.18 times that they actually are—if we had had a better class of leaders and better institutions in the past 50 years.

Whose fault is it? Alas, we get the government we deserve.