Saturday, July 11, 2015

Will reality hit home?

“To be sure, governance that is effective, legitimate, and responsive provides untold benefits, especially when compared to the alternative: inefficient governance, cronyism, and corruption. But the focus on governance reform has not proved nearly as effective as promised in fostering development.” [THE GOOD GOVERNANCE TRAP, Jomo Kwame Sundaram and Michael T. Clark*, PROJECT SYNDICATE, Business World, 29th Jun 2015]

“The case was flawed from the beginning. The indicators used were ahistorical and failed to account for country-specific challenges and conditions, with cross-country statistical analyses suffering from selection bias and ignoring the interlinkages among a wide array of variables. As a result, the World Bank badly overestimated the impact of governance reform on economic growth.

“In fact, this governance-focused approach may have actually undermined development efforts. For starters, it has allowed international institutions to avoid acknowledging the shortcomings of the new development orthodoxy of the last two decades of the 20th century, when Latin America lost over a decade, and Sub-Saharan Africa a quarter-century, of economic and social progress.

“Herein lies the real problem with the good-governance agenda: it supposes that the solution to most policy and political dilemmas lies in compliance with a set of formal process-oriented indicators. But experience over two decades shows that such directives provide little practical guidance for solving the technically, socially and politically complex real-world problems of economic development.”

Translation: A major undertaking demands an ecosystem, both soft and hard elements. In the case of the Philippines when this writer first looked into why we’ve been unattractive to FDI and underdeveloped and our people poor, what jumped out was how deficient our investment levels were. Yet we were desirous of “fighting poverty.” And indeed the World Bank proudly supported CCT. But we needed the hard elements, as importantly, like investment!

Invariably, good governance is a must. Given our deficits in infrastructure, it is common knowledge that corruption has undermined PHL infrastructure development efforts for decades – and, not surprisingly, kept FDI away!

We need the hard elements as well. For instance, the JFC, working with a cross-section of Philippine society, developed the 7 industry winners. Indeed investment must be prioritized! It is not rocket science but science nonetheless – i.e., the Pareto principle, an econometric model. In other words, we can’t be adopting unfettered free market – and rely solely on fiscal and monetary policies. Which in the case of the Philippines was hijacked by political patronage and oligarchy.

While a select few would invoke patriotism as they cornered major infrastructure projects, the reality is Juan de la Cruz continues to suffer from poor infrastructure – from commuting to and from work (or school in the case of children) to the inadequate and the most expensive power supply . . . and beyond. An oligarchic economy shuts out the outside world and holds Juan de la Cruz hostage! And how do we respond? That we are among the happiest people! Resiliency or parochialism – that comes hand in glove with hierarchy and subservience?

“Herein lies the real problem with the good-governance agenda: it supposes that the solution to most policy and political dilemmas lies in compliance with a set of formal process-oriented indicators.” [ibid.] As a private–sector practitioner, the writer lives with this reality: the distinction between being process- and outcome-oriented. Even in the public sector outcomes must be defined to justify budgets and programs. But when governance doesn’t set and embrace a shared purpose from the get-go, how will the bureaucracy manifest the imperative?

As the Asian Tigers proved, government must play a role in establishing a vision for a nation. And that is to move from Third- to First-World. And that presupposes a model like Japan Inc. or Singapore Inc. or China Inc., defined by a leadership that demonstrates strategic thinking: (a) it calls on the people to embrace and share the vision or purpose for the nation; (b) that would then necessitate learning self-responsibility – because of the imperative of division of labor; and (c) which then demands mastery.

That is an example of how good governance can be spelled out. In short, it is not about compassion per se and paternalism and the requisite populism. That was what both Lee Kuan Yew and Mahathir Mohamad lectured us Pinoys. And that we didn't have to love the West but we must seek their money and their technology if we are to move from Third- to First-World. And a mechanism has been offered by the JFC via the 7 industry winners. But we know better – i.e., that political patronage and oligarchy are supreme?

And how do we reconcile our notion of faith and freedom and democracy when we value a sheltered life and parochialism? That lends itself to a hierarchical system and structure – and why we are unable to demonstrate innovation and competitiveness? Does the Church reinforce the notion? What about the elite class that dictates our cultural norms? Not surprisingly, we remain underdeveloped and poor?

What else can we expect?

“A first-time Philippine senator who is the adopted daughter of a film star is edging out veteran politicians as the preferred candidate to replace President Benigno Aquino, even before she’s declared her intention to run.” [Film Star’s Daughter Wins Fans as Possible Philippine Leader, Karl Lester M YapClarissa BatinoCynthia, 29th Jun 2015]

“Grace Poe, 46, was picked by 12 of 23 analysts and bankers in a Bloomberg survey this month as the best choice to steer the Philippine economy after Aquino leaves office a year from now. Vice President Jejomar Binay, 72, got three votes, while four chose Interior Secretary Mar Roxas, 58.

“Poe, whose senatorial bid was backed by Aquino, combines a compelling life story with a relatively new political career unblemished by scandal. Abandoned as a baby at the steps of a church in Iloilo city and raised by Fernando Poe Jr. -- famous for roles where he fought for the masses -- Poe’s perceived honesty resonates in a country whose biggest priorities are fighting corruption and building infrastructure.

“‘Aquino gave us a second chance to be a tiger economy,’ said Jonathan Ravelas, chief market strategist at BDO Unibank Inc. in Manila. ‘But we aren’t there yet. The next president has to have the will to stop corruption and boost infrastructure. In the case of Grace Poe, people perceive her as honest, somebody who will protect the anti-corruption drive.’

“More than half the respondents in the Bloomberg survey predict economic expansion of at least 6 percent will be sustained in the next 10 years. The biggest priorities economists, bankers and academics picked out for the next government were infrastructure investment and protecting the anti-corruption drive.”

Poe is what we probably need for good governance, assuming she does not follow the path of other celebrities – that first made us giddy but today can only regret? And beyond good governance, as pointed out by the respondents to the survey, is the priority of infrastructure investment. And even beyond is to develop Philippine Inc.

Can she do that? Sadly, our elite class that continues to define our cultural norms will influence her. And that is when she would make the first misstep? In other words, would we embrace a totally new perspective and mindset where political patronage and oligarchy won’t again hijack leadership?

In a democracy, we get the leadership that we deserve!

[*Jomo Kwame Sundaram is coordinator for economic and social development at the Food and Agriculture Organization of the United Nations. Michael T. Clark is special adviser on international governance at the Food and Agriculture Organization of the United Nations]

No comments:

Post a Comment