Walden Bello has a recent article out, published in several areas on the web, as well as The Inquirer. It’s titled, “In The Shadow of Debt“, and is a macroeconomic look as to why The Philippines persists in its stagnation. I haven’t read much of Walden Bello’s work, but it seems he is very well decorated in his profession, and is also the President of Freedom From Debt Coalition.
In his recent article, he refutes the often stated assumption that it is corruption that is the key to our lagging economy. While I am in agreement in his assertions, it seems he tries hard to emphasize debt, without stating clearly that corruption may be a key as to why decisions of debt are made. They are intertwined. The last part of the article is key to understanding the central point that he is trying to make,
What we have tried to do here is to position the incapacitation of the Philippine state as the central factor in explaining the stagnation of the Philippine economy.
The priority accorded to repaying the foreign debt in the context of an economy in crisis deprived the state of financial resources to play its role as the economy’s biggest investor, thus crowding out private investment. This emasculation on the expenditure side was paralleled by a crippling on the revenue side by the collapse of customs revenues owing to aggressive trade liberalization.
This double-punch amplified the depressive effects of the policy framework of structural adjustment cum trade liberalization that was imposed on the country in the eighties and nineties with the acquiescence of our leaders. This suffocating policy framework unfortunately lives on, with minor adjustments, and as long as it remains this country’s basic paradigm, it is difficult to see the Philippines emerging from its long night of stagnation.
So the key factor as I am understanding it, according to the professor, is that the siphoning of our cash on hand to finance our debt has taken away our ability to invest, prioritize, and grow our economy. (my words)
Why do we focus on key policy decisions made in the period 1985 to 1995? The reason is that these decisions—in particular the fateful decision to channel government financial resources to debt repayment instead of capital expenditures—go a long way towards explaining why our neighbors leaped forward as we stagnated. (his words)
Now, the question comes up, is this mere mismanagement and fiscal idiocy, or is it economic policy mandated by corruption? What I mean to say is that clearly, we have gone towards the way of debt to supply our need for growth, but why have we gone this way? Are our corrupt officials more dumb than the corrupt officials of other countries?
In any case, it’s a complicated matter, but I agree that to put blame solely on the current Administration and corruption, is to look blindly at our past. But clearly, Arroyo had her chance, but instead of proving her economic worth (she is an economist after all), she has gone the way of corruption and of debt.
Anyone else have views on this?
Popularity: 1% [?]
Recent Comments