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P Noy’s economic road map

/ 06:53 AM July 29, 2011

Not a few were disappointed with the failure of P-Noy to show the big picture of how he will run the economy in the remaining years of his term and the specifics of what he actually accomplished in his first year. Indeed, P-Noy’s State of the Nation Address last Monday was heavy only on one aspect. That is on governance or about his continuing fight against corruption and his effort to erase the wang-wang mentality of our people both in and outside the government.

If you care, though, you will find the details of his accomplishments in his technical report that accompanies his Sona. Anyone can access this technical report in the government website: www.gov.ph. There is simply not much time to mention all of them in the Sona.

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As for the broader picture of the economy or in what P-Noy intends to do with it in his remaining years, I am sorry to say that the technical report was also very much lacking. This does not mean, though, that P-Noy has no economic roadmap to follow. You will find his economic roadmap if you also care to read the new Medium Term Philippine Development Plan that the National Economic Development Authority just completed. The plan can be found and downloaded from NEDA’s website at www.neda.gov.ph.

What exactly is P-Noy’s economic roadmap?

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As can be found in the plan, his roadmap is directed mainly at achieving growth with equity or as the title of the first chapter of the plan says, “ in pursuit of inclusive growth.” What P-Noy wants is to achieve high growth for the economy that is sustained … that massively creates jobs … and reduces poverty in contrast to the performance of the past that has proved unsatisfactory.

The past was unsatisfactory for three reasons, the new plan says. First, its pace has been slow when measured against the achievements of the country’s neighbors; second, the benefits of that progress have not been broadly shared; and third, issues of massive corruption and of questioned political legitimacy have undermined the people’s sense of ownership of and control over public policy.

Given the country’s large population, geographical differences and social complexity, the new plan says that inclusive growth means growth is rapid enough to matter. It must be rapid because sustained growth that creates jobs draws the majority into the economic and social mainstream, and continuously reduces mass poverty—an ideal that the country has perennially fallen short of in the past with the most far-reaching consequences. These consequences, the plan points out, range from mass misery and marginalization, to an overseas exodus of skill and talent, and to political disaffection and alienation, leading finally to threats to the constitution of the state itself.

What makes inclusive growth elusive in the past? the new plan asks.

Low growth, weak employment generation and persistently high inequality are the immediate reasons for the failure of inclusive growth in the country. Accordingly, this has deeper structural underpinnings. First, the country’s investment record has been poor and falling. As a share of GDP, gross domestic investment was just 15.6 percent in 2010. It averaged more than 20 percent in the 1990s, but this went down below 20 percent since the beginning of the previous administration in 2001. Investment in Malaysia, Thailand and Indonesia was high at more than 30 to 40 percent of GDP in most of the 1990s, and that although they have gone down since the 1997-98 Asian financial crisis, their levels are still higher than that of the Philippines except for Malaysia in 2009.

On the part of the private sector, weak investment means lower capacity to produce and compete globally. On the part of the government, this clearly means inadequate infrastructure 0—in transport, power, water and communication more specifically, in addition to lack of education and health facilities.

According to the new plan, weak institutions and governance failures are the second major barriers to achieving inclusive growth as they also affect investments. P-Noy is now taking advantage of his strong mandate to regain the citizens’ trust by creating a new governance climate that encourages massive investment. Hence the fight against the corrupt and wang-wangs.

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The new plan also says that human development, in terms of adequate health, nutrition, and education outcomes, has an intrinsic benefit, which also includes the means to build the human capital of the poor, providing them a means to break out of poverty. Thus, health, nutrition and education will be given due attention in P-Noy’s administration.

Finally, according to the new plan, the deteriorated state of the country’s environment and natural resources is felt most by the poor, who depend on such resources for their livelihood and are most vulnerable to the consequences of its degradation and depletion. Climate change and the risks that come with it will also be given importance P-Noy’s administration.

More specific policies, together with their accompanying programs and projects, are found in the various chapters of the new plan that cover the priority areas of concern of P-Noy. We must consider, though, that public policy making is not an easy thing to do because of its collective nature. What one wants may differ from what others want. Hence, opposition will remain. However, that precisely is the beauty of democracy. Otherwise, we just let one man decides everything for us. Is that what we want?

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TAGS: Benigno Aquino III, SONA 2011
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