Corruption and Neoliberalism in the Philippines

2921 words 12 pages
International Development
SIS 637-002
International Development Paper #2
November 17, 2013 Despite this year’s onslaught of devastating earthquakes, factional rebel sieges, and most recently, record breaking typhoons, the Philippines is doing surprisingly well for itself. In fact, The Economist Intelligence Unit reports that though the wreckage caused by last week’s Supertyphoon Haiyan will likely slow GDP somewhat, economic damage will not be significant, the Eastern Visayas region accounting for only two per cent of the country’s GDP. Economically, at least, the Philippines has had a good year: the first half of 2013 saw GDP growth at 7.3 percent, the highest growth rate in Asia; it saw seen record foreign direct investment
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in Bello, “Is Corruption the Cause?”). Jeffrey Sachs names governance failures as a top factor in a country’s economic stagnation and decline; and William Easterly argues that bad governments, not a poverty trap, are sole culprits in the economic decline of a country (Sachs 57; Easterly 43). Easterly’s stance on corruption is tough: continuing to provide aid to countries with corrupt governments is inefficient, as most countries with bad governments fare significantly worse even with aid than do countries with good governments (42). In the Philippines, all signs in mainstream discourse point to corruption as the major reason for continuing poverty despite high economic growth. Yet there is a small but growing number of people arguing otherwise. According to activists like Walden Bello, while corruption is detrimental to the trust and moral bonds of a democracy, it is not the principal cause of poverty. Between 1990 and 2000, he argues, the Philippines and China reported the same levels of corruption; yet China grew by 10.3 percent, while the Philippines grew by only 3.3 percent (“Is Corruption the Cause?”). It is not corruption, he says, but the negative effects of neoliberal adjustment policies that have maintained poverty levels at the rate they are today (Bello). As Peet and Hartwick explain, neoliberalism was the economic response to Keynesian economics and the failures of Import Substitution Industrialization (ISI) that took