The Governance Agenda for Structural Transformation: The Philippine Case

Ma. Victoria R. Raquiza (University of the Philippines)

The Philippines is a development paradox: on the one hand, the country has experienced high growth rates in recent years, earning the reputation of being one of the fastest, emerging economies in the region. On the other hand, poverty and inequality levels remain high. In the last decade alone, the wealth of the richest clans have either doubled or tripled their wealth underscoring the fact that the gains of high economic growth have benefited only a few. 
 
An important pathway out of poverty is structural transformation which necessitates boosting the productivity across all sectors and moving employment to the most dynamic sectors of the economy. In real terms, this means significant  investment in agriculture and the manufacturing sector, including the micro-, small, medium enterprises. Unfortunately this has not happened because the government’s neoliberal policy framework of deferring to the private sector has prevented it from playing a more interventionist role in the economy in support of domestic manufacturers and micro and  small entrepreneurs.

Because the laissez faire strategy, in place for the last thirty decades, has produced the development paradox of high growth rates simultaneous to high poverty levels, government has resorted to social protection schemes in order to somehow mitigate the worst consequences of macro-economic policies. That these schemes have broad clientelistic appeal to politicians have only added to its allure.

However, for as long as the country’s institutional and policy framework remains neoliberal, significant levels of poverty, hunger and inequality may remain staple features of the country’s development landscape as the country’s potential to significantly boost labor productivity growth remains unrealized. 

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