The Philippines has one of the fastest growing economies in the world, recently registering 6.6 percent GDP growth (second highest in Asia). However, few Filipinos experience its benefits, as 76 percent of this growth went to the richest 40 families in the country. While the government is doing its best to promote “inclusive growth,” 26 percent of Filipinos still live on less than $1 a day. As large companies swallow up wealth, many Filipinos are left out, especially the indigent, young, and elderly, who find securing employment difficult. A few years ago, I witnessed this tragic reality firsthand.
My friends and I went to visit an old retirement home for abandoned senior citizens. We were set to conduct interviews with residents for my friends’ thesis about geriatric loneliness. It turned out, loneliness was the least of their problems. Going around the compound, we saw that it was very ill-maintained. Corridors and rooms were dirty, and pungent. The retirement home was clearly understaffed and lacked necessary funding to maintain an acceptable standard of living for its residents.
After we left, I did some research and discovered that the retirement home has constantly been the recipient of numerous social programs, from food distribution to privately-sponsored Christmas parties. I also found that many other public retirement homes experienced the same situation. My question was: despite all of the largesse, why was the quality of life of residents in these retirement homes still poor? I must admit; it took me a while to answer this question.
It took years of patient effort to consolidate democracy after the Philippines’ People Power Movement toppled the Marcos regime in 1986.
Democratization and the desire for a free market economy continue to be major driving forces behind reform movements around the world. In recent years, we have witnessed millions of people rising up for meaningful political and economic reforms, especially in the Middle East region. Genuine democracy, however, calls for more essential ingredients in its recipe for success and sustainability — namely good governance and responsible citizenship.
Dr. Jesus Estanislao, Chairman of the Institute for Solidarity in Asia and of the Institute of Corporate Directors, is one of the leading advocates for good governance and for responsible citizenship. He observes a crucial connection that reformers must comprehend— “Economic and political freedoms belong to the essence of a genuine democracy.”
In his recent interview with CIPE, now published as an Economic Reform Feature Service article, Dr. Estanislao shares his personal experiences in strengthening democracy through market-oriented reform. He reveals several factors that contribute to successful and meaningful reforms by providing readers with his first-hand knowledge of good governance advocacy and reform — factors that will benefit current and future reformers.
President Benigno Aquino III with “Team PNoy” candidates (Photo: Yahoo)
The recent mid-term elections in the Philippines brought both change and continuity. At stake were 12 of the 24 senate seats, 229 district seats in the House of Representatives, and more than 18,000 local posts, including mayors and governors. President Benigno S. Aquino III and his political allies, Team PNoy, gained important wins, notably in the Senate. This augurs well for the advancement of the President’s anti-corruption and economic growth program of the “straight path” or “tuwid na daan.” Many credit these policies for the March upgrade of the country’s sovereign borrower rating to an investment grade by Fitch for the first time in history. But is the top-level commitment to make government more effective through good governance and economic reforms enough to affect change on the ground? The peculiar kind of continuity in Philippine politics poses that question.
The election results indicate that, as in the past, the biggest winners were the political dynasties and their often questionable tactics involving “guns, goons, gold, and glitter” to mobilize voters. There were, however, some significant upsets by candidates who ran on a good governance platform and won against entrenched political dynasties. Leni Robredo’s win of the congressional seat in Naga City ended the 35 year reign of the Villafuertes family, and Rolen Paulino’s mayoral win against Anne Marie Gordon in Olongapo City ended the quarter-century rule of the Gordon family. But many other dynasties still continue to dominate.
The Hernando de Soto Award celebrates Estanislao’s lifelong contributions to democracy and economic freedom through improving governance in the public and private sectors and his leadership in guiding the Philippines through the early years of its transition to democracy.
Watch Dr. Estanislao’s remarks at the Hernando de Soto Award reception here.
Moving from a dictatorship to a democracy was not easy for the Philippines. It was a long and painful process due to corruption, doubt, financial issues, distrust of the government, and the absence of rule of law.
More than two decades after the “People Power” movement ousted the Marcos dictatorship in 1986, the Philippines continues to make progress. In the latest Corruption Perceptions Index report for 2012, the country moved up 24 points (to 105th out of 176) from its rank in 2011 (129th out of 183) — a tremendous leap compared to rank improvements in previous years.
CIPE recently had the honor to invite Dr. Jesus Estanislao to speak about economic reform during the Philippines’ transition to democracy. With his professional background and personal experience helping to guide the transition, Dr. Estanislao offers a unique perspective on economic reform and institution building in the Philippines.
Dr. Estanislao speaks at a conference in Yemen. (Photo: Staff)
“A transition is a tremendous undertaking but it is a greater challenge to make that transition work.” Dr. Jesus Estanislao was a leader at the time of the “people power revolution” in 1986, served in the administration of President Corazon Aquino, and has continued building governance in the Philippines to this day. His experience as a pioneer in government and civil society brings valuable perspectives on different dimensions of democratic transition: from crisis management to long-term institution building; from economic to political and social decision making; and across all levels of society.
Dr. Estanislao generously shared his advice with civic and business leaders across the Middle East at CIPE workshops in March 2012. These Arab leaders found the Philippine experience to be remarkably relevant and compelling, so we captured Dr. Estanislao’s contribution for CIPE’s Economic Reform Feature Service. Key lessons include the need for a long-term vision, the importance of institution building, and anunderstanding of democratic governance as a process of citizen participation and responsible citizenship.
Hernando de Soto famously asked: although cities across the developing world are teeming with entrepreneurs, why do those countries seem unable to become prosperous market economies? The answer, he argues, is that they hold “resources in defective forms: houses built on land whose ownership rights are not adequately recorded, unincorporated businesses with undefined liability, industries located where financiers and investors cannot see them.”
The Scorecard provides a methodology for property market system analysis to investigate the six core elements necessary for sustainable market development: property rights laws and enforcement, access to credit by small businesses, efficiency of governance, rational dispute resolution, financial transparency, and appropriate regulations. This approach not only illustrates the linkages between property market elements but also helps identify gaps and advocacy priorities where some of those important institutions remain weak, either due to a lack of proper legal and regulatory framework or its weak implementation.
Following an in-depth analysis of the available secondary data such as international indices and national statistics, CIPE partners conducted fieldwork in two select cities to localize the results. This work was tailored in each country through a mix of focus groups and interviews to obtain the most accurate snapshot of the conditions entrepreneurs face in dealing with the government, banks, and professional services providers in the property sector. These views from small businesses have a unique power to illustrate key problem areas because of the real, personal experiences they reflect.
Property markets are multi-dimensional institutional frameworks that touch upon issues key for all citizens but particularly vital for small businesses. As such, property markets are a microcosm reflecting the state of a country’s institutions that build democracies and market economies alike.
This Feature Service article summarizes key findings – both shared and country specific – as well as reform recommendations for the next advocacy-oriented stage of our efforts. You can also read full country reports here (China coming soon): Armenia, Kenya, and the Philippines.
Article at a Glance
Understanding of property rights often remains limited to property titles, without deeper appreciation of the underlying and interconnected institutions that make property rights meaningful and allow property markets to function.
Although private property rights are legally protected in most countries, that protection varies greatly in practice because the implementing regulations and institutions that build property markets remain weak.
The development of competitive and transparent property markets for small businesses requires not only legally protected rights but also strengthening of the broader institutions of good governance and market economy.
The CIPE Development Blog provides coverage of the Center for International Private Enterprise and its partner network at work -- highlighting successes, drawing out lessons from failure, and exploring the broader issues of political and economic development. For more information visit CIPE.org.