AUS-BASED think tank last week said economic freedom in the Philippines has slipped.

In its 2010 Index of Economic Freedom, the Heritage Foundation gave the Philippines a score of 56.3 percent, making it the world’s 109th freest among 179 economies surveyed. This is five notches below the country’s ranking last year.

Worse, the country’s ranking this year is below the world’s and the Asian region’s average scores.

Among Southeast Asian countries, the Philippines was ahead of Indonesia and Vietnam, but fell behind Malaysia and surprisingly, Thailand.

Under its scoring system, the think tank considers a country as “free” if its average overall score ranges from 80 percent to 100 percent. “Mostly free” countries have an average of 70 percent to 79.9 percent, while “mostly unfree” countries average 50 percent to 59.9 percent. “Repressed” countries score 0 percent to 49.9 percent.

Given this, the Philippines is considered mostly unfree.

What pulled down the country’s ranking was its performance in terms of business freedom, investment freedom, property rights and freedom from corruption.

Heritage scored the Philippine economy’s reliance on remittances for its lack of domestic economic dynamism.

Considering that the offshore employment that generates remittances is largely a coping mechanism by Filipino households who find no meaningful jobs at home, then the charge of having no dynamic domestic economy is tantamount to saying the country has no clear-cut nor consistent economic strategy.

The domestic economy therefore is being buffeted by global forces and kept from tilting over by the steady anchor of remittances. This is an indictment of the Philippines’ first economist-led government.

Indeed, unemployment has risen last year. While the global economic slump is largely to blame for the rise in the jobless numbers, Heritage’s allegation of a static domestic economy point to the government’s failure to create new wealth-generating opportunities for its people.

Heritage also said that corruption in the country is “pervasive.” The think tank singled out the country’s judicial system, which “remains weak and vulnerable to political influence.”

Heritage said Philippine judges are “nominally independent,” with “some . . . corrupt or have been appointed strictly for political reasons.”

Coming at a time when the Palace is about to choose the country’s next chief justice, this criticism should give authorities some pause.

These are very serious allegations coming from a non-partisan entity like Heritage.

More importantly, the think tank point to problems that have hounded the nation for decades.

The Philippines’ tendency to adopt half-heartedly the economic strategies that were in vogue among neighboring countries point to a malingering crisis in leadership.

Since our nation’s founding, we’ve had brilliant leaders—save for two or three—and yet the economy has failed to escape a boom-and-bust cycle underpinned by macro and sector-specific weaknesses.

The country’s longest economic expansion during the Marcos regime was fueled by the unsustainable flow of cheap oil money.

The Arroyo administration has set two-decade records in terms of some key macro fundamentals—GDP growth, inflation, interest rates. Yet they’ve been premised on the resilience of consumer spending, which in turn has been fueled by remittances.

The current government’s push for call centers and BPOs has yet to generate the employment numbers that overseas deployment has unfailingly produced.

The absence of an official labor deployment policy highlights the embarrassment occasioned by the government’s failure to generate ample and desirable jobs back home.

The persistence and prevalence of corruption has dogged every administration no end. Occasional opinion surveys among Filipinos raise this issue as among the major turn-offs that led them to seek jobs, if not pursue new lives, abroad.

Indeed, the Philippines’ political economy has yet to emerge from the cacique-led, rent-seeking pattern that has bedeviled it for more than a century.

It is, according to political pundits, a failure of the modernization project, despite the formal accouterments of modernity, such as cell phones—we are still the text-messaging capital of the world—net books, online social networking, etc.

Unfortunately, new legislation alone cannot undo this mess. But leadership is nonetheless crucial, as
Filipinos have long clamored for role models worth emulating, if not following, at the upper echelons of society.

The upcoming elections would be another exercise in futility if candidates who don’t live up to the modernization project win the vote.