Targeted development

Ben D. Kritz

Ben D. Kritz

The Times’ new editorial consultant, Juan Gatbonton, published a thought-provoking article at the beginning of the week, which was unfortunate in some respects, because there is a clear sense in this country at present that anything thought-provoking or focusing on the long term is uninteresting and unimportant.

With the country brought to a virtual standstill over the “pork barrel” scandal—quite irresponsibly, too, since the day that everyone should have been preparing for the worst typhoon the country has seen in years was hijacked by the utterly pointless, embarrassing farce of Janet Lim-Napoles’ appearance before the Senate on Thursday—not much if any attention is being given to actually managing the Republic.

Fortunately, when the people of the Philippines do get around to actually acting like a nation again, they will find that people like Gatbonton have been quietly providing some good ideas about how they should go about doing that. In his commentary, “To redress the balance in national society, government must introduce time-bound ‘affirmative action’ programs for the poorest provinces” (November 3), Gatbonton makes a very sound point: Unless economic growth is specifically channeled to areas or segments of society that are lagging, that growth will only continue to widen economic gaps. “Trickle-down” economics is not inclusive. The concept was popularized in modern times by the Reagan administration in the United States, where it was an utter failure. That important result was ignored by at least four out of the last five Philippine presidents, including the current one, who seems more slavishly bound to the idea than all the rest—which perhaps explain why expanding poverty and income inequality under his watch, quite the opposite of the intended effect, has become the norm.

To fix the problem, Gatbonton propose a time-bound—a window of seven to 10 years—program to increase the government resource allocation to the poorest provinces and regions in infrastructure, primary health care, and basic education. Imposing a timeframe on the initiative has two advantages: Gatbonton points out that it makes the program immune to changes in government—in that sense, making the program work much like the soon-to-expire Millennium Development Challenge—but the other benefit, which he doesn’t point out but would probably agree with, is that establishing a timeframe is necessary to transform a gap analysis into a useable strategic management tool.

The problem the “positive discrimination” plan presents to the country is that it requires another, equally forward-looking and balancing plan in order to actually capture the potential economic benefits. Improving infrastructure and human capital to a more uniform standard across the country will not accomplish much, if improving standards of living will still require that human capital to move towards Imperial Manila or a few scattered “economic zone” enclaves. The follow-up—or really, something that should be done concurrently with the channeling of social structure resources—is to unbalance the distribution of commercial and industrial development in a similar fashion.

People in some of the poorer provinces in the Visayas and Mindanao, areas that would likely benefit from a channeled social development program, express a common desire when it comes to livelihood opportunities: First on the list in most conversations is financing; access to credit, usually at a level that would be covered by the Philippines’ existing rural banking framework or other microfinance schemes, is perceived to be a great enabler, and is preferred to programs such as the Conditional Cash Transfer program.

This reveals an interesting, and problematic, aspect of the Philippines economy; it has a highly entrepreneurial perspective, wherein the solution that comes to mind for most seeking to improve their household economy is not “find a job” but “create a job.” While that sort of ambition is praiseworthy, what it is actually doing is creating a huge class of working poor in this country. A large part of the reason for it is that the Philippine job market is not particularly attractive; there are too few jobs to begin with, and many of those that are available are compromised (from a job-seeker’s perspective) by low wages, being contractual or otherwise temporary in nature, and having highly discriminatory qualifications. The alternative, as many see it, is to find a little capital to start their own business—a corner store, a market stall, an Internet shop, or a similar subsistence-level enterprise.

The solution to all of that is to generate employment, and that is done by encouraging the development of first- and second-tier businesses in the economically disadvantaged parts of the country. There are many approaches that could be applied to that objective, but here are few example initiatives:

Implementing a schedule of tax incentives for business start-ups, with larger incentives applicable to poorer areas, nonservice and nonretail jobs created, and higher numbers of jobs created (with perhaps a penalty applied to contractual jobs, to discourage the practice).

Rationalizing the systems of business licensing fees and taxes at the local government level to reduce red tape and corruption. For the least-developed areas, the national government might subsidize some local fee requirements to encourage investment, particularly in manufacturing or agriculture-related businesses.

As a more temporary measure, provide tax or wage subsidy incentives to businesses located in other parts of the country to encourage hiring of graduates from provincial schools, with a significantly higher schedule of incentives offered to businesses hiring those graduates in the same province or region. The basis for this idea was suggested by Dan Lachica of the Semiconductor and Electronics Industries of the Philippines (Seipi), who noted that his group was trying to encourage its own members to look outside Metro Manila for qualified workers.

Juan Gatbonton’s final word on the matter is, “If we are to redress the balance of our lopsided economy, we must also make countryside development a centerpiece of public policy.” That is absolutely correct, and his basic concept effectively addresses part of that challenge. In order to make it really pay off, however, the economic as well as the social framework must be addressed.


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1 Comment

  1. We are good in preparing plans but not in implementation. I know a study project in 1978-79 that was commissioned by MPWH funded by Japan Govt.(The San Juan River Project) to alleviate the flooding around the San Juan River from Pasig River in Mandaluyong up to Talayan Village in QC. However,this project was shelves and dusted in our Should this project was implemented way back then, maybe the misery of our kababayan along the said river & its tributary creeks will be less every time the big rain come. Another problem I noticed in our gov’t. is that every new administration discontinued the predecessor projects and start again from the scratch..