Looking Forward with Pres Aquino on Philippine Development 229.0

As I write this post, I am listening to President Aquino deliver his inaugural speech; indeed an inspiring one as an inaugural speech ought to be.

Just institution-building? Yet, from the speech, President Nonoy seems just focused in building, if not re-building, the institutions of a working capitalist democracy – possibly as countervailing powers in the check-and-balance context of a necessary for a self-sustaining legacy American-style system of government that was apparently damaged by the corruption of previous regimes.

This is consistent with the Liberal Party ideology but, in the present Philippine context, I do not think it is sufficient to jump start Philippine development into the developed world.

Minimizing corruption and reducing population growth via the RH Bill are not sufficient; a fundamental restructuring that frees up the energies of the people toward equity is critical to meet the rising and restive expectations of the Filipinos.

Still, I must grant, if President Noynoy accomplishes his limited goal, he would have a historical achievement especially, if doing so opens up space for all – the equality in opportunity, and not much more, that he mentioned in his speech; a touch tone of liberal ideology.

Or active justice! Going forward, I believe in this modern age, it is also necessary to do proactive and direct steps – not broad brush transfer payments like foreign exchange manipulations – aimed at critical sectors to promote social enterprise and innovative entrepreneurship, as advocated by Amartya Sen in his book The Idea of Justice, as an active search for justice much more than tame steps towards institution building.

Development benchmarks. Below is a table I posted on my birthday post on the true goal of innovation as a benchmark at the start of the Aquino administration with metrics on GDP per capita and growth, Gini coefficient and attainment of Human Development goals:

I will use data from this table as starting point to monitor over time the performance of the Aquino administration in achieving its campaign promises.

Development economics before Neocolonial and Dependency Theories. I have read broadly and deeply for inspirations and models of development including national innovation systems of emerging Japan, China, India, Korea, Taiwan, and New Zealand, Denmark and Israel.

As with history (and like our young historians rewriting history starting back at pre-American Philippine history), I am particularly interested in pre-Leninist models that start from the concrete conditions of the nation, are democratic and do not require strong states that most Filipinos are suspicious of.

Development Economics circa H Myint. From my post on the national innovation systems of South Korea, Professor Alice Marsden introduced me to Professor Hlia Myint’s book The Economics of Developing Countries (1973, Hutchison) as giving the definitive discussion on the relation between population and development.

Note: Click image above for Amazon link.

The publication date is significant (the first edition was 1963) since he summarized the state of development economics before the advent of neocolonial and dependency theories that became the fad from the 1970s.

I bought Professor Myint’s book second-hand in May for US$1.00 and had it mailed to the New York office of Johnny Air for US$4.00. In another ten days, in late May and after a courier charge of US$15, I had the precious book on hand.

I was pleasantly surprised to read a very good summary of development economics through the 1970s including theories by W.W. Rostow, W.A. Lewis, the Harrod-Domar model, and the beginnings of Amartya Sen.

While many of Professor H Myint’s conclusions have been bypassed by time, many of the analyses remain relevant (like Karl Marx’s) because the conditions on the ground that he observed are still present in developing countries (now called emerging economies).

I have decided to use his summary of the evolution of development thinking as framework to extend forward (and skipping neocolonial theory) to Amartya Sen’s activist (though not revolutionary sense) of justice while picking up John Kenneth Galbraith’s take of the development of countervailing powers given that much of the Philippine political economy copies that of the US.

New directions and classical development economics. Note that Professor Myint’s economics uses classical and orthodox techniques.

While development economics itself uses inductive case methods from the social sciences, the models themselves use questionable assumptions like perfect competition, direct substitutability of labor inputs with just one cost-price, profits maximization as the only objective function for determining one equilibrium, and the like.

Still, much of the conversation in development in an emerging market like the Philippines still uses this language.

Innovation must be coming to Development Economics. It would be interesting to see how development economics will change with consideration of endogenous technological change per Paul Romer, increasing returns from technology platforms with W. Brian Arthur, or the game theory techniques for common pooled resources of Elinor Ostrom.

How will development economics be affected by knowledge of information asymmetry and the leveling effect of the Internet and Social Media technologies?

Furthermore, how would development planning change from the key assumption of profit maximization of classical economics and the topology of triple bottom lines with social enterprises.

For now we stay classical with John Kenneth Galbraith and Amartya Sen.

John Kenneth Galbraith. While W.W. Rostow discussed the need for sustaining institutions on top of sustained domestic savings (and ergo investments) as requirement for take-off, I found Galbraith’s robust discussion of countervailing powers more relevant in the Philippine setting.

Instead of big monopolies in steel and industry as is the case in the USA of Galbraith’s time (though there is certainly many links in the Philippines between big business and political families), I do hope positive action to build countervailing powers as institutions will arise to check the power of political dynasties most of whom merely add a burden to otherwise productive ventures and entrepreneurs.

Amartya Sen. I see in Amartya Sen’s comparative realization concept of justice as a blueprint for an activist centrism.

In the link above to a previous post, there is a possible jump from Karl Marx to George Bernard Shaw’s revolutionists (by definition different from revolutionaries) who demand progress and is unreasonable in doing so. While there is an element of the Nietzsche’s Ubermensch and nihilism, it was not dogma as with Lenin’s pre-requisite of a strong party and state for change.

The active call for justice, instead of mere institution-building, resonates in Sen’s book The Idea of Justice.

In conclusion. Rather than purely in the realm of politics, I would recommend action as the other sword that President Aquino must wield to succeed in changing the course of development in the Philippines

Positively, this can be achieved with strong support to entrepreneurship in the Philippines and, better still, innovative entrepreneurship.

Innovative Entrepreneurship – Reese Fernandez of Rags2Riches, Mark Ruiz of Hapinoy. And to leverage the efforts, strong support should likewise be given to meta-entrepreneurship – including skills, techniques and infrastructures – that is social enterprise, and its adjuncts microfinance and enabling ICT, in that they are involved in building innovative entrepreneurs.

Reese Fernandez of Rags2Riches, Mark Ruiz of Hapinoy, Lisa Dacanay of ISEA at the ASoG have been featured in SYNTHESiST. Jay Bernardo of Let’s Go and embedding entrepreneurship into high school education will be posted in the next few days. (Since posted. Click link.)

Doing so will release the latent energy that Filipinos exhibit in excess in less confining political economies especially overseas. It will find its own way and become the motive energy for the Philippines to take-off, finally!