Thammasat University students interested in ASEAN studies, The Philippines, economics, business, political science, history, international relations, and related subjects may find it useful to participate in a free 16 January Zoom webinar on Politics in the Purse: Budget Cycles as Constraints to Philippine Development.
The event, on Thursday, 16 January 2025 at 9am Bangkok time, is presented by ISEAS – Yusof Ishak Institute, Singapore.
The TU Library collection includes some books about different aspects of Philippine development.
Students are welcome to register for the event at this link:
https://us06web.zoom.us/webinar/register/1217345821540/WN_wJS-GMvwTmyqEdM-Le8d-g#/registration
The event website explains:
The interplay between politics and fiscal policy in the Philippines often results in budget decisions that prioritize short-term political gains over long-term development goals. This talk examines how political business and budget cycles shape public spending patterns, with election years seeing a surge in politically motivated expenditures that distort resource allocation. These practices exacerbate development constraints, such as suboptimal public investment, weakened institutional trust, and policy inconsistency.
Using recent examples under the Marcos Jr. administration, the discussion highlights the systemic challenges posed by politically driven budget cycles, particularly their impact on infrastructure, social services, and fiscal sustainability.
The talk concludes with actionable recommendations to strengthen budgetary institutions, enhance transparency, and implement fiscal rules that mitigate the influence of political incentives on public finance. By addressing these challenges, the Philippines can align its fiscal policies more closely with long-term developmental priorities.
About the Speakers
Dr. Jan Carlo Punongbayan is Visiting Fellow at ISEAS – Yusof Ishak Institute. He is also an assistant professor at the University of the Philippines School of Economics. […]
Dr. Jayant Menon is a Visiting Senior Fellow at ISEAS – Yusof Ishak Institute, following a long career at the Asian Development Bank. […]
The TU Library collection includes published research by Dr. Menon and Dr. Punongbayan.
In August 2024, an article in The Diplomat noted:
The Philippine Economy: Glass Half Empty or Glass Half Full?
Recently announced growth figures look impressive, but they conceal the structural issues holding back the Philippine economy.
Recent reports indicate good reasons to be optimistic about the future of the Philippine economy. The Philippine Development Plan 2023-2028 assumes an annual growth rate of 6.5 to 8 percent for 2024-2028. The country registered growth of more than 6 percent for a few years prior to the COVID-19 pandemic, which many think can be repeated and sustained. The country has a promising tourism sector, and many on-going infrastructure projects, including the renovation of Manila’s international airport. Wages are increasing, unemployment and underemployment are down, the dependency ratio is expected to continue declining until 2035, and the middle class is growing. For a country that struggled for decades, all this is good news.
Yet, projections about the Philippine economy are overly optimistic. The country will certainly continue growing, and the overall situation will improve, though much more slowly than many think. Optimistic projections about developing countries tend to be based on simple extrapolations that hardly ever materialize. In the case of the Philippines, overoptimism also seems to ignore a number of important structural issues that need to be addressed if the country is to maintain a high growth rate and catch up with its neighbors.
The Philippines is still a lower middle-income country with a Gross National Income (GNI) per capita just above $4,000. It is about to attain upper middle-income status. The ratio of Philippine to U.S. income per capita has remained flat at about 5 percent since 1970 (see Figure 1). The same ratio with respect to its regional neighbors Indonesia, Malaysia, Thailand, and China, shows a downward trend. All these nations have a higher per capita income than the Philippines today (see Figure 2). The case of Vietnam is particularly telling: in the early 1990s, Philippine income per capita was about eight times that of Vietnam. Today, it is lower.
Likewise, recent work by the Oxford economist Lant Pritchett showed that in 2018, the Philippines’ per capita income was below that of the world’s leading economies in 1918.
All this means that past growth rates were low. The Philippines has to grow a lot and for a long time if it wants to increase significantly its income per capita and catch up with its neighbors. Yet, we cannot expect the country to attain an annual growth rate of 7 percent during the coming decades. We know that since the 1950s, average world growth has been 2 percent with a standard deviation of 2 percent. Therefore, a growth rate of 6 percent or above would be an extraordinary tail event.
We also know that accelerations to spectacularly rapid, extended periods of growth are rare. Episodes of super-rapid growth (above 6 percent) tend to be extremely short-lived. Only China, followed by South Korea and Taiwan, have been able to attain this rate of growth and maintain it for two decades or longer. Most developing countries tend to see “boom and bust” growth – that is, periods of growth acceleration followed by periods of deceleration. Moreover, the fundamental characteristic about the growth rates of many countries over the medium run is non-persistent growth with episodes of boom, stagnation, and bust, that is, economic volatility. Circumstances or policies that produce 10 years of rapid economic growth can be easily reversed, often leaving countries no better off than they were prior to the expansion.
History shows that today’s high-income economies underwent a process of economic transformation, where workers left agriculture and found jobs in activities of higher productivity and that paid higher wages, especially in manufacturing. The manufacturing sector itself underwent transformation in the direction of producing more complex products in clusters like automobiles, electronics, pharmaceuticals, or chemicals. South Korea’s policymakers and companies understood this well. They also understood that they had to export. This served a double purpose. First, it subjected the companies to competition. Second, it helped relax the balance-of-payments constraint. […]
To sum things up, no doubt the Philippines will continue growing (though it will be hit by periodic crises), but unless its policymakers understand that the country’s firms need to manufacture complex products and export to compete in the world economy, Filipino incomes will continue increasing at a snail’s pace. Constitutional policies that shield conglomerates from competition need to be revised. Sectors that innovate must be open to foreign investment.
Additionally, the government needs to become a forceful driver of the economic transformation that the country needs, and lead a thorough industrialization drive. Filipino firms need to manufacture and compete in the world economy by producing high-quality products, not simple agriculture and basic manufactures. This is what will make wages rise. The Philippines certainly needs infrastructure. Yet, an airport or two will not be a game changer.
(All images courtesy of Wikimedia Commons)