Sunday, November 12, 2006

Why the Philippines is poor

Reason Magazine explains in this article why the Philippines is poor. It's a couple of pages long but i've taken some excerpts below:

Consider the situation: money that was provided because of social networks rather than need; a project designed for prestige rather than use; a lack of monitoring and accountability; and an architect appointed for show by somebody with little interest in the quality of the work. The outcome is hardly surprising: A project that should never have been built was built, and built badly. The lesson of the story might appear to be that self-interested and ambitious people in power are often the cause of wastefulness in developing countries. But self-interested and ambitious people are in positions of power, great and small, all over the world.
But then you might say that it's not news at all that corruption is a small part of a bigger picture of why we are poor but the article contends that...
It is not news that corruption and perverse incentives matter. But perhaps it is news that the problem of twisted rules and institutions explains not just a little bit of the gap between [the poor] and rich countries but almost all of the gap.
The story ends with...
We still don't have a good word to describe what is missing ... in poor countries across the world. But we are starting to understand what it is. Some people call it "social capital," or maybe "trust." Others call it "the rule of law," or "institutions." But these are just labels. The problem is that ... like other poor countries, [it] is a topsy-turvy place where it's in most people's interest to take actions that directly or indirectly damage everyone else.
So how do we fix it?
Unfortunately, the article just gives us the reason why. It does not tell us how to fix it.

No comments: