From the review and critique of the book "Why Nations Fail" by Acemoglu and Robinson—along with Simon Johnson, a Nobel laureate of 2024—which appeared in the last six articles, we can conclude that the Philippines' failure to achieve high-income status over the past twenty to thirty years can only partially be explained by the theory of extractive versus inclusive institutions. We will now adopt a more comprehensive view of the complex society in the Philippines to gain a fuller understanding of the obstacles to its economic development, beyond just the absence of appropriate inclusive institutions, be they political or economic. We will also consider other theories presented in the book that the authors rejected as potential explanations for Philippine underdevelopment; however, these theories may still represent at least partial, if not significant, hindrances to economic progress, defined as both economic growth and a more equitable distribution of income (if not wealth). We require this broader explanation of our failures as a guide for the current administration and future ones, directing ongoing reforms and solutions to the obstacles we face in our journey towards becoming a First World country—hopefully by the decade spanning from 2040 to 2050.
Acemoglu and Robinson themselves discussed some of these inadequate explanatory causes of failure. There is the theory of “geographical determinism” proposed by authors like Montesquieu, Jeffrey Sachs, and biologist Jared Diamond. According to Montesquieu, people in the tropics tend to be lazy and, thus, logically lack inquisitiveness. In contrast, those on the Eurasian continent are more likely to develop strong immune systems. Jeffrey Sachs, one of my economics professors at Harvard in the 1960s, argues that people in the tropics are more prone to debilitating diseases such as malaria and other illnesses that negatively impact human productivity. To complicate matters, tropical soil does not support productive agriculture. All these challenges are further exacerbated by the effects of climate change. It is well known that the Philippines is the most vulnerable country in the world to natural disasters like typhoons and volcanic eruptions. The conclusion of the geographical determinists is that countries with temperate climates have a relative advantage over tropical and semi-tropical regions in achieving First World status.
While it is true that geography may present significant challenges to economic growth, the recent economic success stories of tropical countries like Singapore, Malaysia, Thailand, and more recently Vietnam demonstrate that geographical obstacles can be overcome. For instance, I have personally witnessed how malaria was nearly eradicated from the Philippines through modern medicine and health practices (like eradicating mosquitoes in the forests) because my late father, Dr. Jose A. Villegas, was one of the health officers during the American occupation and in the early years of our political independence who played a key role in the fight against malaria. The same can be said about how malaria was almost eliminated in densely forested regions such as Malaysia, Indonesia, Thailand, and Vietnam.
The biggest challenge posed by our geography is that we are an archipelago with over 7,000 islands. Countries like Thailand and Vietnam found it relatively easier to provide their small farmers with necessary infrastructure (e.g., farm-to-market roads, irrigation systems, and post-harvest facilities) because of their large and contiguous land masses. These countries also benefited from having almost unlimited water, as their ocean-like rivers made it easier to provide irrigation facilities, especially to their rice farmers. In contrast, countries that are archipelagos face water scarcity. Thus, we should never have aspired to be self-sufficient in rice. We have never had a real chance to compete with the cost competitiveness of Thailand and Vietnam in producing rice, a crop that heavily relies on water. In fact, this policy error exemplifies a cause of economic backwardness that is not due to extractive political or economic institutions but can be attributed to ignorance, an additional explanatory factor for economic backwardness alongside geography and culture. Another example of a policy error due to ignorance was the Filipino First policy (similar to the Make America Great Again—MAGA—movement of U.S. President-elect Donald Trump) that caused significant damage to our economy.
Another minor explanatory variable for economic backwardness is culture. Acemoglu and Robinson dismissed culture as an important cause of failure, citing, among other examples, the two Koreas: South and North. Until the late 1940s, these two Koreas shared a common geography and culture. Today, they are worlds apart in terms of institutions and wealth. A more familiar example for us Southeast Asians is the significant difference in economic development between Vietnam, the new ASEAN dragon, and its neighboring countries, which share much of its Indochinese culture: Laos and Cambodia, whose per capita incomes are approximately two-thirds to one-half that of Vietnam, which has recently graduated from low-middle to high-middle income status, leaving the Philippines behind.
There have been numerous theories regarding the “damaged culture” of the Philippines as a primary explanation for its underdevelopment. The most well-known of this culture-based critique of Philippine society is that of American journalist James Fallows, who wrote an article for The Atlantic Monthly (November 1987) entitled “A Damaged Culture: A New Philippines?” The essence of his criticism is that the vast majority of Filipinos lack a sense of nationalism. Our loyalty extends only to our immediate families. We have little regard for the common good, often treating each other poorly. Fallows described the Philippines as “a society that has degenerated into a war of every man against every man.”
There is a grain of truth in Fallow’s “damaged culture” theory. One manifestation of this is the extreme difficulty in organizing farmers and workers into cooperatives, contrasting with the ease with which farmers’ cooperatives succeeded in Confucian societies like Taiwan or South Korea. Another unfortunate trait that suggests a damaged culture is the tribalism evident in the existence of political dynasties and the tendency of the masses to elect celebrities, such as actors, sports heroes, or media personalities, to the Senate despite their lack of qualifications to promote the common good through enlightened legislation.
The other side of the coin, however, is the growing number of People’s Organizations, Nongovernmental Organizations (NGOs), and members of the academic community who have shown genuine concern for the common good by influencing lawmakers and government officials to create more informed laws and programs in areas such as trade, environmental sustainability, taxation, and foreign investments, among others. The Philippines stands out among emerging markets for the number of NGOs and POs that sponsor and actively implement policies and programs for the common good. I can cite only a few: Go Negosyo, the Makati Business Club and its regional equivalents like the Iloilo Business Club and the Palawan Business Club, the Foundation for Economic Freedom, Philippine Business for Education, Philippine Business for Social Progress, and others. Even chambers of commerce and industry, which previously worked almost exclusively to protect the vested interests of the business sector, are now engaging in poverty alleviation activities as well as programs for upskilling, reskilling, and retooling workers in the labor force, serving the common good rather than focusing solely on their respective sectors.
The active work of civil society, in partnership with academia and the socially responsible segments of the business sector, can elucidate why the question posed by Fallow in the title of his article, “A Damaged Culture: A New Philippines?” should be answered affirmatively. Yes, since 1987, the year Fallow’s article was published, a new Philippines has emerged, characterized by a tripartite collaboration among civil society, academia, and the business sector. Thanks to this triadic initiative, our public officials have enacted significant reforms, explaining why the Philippines is no longer the “sick man of Asia,” as indicated by independent assessments from various international banks, multilateral organizations such as the World Bank and the Asian Development Bank, and foreign think tanks. Today, we read almost daily about these independent institutions praising the Philippines as one of the fastest-growing economies in the Indo-Pacific region, alongside India and Vietnam. The leaders spearheading these initiatives for the common good of Philippine society have shown that any damage present in our culture can be mended through the right kind of leadership. If enlightened leadership does not stem from the government, as seen in Singapore, it will come from the private sector. For comments, my email address is [email protected].