Government News Analysis

Institutional failures

Global Innovation Index 2017: Institutions

Innovation – an increasingly critical factor in achieving economic growth – can’t prosper without effective institutions. These are the systems of formal laws, regulations, and procedures, and informal conventions, customs, and norms that shape socioeconomic activity and behaviour. Put simply, such frameworks are there to counter global challenges while pursuing national economic goals. They also provide the environment for entrepreneurs, innovators, academics, scientists, researchers and others to build and develop new solutions. They’re the support base, the bedrock, for getting new things done.

Consequently, ‘Institutions’ feature prominently in the 2017 Global Innovation Index (GII); it’s listed as the first pillar in the evaluation of the innovation performance of 127 countries world wide. For our purposes here, we look at the Philippines’ performance – in the context of the eight Association of Southeast Asian Nations (Asean) states ranked in the survey. Asean members, Laos and Myanmar, were not included.

Here’s what the institutional frameworks for those states look like; (the rankings show their global position on the 2017 GII). Singapore, 1st; Brunei, 31st; Malaysia, 53rd; Thailand, 75th; Vietnam, 87th; Philippines, 89th; Cambodia, 98th; Indonesia, 120th. That’s not a good overall position for the Philippines – a country that likes to pride itself on its institutions, its rule of law and its regulatory framework. What it suggests is that some of that pride is misplaced; that the institutions have failed by not keeping pace with global and domestic demands.

But there are other factors that have contributed to this; not least the ‘Political environment’. This metric assesses each country’s ‘Political stability & safety’ and ‘Government effectiveness’. First, the overall political-environment rankings: Singapore, 1st; Brunei, 20th; Malaysia, 41st; Vietnam, 59th; Thailand, 79th; Philippines, 84th; Cambodia, 88th; Indonesia, 89th. This puts the Philippines at the back end of Asean, making it among the least attractive destinations for investor funds.

And here’s why. While it achieved a respectable 65th place – coming 5th in Asean – in terms of ‘Government effectiveness’, it was ranked next to last in Asean for ‘Political stability & safety’. This measures the perceptions of the likelihood that the government will be destabilised or overthrown by unconstitutional or violent means, including politically motivated violence and terrorism. And that – ahead of corruption, inadequate legal recourse, lack of infrastructure etc – is the investor’s biggest nightmare.

The reason for those perceptions we all know – a Moro Muslim insurgency in the southern Mindanao region that’s persisted, in the modern era, for more than 48 years; a new Islamist threat with links to Islamic State that’s been gathering traction over the past eight years; a communist insurgency spearheaded by the Marxist-Leninist-Maoist New People’s Army that’s been ongoing since 1969 and which recently experienced a renaissance.

Add to that the societal instability created by a relentless wave of criminality and a noxious pestilence of illegal drugs – virtual pandemics that were left unchecked for the best part of the last two administrations – and it’s easy to see why ‘safety’ perceptions are less than heart-warming.

Just for the record, here are the Asean countries’ global rankings for the 2017GII sub-category, ‘Political stability & safety’. Singapore, 6th; Brunei, 7th; Malaysia, 52nd; Vietnam, 59th; Cambodia, 68th; Indonesia, 94th; Philippines, 98th; Thailand, 108th.

(Photo: R&D workers at Unilever Philippines Inc., Paco, Manila).

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  • This is the very reason why oligarchs are fighting tooth and nail to defend their turf. They have monopolized these institutions to corner all juicy government projects and contracts to the dismay of foreugn investors. President Duterte must eliminate this rotten tradition if he wants this country to be internationally attractive.

  • In Philippines, govt bureaucracy, along w/ the help of corrupt agencies, the NPAs, the oligarchy’s cartel, does everything they can to stifle such things.