The Philippines, widely indicated as the next “Tiger” economy of Asia has recently been in the spotlight for its stellar economic performance. Amid the continuing weakness of the global economy, the country posted a robust economic growth of 6.8% in 2012 and 7.0% as of the 3rd quarter of 2013, maintaining its enviable status as one of the fastest growing Asian economies. There is a need, however, to temper exuberant expectations as the rapid growth has only been very recent. Achieving development requires decades of respectable economic growth and structural transformation.
Why is the country unable to ascend to a higher sustainable growth path? All economies are knocked by external shocks but for post-war Philippines, domestic disturbances were major crises of governance that played a major role in derailing the economy. “Governance,” includes “all aspects of the way a country is governed, including its economic policies and regulatory framework, as well as adherence to the rule of law.” According to the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), good governance has eight major characteristics: “It is participatory, consensus oriented, accountable, transparent, responsive, effective and efficient, equitable and inclusive and follows the rule of law. It assures that corruption is minimized…” The failure of Philippine governance to fulfill these eight characteristics has time and again triggered socio political commotion with severe economic consequences.
According to my research, the venerable New York has labeled the Philippines as the economic bright spot in Asia, the IMF has singled out the Philippines for being the only country whose growth forecast it has upgraded, and the IMF 2013 growth forecast was set at 4.7 percent earlier on but was revised twice to reach 6 percent this January etc. these assessments are consistent with series of sovereign credit rating upgrades received by the Philippines. All these assessments were driven mainly by the help of five sustainability factors of the Philippine economy that includes: (1) Sustained structural reforms (2) Robust growth and favorable inflation (3) Sound and stable banking system (4) Robust external position (5) Growing third-party recognition (6) Demographic “sweet spot”. However, the improving situation of the economy should not make the public, especially the government, be complacent. There are still a lot of fundamental concerns that needs to be addressed.
There's another factor, which I believe though has remained a concern for the country's long term sustainability is governance. Some