Address
of
His Excellency Fidel V. Ramos
President of the Philippines
Before the Kennedy School of Government, ARCO Forum of Public Affairs

[Delivered at Harvard, Boston, Massachusetts, October 20, 1995]

Democracy and
economic progress

IT IS AN HONOR to visit Harvard and to bask, however briefly, under its scholarly shade in this forum at the Kennedy School of Government.

Through its various colleges—and the Kennedy School especially—Harvard has cultivated an admirable relationship with countries and governments all over the world. It is not surprising that many who have passed its portals have occupied or occupy leading positions in the public and private sectors in many countries.

In this, the Philippines is no exception.

Today, there are some 400 Filipinos—holding key positions in business, academe and government—who have undergone some years of schooling in this University. This number, I am told, adds up to a lot of Harvard alumni for one country—especially for a developing country.

Good news

When told back in 1986 that there were seven Harvard alumni in President Corazon Aquino’s Cabinet, then Harvard President Derek Bok is said to have quipped: “Are you telling me good news or bad news?”

It is for former President Aquino to answer this query. For my part, I can report to you this: I began office in 1992 with six Harvard alumni in my Cabinet, who are all here with me right now. In addition, there are some fifteen more of your alumni in senior sub-Cabinet positions.

If after three years, we have succeeded in putting the Philippines back on track toward growth and modernization, that is surely partly because of their contributions. So yes, having Harvard alumni in my Government is good news.

Lessons from the Philippine experience

The story of the current Philippine resurgence is perhaps more than of routine interest to students of government.

First, we began self-government in 1946 as America’s supposed “showcase of democracy in Asia.” Yet for the better part of the postwar era we have been—instead—an illustration of democracy’s failure to win economic progress. Today, after a 14-year interval of authoritarian rule and many more years of difficult transition, we are once more a full-functioning democracy. And for a change we are making progress—politically and economically.

Second, in East Asia today, conventional wisdom holds that an authoritarian regime is the way to growth for developing countries—because it is best equipped to mobilize the resources and compel the social discipline that make rapid growth possible. The same East Asian wisdom suggests that democratic government, in contrast, hampers economic growth, primarily because it is prejudiced toward borrowing and consumption, and is too loose and unfocused.

Yet—significantly—it is through full and people-powered democratic government that the Philippines has made its economic turnaround and now is moving determinedly toward national modernization.

And third, we in the Philippines have attracted some attention because, in order to make this fresh start at modernization, we literally had to reinvent our very idea of our nationhood. We have turned on its head the ideology of narrow nationalism that had governed public policymaking in the past and led the Philippines to adopt such policies as economic protectionism, economic nationalism, distrust of foreign investments, legislated wages, public subsidies and price controls.

Today—with these mistaken policies behind us—we define our course toward the future in a more liberalized way, with linkages to the world economy and the international community as fundamental.

I will focus my remarks here today on what our experience in the Philippines has to say about the relation between democratic government and economic progress, and the opportunities and challenges that arise from our development course.

Choosing democracy

It bears saying that we chose the path of democracy—not in conscious repudiation of the course that our economically successful neighbors had taken—but in recognition rather of who we are as a people.

In a way we Filipinos had no choice but to try and modernize along constitutional and democratic lines. History had shaped our political culture in a way that ensures authoritarianism would not work for us. Indeed, for 14 years—from 1972 to 1986—we tried to play the authoritarian card and dismally failed.

Those who wonder about this failed experience with authoritarianism might consider this explanation. Authoritarianism in East Asia was typically built on strong, efficient and relatively autonomous bureaucracies—coupled with weak political awareness on the part of citizens.

Our political tradition in the Philippines is exactly the opposite. From our colonial rulers, we inherited a weak civil service but strong political awareness—even among the poorest and most isolated Filipino communities.

It is easy to belittle our representative system, but ordinary Filipinos do put their faith in it. Except for the 14-year period of martial law, the peaceful transition from one presidential administration to another—which describes in one important way democratic government—was a regular happening in our country.

To find our way back into this tradition, we have had to fight for our democracy and then ensure the perpetuation of democratic rule. This requires rebuilding the institutions and strengthening the culture of democracy—representative and accountable government, majority rule with minority rights, and the rule of law.

The government of my predecessor, Corazon Aquino, carried out the initial task with courage and determination, presiding over the drafting and enactment of a new Constitution and beginning the process of returning government to the people at the local level by strengthening the province, the township and the village. The success of this work is evident in the succession: changes in the executive and legislative branches were accomplished through peaceful elections.

A functioning democracy

Now, as we approach the tenth anniversary of our People Power Revolution of February 1986, the future of democratic rule in the Philippines is secure. Mutinous military officers have abandoned their rebellion and last October 13th entered into a general agreement for peace and development. The communist insurgency has collapsed. We are in the final stages of negotiating an honorable peace with Muslim separatists.

That is why I say the Philippines is a functioning democracy—not a country in transition, not a newly democratic country, but a country with sturdy and effective democratic institutions and a robust democratic culture that is shared by virtually all the Filipino people.

To embrace democracy in the way we did is also to accept a particular way of managing the economy in order to achieve development.

For us, it is an article of faith that we must develop by conciliation and consensus—not by command. Democratic process, we concede, could slow down economic growth. But it also ensures that the political institutions we build and the policies we pass are both strong and enduring.

I believe every country must develop according to—and from—its own peculiar conditions and circumstances. In the case of the Philippines, democracy is a given. It is the glue to our social cohesion, and our economic modernization must proceed from it.

Economic liberalization

Although the Philippines led the world in the democratic revolution of the eighties, we have been latecomers to the economic revolution that began in East Asia in the fifties and sixties. What held the Philippines back was not a lack of natural endowment or human resources. It was government policy and government performance.

We started out in the sixties as the Asian country most likely to succeed—next only to Japan. In just a quarter of a century, by the end of the eighties, we had become a laggard in a continent of dragons.

How, we have often asked ourselves, why did we wind up in this situation when we Filipinos are supposed to be among the finest workers and managers in East Asia?

The simple answer is that we let politics—not markets—rule over our economy.

Mistaking shortsightedness and chauvinism for nationalism, we opted—beginning in the fifties and sixties—to reserve the economy for Filipinos.

We closed our economy—looking inward to our small home market, instead of outward to the large global market.

We set stiff restrictions on foreign investments, barring them from many industries.

We stifled competition and enterprise by allowing monopolies and cartels to dominate key sectors of the economy.

We made political connections—not competitiveness or talent or hard work—the determinants of economic success.

We followed the same wrong path that led many countries in Latin America, Eastern Europe and Africa to economic ruin—and achieved precisely the same results.

While our Asian neighbors toughened and developed their industries through global competition, we wound up with perpetually “infant industries.”

While our neighbors opened their doors to foreign investments—and thus to new technology—we closed ours to them.

Reengineering progress

The way out of this hole has not been easy.

To begin with, we have lived through a painful period of stabilization—just to get the macroeconomy working right. And then we moved to make the market—and the private sector—our main weapons for reengineering progress.

In a package of reforms our country has not seen since the end of World War II, we have lowered trade barriers, dismantled monopolies, brought Government spending into line with Government revenues, invested in infrastructure, and opened our industries to competition and foreign investments.

Just as important, we have moved to stamp out corruption and graft in Government, and tax evasion in the boardrooms.

This shift to a market-based development strategy has been matched by our rejection of economic nationalism as traditionally defined, which was synonymous with protectionism and even isolationism. Today, we define nationalism in terms of our enhanced capacity as a nation—not as defeatism that we cannot compete with foreigners even in our own home market—but as self-confidence in facing up to world competition.

Today, this nationalism leads us to expand our foreign linkages—the better to have access to global information, capital, marketing channels, and inputs of the best quality and services at the lowest cost.

Building political capacity

All these reforms, I am pleased to say, were made possible through the collaboration of the executive, the legislative and the judicial branches of government in the Philippines.

And they have paid off—even this early—in three years now of accelerating growth. We expect GNP to grow this year by 6 percent to 6.5 percent in real terms—more than double that of 1993.

Our exports are rising at an impressive rate of 30 percent this year.

And this year we expect a record inflow of foreign investments on top of the 330 percent increase in 1994.

The inflow of outside funds has in fact been so large that it threatens our efforts to stem inflation. But this is the kind of problem that we like to have for a change—instead of the problems of scarcity that we experienced in the past.

The turnaround we have had and continue to have should definitely belie the argument that democratic government is a luxury to be enjoyed only by the rich. Our experience is proving that democracy is perfectly compatible with economic progress, and social discipline is possible in a democratic setting.

Yet we would also be the last to say that our struggle for modernization is won. Or that the ways of our democracy have fully succeeded in building an enduring national consensus for development. We still have a long road to travel. There is still much work to do.

Our greatest challenge now is maintaining our development momentum, and for this, nothing is more important than the need to increase the political capacity of our Government—to continue the pace of reform, to check corruption and inefficiency in the public service, to institute new standards of performance and accountability in our bureaucracy, and to ensure the rule of law in our society.

Choosing between democracy and authoritarianism was for us always the easier part. Meeting the challenge of making democratic government effective in the process of development is the harder task.

This has to do with more than just elections or constitutionalism. This has to do with effective administration. This has to do with the role of the State in the development process within a democratic society.

Our work is far from over

As things stand now, we have gone a long way toward taking Government off the back of business in lifting its traditional micromanagement of the economy. But in the more positive action of doing what Government must do—such as providing basic services, laying infrastructure, establishing accountability and efficiency in operations, and general problem-solving—our work is far from over.

Our bureaucracy remains in some ways a reproach to democratic effectiveness in the modernization process. We are now working to unleash its energies by introducing reform in organization, staffing, compensation, and all the other vital aspects of Government service.

The rule of law has always been upheld since our People Power Revolution of 1986. There is nevertheless a cause for worry in regard to law enforcement, which we are addressing through immediate and long-term reforms. It is noteworthy that both foreign investors and citizens cite judicial shortcomings as cause for concern.

And our democratic politics—in the legislature and the media—often merely exploits problems, instead of solving them. There is a constant rain of rhetoric on public issues, but many continue to forget that the whole point of debate is to arrive at a solution to issues or problems.

The role of the State

Here we come face to face with a desideratum in democratic government—the political effectiveness of its national institutions, or, as the political scientist Robert Jackson has described it, the effective exercise of “power without force.”

This is a complex challenge for government in a developing country, because constitutional government essentially means limited government. In a developed country, this works easily enough, because the degree of public consensus is strong. In a developing country, we need all the government that we can muster to mobilize society for the tasks of development.

Here we touch upon the tensions and contradictions that some political scientists have noted between democracy and constitutionalism. State building is necessary to society, but it also represents a threat. Constitutionalism or rule of law is a design to curb State authority.

These tensions are acute in the Philippines, where historically the State has been weak—dominated by interest groups and prevented from acting for the common good.

Historically, the Philippine State has been weaker than the oligarchies that have preyed on it—oligarchies that have used their privileged access to the bureaucracy and to the levers of political power to accumulate great fortunes and entrench themselves more deeply in their position of dominance. Unless we can put an end to this political arbitrariness, we cannot fully organize the national economy and enter the mainstream of global commerce.

But all this only suggests that our long-term salvation lies in broadening our democracy—not in curbing it. We cannot progress much further by being a mere democracy of elites.

This is the basic reason why—in running for the presidency—I ran on a program of “People Empowerment.” This is why People Empowerment stands so high on the agenda of my Administration—as a way to mobilize the country democratically for modernization, as a way to devolve power from the center to the countryside—from the National Government to the Local Government units—as a way of giving ordinary people a stake and a role in winning the future.

Removing the mountain of regulations

Our development path, in sum, has required a changed role for the public sector. It calls for a smaller State sector than its interventionist predecessor—in that we have removed the mountain of regulations and State enterprises that used to dot our national landscape.

But it also calls for a stronger and more efficient public sector in that it must effectively exercise authority, make decisions wisely, capably solve problems and resolve conflicts.

That we have not yet fully achieved this condition, we concede. The most that can be said is that we are moving steadily toward this ideal—step by step, reform by reform.

Let me now summarize and conclude.

In choosing to develop as a democracy, the Philippines has chosen a route that concededly is more complex than that followed by our vigorous Asian neighbors. We regard politics–the process of conciliating rival interests and differing opinions—not as an obstacle to governing but as the necessary precondition to concerted action on public issues.

At first glance, this may appear as a disadvantage to a developing country government, as compared to governance with little or no consultation in an authoritarian order. But, in fact, I am confident it will prove to be of lasting advantage.

Democracy and markets go together

As we see more and more of the global economy, we find that democracy and markets really go together. As Harlan Cleveland has noted in Birth of a New World:

“Openness is a technological imperative in the global knowledge society . . . . The connection between market and democracy is basic. Market divides and distributes economic power as democracy does political power . . . . Part of the connection between democracy and market is that people governed by consent want to do business . . . across borders that are as open as possible. The other part is that a democracy’s economy . . . is necessarily and inevitably more open to the rest of the world, and the rest of the world will be more open to it.”

As a free and open society, the Philippines can take part more fully in the exchanges fostered by our global economy—because we fear neither the power of ideas nor the images of other cultures.

Day by day, our experience tells us that political democracy, social discipline and sustained development are not incompatible ideals.

Reform is difficult, but it is the only way to go.

We started late in adopting the reforms so necessary to unshackle the economy and to empower our people for development. Yet in just three years, already we are seeing that some transformation is taking place in the Philippines.

Authoritarianism is a receding ride in the world which we do not regret in passing up. Communism did not collapse in a vacuum. All over the world, authoritarian and statist systems are being dismantled by peoples who have awakened to their political entitlements.

As we look to the future then, we have the quiet confidence and optimism that we will succeed—because of the knowledge that people and markets govern our march to progress.

And that success I am certain is something which you, too, in this citadel of learning and freedom will cheer.