Alajas
Corruption in the Philippines: Framework and context*
By: Alajas
Abstract
This paper proceeds from the more recent literature on corruption as a principal-agent problem whose significance for development depends on its dimensions related to the nature of the corrupt transaction itself, such as distinctions based on the agents involved, scale, type of deal, predictability, industrial organisation, etc., all of which affect for better or worse the nature of the relationship between principal (as represented by the public interest) and the agent (politicians and bureaucrats). From this viewpoint, corruption may be regarded as an incentive-design problem.
The paper also argues, however, that there is a larger dimension to corruption that is determined by the historical and social context. Here, the ultimate factors are those affecting social cohesion (e.g., income and wealth, education, ethnic and other differences), the economic strategies pursued by the government (e.g., minimalist versus interventionist), the political system (the autonomy of the bureaucracy, the degree of centralisation), the extent of market transactions (local, global), and the rate and sources of economic growth. It is these factors that determine the credibility of the formal institutional constraints (however designed) on the behaviour of public officials and private agents alike.
This framework is then used to examine how and why the dominant types of corruption in the Philippines have evolved, from nepotism, to smuggling, to public-works contracts, to debtfinanced schemes, asset-privatisations, until the recent descent into underworld-related activities. The unprecedented governance breakdown under the Estrada administration is then explained as the result of a confluence of a growing sense of public interest (the result of education, urbanisation, political experience, and expanding market transactions) on the one hand, and the drying up of innovative sources of
By: Alajas
Abstract
This paper proceeds from the more recent literature on corruption as a principal-agent problem whose significance for development depends on its dimensions related to the nature of the corrupt transaction itself, such as distinctions based on the agents involved, scale, type of deal, predictability, industrial organisation, etc., all of which affect for better or worse the nature of the relationship between principal (as represented by the public interest) and the agent (politicians and bureaucrats). From this viewpoint, corruption may be regarded as an incentive-design problem.
The paper also argues, however, that there is a larger dimension to corruption that is determined by the historical and social context. Here, the ultimate factors are those affecting social cohesion (e.g., income and wealth, education, ethnic and other differences), the economic strategies pursued by the government (e.g., minimalist versus interventionist), the political system (the autonomy of the bureaucracy, the degree of centralisation), the extent of market transactions (local, global), and the rate and sources of economic growth. It is these factors that determine the credibility of the formal institutional constraints (however designed) on the behaviour of public officials and private agents alike.
This framework is then used to examine how and why the dominant types of corruption in the Philippines have evolved, from nepotism, to smuggling, to public-works contracts, to debtfinanced schemes, asset-privatisations, until the recent descent into underworld-related activities. The unprecedented governance breakdown under the Estrada administration is then explained as the result of a confluence of a growing sense of public interest (the result of education, urbanisation, political experience, and expanding market transactions) on the one hand, and the drying up of innovative sources of