The recent awarding of the Nobel Prize in economics to researchers for their studies on the supposed relationship between a country’s institutions and its prosperity draws attention to a persistent but erroneous notion – the superiority of Western liberal free market democracy over any other social system.
This is a notion that has been promoted through annual “economic freedom” indexes that were created as neoliberal globalization gained momentum in the 1990s. The two most prominent are the Heritage Foundation’s Index of Economic Freedom first published in 1995 and the Fraser Institute’s Economic Freedom of the World index started in 1996. The sinister-sounding term “economic freedom” in itself already signals how these indexes are propaganda devices to give ideological justification to so clearly obsolete neoliberal economic policies.
The Fraser Institute’s 2024 Annual Report on the Economic Freedom of the World was just released. As reported by BusinessWorld: “The Philippines’ ranking jumped nine spots [due] to higher scores in trade freedom and property rights,” “the country placed 59th out of 165 economies” using data from 2022, and “the country’s latest score was higher than the global average.”
Rankings like this give cognitive ease and satisfy our need for order and structure. Still, this latest index and others like it should be taken with a grain of salt. Their metrics come from a narrow prioritization of so-called market freedoms and property rights that unfortunately doesn’t align with a broader and more inclusive understanding of economic well-being and development. This is why the so-called economic freedom scores are so inconsistent with the economic realities faced by the majority of Filipinos who remain poor and marginalized.
For instance, the country’s improved ranking by a dozen notches is clearly inconsistent with important social indicators on a trajectory of decline. Since the middle of 2022, the number and incidence of self-rated poor Filipino families has increased to 16.3 million or 59% of total families in September 2024, and of households without savings to 19.2 million or 71% of total households in the third quarter of 2024. These are according to Social Weather Stations (SWS) and the Bangko Sentral ng Pilipinas, respectively.
More topically, yesterday was World Food Day. The Fraser index places the Philippines ahead of Indonesia, Thailand, Vietnam, Laos, and Myanmar. But the United Nations (UN) Food and Agriculture Organization (FAO) has also just reported that the Philippines has much worse food insecurity than all these countries. The Philippines has 44.1% of its total population suffering moderate or severe food insecurity which is more than in Indonesia (4.9%), Thailand (7.2%), Vietnam (10.8%), Laos (36.3%), and Myanmar (32%).
The Fraser Institute’s index focuses narrowly on market-oriented indicators such as trade freedom, property rights, and business regulation which are presumed to improve the economy. In practice, these measures favor a deregulated economy that benefits large corporations and wealthy individuals at the expense of broader social development outcomes.
It is then not surprising that social indicators are going in an adverse direction at the same time as corporate profits and individual wealth keep growing – the wealth of the 50 richest Filipinos grew 17% to Php666 billion between 2022 and 2024. Top 1000 profit grew 103% to 1.8 trillion between 2022 and 2023, and the net income of Philippine Securities and Exchange (PSE)-listed firms grew 238% to Php1.2 trillion between 2020 and 2023.
The Marcos Jr government’s biased fiscal consolidation is also evident in the distribution of the country’s declining score in size of government. The relatively high score in government investment reflects the persistent emphasis on corporate-friendly infrastructure and pork barrel hard projects, while the lower government consumption reflects insufficient social services and safety nets.
The increase in the score in the freedom to trade internationally category merely reflects continued liberalization that has worked so much against domestic agricultural and industrial development for decades, both of which sectors have fallen to historically low shares of the economy.
Calling this an “economic freedom” index is a misnomer because it clearly does not reflect any freedom on the part of tens of millions of poor and vulnerable Filipinos who make up the overwhelming majority of the economy. If anything, it is an ideological statement that prioritizes corporate profits and elite wealth rather than real development indicators of family incomes, job security, access to essential social services and public utilities, and the freedom and welfare of the wider population.
The Fraser index is wholly about what profit-seeking foreign corporations want: predictability in contracts and protection of their property rights; small governments that tax less, and that let public services and utilities be run for profit by the private sector; and as little regulations, barriers and controls on foreign trade and investment as possible. It is nothing about what the Filipino people truly need.
