Yes it is, but the economy’s troubles are much deeper and the fix has to be much bigger
There’s a lot of technocratic moralizing again today that explains corruption as the biggest problem of the economy. The frustration is common and cuts across political fences.
The Marcos Jr administration and its economic managers blame corruption for the growth slowdown. Many well-meaning critics – and, well, also a good number of not well-meaning critics – blame corruption for faltering macroeconomic indicators and even chronic underdevelopment.
All the country lacks, it seems, is “good governance” and the investor confidence and prudent spending that comes with this goodness. The argument seems compelling because being against good governance is like hating mothers. But are decency and good intentions really all we need?
Actually, we need good economics too.
Corruption, bad
Corruption really has gotten worse under the Marcos Jr administration. This, combined with world class plunder by his father during the dictatorship, has sealed the Marcos brand as embodying the worst corruption in Philippine politics.
The Marcos Jr administration went all-out as soon as it got its hands on the national government budget. Unprogrammed appropriations (UA) – now understood as a proxy for pork barrel carve-outs in the regular budget aside from, in effect, discretionary presidential pork in itself – grew over three-fold (221% increase) from Php251.6 billion in the 2022 General Appropriations Act (GAA) to a staggering Php807.2 billion in the 2023 GAA.
This moderated slightly to Php731.4 billion (2024 GAA) – which was signed off even by liberal opposition in the Senate – and then a little bit more to Php531.7 billion (2025 GAA). The UA pork party seemingly wound down from popular outrage in the 2026 GAA, but the Php157.5 billion this year is still more than double the Php67.5 billion at the start of the previous Duterte administration.
And there are of course still the fatty funds in the regular budget – some Php500 billion in various hard infrastructure pork barrel, around Php200 billion in assorted soft pork barrel ayuda projects, and billions in confidential and intelligence funds including a higher Php4.56 billion just for the Office of the President (OP).
All of this means trillions of pesos being spent mainly according to self-serving political, clientelist, and corruption logic rather than the public’s need for welfare and development – no matter how the propaganda machinery twists it as the latter. This is, by any rational accounting, bad.
However, the problem begins when “corruption” is asked to explain too much. Today, the flood control scandals and its aftermath have been used as a catch-all to explain slow growth, weak investment, and the record low peso.
These claims are oblivious to data. The economy has basically been slowing since peaking at 7.1% in 2016, or long before the flood control scandals made the perception of corruption spike. The pandemic-driven collapse and rebound just masked that steady economic decline. Likewise, annual net foreign direct investments (FDI) have been on a downtrend since peaking at US$12 billion in 2021 and the peso has been depreciating since hitting Php48 in mid-2021.
Corruption is real, visible, and damaging. But it cannot be asked to explain everything.
Policies, badder
The good governance story has appeal because of its moral clarity, especially set off against the moral murkiness of so many high-ranking political leaders, bureaucrats, and private sector folks (the last proving that the private sector really isn’t a paragon of virtue).
But the overemphasis on governance insidiously shifts the debate from how the economy actually works – including how markets and profit-seeking fail – to how people behave. It suggests that once rules are followed and money is spent cleanly, markets will magically do the rest.
The moral explanation is comforting to a predominantly Catholic nation, yet analytically thin and substitutes virtue for strategy.
The Philippines’ central problem isn’t simply that rules are broken. It’s that the economy produces too little of what Filipinos need, that jobs and incomes are inadequate, and that this is all because of the economic framework misinforming the country’s economic policies. The moralizing diverts from changing the “free market” policies that have been so counter-productive.
Good governance won’t fix how “globalization” policies have made manufacturing shallow, import-dependent and foreign-dominated – and down to its smallest share of the economy in 77 years. It won’t fix how agriculture is down to its smallest share in the country’s history producing expensive food while making farmers and fisherfolk the poorest sectors of society. It won’t make privatized education, health and housing cheaper – although it may increase how much public funds go to subsidizing private sector profits there.
These are production and public service problems from a flawed and obsolete “free market” framework – not just governance lapses. Blaming corruption obscures this.
Cleaner governance has to serve a development strategy of the state protecting and supporting domestic agriculture and Filipino industrialization, and of directly providing public education, health and housing on a universal scale.
Instead, the good governance narrative assumes that pleasing investors is just how the economy is supposed to work. If credibility in government is restored, investors will come and growth will resume to uplift tens of millions of poor and vulnerable Filipinos. Unfortunately, without that national development strategy, all cleaner governance will do is simply channel capital more efficiently into the same profitable but anti-development uses.
Developers, corrupt
The free market globalization era started in the 1980s – and no economy has industrialized and developed since then. If anything, the United States (US) even deindustrialized. It’s long overdue to put aside the notion that there can be development through neoliberal globalization.
The last industrialization experiences anywhere were South Korea, Taiwan and the city-states Singapore and Hong Kong in the 1960s and 1970s. China may seem to have done this in the 2000s but its base for industrialization was actually built during its socialist era starting in the 1950s.
None of East Asia’s late industrializers waited for pristine clean governance institutions before transforming their economies. On the contrary, South Korea and Taiwan industrialized under conditions that Filipinos are familiar with today – political patronage, discretionary state intervention, and imperfect rule of law. Singapore’s economic takeoff was on the back of state-driven industrialization, heavy investment, and control over finance and land.
China of course doesn’t fit the liberal good governance model and is characterized as the opposite: authoritarian and closed. The good governance narrative seems oblivious to how China’s economic success was driven by deliberate state-led industrialization, heavy investment, control over finance and land – even more than Singapore – and the subordination of markets to long-term production and upgrading goals.
What mattered most for their development wasn’t some deified good governance but purposeful and strategic economic direction by the state according to a policy of national industrialization. Their “whole of nation” approach was real and not rhetorical.
The East Asian experience also debunks the “investor confidence” hype in another way – foreign investors were just a small part of those economies during their economic take-off. In the 1970s and early 1980s, annual FDI flows to South Korea and Taiwan were just 0.3-1.2% of gross domestic product (GDP) and 1.1-5.2% of gross fixed capital formation; the stock of FDI was just 1.7-5% of GDP.
Today, after decades of liberalization, the Philippines actually has much more FDI measured in those terms. Since 2020: annual FDI flows average 2.3% of GDP and nearly 9% of gross fixed capital formation; and the stock of FDI is equivalent to 27.3% of GDP. More FDI, but clearly not taking off.
The reality unblinkered by moralizing is that growth and development don’t follow the elimination of corruption – economic progress, rising productivity and state discipline narrowed the space for it. Clean governance can’t substitute for a development strategy.
Corruption, diversionary
The fixation on corruption is politically convenient. It diverts from confronting harder questions about power and structure – foreign dominance of Philippine manufacturing, oligarch control of utilities, privatization of social services, land concentration, and a policy bias against reform and redistribution.
Condemning crooked officials and individuals is easier than admitting that the economy is designed to make a few rich at the expense of the majority who are kept poor and vulnerable, and that the system rewards rent-seeking and speculation rather than production.
Because doing that is also admitting that the fix has to be bigger. The mainstream left and progressives have been pushing hardest for a coherent development strategy for decades – national industrialization on a base of agrarian reform and rural development, while providing truly universal social services.
Governance matters, but not the liberal good governance so narrowly construed to reassure investors about their profits. This only shows how that notion is so embedded in – and promotes – existing inequitable power relations, class interests, and material conditions.
Much more than that, the country needs democratic governance that confronts capital (foreign and domestic) and self-serving political elites, and is capable of the hard work of building an economy that uplifts the majority rather than just profiting a few.