Not only in the Philippines

Let us take Japan, the lead goose in the “flying geese” theory of the last century. In a blog that appeared on December 13, 2012, the two authors did not deny that the Japanese study and work hard. They, however, pointed out that the phenomenal growth of Japan in the last century was not due to culture. Japan had a thoroughly feudal culture for centuries under the Tokogawa clan. Before the restoration of the Meiji empire in the 1860s, Japan was a very poor feudal society lacking a modern state. Thanks to the leadership of the samurai class after the overthrow of the Tokogawa clan, a political revolution created new institutions that set it on the path to modern economic growth.

The same can be said about the current poster boy of modern economic growth, South Korea. I still remember some of my professors in development economics at Harvard in the 1960s describing South Korea as a hopeless society in which there was rampant corruption, lazy citizens and a chaotic political system before Park Chung Hee took over as an authoritarian leader. Acemoglu and Robinson went for the jogular when they wrote: “But have the prospects of South Korea always been bright as Fallows claims? Were the economic prospects of North Korea, which shares the same Korean culture of course, not just as bright until the economy became enmeshed in collective ownership and central planning which destroyed incentives and opportunities? As we discuss in Why Nations Fail, this example is telling. North and South Korea had the same culture when they were divided but very different institutional structures were created in the South. It is of course not culture that explains South Korea’s success but institutions.”

The authors quote Benigno Aquino Jr., the father of the present President, who described Philippine society in very dark tones: “Here is a land in which a few are spectacularly rich while the masses remain abjectly poor…Here is a land consecrated to democracy but run by an entrenched plutocracy. Here, too are a people whose ambitions run high, but whose fulfilment is low and mainly restricted to the self-perpetuating elite.” Only in the Philippines? Absolutely not. The authors rightly point out that the description of the problems of the Philippines (including the many anti-common good behaviors of private citizens) could perfectly apply to any “run-of-the-mill” Latin American, African, or South Asian country. In the final analysis, it is not culture but institutions that are created by enlightened and self-sacrificing leaders that enable countries like Singapore, South Korea, Taiwan, and Japan to break away from the vicious cycle of poverty that characterizes feudalistic and elitist societies. As historian Francis Fukuyama wrote, in commenting on Why Nations Fail, Acemoglu and Robinson have two related insights: that institutions matter for growth, and that institutions are what they are because the political actors in any given society have an interest in keeping them that way.

On May 20, 2015, at 1 to 6 p.m., a couple of hundreds of policy-makers, business leaders and opinion makers will be fortunate to listen to one of the authors, James Robinson, who will deliver the Keynote Address in an Investment Summit organized by the Financial Times and First Metro Investment Corporation at the Makati Shangri-La. Dr. Robinson will examine the progress the Philippines has made in terms of institutional reforms; how the Philippines political and economic situation compares with that of the ASEAN neighbors; and what the next Government must do to maintain this progress and achieve sustainable and inclusive growth. Those who are interested in participating in the Summit may log on to the website: live.ft.com/ ftphilippines. In addition to business executives, local government officials should attend the summit to learn from Dr. Robinson and the other speakers what are the institutions that they should create in their respective communities in order to attract both domestic and foreign investors. For comments, my email address is bernardo.villegas@uap. asia.