The latest growth figures in the Philippines are truly sobering, if not disheartening. They underscore how rampant corruption and bad governance can kill the growth momentum — a point also made by my mentor Solita “Winnie” Monsod in her latest YouTube vlog.

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But corruption doesn’t instantly kill growth. I suspect that the “respectable” growth we’ve had in past years was fueled by corrupted public works and programs. As well, corruption is by no means unique in the Philippines: it’s present even in some of the richest countries in the world and some of the fast-growing emerging economies. 

How, then, should we look at the corruption-growth nexus?

Political economist Yuen Yuen Ang offers a powerful reframing: corruption comes in different forms, and these forms affect economies in very different ways. Treating corruption as one blob obscures what really matters for development.

She distinguishes four types of corruption. Two involve outright theft: “petty theft” by frontline bureaucrats and “grand theft” by elites who siphon off public funds. These are always destructive, in that they drain resources, undermine trust, and scare away investment.

The other two types involve exchanges. “Speed money” refers to small bribes paid to move papers faster or avoid harassment — the kind of corruption ordinary Filipinos know too well. More dangerous is “access money,” referring to businesses that reward powerful officials for exclusive privileges like special contracts, regulatory favors, or protection from competition. This doesn’t always look illegal, and it often hides behind lobbying, revolving doors, or “strategic partnerships.”

Here’s the rub: access money can coexist with rapid economic growth.

The reason is that firms that buy access tend to invest aggressively, build quickly, and expand fast. Politicians granting these privileges also benefit, as visible projects help their careers: GDP rises and the resulting projects project the image of a dynamic economy.

The danger is that, with access money, resources don’t necessarily flow to the most productive sectors, but instead to the most politically connected ones. It tends to stifle competition and widen the gap between insiders and outsiders. Worse, financial risks pile up when government ends up guaranteeing the loans made to firms who gain access.

This pattern isn’t unique. In fact, it characterized much of the economy during the Martial Law years under Ferdinand Marcos Sr. Crony capitalism didn’t stop growth at first, but it resulted in too much inequality, risk, and instability.

Corruption in the 21st century

Using Ang’s framework, where does the Philippines fit in the 21^st century? Sadly, we suffer from all four types of corruption.

Obviously, the Philippines faces petty theft and grand theft: procurement scandals, ghost projects, and public funds that end up being funneled to the accounts of corrupt bureaucrats, contractors, and lawmakers.

We still struggle with speed money. Firms are required to secure hundreds of permits, and these permits are delayed unless you “follow up.” Inspections also mysteriously clear after side payments. This is the problem that the new finance secretary, Frederick Go, had to grapple with as soon as he assumed office. Businesses have long grumbled about Letters of Authority and Mission Orders by the Bureau of Internal Revenue, which in too many instances allegedly turn into acts of extortion.

[Ask the Tax Whiz] What you need to know about BIR’s new Single-Instance Audit Framework

I would argue that what increasingly defines our political economy is access money. This comes in many forms. Major infrastructure contracts are cornered by a few conglomerates (think, for instance, of all the infrastructure projects of San Miguel Corporation). Regulatory decisions favor entrenched players (heck, some members of prominent business clans have been appointed by President Ferdinand Marcos Jr. to key posts).

The campaign finance system also quietly converts economic power into political influence (evidenced, for instance, by the proliferation of public works contractors in the party-list races). Former officials also rotate into corporate boardrooms. These aren’t always illegal, but they tilt the playing field. (READ: [Local Power] ‘House of Contractors’: We have the list of lawmakers, help us confirm the projects)

This helps explain a frustrating paradox in Philippine growth. We can post decent GDP numbers but still fail to generate enough good jobs. Growth happens, but much of its benefits are funneled to a frustratingly small portion of the population. (Notwithstanding studies showing that the poor have benefited more from growth in recent years.)

Unlike speed money, access money is harder to fight. You can digitize permits to reduce bribes and strengthen audit systems to curb theft. But dismantling access money requires confronting elite power, especially lawmakers in the halls of Congress. It also demands a host of hairy reforms, such as campaign finance reform, banning entrenched political dynasties, ridding the party-list system of “congtractors,” promoting transparency in procurement, stricter conflict-of-interest rules, and real competition policy.

All of these are politically costly. That’s precisely why pushing for genuine reform in the Philippines is a Sisyphean task.

The lesson from Ang’s work is that not all corruption hurts growth immediately, and may even promote it. What’s troubling is that certain kinds of corruption allow a version of growth that looks development-inducing while hollowing out institutions underneath.

Rather than the usual clarion call for fighting corruption, therefore, we need to root out the kind that systematically converts political power into private privilege — all while being masked by shiny growth figures. – Rappler.com

Dr. JC Punongbayan is an assistant professor at the UP School of Economics and the author of False Nostalgia: The Marcos “Golden Age” Myths and How to Debunk Them. In 2024, he received The Outstanding Young Men (TOYM) Award for economics. Follow him on Instagram (@jcpunongbayan).

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