Costs of corruption

An IMF study had linked corruption to reduced growth, investment and more inefficient public spending.

- BOO CHANCO

Ah, that explains a lot!

According to the IMF, if our corruption were reduced to levels like Singapore's, the investment-to-GDP ratio would rise by approximately 6.6 percentage points, and annual per capita GDP growth would increase by about 1.65 percent.

In other words, we were overtaken by our neighbors because resources for growth were siphoned off our economy by corrupt officials and public works contractors, among others.

Our neighbors have corruption too but they deal with it more decisively. People actually go to jail for corruption in Vietnam, Indonesia, Thailand.

Then there is the Suharto model of corruption in Indonesia and the Marcos (the father) model in the Philippines. Suharto's corruption tended to keep the money within Indonesia, circulated through domestic power networks and institutions.

On the other hand, Marcos largely took his fruits of corruption offshore, hidden in Swiss and offshore accounts through sophisticated mechanisms.

A 1986 Washington Post report observed that unlike the Philippines, in Indonesia, corruption didn't involve ostentatious spending or massive wealth parked abroad.

The Post reports: "In the Philippines there was a systematic ripping off of the country," said an international banker. "You don't hear the same stories here."

Then again, it seems the Indonesian lawmakers caught the Philippine ostentatious corruption bug. But the Indonesians will not tolerate it. Hence the riots over the last few days in Jakarta.

The impact of corruption on economic growth in the Philippines has been measured. Models suggest that reducing corruption can meaningfully boost investment and economic growth. Moreover, estimates underscore the significant opportunity cost in lost public investment and higher borrowing.