Strong Institutions For A Stronger Economy

man-76196_1280As a developing country like the Philippines has learned, the hard way is what may give light to a bright future. An improvement of all levels in society may result from the collective effort to raise the economy’s potential output, the continuous decision of promoting sustainable development and more importantly the strengthening of institutions that shape the movement and performance of the country. There must be a holistic approach to development.

Give Importance to Pillars of Democracy

Many countries still face a political crisis from time to time shown by serious conflicts involving all sectors and institutions. Besides power struggles between pro and anti government supporters there is a conflict on democratic thoughts, land ownership, nationalism and, to a certain extent, social justice.

There are many ways to solve issues but one of the main steps to take is to address political instability. This is because political instability deeply polarizes and divides society. In a country that is experiencing a crisis, democratic culture may not be well established as some continue to exercise their own rights but refuse to accept the rights of those who have opposing views or who simply act differently.  The gift of self to other is neglected. The truth is that, it will take time for the political environment to stabilize and bring back the needed balance between social responsibility and security. This further challenges a developing country to transform towards a progressive peaceful and united nation without the violence and unnecessary deaths or bloodbaths.

The government as an institution must make a conscious effort to regain the confidence and trust of people, through producing positive results, upholding the principle of transparency and accountability at all times. More importantly the core pillars of government, mainly executive, legislative and judiciary must internally reflect and rebuild so as to effectively practice the true values of democracy.

Protection from Negative shocks

As a developing country like the Philippines is part of the fast growing Asian region, its neighbouring countries have also transformed into attractive destinations for foreign direct investment. Medium- term flight of US or major trading partners may occur causing further pressures for currencies and central bank managers.

As the business landscape is changing, financial reforms must also be put into place so as to prevent any financial debt deepening, major investment loss and help in the reduction of distortions in economies. The goal is to ensure both regulatory and supervisory responses keep pace with rising intermediaries. Investments on human and physical capital should also be given priority and be further enhanced. The best way to approach this is to allow competitive pressure and incentives to operate. Which in turn are expected to bring about innovations and necessary risk-taking. These all play a crucial role to long-term productivity and growth.

By Christine Violago, Regional Director, WYA Asia Pacific.