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NEWS UPDATES 27 July 2010

Philippines counts corruption cost

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State-run Philippine Institute of Development Studies (PIDS) said the country loses about half a percentage of its economic output a year because of corruption. In a study titled, “Corruption and Development, Revisited,” Jenny Balboa and Shinji Takenaka said the cost of corruption in the Philippines is estimated at 0.5 percentage points of gross domestic product (GDP) per year, and at 5 percent of total investment.

GDP is the amount of final goods and services produced in the country.

The authors said their projection is “conservative” since it does not factor in other unobservable factors, and the reverse causality from rapid growth to corruption.

“Graft and corruption is considered to be one of the biggest threats to development,” the study said, as reported by the Manila Times.

The authors said various efforts to combat this social ill have been explored, but the problem persists.

The study said private sector growth, particularly of small and medium enterprises, is also affected by corruption, taking the form of rigid regulations that increases tax burden and transaction costs for new entrants.

“The level of corruption in the Philippines, for instance, failed to show significant improvement despite decades-long struggle to curb corruption through various laws and policies. Deeply entrenched personalistic politics is an obstacle to reform efforts,” the study said.

It noted that the success of anti-corruption efforts largely rest on political will and commitment of stakeholders to uphold reforms.

Earlier, Transparency International reported that the Philippines ranked 141st out of 179 countries in its Corruption Perceptions Index for 2008.

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