Public Administration and the Economic Systems

Introduction

The problem about corruption had been a problem by most countries around the world for the
longest time. Corruption as scholars defined it “as the abuse of public office for private gain,”
whether pecuniary or in terms of status. The gain may accrue in an individual or in a group of
people or to those closely associated with such an individual or group. Corrupt activity includes
bribery, nepotism, theft, and other misappropriation of public resources. However, others view
corruption that although some views it as something shameful and unethical to moralists, its
effects need not be detrimental to the economy. Lastly, some scholars have argued that
corruption can also be economically beneficial, because it tends to favor most of the efficient
firms in which the income being generated from these firms contribute to the economic
efficiency of a country.

The focus of this paper will revolve about the corruption in the Philippines, the action of the
government in addressing the issue, the effect of corruption with regards to the economic
status or efficiency in the country. Lastly, a short literature review about the correlation or
hypothesis of: Higher transparency, lower corruption.

Corruption and the Philippines

Philippines had been on the top of the list of the most corrupt countries not only in Southeast
Asia but also in the world. In some historical notes about graft and corruption in the
Philippines, argues that the present Philippine bureaucracy could be traced during the colonial
experience of the country. When the Spaniards came in the Philippines, the native Filipinos’
were governed by then the chieftains.1 Although there was no official public office during that
time as to what these colonizers have introduced to the natives, basic bureaucratic practices
like paying of taxes or what they called then ‘tributes’ already existed. And this is where
corruption occurs, this continued up until the present time. Moreover, the regime of then
former President Ferdinand Marcos, corruption during his time was described as “kleptocracy”
and “plunder” became part of the Filipino’s political vocabulary and discourse. Even though
after the post-Marcos period, laws and agencies to combat corruption have increased through
passage od some laws like the Republic Act No. 7080 in 1991,2corruption still remained as one
of the prime problems complained of by the people. Most of the precedent Presidents of the
Philippines wanted a clean and accountable government, however, their desire for this kind of
government contradicts to the actions they did. Former Presidents Gloria Macapagal-Arroyo
and Joseph Ejercito Estrada are good examples of presidents that were charged of corruption
cases and has advocated anti-corruption platforms during their regime but their actions speak
otherwise. Former President Estrada resigned after he was charged with plunder, perjury,
bribery and graft and corruption. The former President Macapagal-Arroyo was charged with
plunder after her term ended as president. In addition, during her time as president, her regime
was subject to various accusations and scandals like the “hello Garci” scandal in which it was
about the electoral issue on the 2004 elections. These are leaders that are supposed to be clean
and accountable to their field of work and to people that they serve. In the present time, the
Duterte administration, corruption is still rampant despite its efforts to eliminate corruption.

11
Jose N. Endriga, Historical Notes on Graft and Corruption in the Philippines. Philippine Journal of Public
Administration, Vol. XXIII, Nos. 8 & 4 (July-October 1979.
http://lynchlibrary.pssc.org.ph:8081/bitstream/handle/0/4710/06_Historical%20Notes%20on%20Graft%20and%2
0Corruption%20in%20the%20Phils..pdf?sequence=1&isAllowed=y

2
An act Defining and Penalizing the Crime of Plunder
Addressing the Issue of Corruption

The government has established agencies and made laws that could combat against corruption
and other related high crimes. After the Marcos regime, the Presidential Commission on Good
Government was created with the mandates of recovery of the ill-gotten wealth of the
Marcoses. The investigation of other cases of graft and corruption in which may be the
president asked the commission to investigate. Lastly, the Institution of corruption prevention
measures - The executive order specifies this as "The adoption of safeguards to ensure that the
above practices shall not be repeated in any manner under the new government, and the
institution of adequate measures to prevent the occurrence of corruption.” After the Marcos
ouster, the 1987 Constitution was created under President Corazon Aquino. The Constitution is
clear with the officials to be penalized and can be removed in their office through impeachment
if they violated these major offenses. Based on Article XI, Section 2 of the Constitution, the
impeachable officials are: The President of the Philippines, the Vice President, Chief Justice and
the Justices of the Supreme Court, Members of the Constitutional Commissions, and the
Ombudsman. The impeachable offenses are: culpable violation of the Constitution, treason,
bribery, graft and corruption, other high crimes and betrayal of public trust. In which, most of
these officials has been charged of the above-mentioned offenses. Most impeachment cases
that were filed to these officials, for example, formers President Joseph Estrada and Gloria
Arroyo failed due to various reasons. Only the late impeached Chief Justice Renato Corona have
undergone and completed the impeachment proceedings wherein it led him to be impeached
from his post as Chief Justice of the Supreme Court due guilty of betraying the public trust and
committing culpable violation of the constitution. He was the first, of high office to be removed
through impeachment.

Even though the Constitution had limit the impeachable officials, there are still laws that govern
all public official and employees in the government to keep them grounded are the RA No.
67133 , in which it is about the Code of Conduct of Ethical Standards for Public Officials and
employees. That, at all times Public officials and employees be accountable to the people and
shall discharge their duties with utmost responsibility, integrity, competence, and loyalty, act
with patriotism and justice, lead modest lives, and uphold public interest over personal interest.
Wherein, the Civil Service Commission is the one responsible over the civil service. It is tasked
to oversee the integrity of government actions and processes. Other agencies that are tasked
to eradicate corruption is the Office of the Ombudsman, wherein its mandates is;

“THE OMBUDSMAN AND HIS DEPUTIES, as protectors of the people shall act promptly on
complaints filed in any form or manner against officers or employees of the Government, or of
any subdivision, agency or instrumentality thereof, including government-owned or controlled
corporations, and enforce their administrative, civil and criminal liability in every case where the
evidence warrants in order to promote efficient service by the Government to the
people (Section 13, R.A. No. 6770; see also Section 12 Article XI of the 1987 Constitution).
The Ombudsman shall give priority to complaints filed against high-ranking government officials
and/or those occupying supervisory positions, complaints involving grave offenses as well as
complaints involving large sums of money and/or properties (Sec. 15, R.A. No. 6770).”

Under the 1987 Philippine Constitution, the Office of the Ombudsman is an independent body
of the government wherein it monitors all the three branches of the government for political
corruption. The office is tasked primarily “to investigate on its own or upon complaint by any
person, in any form or manner, any act or omission of any public officer or employee, including
those in government-owned or controlled corporations, which appears to be illegal, unjust, and
improper or inefficient.” After the investigation, the Ombudsman may already files charges at
the Sandiganbayan, a special court in the Philippines that has jurisdiction over criminal and civil
cases involving graft and corrupt practices and other offenses committed by public officers and
employees, including those in government-owned or government-controlled corporations.

3
An Act Establishing a Code of Conduct and Ethical Standards for Public Officials and Employees, to uphold the
time-honored Principle of Public Office being a Public Trust, Granting Incentives and Rewards for Exemplary of
Service, Enumerating Prohibited Acts and Transactions and Providing Penalties for Violation thereof and for other
Purposes
Lastly, actions that had been done and could be taken or done in order to eradicate corruption
in the government is through filing of cases of corruption through the right office and court that
hears these offenses and by hoping that these entities would stay impartial as their mandates
tells them to do so.

Effects of Corruption in the Economic Efficiency

Corruption has different efficiency effects across countries (Khan, 1996). The distribution of
power within the patron‐client networks in which corruption is taking place is an important
variable explaining the differences in the efficiency effects of corruption. In which, the country
is being cited a country where corruption is a factor that impedes foreign and domestic
investment and which may weaken the country’s competitive position. Such investments are
vital to the economic growth and social well- being of the country and its people. Certainly,
corruption exhausts all the resources available for development, distorts access to services for
poor communities, and undermines public confidence in the government’s will and capacity to
serve the poor. Corruption also can be economically beneficial because it tends to favor the
most efficient firms.

In the case of South Korea and the Philippines. What are the reasons why Philippines were left
out by Korea in terms of economic efficiency? When both Korean and the Philippines have the
same political meddling into economic affairs, if influence peddling led to economic decisions
made for political reasons, and if in both countries personal relationships mattered more than
individual competence. It is because economic and political power was balanced, corruption
never spiraled out of control. The opposite thing happened in the Philippines, imbalance
between economic and political power led to abuses and corruption that were large enough to
choke off growth. Lastly, Korea made advantage of the circumstance for their economic growth.
The situation between the business-elites and the political elites reduced transaction costs and
made investment and long-term agreements more efficient. And they did not let these one
overrules the other. In which, is what happened in the Philippines during the Marcos regime.
That led the Philippines into a slow-growth. Corruption may affect the economic efficiency of a
country; can be a positive effect or negative. It will only differ on how will you manipulate or
take advantage of the situation to have the best results.

Correlation: Higher Transparency, Lower Corruption

Transparency is widely accepted crucial to reduce government corruption. It is also often

claimed that improving the transparency of the decision process is a cure to corruption.
According to the Organization for Economic Cooperation and Development (OECD, 2002),
budget transparency is defined as the full disclosure of all relevant fiscal information in a timely
and systematic manner. Transparency policies were created in a hope that this will lower the
corruption incidence in some countries. Some researchers have supported the argument that,
““transparency initiatives are helping to reduce corruption in non-Western jurisdictions
because they represent an important mechanism through which citizens can access information
that has not been edited or shaped by powerful political actors (Ferry and Eckersley, 2014).
Although, some scholars believe that transparency policies has its limitations and is not the
solution to low rate of corruption. That transparency is not a good deterrence of corruption,
and it needs to be accompanied by other types of policies (Koldstad and Wiig, 2009). However,
higher levels of transparency do not necessarily lead to less corruption, especially if publication
of budget numbers are not accompanied by public empowerment and access to free media and
fair elections (Lindstedt and Naurin , 2010).

In an article written by Catharina Lindstedt and Daniel Naurin (2006), they argued that
transparency may indeed be an important remedy against corruption. Its main contribution,
however, is to show and explain why this link is not as straightforward as is usually assumed. It
is subject to two important conditions; First, in order for transparency to alleviate corruption
and other forms of agency shirking the information made available by transparency reforms
must stand a reasonable chance of actually reaching and be taken in by the public what we will
call publicity. Secondly, if the release and spread of information to the public is to affect the
behavior of potentially corrupt government officials the public must have some sanctioning
mechanism in its hands there must be a real possibility of accountability. Transparency in itself
just making information available will do little to prevent corruption.

The reason why only few scholars have studies the effects of transparency on corruption is
because it has to do with measurements difficulties. Although there are several cross-country
indices that can be used in measuring democracy and corruption there have been only few
useful indicators of transparency that can be used. A major step forward in this respect has
been the recent construction by the World Bank of two cross-country transparency indexes.
World bank distinguishes between an Economic and Institutional Transparency index4 and a
Political Transparency index5. Both are aggregate indexes composed of several sub-indicators
collected from different sources. Lastly, it is argued that, it is the interacting effect of having
free and fair elections and a free press (or civil liberties more broadly) which gives the
necessary kick. Corruption researchers must acknowledge that democracy is not just a question
of elections. Only when we have in place a lively public sphere of educated people, where the
risk for media scrutiny and bad publicity is always present, free and fair elections will start to
reduce corruption.

4
The Economic and Institutional Transparency index has 13 sub-components, 11 including indicators of access to
information laws, the publication of economic data, e-government, transparency in the budget process,
transparency of policy and of the public sector.
5
Political Transparency is composed mainly by indicators of press freedom and regulations concerning disclosure of
political funding, but it also contains one indicator of political competition and one of freedom of speech.