LESSON 4

FACTORS/PROCESSES PUSHING FOR GOVERNANCE

The International Monetary Fund (IMF) identified several factors/processes pushing for governance,
good governance, in particular. These are:

1. the quest for growth and development

2. the environmental movement
3. globalization
4. consolidation

1. The Quest for Growth & Development

This is the key factor pushing for governance. Since the Industrial Revolution, the market had the principle
role in growth, with the state needed only to nurture the climate that would allow it to grow. However, the quarter
century after World War II swung the pendulum to the state. In the West, John Maynard Keynes gave theoretical
justification for the state to manipulate price signals and fight unemployment and business downswings. Meanwhile,
the socialist states installed and consolidated central planning systems.

In the Third World, the state also reigned supreme as the principal planner, energizer, promoter and director
of the accelerated development effort” (Lewis, 1964:26). In the attempt to assume a central role in planning for the
whole economy and society but also to create its own enterprises. However, at its best, the state had to saddle these
economic institutions with social functions, making it difficult to compete on equal terms in the economy.

At the extreme, elite control of the enterprises or of the state itself made them subject to rent seeking and
corruption, leading to losses that were shouldered not by those responsible for them, but all taxpayers in a country.
In many states where the taxation system was regressive, the losses were borne primarily by the poor.

Thus, a quarter century of the interventionist’s state saw a widespread dissatisfaction about it from all
fronts. In the First World, the trigger was the burgeoning welfare bill, in the Second World, the failure of state
planning symbolized by the collapse of the Soviet Union, and in the Third World, the inability of states, even when
achieving some economic prosperity, to check growth of inequality and poverty in their territories. Governmental
rent seeking, inefficiency and corruption led the demands for privatization, which pushed the state away from its
central role. However, the private sector by itself could not consider the distributional questions that led to the
rethinking of development as economic growth in the first place.

The inability of economic gains to produce acceptable levels or redistribution, poverty reduction and
political freedoms woke up civil society. But they could criticize government and set up alternative delivery systems
but could not provide nationwide coverage. Similarly, they decried the private sweatshops but could not set up the
industries to take their place. Clearly, no one sector could manage society by itself but each had a role to play in
making it move forward.

2. The Environmental Movement

The concept of development has changed from the exclusive focus on economic growth of the 1950s to the
inclusion of distributional goals like the reduction of poverty and inequality during the UN Development Decades,
to the current battle cry for “sustainable human development”. Although SHD as a term is espoused primarily by the
United Nations, its incorporation of concerns for people and nature not only for the present but also for later
generations is now widely accepted by state, market and civil society worldwide. People-centeredness as an aspect
of development recognized that growth alone may affect human lives adversely. Therefore the concern for people
must be central and not just be a by-product or a trickling down of economic achievement. The incorporation of
nature into the equation owes much to the environmental movement which brought home the point that everyone is
indeed only one planet, and the depletion of resources in one area is felt in a real way in all areas. There is no
dichotomy between people and nature, however, because the preservation of the environment is itself a pledge to
care for generations of people yet unborn who must also be allowed to enjoy and care for the bio-diversity, beauty
and wealth of the planet as a proper habitat for all creation.

The environmental movement has provided to governance an urgency to deal with issues in a holistic
manner, to include not only the sector at hand and the obvious stakeholders, but also other affected by them in other
areas and in future times8. It has forced a redefinition of the public interest with nature itself as a recognized
stakeholder. It has pressured private firms to consider ecological effects of their products-even goods as useful and
popular as cars have come under close scrutiny for their lead emissions, for their greedy use of non-replaceable
fuels, for the noise and traffic they cause that debase the quality of these aspects, and firms both for profit and non-
profit to race for alternative, ecologically acceptable solutions. The state has also been pressed to consider new
regulatory laws and deregulation of the economy. If nothing else, the ecological movement has underscored the
point that no one sector can manage the demands of society- and the environment- all by itself.

3. Globalization

The transformation from command to market-oriented economies, the emergence of democratic political
regimes in the former Soviet Union, the rapid development and global proliferation of new technologies, the
pervasive spread of telecommunications systems, the growing importance of knowledge-based industries and skills
and the continuing integration of the world economy through trade and investment - all these have created the
foundation for a new age of sustainable human development. But all carry risks as well. Is it to be a breakthrough or
a breakdown?

Changes in the world's economic, political and social systems have indeed brought unprecedented
improvements in human living conditions in both developed and developing countries. Consider the profound
breakthroughs in communications, transport, agriculture, medicine, genetic engineering, computerization,
environmentally friendly energy systems, political structures, peace settlements. The list goes on.

But these changes also bring new uncertainties and challenges as the world steps into the 21st century.
Signs of breakdown are everywhere: disintegration of families; destruction of indigenous societies; degradation and
annihilation of plant and animal life; pollution of rivers, oceans and the atmosphere; crime, alienation and substance
abuse; higher unemployment; and a widening gap in incomes and capabilities. Not a pretty picture.

The trend towards globalization deserves special attention. It is manifest in the growth of regional blocs
that cooperate in such areas as trade and legal frameworks, in the power of intergovernmental bodies such as the
World Trade Organization and in the spread of transnational corporations. Globalization has profound implications
for governance the final impact of which we cannot yet determine. First is the increasing marginalization of certain
population groups. Those who do not have access to the technological/information revolution are in danger of
becoming part of a structural underclass. Second is the erosion of state sovereignty as transnational bodies
increasingly mediate national concerns and press for universal laws. Third is the increased globalization of social
and economic problems, such as crime, narcotics, infectious diseases and the migration of labour. Finally,
international capital and trade are decreasingly accountable to sovereign states.

Governance can no longer be considered a closed system. The state's task is to find a balance between
taking advantage of globalization and providing a secure and stable social and economic domestic environment,
particularly for the most vulnerable. Globalization is also placing governments under greater scrutiny, leading to
improved state conduct and more responsible economic policies.

Because each domain of governance - state, private sector, civil society - has strengths and weaknesses, the
pursuit of good governance requires greater interaction among the three to define the right balance among them for
sustainable people-centered development. Given that change is continuous, the ability for the three domains to
continuously interact and adjust must be built-in, thus allowing for long-term stability. UNDP's Initiatives for
Change recognizes that the relationships among government, civil society and the private sector:
 ..are key determinants in whether a nation is able to create and sustain equitable opportunities for all of its
people. If a government does not function efficiently and effectively, scarce resources will be wasted. If it
does not have legitimacy in the eyes of the people, it will not be able to achieve its goals or theirs. If it is
unable to build national consensus around these objectives, no external assistance can help bring them
about. If it is unable to foster a strong social fabric, the society risks disintegration and chaos. Equally
important, if people are not empowered to take responsibility for their own development within an enabling
framework provided by government, development will not be sustainable.

Developing countries must ensure that everyone can participate in economic and social development and
take advantage of globalization. They must build a political system that encourages government, political, business
and civic leaders to articulate and pursue objectives that are centered around people and a system that promotes
public consensus on these objectives.

The term "globalization" has acquired considerable emotive force. Some view it as a process that is
beneficial—a key to future world economic development—and also inevitable and irreversible. Others regard it with
hostility, even fear, believing that it increases inequality within and between nations, threatens employment and
living standards and thwarts social progress. This brief offers an overview of some aspects of globalization and aims
to identify ways in which countries can tap the gains of this process, while remaining realistic about its potential and
its risks.

Globalization offers extensive opportunities for truly worldwide development but it is not progressing
evenly. Some countries are becoming integrated into the global economy more quickly than others. Countries that
have been able to integrate are seeing faster growth and reduced poverty. Outward-oriented policies brought
dynamism and greater prosperity to much of East Asia, transforming it from one of the poorest areas of the world 40
years ago. And as living standards rose, it became possible to make progress on democracy and economic issues
such as the environment and work standards.

Undersecretary Luis C. Liwanag of DBM highlighted that one of the greatest challenges that is confronted
in any development efforts today is globalization9. Globalization has been criticized for having a lopsided inclination
towards rich and developed countries. It has also been said that globalization impinges on nation-states sovereignty
and territory since the dominant players weaken the power and influence of individual nation-states, particularly the
Third World Countries and those that are not linked to the regional trading blocs. With globalization, we are
bounded by foreign economic policies and by agreements between member nations.

Economic "globalization" is a historical process, the result of human innovation and technological progress.
It refers to the increasing integration of economies around the world, particularly through trade and financial flows.
The term sometimes also refers to the movement of people (labor) and knowledge (technology) across international
borders. There are also broader cultural, political and environmental dimensions of globalization that are not covered
here.

At its most basic, there is nothing mysterious about globalization. The term has come into common usage
since the 1980s, reflecting technological advances that have made it easier and quicker to complete international
transactions—both trade and financial flows. It refers to an extension beyond national borders of the same market
forces that have operated for centuries at all levels of human economic activity—village markets, urban industries,
or financial centers.

Markets promote efficiency through competition and the division of labor—the specialization that allows
people and economies to focus on what they do best. Global markets offer greater opportunity for people to tap into
more and larger markets around the world. It means that they can have access to more capital flows, technology,
cheaper imports, and larger export markets. But markets do not necessarily ensure that the benefits of increased
efficiency are shared by all. Countries must be prepared to embrace the policies needed, and in the case of the
poorest countries may need the support of the international community as they do so.
 As globalization has progressed, living conditions (particularly when measured by broader indicators of
well being) have improved significantly in virtually all countries. However, the strongest gains have been made by
the advanced countries and only some of the developing countries.

That the income gap between high-income and low-income countries has grown wider is a matter for
concern. And the number of the world’s citizens in abject poverty is deeply disturbing. But it is wrong to jump to the
conclusion that globalization has caused the divergence, or that nothing can be done to improve the situation. To the
contrary: low-income countries have not been able to integrate with the global economy as quickly as others, partly
because of their chosen policies and partly because of factors outside their control.

No country, least of all the poorest, can afford to remain isolated from the world economy. Every country
should seek to reduce poverty. The international community should endeavor—by strengthening the international
financial system, through trade, and through aid—to help the poorest countries integrate into the world economy,
grow more rapidly, and reduce poverty. That is the way to ensure all people in all countries have access to the
benefits of globalization.
4. Consolidating Peace

Another force pressing for governance is the need to consolidate peace in war-torn nations. This issue is
rarely recognized as among the processes pushing for governance. However, this unique perspective was brought to
the force dramatically by Hage Geingob, Prime Minister of Namibia, in his remarks to the World Cog. Countries
that have undergone a civil war, secession movements or the creation of a new state out of the break-up of national
territories have a specially strong imperative to get everyone involved in the process of building a nation or affecting
a national reconciliation. In these situations, the coming together of the state, market and civil society to manage
societal affairs is not more rhetoric but a national urgency. It requires bringing together former adversaries beyond
the discussion table to the fields of service in the cities and farms including those which were battlegrounds. This is
not only a lesson learned in Namibia.

In a recent study in Mali, Uganda, Thailand, Guatemala and the Philippines, as countries emerging from
internal conflict, all found governance particularly, decentralizing governance-was necessary to make concrete the
commitments of all protagonists for peace. It entailed capacity building not only for state agencies in dealing with
former rebels, but also leadership and political skills training for those former combatants so that they may take up
social responsibilities side by side with their military and civilian counterparts.

It required the private sector to regard them with new eyes, as potential producers and consumers and
therefore part of the market also (UNDP, 2000:25-34) They were acknowledged as members of civil society even as
other organizations of
that sector also recognized their role in affecting changes in governance for all and not only for former adversaries.
As Prime Minister Geingob stated, the tasks of nation building must be seen by all as their responsibility and the
resulting peace and development their common ownership.

KEY ISSUES and CHALLENGES IN GOVERNANCE

The Philippine Experience

1. Policy Issues, Concerns, and Challenges

Most people agree that the constitutional and legal frameworks in the Philippines provide the foundations
for good governance. The policy environment allows people’s participation and public scrutiny and criticism of
government operations and outputs. Further, the country has adequate laws, rules, and regulations to establish order
and move forward. While underdevelopment can easily be attributed to a lack of institutional capacity and
professional competencies to implement policies and enforce laws, certain lessons learned and issues related to
public policy making deserve mention.
 The Philippine public policy-making process bears the following features: (i) policy decisions and
programs are arrived at through institutional mechanisms provided for in the Constitution of the Republic of the
Philippines and other laws; (ii) policy-making process is then characterized as precedent bound, based on laws and
forged by such structures as a bicameral legislative body and the executive branch of the Government; (iii)
legislative branch is composed of the Senate and the House of Representatives, while the president heads the
executive branch of the Government and is the prime initiator and implementer of policies and programs; and (iv)
the decisions of the legislative and executive branches are subject to judicial review by the Supreme Court and
inferior courts on questions of constitutionality and statutory construction.

Different sets of forces each influence the different stages of public policy making, namely, decisions on (i)
including items in the agenda, (ii) developing any particular agenda item, (iii) passing legislation, and (iv)
implementing new laws. Different constituencies exert their influences at different stages of policy development and
execution. Many policies have nonetheless missed out in giving importance to meaningful public consultations,
constructive debate and criticism, and needed consensus building and development of a sense of ownership of
different stakeholders. Without these elements, and with extensive graft and corruption in the country (which
undermines and subverts the rule of law), many policies fail to command respect and compliance.

It should also be made clear that policy initiatives for governance reforms could be undertaken by the
Government even without legislation. In these cases, one might consider whether legislation is useful or not. The
value of legislation is that it binds public institutions to certain decreed directions. If one wants to assure the future
sustenance of any initiative currently carried out by the Government, legislation may be considered. However, the
Government tends to be too legalistic and rule bound in addressing most of its problems.

Legislation is complicated, not under the complete control of any person or group, and may have
unpredictable results. Embarking on a campaign to get something legislated cannot be a decision taken lightly or
casually. In addition, successful legislation generally occurs when the problems deemed important meet the
solutions deemed highly probable by political personalities or groups in positions of power. Problems, policies, and
politicians have to intersect for proper action to occur.

Legislation as an instrument for achieving desirable societal goals and institutionalizing reforms is
advisable when the underlying assumptions of policies have any or all of the following characteristics:

a. policies can only be optimally effective when adopted by the whole Government and supported by
stakeholders;
b. policies can yield best results only when implemented over the life of several administrations;
c. policies can be accomplished only with adequate and judicious use of resources;
d. policies can be accomplished by the Government’s applying cost-effective measures and using
available technology and resources;
e. policies, when deliberated and agreed, would create a framework for many people and groups to
assume broader responsibilities on an institutional basis.

A policy needs to be very clear and specific about the:

(i) nature and magnitude of the problem being addressed;

(ii) basic mechanism for responding to the problem;
(iii) standards and provisions for making the mechanism work;
(iv) system of responsibilities and accountabilities for coordination, implementation, control, and review of results;
and
(iv) organizational and budgetary implications.

These elements are often deficient in many public policies. It is common to have layers of rules and
regulations to clarify policy provisions, not to mention sets of procedures to inform and guide implementers and
stakeholders.
 Some policy initiatives may not be ready to be pursued because the data and analysis necessary to make a
decision may be unavailable. In these cases, research is probably more appropriate than formulating a new policy or
draft legislation. Some policies are haphazardly and hastily developed and scarcely take into account deliberate and
careful planning and effective use of objective and accurate information. Public policy making in the Philippines
boldly underscores the need to improve its capacities in undertaking knowledge-based policy analysis and
development.

Access to timely and correct information about public policies also precludes overall efficiency,
effectiveness, and productivity. Those who are affected may sometimes be unaware of or improperly informed about
their rights, duties, and responsibilities provided for in relevant policies.

2. Problems in the Bureaucracy

Bureaucracy is a distinctive arrangement used by human beings to organize their activities. The invention
of Western bureaucracy several centuries ago helped solve the problem for leaders of governing human systems that
grew larger and more complicated with each passing year. The great virtue and probably defining characteristic of
bureaucracy, according to the one of the founders of sociology, German Max Weber (1864-1920), is as “an
institutional method for applying general rules to specific cases, thereby making the actions of government fair and
predictable” However, in the governance process, there are two problems in a bureaucratic type of government:
inefficiency and arbitrariness.

For nearly half a century, the Philippines was caught in an endless cycle of reform exercises that hardly
produced tangible and lasting results. Structural issues— such as (i) duplicated functions and overlapped
jurisdictions, (ii) outdated and slow government procedures, (iii) various loopholes in administrative procedures, and
(iv) limited capacity for policy analysis and strategic long-range planning that caused delays and higher costs in
handling business—made maintaining objectivity, accountability, and transparency in decision making and
government operations difficult and gave rise to a host of other problems, including poor implementation and
coordination. (ADB, 2005).

As reflected in the Country Governance Assessment, (2004) Administrative reform efforts in the
Philippines did not fully succeed because of the following:

(1) lack of acceptance of and commitment to the need for reform by political authorities and different
affected entities;
(2) lack of stakeholder appreciation and agreement concerning administrative reform being a long,
strategic, and continuous process;
(3) lack of understanding that reform objectives are specific, measurable, realistic, and time bound;
(4) lack of good reform implementation strategies and adequate resources to carry them out;
(5) lack of an established central agency tasked with formulating, coordinating, and monitoring reforms and
providing corrective measures;
(6) lack of reform procedures and regulations that are fairly and consistently applied;
(7) lack of meaningful stakeholder participation in the entire reform process;
(8) lack of strong and sustained support of political leaders;
(9) lack of an established and enforced system of accountabilities; and
(10) lack of safety nets for groups and individuals who may be disenfranchised by interventions.

In the Common country Assessment of the Philippines (2004), an inefficient bureaucracy is one of the
major problems and an area for development cooperation. The Common Country Assessment (CCA) is an in-depth
analysis of the development problems in the Philippines, undertaken through a participatory process of consultations
among United Nations agencies, its development partners both in the government and civil society, and with other
donor agencies in the country. It builds upon the programme of reform launched by the UN Secretary-General in
1997, preparing the UN for the challenges of the 21st century and emphasizing its mandate in developing standards
and goals arising from UN conventions and global conferences.
 In particular, the CCA was driven by the principles and goals of the Millennium Declaration, especially the
Millennium Development Goals (MDGs). It also builds on the development objectives of the Government of the
Philippines, articulated in its Medium-Term Development Plan as well as commitments made in the context of
international conventions, conferences and protocols. Past Philippine administrations have carried out reorganization
and reengineering schemes for the bureaucracy, in an effort to improve efficiency and reduce corruption. Studies
about Philippine civil service system point to several deficiencies include:

(1) Weak mechanisms for planning, agenda setting and policy-making;

(2) Failure to implement and maintain an appropriate performance management and measurement system;
(3) Overlapping and duplicating government functions and activities;
(4) Overemphasis on rules and procedures rather than direct resource management towards the realization
of intended outcomes and impacts;
(5) A highly politicized bureaucracy
(6) Lack of required managerial and technical expertise

2. 1. Corruption

Corruption damages the development process in many ways. It undermines social confidence in the
willingness and capacity of public institutions to fulfill their obligations to the people and it reinforces existing
power relationships that are themselves typically part of the development problem. Losses due to corruption deepen
poverty as they deprive the disadvantaged sectors of much needed programmes and environmental stewardship.
Incidences of bribery and graft are often front page news,
leading the public to perceive them as the norm rather than the exception in government transactions, further
reducing the incentive or willingness to increase taxpayer compliance.

The Government has recently introduced affirmative actions toward addressing this problem such as the
passage of the Procurement Act, the implementation of lifestyle check among government officials, and the
reactivation of the Inter-Agency Anti-Corruption Committee (IAGCC) to synchronize the various anti-corruption
initiatives of the national government. Despite these efforts, large scale and petty corruption is pervasive throughout
various levels of the Philippine government. The draft report of the “Consultations on the UN Conference on
Financing for Development cited that out of a total national budget of Php 781 billion in 2001, PhP100 billion, or
13% was at risk of being lost to corruption; 70% involved in public works contracts while 30% involved the
purchase of supplies and equipment. The Office of the Ombudsman estimated that a total of USD48 billion was lost
to graft and corruption over the past 20 years, and that only 60% of the national budget was actually spent on
government programmes and projects.

Numerous laws addressing graft and corruption exist in the Philippines, and these date back to 1955. At
present, the main references are the Revised Penal Code of 1960, referred to as the Anti-Graft and Corrupt Practices
Act, and Article XI of the 1987 Constitution of the Republic of the Philippines. Box 1 presents a summary list of
related laws, presidential decrees and proclamations, and other regulations on corruption prevention.

Corruption is becoming global. Hence, anti corruption efforts also require a global action. It is in this
premise that the United Nation Convention Against Anti-Corruption (UNCAC) is being pushed for ratification by
UN member states. Dimitri Vlassis (2006) in his discussions on UNCAC highlighted four elements of anti-
corruption which include:

I. Prevention

Corruption can be prosecuted after the fact, but first and foremost, it requires prevention. An entire
chapter of the Convention is dedicated to prevention, with measures directed at both the public and private
sectors. These include model preventive policies, such as the establishment of anticorruption bodies and
enhanced transparency in the financing of election campaigns and political parties. States must endeavor to
 ensure that their public services are subject to safeguards that promote efficiency, transparency and
recruitment based on merit.

Once recruited, public servants should be subject to codes of conduct, requirements for financial
and other disclosures, and appropriate disciplinary measures. Transparency and accountability in matters of
public finance must also be promoted, and specific requirements are established for the prevention of
corruption, in the particularly critical areas of the public sector, such as the judiciary and public
procurement. Those who use public services must expect a high standard of conduct from their public
servants. Preventing public corruption also requires an effort from all members of society at large. For
these reasons, the Convention calls on countries to promote actively the involvement of non-governmental
and community-based organizations, as well as other elements of civil society, and to raise public
awareness of corruption and what can be done about it. Article 5 of the Convention enjoins each State Party
to establish and promote effective practices aimed at the prevention of corruption.

II. Criminalization

The Convention requires countries to establish criminal and other offences to cover a wide range
of acts of corruption, if these are not already crimes under domestic law. In some cases, States are legally
obliged to establish offences; in other cases, in order to take into account differences in domestic law, they
are required to consider doing so.

The Convention goes beyond previous instruments of this kind, criminalizing not only basic forms
of corruption such as bribery and the embezzlement of public funds, but also trading in influence and the
concealment and laundering of the proceeds of corruption. Offences committed in support of corruption,
including money-laundering and obstructing justice, are also dealt with. Convention offences also deal with
the problematic areas of private-sector corruption.

III. International cooperation

Countries agreed to cooperate with one another in every aspect of the fight against corruption,
including prevention, investigation, and the prosecution of offenders. Countries are bound by the
Convention to render specific forms of mutual legal assistance in gathering and transferring evidence for
use in court, to extradite offenders. Countries are also required to undertake measures which will support
the tracing, freezing, seizure and confiscation of the proceeds of corruption.

IV. Asset recovery

In a major breakthrough, countries agreed on asset-recovery, which is stated explicitly as a

fundamental principle of the Convention. This is a particularly important issue for many developing
countries where high-level corruption has plundered the national wealth, and where resources are badly
needed for reconstruction and the rehabilitation of societies under new governments. Reaching agreement
on this chapter has involved intensive negotiations, as the needs of countries seeking the illicit assets had to
be reconciled with the legal and procedural safeguards of the countries whose assistance is sought.

3. Issue on Public Fiscal Management

 Another issue on good governance is on public fiscal management. Prior to government reform programs,
there were weaknesses and constraints in fiscal management, especially in the budgeting process. Some of these
constraints are still lingering.

Recognizing the impact that the fiscal condition has on macroeconomic stability, the government should
continue to give priority to raising revenues and improving the efficiency of the bureaucracy so that more and better-
quality public service can be delivered.

Following the onset of the Asian financial crisis, the Philippines government’s deficit deteriorated quickly,
mainly due to slippages in revenue collection. The major causes of the decline include the following:

1. Tax evasion and weakness in the tax structure.

2. The private corporate and banking sectors which are major contributors to the national coffers were
weighed down by nonperforming assets.

4. Deficiencies in the Political and Electoral System

Public confidence in election outcomes is low because of widely alleged irregularities in the Philippine
electoral processes. The modernization of the electoral
system in the country today is an attempt to enhance public confidence in election outcomes and address traditional
election anomalies such as cheating, intimidation and bribery. The government has initiated concrete efforts to
institutionalize electoral reforms through the passage of laws on Election Modernization (see appendix for the full
text of the Election Modernization Act or RA 8436), Party-List System and the Absentee Voting for Overseas
Filipinos.

A democratic and effective political and electoral system is important to ensure that a development agenda,
primarily addressing the needs of poor and disadvantaged, is promoted and sustained beyond administrations. Civil
society organizations are currently working with their government counterparts of pending reform bills in Congress
that also seek to address issues on political dynasties, the continued practice of party turn-coatism and the
diminution of the electoral process into mere contests of personalities.