Stifling development

This week's Senate inquiry into the killing of Governor Roel Degamo and other violence in Negros Oriental has highlighted the stark political and socio-economic realities faced by many regions in the Philippines. Despite its abundant natural resources and potential, Negros Oriental has trailed behind in development compared to its neighbor, Cebu.

Local political elites often assert that the solution to underdevelopment in rural areas lies in decentralization and increased autonomy for local development planning and implementation. Cebu is often hailed as a prime example of the benefits of decentralization and autonomy, with politicians pointing to its independent spirit and ability to self-govern.

However, this also raises the question of why many Visayas provinces, despite some measure of decentralization and local autonomy, continue to struggle. Likewise, provinces and cities in Mindanao, even with the backing of past and present national officials from the region, still fall short in development compared to Cebu.

During the second day of the Senate inquiry this week, two small business owners from Dumaguete City shared their harrowing experience of surviving an assassination attempt in March 2021, allegedly orchestrated by powerful individuals seeking to seize their business.

The details revealed in the inquiry bring to mind a conversation I had 10 years ago with a client in Southern Leyte. I asked him why his town and its neighboring areas were poor and underdeveloped. His answer shed light on the main reasons behind a locality’s lack of development, which I had long suspected.

Andreas Lange's 2010 study, "Elites in Local Development in the Philippines," published in the journal "Development and Change," found that varying elite structures led to distinct development paths for Philippine provinces. The study showed that despite planning system weaknesses, Cebu's political elites effectively used decentralization reforms, more so than those in neighboring provinces. This success created “pockets of efficiency” in Cebu, resulting in more development-friendly investment policies.

That conversation I had with a client 10 years ago exemplifies the study's observations. The client shared how a large investor intended to establish a gas station in their locality, but local leaders blocked the plan due to potential competition with their own business. Similarly, a retail investor faced challenging circumstances when attempting to expand in their town, as the local political elite sought to protect their monopoly.

Travel across the country, and you'll notice a recurring pattern of development and underdevelopment in various regions. In areas with widespread poverty and dependence, local elites, made up of prominent families and power brokers, consistently dominate the political and economic landscape.

They maintain tight control over various sectors such as agriculture, commerce, and industry, ensuring that the lion's share of wealth remains in their hands. This monopolistic behavior stifles competition and discourages innovation, creating an unfavorable environment for small and medium enterprises, as well as outside investors.

Brilliant and talented individuals from these areas often find themselves forced to leave their hometowns in search of better opportunities elsewhere. Local elites' stranglehold, not just on the economy but also the rule of law (police, justice system), leaves little room for people to flourish and innovate. The result is brain drain, with professionals and entrepreneurs taking their skills and potential contributions elsewhere, further worsening the development gap.

The impact of this stifling environment are felt most acutely by the poor and vulnerable. With limited opportunities for upward mobility, people are often forced into a stagnant state of dependency on the “mumho” or meager resources provided by the local elites. This dependency, fueled by our culture of "utang na loob" (gratitude and loyalty), enables the elites to retain their grip on power. The situation turns uglier when the threat of violence is thrown into the mix.

In Cebu, we may consider ourselves relatively fortunate, as Lange observed in the study I mentioned. Aside from we have a large middle class base, political power here is more evenly distributed among several families. These families compete with one another because none of them possess the wealth required to monopolize political power.

But Cebu risks falling into a regressive economic structure if a single party evolves to dominate the local political scene, or if funds from shady sources, such as from highly popular gambling games, are used to finance politicians and their influence. This consolidation of political power, combined with the impact of suspicious financing, could erode the rule of law, impede fair competition, and stifle progress.