The Quality of Growth
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When growth impinges on minority groups or cultural identities, you might call it rootless growth. For instance, more than two years since the Marawi siege, many Maranao evacuees still live in tent cities and cannot return to their homes. Rehabilitation was stalled largely because Chinese firms were vying to build a new Marawi, even without the consent of the Maranaos. Meanwhile, the lives and communities of the Dumagats are now under threat from the Chinese-funded Kaliwa Dam project in Quezon.
Finally, growth is unsustainable or futureless if pursued at the expense of the environment.
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Several reports repeatedly show their overfishing, their destruction of coral reefs, and their reclamation of new islands. Yet even with such environmental atrocities, Duterte refrains from invoking even mentioning our victory in the arbitral tribunal in In the wake of the recent boat ramming incident, Duterte also did not come to the defense of the Filipino fishermen, and even seems to be lawyering for the Chinese government.
Yet, at the same time, growth has been jobless, ruthless, voiceless, rootless, and futureless. In other words, economic growth under Duterte bears all the hallmarks of bad growth. Disturbingly, it did not figure in the recent midterm and local elections, which were dominated by Duterte's candidates. How much worse could things get? His views are independent of the views of his affiliations.
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Economic Quality: Slowing growth but fewer in poverty :: Legatum Prosperity Index
Economic Development is an improvement in factors such as health, education, literacy rates, and a decline in poverty levels. Initial low levels of inequality are associated with more negative elasticities of poverty reduction concerning growth. Higher initial inequality results in less effect on poverty with an increase in economic growth. Governments pursue poor policies redistribution policies trying to reduce inequality, which results in high inflation, high deficit, and lower growth.
Growth Occurs When. There is an increase in the number of people in the workforce or the quality of the workforce improves. For example, through training and education.
Health and the economy: A vital relationship
There is an increase in capital and machinery. This leads us to two broad hypotheses: The quality of jobs in the Vajpayee era was poor, but jobs at those wages were aplenty even with low growth. The quality of growth in the UPA era was poor, which is why even at rising wage levels, people were dropping out of the workforce. It is possible to have high growth with very few worthwhile jobs, but it is equally possible to have good quality jobs even with lower growth.
This means not just macroeconomic policies, but microeconomic ones matter. All economists would agree, for example, that we need factor reforms freeing land and labour markets and agricultural market reforms.
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Only if we free the markets for agri-produce will farmers benefit from increased productivity by, first, catering to a bigger national market and then to a global market. If this does not happen, every bountiful harvest will lead to a crash in prices and farm misery — precisely our story over the last few years. In the last decade or more, we had jobless growth because capital markets were liberalised before the labour and land markets, as a result of which employers liberally used capital and automation when humans could have been employed in larger numbers.
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We invested in capital intensive sectors like petroleum refining, when more job creating sectors like apparel, furniture and leather works should have been encouraged with easier labour laws. We focussed on subsidising agriculture because politicians loved to play sugar daddy to farmers, when the focus should have been on policies to create more non-agricultural jobs, especially in urban areas, to absorb the workers who want to leave low-income agriculture. We need the right kind of urbanisation policies — which means allowing land prices to be driven by real demand and supply, and not artificially constrained by arbitrary building laws and zoning rules.
But land reforms and rational building laws cannot happen without getting politicians out of the way. It is no secret that most politicians hold their ill-gotten wealth in real estate, and they resist a fall in prices since this would destroy their wealth. Similarly, foreign investment in job creating sectors will come only if our legal system works faster. Without the ability to buy property and enforce contracts, two big job-creating sectors — construction and real estate — will simply underperform.
The short point is this: If we want to improve the lot of our citizens and create worthwhile jobs, we need to focus on the micro reforms involving specific sectors.
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Higher growth will happen when the composition and spread of growth improves, and not merely the topline. The quantum of growth is less important than its quality.