11 - Conclusions

Summary

The puzzle of why the Philippines was a laggard in terms of economic development, relative to its neighbours in Southeast Asia provided the backdrop to this study. Its poor economic performance had been attributed to a weak state captured by a strong oligarchic class. In contrast, Malaysia's capable and strong state was considered a major factor in its more successful development. Although the post-colonial political and social systems in both countries were substantially different, patronage and rent-seeking stood out as clear similarities. Yet, they seemed to have had different effects. While the persistence of patronage and rent-seeking had apparently not prevented growth in Malaysia, they were an important explanation for the economic underdevelopment of the Philippines.

With this as background, this book's goal was to address debates on: the possibility and sustainability of policy reform in states with varying capacities; the impact of different coalitions or groups supporting reform; and the consequences of rent-seeking and rentoutcomes during market liberalisation and their role in promoting or hindering economic development. To this end, the study answered three major questions: First, how did the strength or weakness of the Malaysian and Philippine states and the presence of rent-seeking and patronage networks affect the possibility and sustainability of policy reform? Second, who made up the crucial constituencies for marketoriented reform and to what extent did they affect the outcomes of reform? Third, what were the outcomes of market liberalisation? Did market liberalisation invariably remove rents? If not, were the effects of policy change in the face of rent-seeking always deleterious? What sorts of rents were created, who captured them, and how?

To address these questions, this book focused on the reform of the telecommunications sector — one of the first to be liberalised in both countries — as a source of empirical material. In analysing the case studies, the study used a political economy approach to investigate how reform took place and what outcomes it had in each country. The aim of using a political economy approach to studying policy reform was not so much to analyse the intended economic effects of policies, which is of prime interest to economists. Rather, policy changes were viewed as outcomes of interactions among politicians, bureaucrats, and social actors operating within a given set of institutional constraints.