KEYNOTE MESSAGE

UPLB CEM Centennial CelebrationAwarding Ceremony & Grand Alumni Homecoming

Theme: Isang Daang Husay at Dunong para sa Kaunlaran ng BayanCharles Fuller Baker Hall, UPLB

19 July 2019

BOR Regent Francis Laurel

University and BOR Secretary Roberto Lara, representing UP President Danilo Concepcion

Former UP President Alfredo E. Pascual

UPLB Chancellor Fernando C. Sanchez, Jr.

Dean Isabelita M. Pabuayon

Economics Department Chair Agham C. Cuevas

Present and past officials of the university and the College of Economics and Management

Awardees

Colleagues, former classmates, friends

Ladies and gentlemen:

Good afternoon!

First of all, my heartfelt congratulations to the UPLB CEM on its centennial anniversary! Isang Daan ng Husay at Dunong para sa Kaunlaran ng Bayan!

I marvel at the prescience of our forebears who established the Department of Rural Economics in June 1919, the precursor of the current CEM, which now offers various areas of pursuit.

I wonder what motivated the university administrators and professors at that time to initiate the agriculture economics curriculum – the first of its kind in Asia.

One thing I know, I am proud to be part of the College’s first 100 years. I am grateful to be one of its sons. Seeing my former mentors and classmates today makes me nostalgic. Vignettes of memories of my days here as a graduate student some 40 years back are flooding my mind.

I arrived at UPLB as a probinsyanong Ilocano in my early 20s, desiring only to study and get an MS degree. Two years later, I left this beautiful campus with a much more expanded view of the world, and certainly with more questions about the state of our country than when I first arrived. Questions that set the direction of my professional career.

For opening my world and pushing its horizons, I wish to thank my mentors and classmates. Some have become life-long friends, like Tirso Paris, Tina David, Levi Cabanilla, Nars Deomampo, and Lee Garcia. Others have passed on like Dr. Gelia Castillo. Other influencers during my time here include Dr. Bob Herdt and Dr. Kaliappa Kalirajan of IRRI, and Dr. Leo Gonzales of IFPRI.

The UPLB CEM has produced a long list of accomplished alumni. Yet you chose me to speak before you on this auspicious occasion. Thank you so much for this great honor.

My talk today has three parts. First, we will have a quick look back at the past decades. Then, we will examine our major development challenges. And finally, we look at the way forward.

A hundred years ago, with the First World War just ending, governments were focused on normalizing societal life. With most countries dependent on the agriculture sector, the Philippines among them, the basic challenge was agricultural production to put food on the table and fuel national economic development, harnessing science for improved farming

productivity. At that time, our top agricultural exports, largely to the U.S., were sugar, copra, abaca, and tobacco.

As a young republic, following the Second World War, the Philippines was a rising star in Asia. The country had good initial conditions for development. A book published by Oxford University Press in 2003 titled The Philippine Economy describes the Philippines in the 1950s and 1960s as follows:

“Its educational standards were among the highest in the developing world. …It had privileged access to the market of the world’s largest economy (the U.S.) … until 1974. The country’s civil institutions were comparatively well developed. It possessed a reasonably democratic political system, albeit of the “winner-takes-all” variety. Its judiciary and legal system were quite well developed and somewhat independent. Its press was open and vigorous. …While not especially resource-rich, it possessed ample agricultural land to sustain decades of rapid agricultural growth.”

The 1960s saw major international development and research institutions setting up headquarters in the Philippines – indication of their confidence in the country. We were a priority choice for hosting international organizations and were an important cog in international research. These institutions include the Asian Development Bank, the World Health Organization in the Western Pacific Region, the International Rice Research Institute, as well as the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA). The latter two were set up right here on the UPLB campus.

Similarly, multi-national corporations came to set up operations in the country, bringing with them foreign direct investments and employment opportunities. With a U.S.-style agricultural education system in place, people from all over came to study at UPLB, to learn from us.

And yet by the end of the 1980s, observers began to call us a basket case, or the sick man of Asia, in the face of a rising Asian economy. We were not experiencing the rapid high-growth trajectories enjoyed by our neighbors.

Fact is our economy began to grow slower and slower, and at some point stagnated or even contracted. We “missed out on the Asian boom from the late 1970s until the mid-1990s. The country became an increasingly marginal player in the region’s trade and investment flows.” So that by the end of the 20th century, almost all our neighbors have overtaken us: Thailand, Indonesia, Malaysia, Singapore, Korea, Taiwan, China.

Soon, in a couple of years, if we don’t shape us fast, even Vietnam will overtake us.

We were not only a basket case, the Philippines is also a conundrum, a puzzle. With all that was going for us, what happened? How come we are now playing catch-up with our neighbors?

We have asked this question countless times. Sometimes we joke that we trained so well the Thais, Malaysians, Indonesians, Indians, and many others who came here for their MS and PhD, that’s why their countries are now way more developed than the Philippines.

This leads me to the second part of my talk, where I would like to discuss what to my thinking have been our two major development afflictions through the decades.

Just a word of warning. I’ve been “preaching” this message for at least two decades now whenever there is opportunity. I hope to have some converts this afternoon.

Culture, religion, colonialism, even geographical location -- these have been the easy, convenient scapegoats for our state of development. Such explanations, however, can only go so far.

Science and modern economic history have enriched our understanding of the dynamics of development, including the causes of poverty and prosperity of nations and communities. Through the years, helped by this understanding, I have come to realize two insidious causes of our slow development.

One is the failure of Philippine agriculture to take off. The other is the country’s failure to address the acute inequality in the distribution of opportunities. And these two intertwine.

For the most part throughout the past decades, poverty is an agriculture phenomenon, and thus a rural one, for it is in the rural areas where we find the large majority of the country’s poor. The failure to develop agriculture is therefore also a failure in addressing poverty. Even much of urban poverty is, in part, a spillover effect of intense deprivation in the rural areas, where access to education, health, infrastructure, technology, and finance is acutely limited.

A key insight we have gained in the postwar history of agricultural development in Asia and, in particular, the country’s agricultural and rural development efforts through the years, is that the piecemeal approach is incompatible with sustainable agricultural and rural development.

Our major interventions in the past – for example, the Green Revolution, Masagana 99, agricultural mechanization, irrigation, even biotechnology – have been approached in a manner that is detached from the rest of the economy. That is, we have made public investment in agriculture in isolation of the conditions of markets and institutions in the broader national economy.

This insight underscores the crucial need for coordination of development investments. A major lesson from successful countries is that we must be mindful of the interdependence of agricultural development with the economy. Yes, we fix the problems in agriculture to generate surplus, but at the same time, we also have to address the problems that prevent the non-agriculture sectors from absorbing the surplus, particularly excess labor from agriculture.

These two sides of the economy are dynamic. Addressing one side of the economy and failing to fix the other side would bring about only short-lived solutions to poverty. On the other hand, when opportunities in both sides are opened up, poverty can be sustainably addressed on several fronts.

An example that comes to mind is the Green Revolution. Its benefits were short-lived simply because appropriate economic policies and infrastructure required to grow manufacturing and exports – sectors that could handle agriculture’s excess production and labor or provide value-added -- were missing.

Given the above, my questions for us are:

Have our universities helped perpetuate this piecemeal approach to development?

Has the educational system encouraged silo formation, too remote from the realities of interdependent, interlinked development processes on the ground?

How grounded are our graduates to what ails Philippine society?

Particular to my profession: How do we ensure that our young economics graduates are both skillful in solving optimization problems and well-prepared in grasping the complexity of inequity and destitution in the country?

Few of you know me personally. So let me share a personal tidbit so that you may understand why the study of poverty and agriculture is close to my heart.

I spent my early childhood at the fields close to the foot of the grand Sierra Madre in Northern Luzon. Our family was poor. My father was a farm tenant, later a janitor in a private school in Laoag. The summers of my high school years were spent going with other seasonal migrant workers in our town from one farm to the next in Cagayan, harvesting and carrying on my back sacks of rice.

This first-hand experience of agriculture’s backbreaking work started me thinking why things were the way they were and that there must be a way to make life less difficult for farmers. Those questions led me to take up B.S. in Agriculture, after which I had more questions on why farmers continued to be poor. My Agricultural Economics education in UPLB started me off along the path to find answers to my questions. And so here we are.

I’ve been researching poverty and inequality in the Philippines in the past three decades or so. The country had comparatively low absolute poverty levels in the 1960s vis-à-vis other Asian countries. Yet at the start of the 21st century, our incidence of absolute poverty was among the highest in the region.

Part of the story behind this poor performance in poverty reduction was the comparatively slow growth of the economy. But even during periods, albeit short ones, when the economy managed to grow, the response of poverty reduction to this growth was evidently weak in comparison with the way comparable growth stimulated poverty reduction in our neighbors.

The first two decades of the current millennium, especially the 2010s, are telling a new story, however. For almost a decade now, the Philippines has been beating expectations, partly resulting from previously enacted institutional and structural reforms. Consequently, the country has emerged as one of the fastest-growing economies in Asia. Yes, for a change, we are scaling new heights, not crawling on the same ground.

And yet, despite our comparatively fantastic economic growth of late, the growth has not been as broadly inclusive as we would like it to be or expected. The poor, in particular, have remained largely left out from the much-improved economic growth.

The reason—and this is the other insidious cause of our slow development—is our society’s failure to address acute inequality. Inequality, especially as regards access to opportunities, has kept many of our fellow Filipinos chained to poverty.

It is a persistent, pervasive problem, which has created a huge disparity among our people in terms of physical assets, health, education, and livelihood. It has limited the prospect of a vast majority of the population to take advantage of the benefits provided by game changers, such as the Green Revolution and today’s modern technologies, the so-called disruptive technologies brought about by the internet and information technologies, and by globalization.

A high level of inequality is inimical to sustained economic growth and poverty reduction. It slows down human development and stirs social discontent, which leads to social instability. It is at the core of the country’s long-protracted insurgency problem.

Economic inequality enables the existence of cartels, monopolies, and abuses of dominant firms, which in turn encourage the concentration of economic interests, which further accentuate inequality.

Worse, the concentration of economic power normally leads to the concentration of political power on the same elite. We have all been witness to what happens when economic and political power mix. We see rent-seeking behavior as politicians make policy decisions to protect their economic interests.

The challenge of addressing inequality, of making economic growth more inclusive, is more pressing now than ever. Globalization and technological changes, particularly digitization and the internet revolution, have disrupted the way we live and interact, the way we make a living and do business, and many other aspects of our lives. They bring with them myriad of opportunities and possibilities.

Unfortunately, they have also sharply increased inequality in many societies. The educated, healthy, skilled, and mobile members of our society are able to take advantage of these new opportunities and possibilities.

On the other hand, the uneducated, unskilled and semi-skilled, non-mobile workers are put in an even more disadvantaged position. We are beginning to see some backlash across the globe, such as the rise of populism and trade protectionism.

Studies show that developing countries with good institutions and governance structures, which enable markets to function well, have benefited from globalization and technological changes, even very disruptive ones. As a result, in these countries, a vast number of people—hundreds of millions in China—have escaped poverty.

A key lever here is education and training. We need to produce a new breed of labor force. Workers whose knowledge and skills give them the ability to navigate today’s information- and technology-driven work environment, who are alert to opportunities and adaptable to the fast-changing demands of the work environment.

Equally important is the need to think of creative, effective solutions to open up access to such education to the marginalized sector of our society in order to increase their chances of getting out of the poverty trap.

This has huge implication for our academic institutions.

It is not my intention to oversimplify our situation. We know that poverty and inequality are a multifaceted challenge. The two failures we discussed earlier have come about as a result of a confluence of factors that play out in the Philippine economic, social, political arena over the years, as well as natural destructive phenomena that visit our country with increasing frequency. The one that often monkey wrenches our development effort is politics. But I am no expert when it comes to politics, so I leave the matter to our political scientists.

Because of my work in development economics, I have had various opportunities to serve the government, enabling me to contribute to national policymaking and development governance. As we know, policies provide a stable ground for decisions and actions.

I would like to share with you two significant pieces of development policy that give me more than a glimmer of hope that our country could do a socioeconomic turnaround, hopefully within our life time.

These are: Ambisyon Natin 2040 and the Philippine Competition Act. These two lay a strong foundation for achieving enduring and inclusive development.

Ambisyon Natin 2040 was crafted under the auspices of the National Economic and Development Authority or NEDA and launched in 2015. It defines our long-term goals as a nation, reflecting the standard of living that we aspire to have as a nation by 2040. It is anchored on the unifying desire for the country to have a sustainable and inclusive growth. It is meant to transcend political administrations and to provide the basis for the crafting of medium-term plans. The visioning exercise was widely participatory, methodologically robust, and evidence-based.

Fortunately, while Ambisyon Natin 2040 was crafted during the Aquino administration, the Duterte administration saw its merits and embraced it as the anchor of this administration’s socioeconomic development agenda. We hope the next administration will do the same.

On the other hand, the Philippine Competition Act or PCA is a new game changer in our county’s governance and economy. It is a potentially effective instrument in our bid for a more enduring and more inclusive economic growth.

Enacted in August 2015, the PCA aims to create a policy environment that promotes a fair and competitive market—a level playing field. It does this by regulating business practices that unreasonably restrain competition.

For instance, the Philippine Competition Commission—which is mandated as the primary agency to implement the PCA – has denied Universal Robina Corporation’s move to acquire Central Azucarera Don Pedro in Batangas because it found that this merger-to-monopoly transaction may adversely affect sugarcane planters in the Southern Tagalog region.

Another priority work of PCC is the dismantling of cartels. Cartels control prices and, more often than not, politicians. Their presence hurt consumers, especially the poor.

The PCC is set on disrupting unfair market practices, including collusive acts, which disproportionately affect the poor. Our end goal is to advance consumer welfare, enable a fairer distribution of opportunities and income, and promote sustainable economic development.

Let me conclude by reiterating some thoughts on the way forward.

One, despite rapid urbanization and the rise of the service economy, agriculture remains a key pillar of socioeconomic development. But for agricultural development to take off and play a bigger role in our war on poverty, we need to mainstream it in the development process, not to treat it in isolation of the rest of the economy.

The goal should be to maximize the opportunities for society, not just for the sector. That requires a shift in perspective, embracing that agricultural development today requires interdependence across the value chain

from the farm to the table,

from the villages to the cities,

from the domestic to the global economy,

from agricultural policy to industrial policy,

and from local governance to national governance.

That also means that students of agricultural development should not be only good in handling optimization models, but nimble as well in devising solutions to problems and constraints that are preventing us from seizing opportunities for growth, whether within or outside of agriculture, in the midst of rapidly rising Asia.

Two, we must address the persistently high inequality of access to opportunities that has been plaguing our country. A key lever here is to develop a well-skilled, information-savvy labor force. It is said that education is the best leveler.

Let me qualify that: Education that imbues skills on students so that when they graduate, they are flexible and agile, able to learn new things, adapt to changes, and seize opportunities posed by changing technologies or conditions.

The challenge here is the need for proactive collaboration among the academe, government, and the private sector. We have got to get out of our respective silos, have the mindset and will to synergize in order to come up with creative, effective solutions to our complex social and economic problems, particularly in addressing skill mismatches between what we in the academe produce and what the fast-changing industries and economies need.

One thing going for us is that we are now much richer in experience and lessons—from our own experiences and from other countries’. Given the country’s good economic performance in this decade and the optimistic prospect for the near and medium term, as well as the policy reforms that have been put in place, the Philippines has another window of opportunity to achieve its development goals.

May we not squander this opportunity! This time, let us pour new wine into new wine bottles.

Thank you, and once again, my best wishes to the College!

Mabuhay ang UPLB CEM! Mabuhay tayong lahat!

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