THE POLITICAL ECONOMY OF

POPULISM AND GROWTH

2017 PPSA INTERNATIONAL CONFERENCE
Democratic Governance in the Vortex of Change

MAY 11-12, 2017

THE POLITICAL ECONOMY OF POPULISM
The Macroeconomics of Populism, Rudiger Dornbusch & Sebastian
Edwards (1991); Distributive Politics and Economic Growth, Alberto
Alesina & Dani Rodrik (1994)

An approach to economics that emphasizes growth and income

redistribution and deemphasizes the risks of inflation and deficit
finance
Emerges when citizens are deeply dissatisfied with the
economys performance and when a large section of the
population does not have access to the productive resources of
the economy (i.e., the Latin American experience)
Enabled by weak political institutions; populist policies ultimately
fail at the expense of groups that were supposed to be favored
THE POLITICAL ECONOMY OF POPULISM
A Political Theory of Populism, Daron Acemoglu, Georgy
Egorov, Konstantin Sonin (2012)

Populist policies signal that the politician is not unduly

influenced by the elite that they will choose future policies
in line with the interests of the voters
Populist bias of policy is greater when the value of
remaining in office is higher for the politician; when there is
greater polarization between the policy preferences of the
voters and the preferences of the elite
THE PHILIPPINE CONTEXT:
THE CHALLENGE TO INEQUALITY
The economy grew by an average of 6.5% in the last
6 years, among the fastest in the region, but growth
has not been inclusive
Poverty rate at 21.6% in 2015 and the Gini index of
inequality at 0.4439; other countries have been able
to reduce poverty rates faster
NCR, Central Luzon, and CALABARZON accounts for
two-thirds of the economy
Regions in Mindanao have some of the lowest
income, highest inequality, and highest poverty rates
DUTERTES RADICAL CHANGE
Positioned as a candidate for change, with a
can do and problem solving attitude
President who can articulate the frustration,
discontent, and desperation of regular people
Promised to fix a dysfunctional government,
unresponsive public services, and address
inequality
CREATED EXTREMELY HIGH EXPECTATIONS
RISKS OR OPPORTUNITIES
DUTERTE PRESIDENCY: POPULIST
LEADERSHIP, BUT PAROCHIAL THINKING

Arrogance of power could lead to

instability?
Supermajority: rubber stamp Congress or
mandate for change?
Could lead to responsive public services?