Economic development with or without  human rights?

September marks one of the most pivotal moments in recent Filipino history because of the martial-law proclamation by former President Ferdinand E. Marcos in 1972. Much of the memories of martial law has centered on issues regarding human rights. In response to this, the 1987 Constitution created the Commission on Human Rights (CHR) to ensure that the State will no longer repeat the civil- and political-rights abuses it allowed and implemented during the Marcos presidency.

Forty-five years later, under the current administration, we observed a rising wave of “extrajudicial killings”, which remain unresolved. A number of such were attributed to State forces, thereby putting the CHR in the limelight. This has pushed the CHR in a collision with the police and the administration as they sought information for their investigative powers.  Such role was seen as political moves by the CHR, making the Lower House give the agency budget allocation of merely P1,000 for 2018. Why is ensuring human rights important? What is its role in economic development?

Amartya Sen, winner of the 1998 Nobel Prize in Economics for his work on welfare economics, is one of the most renowned scholars on the impact of rights on the economy. In his 1999 book, Development as Freedom, he considers real economic development as that which allows individuals to have a set of interconnected “freedoms and choices”. While he argues that civil freedoms and political liberties have intrinsic value because they are ethically and morally important, he suggests that freedoms and liberties may actually fuel growth and development. Human rights become a necessary condition for development, and not merely an outcome. For example, the freedom of elections and free speech help encourage economic well-being. When there is a lack of respect for human rights, anxiety and instability in the economy practically emerge. Ignoring human rights may lead to lower growth, decreased investment and reduced productivity.

During the 1993 Vienna Conference on Human Rights, representatives from China, Hong Kong, Indonesia, Malaysia and Singapore declared their belief that disregarding civil and political rights is “advantageous” for rapid economic progress. Noted political leaders from developing countries, particularly those with authoritarian attitudes, believe there is a legitimate trade-off between a state’s promotion of human rights and its economic development. Characterized as the “Lee hypothesis” in the Asian context (attributed to Singapore’s former Prime Minister Lee Kuan Yew, who rationalized restricting people’s freedoms to facilitate economic success and stability), this has been utilized to reinforce the absence of protection of fundamental civil and political rights in developing countries.

In 2005 London School of Economics researchers Andy McKay and Polly Vizard reviewed existing literature and found that there is much less of a trade-off; rather, economic growth and rights might have significant “mutual complementarities”: policies that help promote human rights can positively influence growth, and in a manner that reliably agrees with standard economic theory and evidence on growth determinants/factors.

For instance, the right to freedom of movement enriches efficient resource allocation, as people are empowered to make appropriate consumption, employment and investment decisions, thus, productively contributing to economic development. The right to freedom of information and speech would lessen asymmetric, imperfect and incomplete information and accordingly diminish the negative effects on growth, investment and other economic activities. Additionally, freedom of information is crucial in the requirement for public efficiency and accountability among government officials, whereas a lack of information transparency is often followed by corruption, which would have adverse outcomes on the economy. The freedom of assembly and association would enable individuals to gather, protest and openly criticize government policy statements and actions, so that probable preferences for misconduct and dishonesty are regularly checked.

In 1996 Robert Barro validated the importance of higher life expectancy, higher schooling levels, better support for the rule of law and female empowerment as key drivers of economic growth. Stephan Haggard, in his 1999 paper, underscored the significant and favorable impact of democracy in handling the downturn resulting from the 1997 East Asian crisis. In 2002 Dani Rodrik discussed the vital role of effective institutions (e.g., rule of law, security of property rights, efficient conflict resolution arrangements and provision of “safety nets” during economic recessions) in enhancing and sustaining economic development. In 2004 Silvio Borner and his associates suggested the critical significance not only of free elections but also of “rooted democratic checks and balances on the abuse of power” in energizing economic performance.

Upholding civil and political freedoms could simultaneously be the “right and smart” course of action, given there is an apparently positive relationship between human rights and economic development. Since economics is about weighing between benefits and costs, the choice of not being mindful and being uncertain in supporting these freedoms could have actual costs and losses to everyone else in society.

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Abigail P. Dumalus is a former faculty member of the Economics Department of Ateneo de Manila University. Dumalus is studying at the University of Aberdeen in Scotland.

 

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