beyondbrics

Expensive elections are not always good for democracy. But they can boost the economy – as today’s Philippine growth figures show.

First-half GDP grew the most in 22 years, and economists say one key factor was spending on political campaigns and vote organisation.

Manila’s statistics agency said the economy rose by 7.9 per cent in the first semester from the same period last year, in spite of a severe drought that pulled farm output. It traced higher growth to “the peaceful national elections, improved investors confidence, the global economic recovery, increased capital expenditure of government and a low base.”

But Benjamin Diokno, a professor of public finance, estimated that, without May’s presidential election, first-half growth would have been no more than 4.5 per cent.

This election was the first with computerised voting. The government bought over 7bn pesos ($155m) worth of automated election computers, helping boost capital outlays by 25 per cent in the second quarter, Diokno said. He added that the government also raised spending on infrastructure and public services to aid incumbents.

Pera at Pulitika (Money and Politics), an NGO, says the last polls were the costliest ever. It points out that the two leading presidential candidates spent twice as much as their equivalents did in the 2004 campaign.

Up to 80 per cent of the candidates’ spending go on television advertisements since the Philippines removed a ban on political advertising in 2001. The country’s biggest television broadcaster, ABS-CBN, almost doubled its first-half advertising revenue, from 6.7bn pesos ($148m) last year to 11.5bn pesos ($255m) in 2010.

In the Philippines, the link between elections and growth is not new. Government numbers show that the last time first-half GDP rose by more than 7 per cent was in 2004, another presidential election year.

Philippine candidates and their donors are trying to win an election, and perhaps better the country. But as they seek to climb the greasy pole, they may also grease the economy.

Related:
Philippines: a U-turn from Aquino could take its toll, beyondbrics
Philippines’ president faces deficit dilemma, FT
The Philippines changes president, The Economist