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CHAPTER II LITERATURE REVIEW
This chapter discusses concepts, ideas and theories highlighting the relationship of the variables in the study. It starts by presenting theories and arguments relating to capacity building and economic growth. Then a brief background of both Taiwan and the Philippines is discussed as well as the present initiatives of the Philippines.
CAPACITY BUILDING
In discussing capacity building, it is crucial to explain first what is meant by capacity.
Capacity is defined as “the ability of individuals, institutions and societies to perform functions, solve problems, and set and achieve objectives in a sustainable manner.” (UNDP, 2016). Hall (2008), further stresses that capacity is no longer seen in general terms but is specific to a “policy goal, a program or a task. It comprises of multiple dimensions that can be measured independently to better portray the actual capacity of an organization”. Therefore, capacity building refers to the creation and shaping of individuals’, institutions’ and societies’ set of skills needed to reach their specific objectives.
Capacity Building vs. Capacity Development
In recent years, the terms capacity building and capacity development have been used interchangeably. Although there remains to be a contention on the use of the term as “building”
and “development” connotes different meanings. “Building” is said to refer to creating new institutions and capacities from scratch. It is implied that no institution or capacity exists, thus the need to build. On the other hand, “development” implies that resources are already in place and merely needs to improve on these existing capacities. However, this distinction is not made consistently in the literature. Table 2.1 below illustrates the development of the concept starting from what was known as institutional building in the beginning to what it is referred to today.
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Table 2.1 The Development of the Concept of Capacity Building
Concept Emergence
1960s and 1980s Concentration on education, health
1980s and 1990s Strengthening of institutions in the
1990s to present General concept for linking the
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Based on this progression of the concept, both capacity building and capacity development are still being used today. However, the academe and the field is slowly changing and leaning more towards capacity development. In reality, resources are already in place and institutions are more concerned on improving existing resources and capacities rather than creating it from scratch, thus the term can be interchangeable. In terms of what can be considered or classified as capacity, this can also vary based on the individual, organization and society. As Bowman and Kearney (1988) argues, capacity should be defined based on what the individual, organization or society possesses. It can be human resource factors, leadership and vision, management, strategic planning and operational support (Frederickson and London, 2000) or even the ability to attract resources (Honadle, 1981). Almost anything that the object of query possesses then can be considered capacity.
For the purpose of this study, the term capacity building will be used, assuming that some form of resources and institutions are already in place and what is needed is to propagate it. For the succeeding discussions, arguments pertaining to capacity building and capacity development will be used under one umbrella concept.
Discussions and Studies
Several scholars and development institutions provide different definition for capacity building: The United Nations Development Program (UNDP, 2016) defines capacity building as
“a long-term continual process of development wherein individuals, organizations and societies obtain, strengthen and maintain the capabilities to set and achieve their own development objectives over time.” This involves both private and public stakeholders; including but not limited to ministries, local authorities, non-governmental organizations, professionals, community members, academics and more.
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“..the development and strengthening of human and institutional resources. It is acknowledged that the process needs to go beyond the public sector, as it is also influenced by entities in the private sector including commercial enterprises and nongovernmental organizations.” (WHO, 2016)
“The creation of an enabling environment with appropriate policy and legal frameworks, institutional development, including community participation, human resources development, and strengthening of managerial systems” (Alaerts et al., 1991).
All these definitions of capacity building highlights the need to develop appropriate institutions, policies and frameworks including human resources development, strengthening of managerial systems and community participation and ownership to support long-term development.
The concept of capacity building conveys the idea of potential (Ife, 2010); which assumes that if one country has the “capacity” then it has the potential to achieve something. It is also assumed that it is not operating to its full potential, thus building its capacity can actually help it achieve more. With this, it can be assumed that all countries have potentials. What is important is to build up these potentials by applying appropriate capacity building exercises. It should not merely replace existing capacities with new knowledge and systems from developed countries. It should strengthen and equip existing capacities with needed resources, systems and skills in order to sustain its own development.
Both UNDP and JICA (2016) have identified three levels in capacity building: individual, institutional/organizational and societal. These levels are interdependent and a certain level of
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integration is needed to achieve the goals for capacity building. Figure 2.2 below illustrates these three levels in capacity building:
1. Individual level – On an individual level, capacity building requires the development of conditions suitable for an individual to build and enhance their knowledge and skills. Part of this requires for the establishment of conditions that will allow individuals to engage in the process of learning and adapting to change.
2. Institutional level – On an institutional level, capacity building should strengthen institutions by modernizing and supporting the formulation of sound policies, organizational structures and effective methods of management and revenue control, not just merely creating new institutions. This would mean that existing institutions need to be evaluated in order to determine which of these areas need to be focused or strengthened.
3. Societal level – On a societal level, capacity building is rooted in the support for the
establishment of an interactive electorate that actively receives feedback from its constituents based on their needs. This is done in order to develop leaders and institutions that are proactive, reactive and accountable. The enabling environment provides the overall scope for capacity building.
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Figure 2.1 Levels of Capacity Building
The three levels emphasize the need for change management and adaptability, formulation of sound policies and transparency and openness to feedback of institutions. There is a need to ensure that all elements in each level is enhanced to guarantee that each level complements each other in order to achieve the overall objective. The improvement of each level helps to further improve the other levels. In other words, enhancing the individuals’ knowledge, skills and abilities which enable them to efficiently and effectively perform their duties can spillover on how the organization or institution works as a whole. This improvement is achieved if conditions wherein individuals and institutions perform is conducive to exercise these enhanced capacities.
In relation to these levels, UNDP (2016) likewise enumerates four core issues that can affect the abovementioned levels. First is institutional arrangements which are the systems,
Societal
Institutional
Individual
Targets of Capacity Building
Conditions or environment conducive to exercising the capacities of institutions and individuals.
Strengthening organizational culture, systems and leadership on each institution.
Enhancing knowledge, skills and abilities of the individual in order to perform efficiently and
effectively according to the goals set.
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policies and norms that allow for effective operation of an institution or a group. This can include by-laws, contract, codes of conduct and generally accepted practices and values within an organization. The second core issue is that of leadership. This pertains to the ability to influence, motivate and inspire people to achieve goals. It also includes pro-activeness and change management. It is not limited to a position of power or authority but can encompass informal leadership that enables mobilizing people toward a certain goal. Another core issue is knowledge which relates to what individuals know and the skills they are capable of. Enhancing knowledge is traditionally done through education which can be done through training, classroom settings, on-the-job-training as well as other modes of acquiring information. Finally, there is the issue of accountability. In capacity building, accountability is critical in monitoring, learning, self-regulating and adjusting based on the feedback of those people the institutions and individuals are accountable for. It allows for constant monitoring and adjustment which can help in the effective achievement of goals.
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Figure 2.2 Capacity Building – Core Issues
CAPACITY BUILDING AND ECONOMIC GROWTH
In associating capacity building to economic growth, we look into the theory of New Institutional Economics (NIE) due to its focus on the institutional environment and its rules as well as on governance and the interactions of individuals (Williamson, 2000). Talking about government-driven capacity building initiatives, the New Public Management (NPM) is also a good starting point coupled with the NIE theory.
NPM incorporates economic ideas to ensure more efficient and effective delivery of service.
Lynn (1998) summarizes the elements of new public management:
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1. A stronger emphasis on performance-motivated administration and inclusion in the administrative canon of performance-oriented institutional arrangements, structural forms and managerial doctrines;
2. An international dialogue on and a stronger comparative dimension to the study of state design and administrative reform;
3. An integrated use of economic, sociological, social-psychological and other advanced conceptual models and heuristics in the study of public institutions and management.
NPM’s emphasis on performance-based administration and integrated use of different models aims to professionalize public management and make use of these different approaches to enhance the government’s efficiency.
Capacity building initiatives have become foundations for a wide variety of development projects all over the world. It is used in the United States President’s Emergency Plan for AIDS Relief (PEPFAR, 2012). McGuire, Rubin, Agranoff and Richards (1994) identified that “the primary responsibility for economic growth and survival has gradually shifted from the national government to communities and their local governments. Development capacity of communities become a prime determinant of economic and thus governmental performance. Capacity has long been identified as an important correlate of effective governance.” In their study, the authors observed that small communities who have undergone strategic planning exercises have higher levels of development capacity compared to similar communities without prior strategic planning experiences. Similarly, the World Bank (2014) conducted several case studies involving government ministries from the Gambia, Laos, Sierra Leone and Timor-Leste. For Gambia, the Ministries of Finance and Economic Affair (MoFEA) and Basic and Secondary Education (MoBSE) have put in place several reforms in different sectors to propagate growth. MoFEA
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curbed overall spending through strict cash budgeting while at the same time continued funding programs in health, agriculture and education. MoBSE implemented construction of more schools, trained a larger number of teachers and instructors as well as introduced innovative programs for hard-to0reach communities. This resulted to a greater number of people gaining access to education.
In the case of Laos, despite legitimacy concerns towards the government, the Ministry of Public Works and Transport (MPWT) led the construction and expansion of the country’s road network which resulted to an improvement in the transportation and access to economic opportunities of the citizens. Due to this projects, the MPWT, in turn, has strengthened the legitimacy and support not just for the ministry but for the government as a whole. The country’s growth felt more inclusive to its citizens since their access to economic opportunities have expanded due to this.
Capacity building can be done in a wide array of sectors. What is crucial is to be able to identify existing capacity and needs as well as to engage involved parties in working together to achieve their collective goals.
SIMILARITIES AND DIFFERENCES OF TAIWAN AND THE PHILIPPINES
The determination of using Taiwan and the Philippines in this study was not done at random. As discussed in Chapter 1, the basis for the comparison is that Taiwan is one of the Tiger economies that illustrated the better performing economic development in East Asia. On the other hand, the Philippines is one of the Tiger Cub economies of Southeast Asia demonstrating the same track seen from the Tiger economies. The comparison will be done to determine how Taiwan was able to reach its economic development in an attempt to provide the Philippines with a model on how to achieve similar success.
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Table 2.2 highlights the basic characteristics of both Taiwan and the Philippines:
Table 2.2 Profile of Taiwan and the Philippines
COUNTRY TAIWAN PHILIPPINES
Official Name Republic of China Republika ng Pilipinas / Republic of the Philippines
International Short Form Taiwan Philippines
Capital City Taipei Manila
Government Multi-party democracy;
Unitary semi-presidential constitutional republic
Unitary presidential constitutional republic Population 23,441,708 (July 2015) 1 102,155,941 (October 2015) 2
Language Putonghua (Mandarin
Geography * Eastern Asia, islands southeastern of the coast of
Ethnic Groups * Taiwanese (including Hakka) 84%, Mainland Chinese 14%, aborigine 2%
Malay, Chinese other indigenous groups
Currency New Taiwan Dollar Philippine Peso
Area 36,188km2 (13,972 sq. mi) 300,000 km2 (115,739 sq mi)
1 National Statistics, Republic of China (http://eng.stat.gov.tw/point.asp?index=9)
2 Commission on Population, Republic of the Philippines (http://rpo3.popcom.gov.ph/)
At a glance, differences and similarities can already be observed. Both countries are unitary presidential constitutional republics and geographically located near each other which can more or less determine similar environmental factors and are composed of several ethnic groups. However, in terms of population and land area, the Philippines is more than five times as big as Taiwan.
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Beyond this initial comparison, it is important to look deeper in each of the country’s history in order to formulate a more substantial analysis. Chapter 4 will further discuss on both Taiwan and the Philippines’ history and economic journey.
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