Cronyism and the ubiquitous padrino (patronage) system describe an economy in which certain business people and government officials maintain a close relationship, resulting in favoritism in the allocation of government contracts, permits, grants, benefits, etc. In its more despicable form, cronyism makes use of illegal and corrupt practices, causing people to lose respect for, and develop a mistrust of, both business and government.

While cronyism is an important factor in the growth of capitalism and the economies of countries, it results in discrimination against honest, legitimate business.

The Philippines ranks among the top ten countries in which cronyism is rampant. And the connection between cronyism and pervasive graft and corruption in the Philippines is all too obvious and well-known.

Every area of business in the Philippine economy is fueled by cronyism, including retail, manufacturing, banking, transportation, energy and natural resources, real estate and construction, and communications – and all branches and agencies of the government are affected.

Cronyism owes its spread in the Philippines to the proliferation of political dynasties, the culture of patronage, and the fact that Filipinos value social and institutional bonds, sometimes over blood relationship. Almost every adult Filipino has a kumpadre or two, and the bonds created by each relationship extend across entire families. Strong ties also grow through college organizations and the fact that people were schoolmates, or are members of the same service club.

Newly installed President Rodrigo Duterte has promised to eliminate all forms of graft and corruption in government and business – and between business and government. Mr. Duterte can succeed by adopting the following measures to curb cronyism:

1. Bring the salaries of all civil servants – including and especially law enforcers – at all levels of government to living wage standards. This will reduce the temptation to accept bribes or privilege.
2. Guarantee transparency in government conduct by using smart technologies in government processes, activities, and procedures.
3. Enforce transparency in all government transactions. This will assure openness and minimize misconduct.
4. Streamline procedures and processes to eradicate red tape. Red tape induces bribery.

With a civil service that is above-board and transparency in government conduct, cronyism – and the padrino system – will fade away.