In the late 1940s, the years immediately following World War II, the Philippines had all the makings of a country poised for sustained recovery and rapid economic growth. Those were the days before countries ceased to be classified as either developed or underdeveloped and came to be classified—after the coinage of the phrases by a French journalist—as First World/Second World or Third World.
The high expectations of the early post-War years failed to materialize and today the Philippines remains very much a part of the Third World. This, despite the existence of a number of factors that were conducive to sustained economic growth.
Chief among these was the rich physical endowment of the Philippines. In the late 1940s, this country’s physical resources were still virtually intact: extensive forest cover, plenty of arable land with rich topsoil, abundant unpolluted water and numerous mineral-deposit sites. Physical resources-wise, the Philippines was well-placed to lead, with Japan, the East Asian march out of the Third World.
Another factor supporting the Philippines’ shedding of its Third World categorization was the comparatively small, and therefore manageable, national population. At the start of the 1950s this country’s population stood at close to 25 million. With the national population at that level, the economy was not under severe pressure to generate employment for a high percentage of the labor force, infrastructure capable of supporting a high level of economic activity and domestic production of goods and services sufficient to feed, clothe and shelter the Filipino people in accordance with a decent standard of living. There was no need at that time for the diaspora of the last few decades, which gave rise to the abbreviation OFW. And there wasn’t the kind of infrastructure crunch that has seen the steady deterioration of existing facilities and the inadequate-infrastructure charge that has been laid at the door of the Philippine economy by would-be investors.
Still another factor that should have operated to usher in an era of sustained economic development was the strong inflow of post-War reconstruction assistance from the Western countries and the Reparations Program of Japan. The inflow of grants, loans and materiel should have served as the foundation for the establishment of the industries and infrastructure needed by an industrializing economy. Unfortunately, flawed policies, bad management and corruption operated to thwart the good intentions of the best economic minds and destroyed the development possibilities offered by the cited favorable factors.
Still another factor favoring the Philippine economy’s sustained growth in the immediate post-War era was the establishment of a central bank. The Central Bank of the Philippines was off to a good start in 1949, supported by the good wishes and prayers of a people whose monetary affairs had, in the American era, been governed by Washington. But fond hopes soon turned to disappointment and frustration as the new monetary authority chose to deal with the post-War monetary excesses through a panoply of controls that a country with no record of good financial management could be expected to implement efficiently.
This country had all these things going for it, yet today it is stuck in the Third World and is still mired in the kind of development environment that economists deplore. True, a few years ago the Philippines was reclassified from a low-income to a middle-income developing country. But, given its present circumstances, the prospects of the Philippines’ being upgraded anytime soon to high-income developing country and, thereafter, to developed country cannot be considered bright.
How did the Philippines, which had many good things going for it at the start of the 1950s, get to its situation in 2014? Does the fact that it has in recent years been posting annual gross domestic product growth rates of around 7 percent count for anything?
Bad things have happened to the Philippine economy in the decades since the 1950s. True, some, like the gyrations of the world markets for major Philippine exports—particularly sugar, coconut products and copper—and of the price of crude oil have been of external origin, but for the most part the bad things have been of the self-inflicted-wound kind.
Corruption is always cited as a major factor behind the Philippines’ record as an economic laggard—“the sick man of Asia” is the most pejorative of the sobriquets—but many erstwhile developing countries that have moved up the world economic ladder have been racked by as much—in some instances, more—corruption but they managed to place their economies along the path to rapid and sustained growth. Deserving of special mention are South Korea and Taiwan, which are today regarded as First World countries notwithstanding that in the 1950s they were far less well-placed than the Philippines.
Likewise, compared to this country, they did good jobs of managing their physical resources and their populations, with the result that they have been able to give their peoples high standards of living, have preserved their resources and, most important, have become important elements of the world’s production and trading systems.
It is in the area of economic policymaking that the Philippines has sustained the biggest self-inflicted wound, resulting in a much-inferior economic performance.
A discussion of the bad economic policies of the decades since the 1950s will have to await a future column
No comments:
Post a Comment