This essay uses the Dependency theory on how the economy of the Philippines fared out during the 1946-1986 period. This will also discuss facts on how the Marcos regime made the country surge into large international debts and why even though our country has a lot of natural resources cannot join the league of developed nations. The reason maybe that the post-colonial culture that our colonizers left us. There are so many assumptions on why our country is still behind. This essay will view the economy during the post colonial to martial law era to post martial law era. That particular period of time may have given the people the power to say what they wanted to (but there are some articles that indicates the the so called people power was not really a people power but of the Imperial Manila. As what Amando Doronila said in his feature article in the Philippine Daily Inquirer “People power movements have been an Imperial Manila phenomenon. Their playing field is EDSA. They have excluded the provincianos from their movement with their insufferable arrogance and snobbery … ignoring the existence of the toiling masses and peasants in agrarian Philippines.”) With that observation that has been taken to account, the essay will include some insights on why do we seen stuck to this. Why do the country that has so much potential has been left behind even though we are thought to be one of the countries that will boom after the decolonization?
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Officially classed as developing country, the Philippines was once the second largest economy in Asia. In 1970 however, a path of loans and heavy borrowing was taken. This swelled the debt from of the country to much larger sums. The decline of Philippines exports, the corruption and economic mismanagement of the Marcos regime followed by the assassination of Ninoy Aquino in 1983 all contributed to the breakdown of the economy. In September 1972, Marcos declared martial law, claiming that the country was faced with revolutions from both the left and the right. He gathered around him a group of businessmen, used presidential decrees and letters of instruction to provide them with monopoly positions within the economy, and began channeling resources to himself and his associates, instituting what came to be called “crony capitalism.” By the time Marcos fled the Philippines in February 1986, monopolization and corruption had severely crippled the economy.
In the beginning, this tendency was not so obvious. Marcos’s efforts to create a “New Society” were supported widely by the business community, both Filipino and foreign, by Washington, and, de facto, by the multilateral institutions. Foreign investment was encouraged: an export-processing zone was opened; a range of additional investment incentives was created, and the Philippines projected itself onto the world economy as a country of low wages and industrial peace. The inflow of international capital increased dramatically. The Philippines defaulted on its debt 1983 – 1984 with the economy undergoing significantly negative growth in 1984 and 1985. Since the downfall of Marcos in 1986, administrations have opened up the economy to foreign investment but the privatization of the economy has been too slow. A trade deficit is the result of heavily importing goods while exporting very little. To make matters worse, government expenditures exceed government revenues.
The Philippines found itself in an economic crisis in early 1970, in large part the consequence of the profligate spending of government funds by President Marcos in his reelection bid. The government, unable to meet payments on its international debt, worked out a standby credit arrangement with the International Monetary Fund (IMF) that involved renegotiating the country’s external debt and devaluing the Philippine currency to the United States dollar. The government, unwilling and unable to take the necessary steps to deal with economic difficulties on its own, submitted to the external dictates of the IMF. It was a pattern that would be repeated with increasing frequency in the next years.
Despite once being the second largest economy in Asia (after Japan), the country is now relatively poor. The economy is agricultural, lightly industrial and service orientated. Economic growth is much weaker due to enormous debt. Much government money goes towards payments of the debt leaving very little money remaining for improving infrastructure. Since 1986, efforts have been made to open up the economy to foreign investment but the privatization of the economy has been just too slow
After WWII, the Philippine economy was in bad shape. During the term of President Quirino, the economy began a phase of rapid growth. The economic growth slowed over time but by 1965, the Philippine economy was the second largest in Asia. This was largely due to the enormous spending of government funds by President Marcos. Arrangements were made with the International Monetary Fund (IMF) and so began the period in which the Philippine economy would be propped up with loans from the World Bank and IMF and heavy borrowing from banks and organizations. The economy of the Marcos regime can be described as debt driven. However, the economy continued to grow during the Marcos regime, even throughout martial law. In the 1980s, the economy started to falter due to a number of reasons. World demand for Philippine exports went into decline, corruption and economic mismanagement from the Marcos regime and the assassination of Ninoy Aquino in 1983 shattered investment confidence in the country. Economic growth was significantly negative in 1984 and 1985. As a result of a shrinking economy and enormous debt, the Philippines defaulted on its foreign debt payments 1983 – 1984. In the following Aquino years, the economic issues remained. It wasn’t until the Ramos administration that the economy began to significantly grow. The Philippine economy was also hit by the 1998 Asian financial although not as much as some of the neighboring Asian states, partly due to remittances from overseas Filipino workers.
Large debt is a major factor in the hindrance of the Philippine economy. During the Marcos years, loans and heavy borrowing were used keep the economy propped up. The decline in demand for Philippine exports, the uncontrolled and unrestrained corruption of the Marcos administration and the assassination of Ninoy Aquino took its toll. The government defaulted on debt payments 1983 – 1984 and the economy underwent a period of significant contraction in 1984 and 1985. In 1986, after the downfall of Ferdinand Marcos, the debt was at US$28 billion with the country in a bankrupt state. In more recent times, the public debt is just over three-quarters of the Gross Domestic Produce (GDP) and a large trade deficit has grown from the heavy importing of goods combined with a weak export growth. Given this situation, much of government funds is being used to pay off the debt (or probably more accurately, the interest on the debt) this leaves little money for the government to develop infrastructure. The lack of infrastructure in turn has resulted in much lower growth in various economic sectors. Since 1986, administrations have gradually opened up more of the economy to foreign investment. However, the privatization of the economy is currently just too slow. The corruption of the government and tax evasion tactics by big businessmen has also robbed the government of funds. The situation has been described as a fiscal crisis and on the current course, it is expected the Philippines will default on its debt in the next few years.
The Philippines is essentially an agricultural area but in more recent years other sectors have developed. Although greatly potential in the agricultural sector, the lack of infrastructure and finance combined with government policy have limited the success of this sector. The rural economy is largely based on agriculture, forestry and fishing. Years of uncontrolled logging are having an impact on forestry and fishing may have its days numbered due to the expense of equipments. The country has numerous natural resources including deposits of copper, chrome, nickel, gold, silver, coal, sulphur, gypsum, limestone, marble, phosphate, silica, clay and natural gas. Problems from the energy sector also contribute to economic woes. Electricity is relatively expensive and is subject to government red tape, preventing unprofitable public sector electricity companies from raising rates to raise money to develop and improve services.
A general rise in world raw material prices in the early 1970s helped boost the performance of the economy; real GNP grew at an average of almost 7 percent per year in the five years after the declaration of martial law, as compared with approximately 5 percent annually in the five preceding years. Agriculture performed better that it did in the 1960s. New rice technologies introduced in the late 1960s were widely adopted. Manufacturing was able to maintain the 6 percent growth rate it achieved in the late 1960s, a rate, however, that was below that of the economy as a whole. Manufactured exports, on the other hand, did quite well, growing at a rate twice that of the country’s traditional agricultural exports. The public sector played a much larger role in the 1970s, with the extent of government expenditures in GNP rising by 40 percent in the decade after 1972. To finance the boom, the government extensively resorted to international debt, hence the characterization of the economy of the Marcos era as “debt driven.”
In the latter half of the 1970s, heavy borrowing from transnational commercial banks, multilateral organizations, and the United States and other countries masked problems that had begun to appear on the economic horizon with the slowdown of the world economy. By 1976 the Philippines was among the top 100 recipients of loans from the World Bank and was considered a “country of concentration.” Its balance of payments problem was solved and growth facilitated, at least temporarily, but at the cost of having to service an external debt that rose from US$2.3 billion in 1970 to more than US$17.2 billion in 1980. It was in this environment in August 1983 that President Marcos’s foremost critic, former Senator Benigno Aquino, returned from exile and was assassinated. The country was thrown into an economic and political crisis that resulted eventually, in February 1986, in the ending of Marcos’s twenty-one-year rule and his flight from the Philippines. In the meantime, debt repayment had ceased. Real GNP fell more than 11 percent before turning back up in 1986, and real GNP per capita fell 17 percent from its high point in 1981. In 1990 per capita real GNP was still 7 percent below the 1981 level.
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Industry has grown over the past few years but only in the urban areas. The industrial sector includes textiles, food and beverage processing, pharmaceuticals and chemical products, such as paints and fertilizers, and also electronics. In 2005, the Philippines began exporting cars in significant quantities. Electronic based companies such as Intel have been in the Philippines for many years too. The services sector is a big player in the economy and one of the more recent booms is the establishment or transferring of call centers in the Philippines for many large and in some cases multinational and international companies. Setting up call centers in the Philippines is ideal because of much lower costs than in the developed countries of origin and cheaper labor. A major advantage the Philippines have over other countries is the significance and usage of the English language within the country.
The continuous growth of the outsourcing companies has led us to our current situation right now. Because of the limited availability of the jobs for the newly graduates, they resort to taking call center jobs wherein they could earn a decent income but doesn’t level to their core competence. The decent income that they are receiving covers up to the company’s main motive which is to exploit us. Our country may have benefited well to the boom of this sector but it exploits us in a sense that they are taking advantage of our resources but for the less cost. We are one of the countries that the other advance country exploits. Another example of the countries that were being exploit are India and China but to be fair with them, they are taking it as a challenge to grow more in terms of economic, and self improvement. Some may argue that they were racing to the bottom but they were not because they were racing to be on top. The Philippines does it the other way. We have the resources, the vast number of educated people but we are not improving. It may be blamed to the culture that we grew up in and the decision making of the leader.
The loans that the country had during the time of Martial Law hit to its lowest and brought us to much more inescapable debt to which led us to borrow more to the predatory shark, the IMF. We have been dependent to them expecting that we would be out of this huge foreign debt but we only led to more debt that makes the Filipino people responsible for paying those huge sums of money. Only an irresponsible leader could only lead us to this state. The economy reached its lowest point and now the people are paying for this.
The country may have achieved its democratic status but are we really free? Or are still heavily influenced by our former colonizers? The answer could be is that it depends on how we take it all in. We are still heavily influenced by our former colonizers from the music that we listen, to the clothes that we wear and to the culture that we are trying to fit in. But it seems that it boils down to how we respond to it. The state wherein our country is in right now may have been better than to what it has experienced before with the colonizers and the Martial law. The economy seems to be stable but it’s still not enough to sustain the growing economy of our country. A lot of people die out of hunger, the population has been multiplying every year and the education system in our country has not helped us to bail out from this system.
The Philippines is a beautiful country with lots of things to offer. Sadly, the country today seem to be in lost on how to go on after to what had happened after the pos-colonial and martial law era. The country has been lost and still looking for the way out for this misery. Sure former President Fidel V. Ramos made the economy slightly back on track but we are now down again. Our country has been waiting for the promises of the politicians to come true to save us from this misery but again, it boils down to how we handle things and how we adapt from it. We could have been doing well if only we had retain the positive things that our colonizers left us. They may have invaded our country but it lead to some transition but we took it and applied it on the wrong way. We are still dependent to our past may it be the post colonial era or it may be the post Martial Law era. We cannot run from it.
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