College

Something I found a while ago. I can’t really understand what I was saying when I’ve just read this. Lol whut. This was for our macro paper. TROLOLOL!


Strategies for Economic Development

 

This section will be divided into three segments which will present strategies needed to be employed and pursued by the Philippines while also showcasing some issues and attempts made by the country in the past; 1) Agriculture or Industry , 2) Export or Import Substitution , and 3) Central Planning or Free Markets.

 

Agriculture or Industry?

 

Like many other developing nations, the Philippines continually dreams of becoming a Tiger Country yet again. With the first tradeoff presented, in which a developing country must choose whether to preserve its economy as a raw material producer, or to operationalize industrialization, the country is sure to be better off if it chooses industrialization over the former. It is obviously the ideal and logical choice. Although there are cases in which industrialization has not brought the benefits that were expected, like in the case of China whose Industry Percentage of its GDP was 49% during 1998, its per capita income only remained at $750 compared to that of U.S. whose Industry Percentage was only 26% yet its per capita income was $29,240, the Philippines could reduce its heavy dependence on the agricultural sector, providing the country with financial affluence, self-sufficiency, employment, and World Leadership in the long run.

 

We have seen many of our neighboring countries like Singapore, Taiwan, Japan, and Korea in progressing towards becoming an industrialized state by adopting and implementing real industrialization programs. But why has the Philippines chronically lagged in terms of adopting industrialization? Was there any possible misconduct or wrong decisions made ​​in the past by the Philippines which doomed it to never transform the economy into an industrial state and hence, remain as a raw material economy? How has the Philippines during the 1950’s attained its position as the “best performing Third World economy in the Far East, and rated only “second to Japan””?

 

To answer the first question, Article XII, Sec. 1, par.2 of the Constitution is the “mortal factor which guarantees that the Philippines shall never transform into an industrial state and graduate to Newly Industrialized Country Status” (Cited in Lichauco, Hunger, Corruption, and Betrayal in the Philippines). Under the provision, “the State shall promote industrialization and full employment based on sound agricultural development and agrarian reform”. These industries are furniture and carpentry, rice milling, making fertilizer out of animal waste, etc. No engineering nor machine tool and metal industry because such industries have no connection whatsoever with agriculture and land reform (Lichauco). This kind of industrialization, which constitute the core of any industrialization program, on the basis of metal and machine power, will be considered unconstitutional. No president after Marcos pursued any industrialization program because to do so would be unconstitutional.

 

For the second question, by allowing the U.S., being a neo-colonialist state, to politically and economically control our government by means of intervening with the electoral process of the Philippines and subsequently making the candidate a subordinate, has paved way for the Philippines’ “puppet government”. There were many former Philippine Presidents who have served as a collaborator of the United States such were the case of Manuel Roxas, Ramon Magsaysay, Diosdado Macapagal, and Corazon Aquino who conformed to the ideals and motives of U.S. with intervening in the sovereignty of the Philippines by the former’s various programs and policies which have kept our country from industrializing. According to Lichauco, what created the Philippines as America’s neocolony was the Bell Trade Act of 1946. Some of the conditionalities presented was “to allow U.S. citizens the right to exploit the nation’s natural resources and operate public utilities”, and extension of free trade. This policy ended up as a destruction of the country’s economic sovereignty and hence, caused the economy to plunder, making it more impossible to industrialize.

 

There should be a revision on the Constitution regarding our country’s industrialization which should be based on machine power to produce the means of production.

 

Export or Import Substitution?

 

According to Case, Fair, Import Substitution is “an industrial trade strategy that favors developing local industries that can manufacture goods to replace imports”. This promotes and values economic independence from other states and protect a nation’s internal market. For the group, this strategy is more favorable for a developing nation like the Philippines than the other. Although there are many arguments combated with this kind of strategy, one counterargument is to present a valid example to show that this strategy does not always fail.

 

To answer the third question aforementioned during the deliberation on whether to adopt an agricultural or industrialized economy, which was previously unanswered, the only reason why the Philippines has attained its “Best Performing Third World Economy” position and rated “Second to Japan” during the 1950s was mainly because of the former President Garcia’s Filipino First Policy. He concentrated on “training” Filipino manufacturers in producing final goods for the Filipinos. With this policy, Garcia ensured to protect its economy from being overtaken by the influx of iniquitous supply of foreign goods. This paved way for local industries and entrepreneurs to make it big in the business industry. Moreover, Filipino businessmen contributed a substantial amount/percentage to the country’s overall GDP and not the foreign investors.

 

Central Planning or Free Markets?

 

Central Planning lies in its “ability to channel savings into productive investment and coordinate economic activities that otherwise might not exist(Case, Fair 2002).” This would be the more appropriate strategy for the country to adopt as this would enhance the growth of our economy towards maturity by intensively and carefully planning the country’s future potential performance. Although it is more difficult to administer compared to free markets recommended by international agencies, whose reforms included the elimination of price controls, privatization of state-run enterprises, and reductions in import restraints, the former is still more reliable.

 

The group would like to emphasize on the last reform presented which is the reduction in import restraints which already happened during the implementation of the Bell Act of 1946, which was then barricaded during Garcia’s administration(1957-1961) by implementing the Filipino First Policy and system controls, which was subsequently dismantled by presidents after him- Macapagal, a collaborator, through his Decontrol Program, and Aquino, also a collaborator, through her Import Liberalization Program, and presidents after like Ramos and Estrada. With these programs taken into course, the economic fate of the Philippines was doomed to repeat the historic results underlying the Bell Trade Act of 1946. These hastened the influx of import demands in the country under which there were no quota, nor tariffs required for these foreign goods to enter. As a result, with the exorbitant supply of import goods, the Philippine economy became too grossly dependent on them; the Philippines never produced nor manufactured domestic goods. With that said, the case goes if the Philippines were to adopt a Free Market.

 

Consequently, the strategies for economic development for a developing country like the Philippines should be to operationalize industrialization, while opting for import substitution, and concentration on central planning.

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