Echoing softly across the 7,100 islands that form the Philippines archipelago, the lilting strains of the country’s national anthem seem to be a reminder of a volatile past. This indeed is a country where invaders trampled its sacred shores, imposing colonization for more than three centuries. Freedom since then has been a thorny crown to wear and the years of toil under colonial masters and then despotic power hungry leaders have marred these pristine islands. Asia’s only predominantly Christian country, the Philippines enjoys one of the highest literacy rates in the world, and it would seem that economic prosperity is its destiny. But then man plays a cruel hand where destiny cannot. It has been the curse of the Philippines that its leaders have shorn the country of its value. Will the nation rise again? Perhaps, gentle as the wind that swirls across the country, it already has.
The economy of the Philippines is an anomaly in the Asia-Pacific region in that it has lagged behind other economies, such as those of Singapore, South Korea, and Taiwan. From a position as one of the wealthiest countries in Asia after World War II, the Philippines is now one of the poorest. Since the 1970s, which were a relatively prosperous decade, the Philippines has failed to achieve a sustained period of rapid economic growth and has suffered from recurring economic crises. This persistent underperformance has occurred in spite of the Philippines' rich natural and human resources.
The reasons are rooted partly in history, partly in policy. As a legacy of the U.S. colonial period, oligopolies have dominated the economy, particularly in agriculture, where farmland continues to be concentrated in large estates. In the post-World War II period, the Philippines pursued a strategy of import substitution industrialization, whereby domestic goods are substituted for imports. This strategy required protectionist measures, which led to inefficiencies and the misallocation of resources.
After reconstruction followingf World War II, the Philippines was one of the richest countries in Asia. Growth slowed however, as years of economic mismanagement and political volatility during the Marcos regime contributed to economic stagnation. Political instability during the Corazon Aquino administration further dampened economic activity.During the 1990s, the Philippine Government introduced a broad range of reforms designed to spur growth and attract foreign investment. As a result, the Philippines saw a period of economic expansion, although the Asian financial crisis in 1997 slowed growth once again.
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 US$2.3 billion international debt, worked out a US$27.5 million standby credit arrangement with the International Monetary Fund (IMF) that involved renegotiating the country's external debt and devaluing the Philippine currency to P6.40 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...