The Philippines: Failure in Emulating East Asian Growth - Essay Example

The Philippines: Failure in Emulating East Asian Growth There is no particular pattern that all countries must follow in order to achieve economic development. There may be similarities in certain respects but a closer study on the details of the development process of each country will certainly expose that these have differences in varying degrees. This is true even for countries that belong to just one continent or even a region such as East Asia or Southeast Asia. The reason for this is that each country has its distinct characteristics in politics and culture; two factors that fashion the nature of the economy. Culture is the representation of the mode of thinking of the national leaders and the people. Politics, on the other hand, is the expression of such mode of thinking, which can be seen in the manner state and economic policies are created and implemented. Therefore, while economy may be most visible base, one that serves as the gauge whether the country is moving forward or not, it is actually the superstructure of politics and culture that promotes and protects it. However, economy, the base, is the reflection of political and cultural realities too. The superstructure and the base have a dialectical relationship. Because of the diversity in the political and cultural conditions of each country, following a particular economic growth model does not always produce the desired results. Despite the success of the East Asian model, which Japan, South Korea, Singapore, and Taiwan have become renowned for, not all countries in East and Southeast Asia absolutely imitate its standards and procedures. Again, this is because of the difference of the political and cultural conditions of each. Essentially the East Asian model suggests the establishment of a strong state first and foremost as the requirement for economic growth. The Philippines, ever since it was granted independence by the United States, has been making an effort in making itself as a strong republic. At the same time, it has been opening itself to foreign trade and investments at degrees oftentimes even much higher than its now industrialized and financially stable neighbors in East and Southeast Asia. While it tries to emulate the ‘dragon economies’ in the arena of governmental functions, it has, however, failed to realize economic strategies that bear the hallmarks of the East Asian model. As a result, the Philippine state has only become stronger at the expense of the people’s civil and political rights but the economy has not achieved any significant level of progress. It used to be one of the better economies in the region right in the 1950’s. Now, it is considered as the “sick man of Asia.” (Escobar) The East Asian model for economic and social growth can be best explained by pointing out the experiences of Japan and the “four little dragons” as explained by Ezra Vogel. The little dragons refer to South Korea, Taiwan, Singapore, and Hong Kong. All these countries, despite some basic differences in their culture and political systems, share common features in certain situational factors. (Vogel 83) One of these factors was the aid provided to them by the economically powerful countries, especially, the US at the end of World War II. The aid was not just to help these countries recover from the devastating effects of the war. It was also a means to boost the economies of such countries and deter the spread of communism in the region. In the case of South Korea and Taiwan, the US actually fed them with aid and loans in order to showcase that a free-market economy works better than those of North Korea and the People’s Republic of China. Nevertheless, the aid was instrumental in making both South Korea and Taiwan become what they are today. (Peters) However, the more important situational factors are the decisive actions of the four countries to end the forces of feudalism, the capability to unite their respective people under a common and urgent political and economic agenda, the development of an abundant source of manpower that is both skilled and eager, and the knowledge on the Japanese methods of advancing economic growth. The vast tracts of lands owned and controlled by the old feudal forces, based particularly in the rural areas, were shattered. This eventually led to the liberation of peasants who had long been bound by tenancy. Agricultural production increased even as an increase of labor force for industrialization occurred. The successful policies in land reform consequently made the governments of the four countries more popular. Because of this, as soon as these governments called on the people to sacrifice some of their liberties, their civil and political rights, for a certain period of time in order to achieve industrialization within a certain timeframe, they did not encounter much opposition. Besides, by instituting land reform, these governments also solved the problem of landlessness, an issue that has often led to rebellion and revolutions. The land reform programs also resulted into the creation of a larger labor force, a necessity for the construction of industry. Vogel described the factors that has been instilled as part of the current culture of the Taiwan, South Korea, Hong Kong, and Singapore as the industrial neo-Confucianism. These countries already have their traditions influenced by the teachings of Confucius. These traditions were enhanced by just injecting these with the industrial ethics or behavior, a method that has made Japanese companies very successful. Therefore, the factors for tradition have been developed, which are identified as the existence of a meritocratic elite, the ‘entrance exam system’, the importance of a group, and self-cultivation. (Vogel 93) The meritocratic elite refer to that special sector in society that has been promoted to key positions in government not out of popularity but out of expertise. Therefore, they basically do not feel accountable to the people but to the government and to the tasks assigned to them. Without feeling any pressure from the public, they can perform more effectively in their work. The ‘entrance exam system’ refers to the process in which workers have to go through to be employed. This means that they should be able to complete certain levels of education and mastery before they can get jobs. Through this system, the labor force does not only gain strength in numbers but also in quality. Individualism both in the macroeconomic and workplace levels is avoided by emphasizing on the importance of group efforts. While all these countries profess capitalism, they have made it a point to instill loyalty to a group in every individual. This emphasis on the importance of group, however, is complemented with self-cultivation, which embeds in the individual the drive of continually improving oneself not just for the self but for the group or company that he belongs. The aforementioned factors would not have become integral in the social fabrics of the four East Asian countries had their respective political structures ensured it. The state was very much responsible in instilling all these in the people. Aside from adjusting culture to serve the economic agenda, the state was also instrumental in making policies that would bolster the realization of such agenda. South Korea, for example, was a country that does not have many natural resources to boast but it ensured that the funds it received from the US and from the war reparations from Japan would be uses for social infrastructures and corporations. Most notable among these were the Gyeongbu Expressway, Soyang River Dam, and Pohang Iron and Steel Company. In Singapore’s case, the state did not treat the market as a mechanism. Instead, it employed the market as a tool. (Asher 795) The East Asian model, as seen in the experiences of Taiwan, Singapore, Hong Kong, and South Korea, involves certain features that clearly distinguish it from the economic growth formulas commonly applied in the West. The most prominent among these is the emphasis on the development of the economy rather the civil and political rights of the people within a necessary period to achieve economic stability. (Peerenboom 31) Calls for reforms may be accepted but are dealt with a pragmatic approach. The government does not totally copy ideas from the west. Instead, it adjusts these to suit concrete conditions while rejecting those that are absolutely unsuitable to the local setting. While economy gradually grows and capital is produced, the government begins to invest in human capital as well as in key state institutions. After this, democratization is introduced, usually in the form of free elections, and greater protection is given to the civil and political rights of the citizens. Unlike many of its Asian neighbors, the Philippines did not take the path shown by the East Asian dragon economies. It was only during the early nineties, at the start of the Fidel Ramos administration that the aim of being a newly industrialized country and of a similar status with Taiwan or Singapore was treated as a much-hyped national campaign. Its target was to become Asia’s “new tiger” by the year 2000. (Zaide) In gauging the current economic situation of the country, it is obvious that the campaign failed in achieving its objectives. The reason for this is that the methods used towards its goal do not actually cover the twin basic conditions of genuine land reform and national industrialization, which the East Asian dragons implemented first. In fact, its policies did not take into consideration the distinct objective conditions of the country. Instead, these were largely influenced by the designs prescribed by the World Trade Organization and the United States. The Philippines’ historical background is a proof of its inability to appreciate its concrete conditions, to gather lessons from the experiences of its East Asian models, and to chart its own path of progress. The country was a colony of Spain for 500 years. During that period, the archipelago with its multitude of small kingdoms and lordships were all conquered and made into one colony. Roman Catholicism was introduced and utilized as an effective form of subjugating the people. This religion, one that is absolutely Western and does not bear much trace similar to Confucianism, was effective in instilling fear of both religious and civil authorities. Because of this, it became easy to establish feudal relations of production such as the encomienda, which was run by the Spanish friars, and later on, the hacienda, which was owned by wealthy individuals from Spain. Although the nationalist aspirations of the Filipinos sparked a revolution in 1896 against Spain, the United States stepped in to quell both Spain and the revolutionaries. The country became a colony of the US. To some extent, the Filipinos benefitted from American colonialism since they were taught Western concepts of democracy. Public education was established but this was geared for training bureaucrats who would run the country while maintaining obedience to the US. This was also meant to develop the human resources necessary to maintain the economy that had become very dependent on the US. (Constantino 310) At the same time, the US did not implement agrarian reform. Instead of breaking the exploitative haciendas, these were enlarged and multiplied in the form of banana, sugarcane, and pineapple plantations similar to what it did in Latin America. The colony was invaded by the Japanese in 1941. However, the Japanese were never able to exert so much influence the Filipinos culturally because their occupation on the islands was short. The US colony was granted independence in July 1946. However, the newly born Republic of the Philippines under President Manuel Roxas immediately made a treaty that further established its economic dependence on the US. (Dolan) The Philippine Trade Act, which restricted the country from trading with other countries except the US, was a precondition for receiving aid from it former colonizer. While quotas were provided for the entry of Philippine products into the US, there were no restrictions for American imports. The value of the Philippine peso was pegged to the US dollar at a fixed rate. Another proof the Philippine economy’s neo-colonial nature was the provision on another treaty it made with the US. The Bell Act granted Americans the rights to exploit the country’s natural resources. However, this did not apply to Filipino entrepreneurs wanting to use American natural resources. In 1953, President Ramon Magsaysay launched a token land reform program. This was done not as a requirement for industrialization but as a means of quelling peasant unrest and a communist-led armed rebellion in the north. Instead of destroying the power of the landlords, the traditionally Muslim lands in the south was provided to non-Muslim peasants who wished to till lands of their own. This may have solved temporarily the problem in the north but it also began Christian-Muslim animosities in the south. (Dolan) However, during President Carlos Garcia’s administration, the National Economic Council formulated the “Filipino First” policy. Under this, Filipinos were prioritized in dollar allocation to be used for importation. (Malaya) Filipino businessmen were encouraged to buy stocks from foreign firms and gain leverage in its control. Filipino consumers were also encouraged to buy locally made products instead of imported ones. The most significant move, however, was when the government promoted import-substitution, an industrialization that was geared to make the Philippine economy independent and progressive. All these moves, however, were rescinded during the administration of President Diosdado Macapagal and his ‘open door’ policy. When Ferdinand Marcos took power, he paid attempted to provide an impression of industrialization and economic progress through the construction of big and costly infrastructure projects, financed with huge foreign loans and the building of export processing zones. He tried uniting the people under the slogan of a New Society, which imposed discipline supposedly to achieve a progressive economy. However, Marcos failed in making the economy developed and industrialized. Instead, along with his infamous and gross human rights violations, his infrastructure projects were so much tainted with corruption and the export processing zones only exploited cheap Filipino labor since the multinational firms operating in these were allowed to repatriate fully their profits. There was no transfer of technology. After Marcos’s ouster in 1986, the Aquino administration enacted a so-called Comprehensive Agrarian Reform Program. However, this proved to be a failure too because it merely targeted the lands of those smaller and medium landlords, while the vast tracts of lands and the remaining haciendas of the big landlords, including those owned by the Aquino family remained undistributed. The succeeding administrations of Fidel Ramos, Joseph Estrada, and Gloria Macapagal-Arroyo did not improve the CARP and neither did they attempt at implementing measures of achieving national industrialization. Instead, they all sought for a stronger state in order to implement economic liberalization, deregulation, and privatization, which are all based on the agreements of the World Trade Organization, on the recommendations of the US, and on the principles of globalization. The Philippine economy has not achieved the levels of development of many of its East Asian neighbors because of its being too dependent on the US, at first, on the foreign markets, at present. There is basically no industrialization and the signs that say otherwise are mere tokens. What it has is an export-oriented semi-manufacturing sector, which has become unstable because of constricting foreign market. At the same time, the economy remains heavily dependent on exports. With the absence of national industrialization and genuine agrarian reform, the economy can never become another Asian dragon. While other countries in East Asia, such as Korea, utilized war payments to industrialize, the Philippine used financial aid and foreign loans to build infrastructure which did not produce capital necessary for industrialization. The state never failed to introduce measures that would instill in a sense of political and economic urgency. However, these were only meant to steamroll opposition to the policies of liberalization, privatization, and deregulation, which only benefited the foreign businesses and a few of the local elite. Aside from these situational factors, the tradition built through the history of colonialism, neo-colonialism, and feudalism only worsened the economic and political conditions. There is nepotism in politics, bureaucracy, and even in the corporate structure. In many cases credentials for being employed by both the state and the business sector are still based on patronage and not capabilities and potentials. Instead of collective or group effort, individualism and the importance of family is encouraged, the result of a mixture American and Asian cultural influences. If there is any sign of success of its attempt to copy one feature of the East Asian model, that is the strengthening of the state. All national administrations, from past to present, have programs that require discipline and sacrifice from the people. All its economic programs require peace and order to succeed. This has become a pretext for limiting civil and political rights but, unlike the East Asian dragons when they were just starting to develop, this was used to clear obstacles to economic policies that favor only the foreign big businesses. Conviction to work harder among the Filipinos is low just as the moral financial rewards for their efforts are wanting. The East Asian path of growth is definitely not what the Philippines has been treading ever since it was granted independence. Its main economic objective is to accommodate foreign capital and products. Without basic industries, the Philippines has become so dependent on other economies that any international financial crisis would be a serious blow. Works Cited Asher, Mukul G. Economic and Political Weekly Vol. 29, No. 14. April 2, 1994. Mumbai, India. Constantino, Renato. A History of the Philippines: From the Spanish Colonization to the Second World War. New York, NY: Monthly Review Press, 1976. Dolan, Ronald E. (ed). "Economic Relations with the United States". Philippines: A Country Study. Washington: GPO for the Library of Congress, 1991 Escobar,Pepe. The Sick Man of Asia. The Philippines: Disgraceful State. Asia Times October 1, 2004. 18 March, 2010. Jong, Sik Kong. “Korea Was Most Efficient in Utilizing Japanese Reparation.” Dong-a Ilbo. January 19, 2005. Malaya, Ed. “Carlos Garcia: Unheralded Nationalist.” Philippine News.com April 21, 2004. 19 March, 2010. Peerenboom, Randy. "China and the East Asian Model: Threat to the West or Model for the Rest?" The Law and Society Association TBA. Berlin, Germany. July 25, 2007. Peters, Anne. "Special Relationships, Dollars, and Development: U.S. Aid and Institutions in Egypt, Jordan, South Korea, and Taiwan.” APSA 2008 Annual Meeting. Boston, Massachusetts. August 28, 2008. Vogel, Ezra F. The Four Little Dragons: The Spread of Industrialization in East Asia. Cambridge, MA: Harvard University Press, 1991. Zaide, Gregorio F. and Sonia M. Zaide. Philippine History and Government Sixth Edition. Quezon City, Philippines: All-Nations Publishing Co., 2004. Read More