Dt!lF;.~ier f t.he Umt.lad NutioN UnliveJ:Bity o ~auth~ilSt Asia,['I pen;p~tl-vt!

S PtGje~11 For Lim,ited (JirelilJutlon Only

NEW A.SIAN VISIONS

Monagns.pb Sarie.t!, laS5

TR,ANSN AT 'ION,A II ZA T'I ON,~TIH E ST A'TE, AND 'TH E PEOPLE: THEPHIILIPP'IN E C A S,E

Pari II.

SOVTHF.AS1' ASlAiN PERSPEcnn:s

PR.GlEC'l'

Co-orriim11ing offlc:~:

ThIrd Wand SrndiPr CenJ1.7_ UIi~11)' (}f,rf~f!. Phiflppmes • DiJi,nqfl. (2!ue<:~, EJ'Y, P~lil;ppih(!<~ PO. Bo» .11 tJ !II!I J'ifC'plw I . 97·f_()'61 bt. 78J

:Pffm$e amJ:. lS·aU inqmnei t:rnroeming- tl!l& f.l;ubl!K:Ja:ti-M1o:
j

f fl D-~Cl eo~oiditUl~ ~·Swth~t rum lINt} A:s:ian pe1'llpwUve~JPi:a.l~l t/o Thiri;l \¥;bd"d ~ ClnteJi P:n[ma Han, UnlvBl,'Sitf, at the mnI!.

fi:ef. ~iI.11

CfUtlzOfi City, PH lId PPI- N HIS

'i'RAN~NlAl'IOh'fALIZATION~

Tliil; S'l'A,T! AND THE PEOPLE:

THE PHILIPpnut

EXPERIHNCE

("PART TWO)

OO.RKINC1 PAPERS OF THE UN ITED
ASIAN

NAT IONS UN IVER3ITY
(SOUTHEAST

PERSPECTIVES

PROJECT

ASIA)

1.965

1"

THE 1'1.

ern S IS
Ph iIi

OF A DEPENDEN TH;CONQMY
C) L:i on s Lo C r- ji S i.s : Po 1 i t i f•.:".'3. 1 EC'f.:rnnmy

F'r-om Con-tredi
pp i.rre

The

Ca.:!> e

0

f

Lh e

B.

'Ct'ansl1.at

For-ei an

Debt~:

i one Lizat

i on , t,he (~; oba 1 r~l"' Ls , and 1 is Th,0' Phi lippil'll:lf!;x:pel.'i enaf.l
n,qV

r~ar:arlo 1f S.

id

.Eduardo

(:,

I

I'ad 1"'3rr1

II.

TBE AUTHORITARIAN
A,

STA'flE AND ITS
Cri s is

CURRENT CRISIS
of
I'{J}

The M!"lrons l/:et"!!ime:

i "t~ical Reproduction

Alexander

R. M~.no

P. N,

Abina.1eofJ

Ti9r'esa. S.
D. BreakdQW'n a.tld

Enca. r'n a o i un
ReH'l(ms Li i:utd on of a NBtioi1--St:a.te: i.n bhr;; Ph i 1 ippineg
Jl,omana

PQ1 it; i.r::al Cris is

.Elpid i Q "$t,a.

nL

THE NEW POLl TICS
AThe

AND T,[1E THAMS I T'ION
in. t.he I'h i l f pp i neas
IJ01 i t.ics: Lessons

ro

POPULAR DEMOCRACY
from t.he Demoor abLo

8t;ruggle

New

Karina C. Df.tvtd B. From DJ (;1-bntorsh
Pbi I :j.ppi.n~~.: 'l'he' 'I;'rans 1i~ ion
[)e'ffiQcrati(!,' S'l:..~'t,e
l,J;j

Find i~'ci:t'eign Iinmi nat; i on in
i:;t;)

a

'Sovereign

the
and

Edmundo

G. GarC'i~

'rH.E STRUC"TtIl'tAL

ROOTS

OF 'l'HE PH I L I PPlNE

ECONOMI C;

CRISt SAND

'l'HE ROLE OF' ,'RE ST,A'f'E

GERMELINO

M.

BAUTIST'A

1t

t.5

o hal'.aeter

i 7.ed by

);'.;:::c.!"J:!i

s ion

or

a con t i fIUOU!5

down sw i ng

in

economic a~tivity
gro~th 1"atfl of -the
g':r-055

nat,.l6nal

product

(GNP) ,

arid

by

a'n

unabatina inflaL1on,
regi the:
5 tered
is t,art

t he annua 1 growth

rate
By

an average of the

of
J

6 _~%.

whil e i nf 1. at; Lon .Ertood
r a t.e d.ec.: tned I

at. 15%.

19'8 ~J:? ·t.h€ GNP growth 3,·8% in 1981. ~.7.%

J;,l€lr::ilstent 1 y 1983
(1.).

4.9% I n 1980.

in 198-2 and

1.4% in

In

198~,

th~

nation realjaed Chat the econo~y was in a
for the at an indeterminate E)"~r.i0d of

crisis
Th¢
t

which

wm.lld continuf-l r'~a·f.f irmed

time.

next; year

diff i cu l t- les ' .i t,. Ho.ul d have a negat:l ve l"crte of ·5,5%, Fo;t'ec·a:st,,s for bY' l.:1 too 2.75%,

·to gCl i~hrough ' whilp. prices
real

as re~-E!lGNP ¢ontract~d . ccnttnued GNP will

to ri~e by ~b%, shrink further

,198~ Pl"\BcUct that and inflation

will

ReceS5i.on LeveL
~6

or-

the nona .,cumuli;l,t,j on of 5Ul'pluz in

on

8

n;;ltional

evident
2'. ation

idla

productlve
gxeater unemployment, fu.r,ther

faotory
ds:eper

bankru pte Le 9 imm.er i ser-i and

conseguentlYj

con:traci,ion

of

by

the

economic

and political in

uncertainties
the
1

surrounding
Based on

its r,he

indet.e r-nl tru4te

re50J ub.i cn

fu t u re .

govermneTl'L':s

own

assumptlon3
R3sBrt~d

and

.sEHISe

or

opt,lmL::::m. recovery

official
Or

pronouncements

hav~

tha~

economic

the

1990.

NG m~n~ion

j~

made,

i'!:,

j

gi,ven me. and for

U~e

incrB8s'e
;.J!F.::

in popul a l.Lcn by n on aooumu La't Lon

t.he pr.evai

1990s.

In

the I ng more

meant.] sooia!

a5 long
economic

wi 11

15 ~ exist be-came

lneql]i t.ies
f'Orm5 of

wi 11 lrLcre.asln.gly
l~g·:lt.imat;ion and

appa reni:..

u.ndci:"m:i ning

Ln liens ifying

social conflicts.

st.a:baunderdeveloped and
aocumu l at.Lori .

w-hich .

un

I i ke

ot.he

r

5 il'l1i 1.~:t ly

s:i.t.Uf:l:!:;ea

societies inlt:la·te,

fallarl
If

to

r~prbduce

its

economic

not

s~~tain.
I

of

It th~e finds

itself e~brptled

in an economic an~

political

crisis of legitimation.

(1)

Wh8t is the

economic

5'l:,ructu:t'8

of

the

count.l:Y?

( 2) what Lnt.. il':'llal and ext€! rnaJ.! € nonreproductj on of t,ha e.COhQrtly bringing it to its present particular
(3) what rol e di d. th.e

actor s re f;lul ted in the at previol,J ~ 1. eve1!'> , c~isi$? into the e-conomy play
5 t.a

in the :current, sta.t·e of aff a i ra? Why did ·t>ile cri s i.s occur in 19831 and not at an earli~r time. considering the ~tructural vuinerabiljty of the economy? Why J'd gov~rnm€f'I·t ar.::; in ill par 1:;.1 L cular Nay and not ot.herwi se? What errab l.ecl 1t t.o do so" despj toethe adverse c'onEequences o f its a('.'!t.l ('1n?

mode of interv'ention

aut.hord, tar:l. an

te

and

1. LE

nonaocumu Le t.Lng
d. ,rec·Liof!
f.~

producti.ve

14)

wh~t

re

E'ltruct..ur,e

~ me

of

char-act.e.r

lOf

the

f'o r dBv~.doping

th®

implications

of
(;I:nd

bhe

eConomy

alternative

its

f o r' t.h~ natiQl'I?

This paper attempts 1 ar~~w:ers the of
.fir.,set

to ~ddres5

the above questiohs.
5 J;itructlH·al

Section
features

question

hy specifyimr
predispose

the cuonomy, on

whioh tOleth~r the postwar

it to a crisis.
to most of

The

literature

enQnomy

rBfers

theE~

r~latiot1sh.ip

of Se~t,ion

internally' 2,

and therefore!

~k~ernallv-based

discusses of

the

in~erplay

of

contradictory

Rovernmenb credit

policies,
and

TOr'f:lign

investments and of fcre~gn the 5trl1.cturaJ feat.ures of

in engendering

m~intaining the

,t.he economy.

S!?'c"tiol"1:3 addxElsses

symbiotio

relatioDship

betwe8n

foreign

pradit
of

and

th~

state

re.produeed and
r e au l ti ng
j

he:lghtened th~ cont.rad1cti?us
the cu n,·ent €:conomi"c and

the
crisis.

economy!
'l'he

n

poi.,U:;ical

THE STRUCTURE OF TIlE, ECONOMY

At
aeouomy. whtch

least 5 Btructural F'irg.t, consists sector, the of' post,war a

features producti

charaoterize
ve struct.u.r€

the
of
€I

Philip~ine the economy. and sma,11

pre.ponderant..

nOll.trade~ bl oriented

exporting
domestic

is

~rimarily

towards

a

limited

market..

Second,

no significant
nontradeable

articuiatiom
manufacturing hand, and

or linkage ~ectcr and
t,he

exists bet"~en the

the dominant

manuf actUi: Lna eJ{por L t. ndua t ri e s • 3

on one

non-

p,rbdu

CeY:3

I

other.
industry,.

Conseqt.l.~.mt ly

I

W1 trh

TV)

vI ab Le dome.st.· \..

cap;'

+a L

goods

Ll.Lus Grat,ed importable

by

1~he

oorrb Lnued 5ignif gi v eri the itA

Lcancie and
yo

~rowth

of

·the the

aect.e r . Third,

relr:!t>l.v81

slow

g..t'owt.h of

manufacturing
enc l.ave .'5ect.or; rural t,he

sector

j

d~pital-tn~en5ive

~eehnalagy

and

character. majority

and the of

much s Lowe.r gl'owth

of t.he PIg 1.<'!1.l11I.uraJ -iu the by

t.he Labou r fcn"'ce. oorrcLnue t~) reside on th€l e:mflloyrnent
i

are·as.

dependent
,

opportuni:L:i

e s cre.ated

gave rnrnent

dome5'~'1 C SEl'rv ice S
S inca

utilities

and

con5truction
is pri'mari
ly

Lhl':',

producti.ve

~truc·t.ure Le'veL of

or' f::ti,ted
arrd

to-wards

the: domest,ic

ma.rkt3t, the
.5:1:, rucrt'lu"e

ll1... 1 i zation i

growth

0.£ t.hs produqti ve
b.yt,he

ha.s been cQrlstra i ned

and

influenced

::d:!'oe and distribution

pi' the
poverty

market

I

that is~ of
r.ncome

by

the

prev61ence

and growth of mass

and

dispal.~i ty . Hor-eo've.r , th!-:'l'

'J'tiltzation

and

expansion

of

the r~

si:,rLlcture
and

have

beeQflv:3

I.no ;t"east ng ly F: fth,

depend'F.m t on e x:l:.'erna J tn the ~oun1',ry,
j

50urbt'aS'

dev'eJopment.s. and asset the

tJhe pQvert.y of the

the consumption
i ty of

praI0r@nce

e;qonon~i_(· lite. e e Iumps a low, and

the VI) Inel'abil the

external have

secto.r all

t.o price'

net.

Qu-I:;fluw of

capital

cont l'i bn t,ed to

and

SQmet

Lrne dec 1 i n l ng , s

nat~onal current

Bav~Dg5
account

tate
defioit

which in the

context

of

a
for

persistent external

has intensified

the need

credit.

4

The Domestl'c Market

Ori'enta;tio:n
produ·ced

of the

Produ.cti va Strt.lcrt:.ure +he
economy may

'1'11 thin

I;:! 1 as

s if if.'.d

a.s

norrbr-ade.ab Les ,

Bxpo1"tables

or

impori.ables.

which

Hl'B

'PrOdll(;!~d.

dom ~s:t.ical1v

and

entj

r-eJy

fO.T

.Icme.s t.Lc

consum~tion imports.
circu.:i t tran sparta t j Ind.ustries

and
These

whQse domestic
com:modi"t.i.e.z do

BUPP!Y

t~

not 'bh,e

supplemented ext.ern.al

by

rlot~ enter

trade

exports
01"!.

or

imports
f f £,
0,1:'

pr.all i b i. ti V;9 impo:r:t t;ont,l"0 1 as norrtr-ade ab if as,
PO

costs·

I

high tari

U ci ss ( 3 ) . given the

are QPerattonally

d·e:.E Lned

level of aggreaation
ex-part; and itnpor1;

in the input-oLlt.p:ut,. val U.El s· amount va lue , of the
no-nt,rade's'b'
$

table.

'the] r th€'lir

ac t:.uaI
own

to l€l:3isthan

10% of

domes td,c ·prod.uction The pr€!dominance toget,he.r
Til'

sect,ot"

in

to,t.al
I

ou t.pirt , reflects

th

the

small

:sih,are of

bhe ',exportable
of the ~conomy.
I

secto.r

the
output half

dome Lc market s't

.or-Lent.a t ion 1974. and of total

Based on 1npu:t-

d:ata (6l

f o.r 1969,

1979,

IIab Le t shows produced by

that the

mere t.han 4 major other .a.s

to

52%) namely mining,

output

industries .'
agricult,ure,

agricultur@j and

fore5try-livesto~k-and can be cla.s's,ifj_ed

tna.m.dacl't,uring. (See Tabla
mt'i._j'br

rlont.:rade:able cotrunodities.
total ou tput of: all the

2 for the distribution The ranged sh 8.-1' e from

of
0

indw:'j,tries.) other hand
i

f

expo.r't.ab Lee in

tota .. output., l

on the

20 to

24%.

Except

for the mining

industry. the share of ncntrad~ab~~s
in ~&ch major

was greater

than that of exportables

industry.

5

F

llist,ea.d

j

the t".lxpnrt,

sp.ct.Qr.

who ; eh;;Il'Ose

.f r-om

a~ far

'back

,!'.5

t,he:ea.rly ~:n_lgar,

~O-t.h cen.t.nry _ toba-c.co ,
C:OCOTlUt

'l'he .large' share
Q

of

I8xport

pr.oduct ~

1 ike

i 1,

abaca and lugs

in

Up to

'the

'~~:IHJ

elf t h@l 1 ~)605

!

Philippine
and

exports

con si Sit.eel
goods (4) .

mainly

of

traditional

primary

no·n-,~rticulat.ion

with the

rest

of the

economy.

The

growth of nontradeablB·mBnufaQt~ring industries in

the

tobaccoexportables ma·:nuf·acturi ng loc~!L ly-rnark~t€id mineral. inc ;reaged , s ector text

are

locat<2ld,)in the value

added t,he

of sha.re

t.he of

d~cl ined i Le ,

bV

1960

I

whl 1 e
.l

p.aper ~
j

1ea.the r

rubber.

nonmetallic
equipment

b<5!si.c metal compared

prGduct.s

machinery s ize-:Ln

and -t.ransport 1946 ( 'l' a bIe

tot

be i r

:3 ) .

The

t.he

1.9705.

l:r;IaiJuf ctu red a 5hs,re end

.

export

saIl

.t.hr'ou ghou t" the S" 6% at 4),
(3

1910 s d 1. d i ncn:ee ~e
t,

f,hei l'

of of

t,Q'tal the

exp01·tsfrOfn

the ,start; t.o a bou
<')1::\1

.~S:% hy ,the

pe.d od

('I'able

well

BtS

their

.share

of

manufacrt.ur-ed However
i

export.ablB5 relati output

from in

9.

a%

in

H~69 t.o

17.1% of

by

1979 and

the

ve (~hange

-the compos; t ion

@x_port.,s

manufactdred the 1969

did not entRil a significant
export;ahl es
I

jrnproveme~t over of
the

5ha_t'e of market

rnuch less

a redirectioh

economy~s

orientation(b,.

The Limit.ed Nature of Internal
The
i_ndu5i.~riefl or sectors

Articulation
dt:fferent

with in the- econom'y This is measured input.

indica·tes

the

Leve l

of

internal

~rtic~l~tion.
of

by the ratio

of

th~
and

indust:q!''' 5 5l,pply ""7 :L ts import

.int.(!'!rmediate

OVBr domestic:

m_:lt!?ut..

coeff Lci.en t (the

r at.Lo of imported

input

demand

over

total

demand for intermediate input~l_

These

ratios

a~~

shown in Tables Since
( ID )

4
J

and 5, respectively. output (Q) aon5ist~ of lntermediate
i'il n

domestic
f ina

demand
a

anti

deman d {FD),

i l'ldust.ry

I

or sector'

j_ 5

net. or

~upplier of intermediate

input5 if ID/~ 1,

is greater than rD/Q,

larger than 50% but less thrul
than 1, it':s

If FD/Q exceeds
di.N~ct

50% but 13 less On t.he of

a nef supp} 1er of

.corieurnmab Le s .

other

hand,

if ID/Q is greater

than

I,

~t is a net import8r

either fjn~l or intermedi~te gbods.
The

following

observations

can

b~ abstracted

fro~

Table-

4.

First, except
palsy; ec rn ,

for 50me nontraciea'bleagricultural sugar-cane" aector tobacco
i

commodities

like

and livest.ocK, provide t.he
\ntermcedic:l'te

nontradeabl~" Input

in general producsrs logs in

d'oes not '!,Jut. the

req,ui r.emen'i:.s of exaep·t for

f i na 1 goods
j

of

end--US(-a"5.

~Bepond~

the. forestr:v-

ndustry

in

1979

i

7

expor~~ble5 domestic

from

all the major

industries

are

hardly out in

used

In

production fd rm ,

but
Third.

a~e

mainly
~,.Lw.:e

~hipped
bo t.h I:.he

whatever and

llnproqeB sed

nrtntl'adeab18

intermediate for

input:, requi reme:nts.
goo.ds

of r:lOm€~5tic

indu~t.l~ies,
indusi:.t"i.eB,

:l.n."termeciiat.e

are

mot. by t.h€

i mpor-t.ab I e

all L~e importable

inriu5tries have
Lndus td.Bf.i industries. In like
rEl

Fourth,
agriculture, paper. greater mining and in ~ertain

the

;tmport,eble

m~nuf2cturj~g

Jeather. t,han 1, of

bas I c

chenu.ca l and metals, that the

have;;;m

rn/Q

t. I o

whlch indicates domes t Lc pToducer5

requi.red

i.nterfllerila"ts through their

ommodLties

havH -t,Q be

imported

these

industrie~
(6-) •

in

order to enable them

to

undertake

activities

that

domes t Lo productIon

is

;lnadC{lU€'II',e ,t,o·.meet bo th 1ut,p' 'mediate
I'

and final demand within that,
the importable

the ecnnonw.

Table

5 3hows'

~.

Lndus+..r ie s in
inte.r·med tat,e

bhe
and
<:l bout

nominant

manufact,uriug
~00d S
0 f:

secrtor ~which

5~ll.ypJ ' Y

f I na L
hal f

+.0

ot.her tot. al

indu5"tries,

requ i r.e

1mPQr·t s
~qnirements_

for

the i r

in .ermediat~ ~nput

Given

tl~

role

of

the

jmportable

sector

~i~hln

t.he

variOU5
ex i st.in"g

sectors,

the

eKpan~i0n

o:f ecoupmic aot1.vity great.er

wi thin

th~

set.-1Llp :nece55arily

involv5

lmpo:t'ta t i on.

8

'rable

6-

In

the 19505,

the tnitial implemen~a~ion of within
tb~

import
eeonOI'll1

sube t I tintion

indu6trlalization

growing

~ucce~ded
6') •

in

reducing ~he ratjo of import5 ov~r GNP (see in the ~uhsequent decadaB, th~ ~atl
high
illlPOl't

Table

However,
the

ro se and even in the mid-

surpasse.d 'lO~

ratio qf the lat.e

40s; arid

despite

~h@

continued
It 19505

implementation

of
abou't, 80% of of 'Of early total

5ubstitution policyimport sf .good$ and rom
thf!

ahou l.d be noted -t.hat
1:'0

the

sar I y 80s arid that.
"CQS4e

cons i steed t,h~ share the

cap i to. 1. im,ported 705 t.r?

l.n't:.ermeciiat€!

inpu1:.;s ~

ccnsume r goods, in tQ'ta;l 21% to t,he early

i.mports 7); also

from 15% in

80.s Crahle

G.reat,er

importat.ion..;;

aC'companied

the

eme.r,genc,e

and

product.ion Ll Ius t.r at.e , axpo r t, labour imported only

is

not

U nke d t.o nan-labour
imported

dome~t.io firms
intbe

ma.teriaL'Oi country.'
So

'I'd

th.€l

IIl.a.-t.efiflll IS of c on s t.I t.ute

:3
l':

processing inputs.
r

zones

about

8:3 to

93% of' to-tal

non>

de p,endt na on whethe 1::' f CLcto.ry Be J. n g import d€lpenden t
j.

suppl i e-s were firms reported in

a.I SQ ef:F ect export

( Tabl s 8).

these

exported

in net

-t~rnlS about 2·2 to

40%'.of

value.
seem

However.
to
be ret

this high dependence
It.::H ..l Led
in

on imported
import
I

inputs does not
(8.4.%)
I.

t;be

l,O_W

ra.t.i(1I

0:£

manufactur,ed r:m,anuf actured
C.QUllt,erpa:t'ts

€lxportables expot'ts
of

(Tahle
'have

5}

€lv'en sf nee
zone

if
th@

non-traciitio'r',ial '10 s have
a.nd

grown

export wi·t.h ,the

.processing re:st of the

firms

the

sam€)

limited

I Lnkage

economy -

This

m;.)Y' bEl due t.o

'errol:'S in

repol'tiug.

9

The ccun t rv ~s Labouz- si tl1at,;i.em Lrrt.er-n a I Ph I I ippine the El.1"·t.iculatlon
post.wal'

naturallymai nt.airjed

ref lea. 1:;5 t.he 1 imi ted by t.he
nab ... u"'e.

fo·gb!!1:ed and

of

and corrt empor a.rv gro\'.J'th exp~riem.:~e and exportable sectors are articulated

(7).

Sine-e

nontradeable

mainly

5ince

t.he

1 imi t.ed

i.nterna.l

articul.C1ti.,on the

i8 of

geo,gr:",phi
€I i

Crt

lly

c.CIHcen tr~ t.ad

growth

the

_t"

non tradeable
expanded

or the exportable
opporbun

manufaoturing
i ties. no r

ir~ustri
'b he

s has

not

em!?1oyr:nent

changed

overall

About 70% of

the

population

in the. lat,~

19705 resided

in th':9

agricul earlier

tare

(Tah Le 9).

Al t.hough

the pro,,?or t L ns wer'9 higher whj Le pf-lrtJ.y in.dica.tive
I

ill the

-decades.

·the decline. process, and labour

of

rural-to-urban of t he ;rural
has begun.

migration popula:ti(:n1

does not imply that the growth
force
-I t

has

re.ached

a p 1at.e au or

+.o

dec 1 j_ ne .

Nor·

dGH~'B

imply

that, t,he. laboul"f·orcA

has

shjftBd

from

t·.he ag r i cu I +ur a 1. 'ca the

Lndu at.r-d a.l sector.
.arintza'l, r-a+e of

'I'he rUf',al popu.Lat.Lon
.2.. 7%. and and on the

hag

grown

Cl.t an average

has

p laoed

pressure

on ·the ].imi t.ed agricul'~lJ.t"al
farm lands.

lands Average and

Labour+abao r-pt.t ve capaci t:s-"of

.f·arm

si.z,e has

subsequently

dec 1 i.n~d 'at

a r.at,e of

2. 4%.

the
a. the

opportunity
dacline

for

direct a~ce~s to land has dim~ni~hed.
and propcr~·on of landless
t,rl, l"El.

Given
on

in the number

of fB~ily

lahorers

farm, and an increaee
opport.unj 'l":;i{~s in

rural workers, however, has

hired employment not adequately

agricu.l

10

expanded. CTable to), ~gricul t.ur? 1 of greaLe~ of
out.put. g.t'l",wth

has

rrnt

ensured

the

availability the

employment

npport~nitt~8.
:l rrtgatiou

For a

wh;']e.
and

growtrl

1·1.e produc1~:l.on through

development

the use df the n~w seed-fertili~er

package

raised tl~ demand
fa:r;IIl

for

hired
opportuni

labou.r, tie5

but.
became

hy

the

mid-70s as c·ertaj

hi.r.ed

emp Ioymen t,
'rl~1.'B

1 i rni ted

n .f arm

opElra.ti.on:::,

G:i ven

t.he

1. i.mi ts

of

agrinu]

tural

'empioyment,

o'ppor-c,uu i -t.i €,Os out5id~ provide
oft,ne

for

th~ g~owing r~ral labour force could only ~ome from
The mamrf acturln~ as 'l'able 9. shows;
£reG

the sector.
jobs' beoauae

l'j(;n;.

hOw-e.VAl7,r

coul d not
f:

manuf.ao't.u r Lng '

,sha.re

labour
Baaed

foree
on the

has

rem~ined constant 'ov~r the
Gutput growth

past

3

decades.
10.

annual

rates

by sect.or

.i u 'l' ahLe

opportunities odn~tructioD
opportunith:~s

for en~loyment in the '765 depended and certain
Ln these seryj.ce sectors.
S'l2ct.(lr~; ~.5

largely

on

the

Avai Lab l.e as

€Hl'lpJ(lymc.:nt.

Hell

in rates.

a.gl'"ic:ultul"1':l·,

Il;

however. In t.he

can generally the 1ast few

be ohta' r5 •

ned at; lOH€rwa.g-e
5

YGr)

the by

t,.at.·ra; has at.bemp'te d to all ev i a;te
y seeking

unemploy-me.ni:, While

problem

active]

labor

lna.i''kE!·t~

abroad.

a number of Filipino
job contracts lose
I

workers
the

have lone ov~rs~a5 to
ratm'l. continue

fu_lf J_11 'tempor·ary to increase

unemployment

as work.ers

theJl'

j(')bs arid a.S flew en t r ant.s Qr overseas

in the

labor force face dim prospects

of local

employment.

II

Poverty}

In.e'Q.uality

and the

Productive of

Structure the ~ economy implie.s that.

'I'he domestic the level of,
1.1 til
5

ma.rket ization

t'n"ien.ta-[.ion

and gl"ol,11:h of 'th~ product:i ve
ma.r.ket.

s·tructnre' tnA

de.PBUd5

on t.h-e
\.'1fth"~

i z.~

arid grow t~h of the! local
is 1 imi. t.ed by the

In turn,

si:<'ie

market Based

proporticHl standar.d

of. people where
a

J.ivj ng fa.mil'Y"

on a ndnimum

living

rni'n' mum+cos t; diet Tabl~ 1.1 shows on the

I

arid spends that aboqt

tnt'},

rt~li>t Tor 85% ' 'f

5h.el tel'

and

clolhin-g families.

i

60 t.o

Fj.llIlino

d.epending not, even

5,ampling

de s i gn and ~"'eal:'under p~.u~(.~hssingp<;;lwer
1::'0

cons' derat:ion afford the

~ do above

have .suff iaient

Table
greater propo l:tiono movemerrt declining

11

further shows that

since

1980

a

f ;I:' and ]_ies

have be come i InpQver i ahed, time also show5 in the the a~d Since

'lihe secular

of

real

ytage rate!"> oyer ~f. Fi 1j pinos the .real tr
I

capaclt,y

p.artir;ipate

local market.
unskilled 1'969, laborers

Table

12 gi yes

wag~. -ates. of ski lIed e·st,abl ishfu.ent.s.

in Manila'.'3
·.for both

indu51trio!d ~killed t,hat
wages.

r ee l. wage rates

and unskilled by 1980

wo~'k~rs have cou l d only

continuoLlsly pur.chase
Wh i 1. e

deterio,r:a-ted. ut, half
the

such

workers in i on

ab

of

wh~t. their

ccu l d bay
pro.pOI;"t

19'69.
o-f
peop 1e

pO vi'!';rty

'Of Fin in crea 5 j ng t.he si ze- of the

nat;u.rally

QOh5td,ct.s

dmflestic

ma.rket.,

it

is

possible
siZG on

to

temporarily offs®~ the effect of a
of

reduced
of

market
gr.e,~ter

growth

dema.n.d thrQu.gh

thHacqui.si

tion

society

Ij_ke the
for

government
inst;anc:e ~ has

and

the

rich.
a g,t'eat~r
sha1"@

,gov'@:rnmenl.!

nn.derwri t-ten

of

12

t.otal in

consumption the late
'lOs

expendi ('fable

t.u.. re

-

from

7.2% i

I'l

the

La.Le 40
I

So

to

9.2%

13.)
in

When

goverfiment

s

inves·tment

~pe.::ndin~s Included, i

its share

total

spending

rises to about

t5% by the lat. t.er pe rLod .
All! de :1.
"f rom

gave r-nmeri t. ,

·t.h~ ""top 2Q% of

the

popul

a.-ti

o"'n:\

whose

share of total income incre~sed
could ther~ theoret
i5 8

from 51% in 1961 to 59% in
f 0 rcornmodi tie:5 .

1981,

i c B\ 11y

gene z-a t.e demand r

Ilowever , ... local second
than

limit to the ~apacity
the
f. il"s;t, place,

of this group to stimulate
a.re

demand.

In

they

"boo few.
of

In the rat-her

'plaC!e I 'the

r i charEl

the

b i gg0.frt

(~dnsumer.'5,

imported the a in

local

end

products. could only

At

best,

therefore,

rich
very' the

and

the

gov.ernment exten.t.. the.

Elt,it'n

Lat.e the disp{;lri ty,.
R!

ma...l·ket ,to
ref] ected

lind ted fact. that 14)
t.hEl

'{'he F1::t'owingincome 4:0 or 60% abaor-b imp.o:s~ible

bottonl

sma Ll.e r share to expan.d the
I'

of

income

(,rable

mak~a it, vi:rtuall·.y

ma.rket

and change

LOM Internal The faot,ot

Financing
s

and Eltt.~rIlal
pervasive the

Dependence
is
fj

country" has

poverty economy' source

surely

one

structural save of the

which

limi'ted

overall

capaoi ty to Low levels made .on

and genel':'ate sav.:i.ngs has

i 1,:,5 own interna~l

of

.financin.,g.. claim.s

.aI so r€ls.u.lt~d surplu5

:from the mUltiple

economy; 5
f~w

genera'ted

(pro-fi t;s and rents) by th~
sector,

a.ffluerd:; 11he of

in .society, for

the government

and foreig·ncapita1.
CODsu,mp.tioTI

affluent, Ittx!lries 'and liquid

ins.tance,

enga,ge

in the I,uu"es tricted

and aocum.ulation
hoa.td·ifi:i or

of unproducctive
.abrQad,.

aS8et'f5

1 ik€l real

est..ate

deposit.:;>

13

Moreover, while on account,;L:ng government or
unproduc

of

government

ex:pe:nd:!.1;,ures

hUD

long

beert

overdue. unv.i able

hag funded t~iV"e

low-yielding,

If 'not financially
and
~f

iI~frast,.l'ucturaJ

projects

~c .... nomj c

It
Got'l"nption
i

has

~lsc
j

dive te~ publi~ resources
and repre s s i on and
I

.Finance
S\lppor·t

co -c·pt-crt, i on

a.S we 11 a.S to

political

3tandinu

Qr

public

Foreign Through(lIlt

capital the

also

hardly

,~ontri.hut.8d ofthte port.foliO'
p;r;'of

to don'lestic
(exQ."pt.

savings. f'or 1975) were

70s and the

st· rt

80s

.dirt=lct foreign lar'ge l:y
():of

inve.':l,tment and net by l"em.i t 'tfilnq9.s. of

capital
eal;:'n:i.ngs

inflows
and

I.set

it.
f al"m

d;\'vi dends
f e~5
I

and

other

c_'·ap aI i'~ and

out.f lows in the payments

.of

management
to

copyright

rQyal ty

(T.abl~ 15) ..

Amounting

$901 than of t,he

million
that. foreign of

for the period 1971 to 1981.
the prececti.ng in decade, thB

and bei.ng ,

870% highe.r large offset inflow by

t.he· relativ.ely

investme.nt.

pe:l:"iod wa:;;: nevert-heles5

$960

million
Qut;f low

net equity outflow
for 'th~ period

for tha

same

period(lOJ.
than that, of

Net
-the

equi ty previous

was 87% highe'r

decade. structural Table fa c-tors
have Ii. mi t.,'Bd thB

While ·theabovlS domestic s avi nis sav'in,gs}

level

of

16 shows
'1' be

f lucd:u.aiions

in the

moverrH3.nto:r

'th.rough time.

growth

of

saving:s

ha.5 de.e.l i ned

f rom

the 1964-1956
and from

period

to 1958-1962, to 1978-1982.
can be ·tl'aced are

from 1962~196£

to

1966-1970 domestic
nati.onal accounting

1970-1974 'in

The contractions in
'0

savings

general

t,ne

decl t.ne olf factors

in

income

levels.

Whi Le there

a number

1·4

for the

such

a decline, eff'e-c.'c of net effeo't

one of t.he .identifiable

external l.ncotne. cas of

factors Table exports

15 1 if and

adverse

the terms
of change~

f

txade in the

on
.PI""

rElyea-If!)

the

imports on the decline of overall incom~ during particular
within the
pe r Lod specified

year5

ab ov e :

from. 196'9 to 1970.

from. 1974

to

1976,

and from 1979-1981.
account the

Other factor3.

which need to
iuthe

be

identified rears wi thin

for the

Clet,eriol';;:ttion of savings savings.

other

periods

of declining

Th~
t.he Leve I

contractions in dQmesti~ savings
of

~everelt
the

constrained
in,flow of

'cap:l'tal

formation

and

1119CeSiSi te.ted

particularly from 1965-1969

inadequate and

t.o II'h\!J\'ijtgl'05S

doro€Btlc

cap:l tal

fprrrLati.on

lx-om 1975 'to

19l~3 (11).

1BE INTERPLAY OF INTERNAL, WIT'lilN THE ECONOMY

AND EXTERNA.L STRUC'T'trRAL .'

FAG'fORS

The the flDW

inter;play of foreign years seater

ofa

09rd~f.'ad1ctoi"'Y ~et

of st,ate

policies. with
in

inve'5tm.~mts

o!lnd of e;xternal

credit

the

postwar-

engendered

and m'ainta.:iued ma i, lilly to and

a.nimport a 1 imited :i.mpo;rt.able

dependent; dome·st.i e

Pl' 0 chic t i VEl

whi.ch catered dominant

mark,et.
(loexisted

The

nontrade,able

secto.:rs

with a, small and unstable

if' not, stagnating

.. resCJ.urce-

factors

sets

limits

on the capacity and

p£ the

nation

t-o

trruls:f.orm

i til!! produo·t iva

:;s,truot.ure

a. CGUfrl1.:1lat,e.' sUl"·plus ( 12).
of

'rhi 5: sect ion
(13).

poei t.s the arguments

in

support.

the

above-iccrrt.errm.cn

15

s@c.-hoTS

of

t.he

ec orromv

desrli t,e the

pr:l.IDf:1cy

of

t,he

impClrt-

suhAtitution

policy

since the immediatR

po~twar

years,

and

the

exporta b 1 e h~ve

sector

can

be trac~d

to

S(;:V0

ra]_ state

po 1i.c i.~ s

whi e h
irnport-

produoed

contradl~tcry

outcomes. stl'ats'gy'

In line with the of most

E,ubsti. t.u t Lon countries

indvstri"-ll

i z:ation

Thi I'd

World

in the immediate
irfdust.ries

years after World War

[1. nontradeable
G!!5

manufacturing

in the 'Phili ppj nes were

bablished
and

wi'l:;h import",

t.he

imposit.ior!
in the late 40s.

restrictions corrt.r-ole

While
the

foreign

exchange

and

lmport

were, lifted

dur.ing

period

o'.f de~ontrol

In tJ:18 early

60s, a proteotionist

cascading

tariff structure
the

and an overvalued
of

domee-t.i c

c.urrency

po l::i.cy· malntedned

prof its

import

sU.bst.Ltut i ng industr

i as',
proceSs of rimport

The ec:onomy-wide a flow of

St:!bs-61tl.;ltion Lnvc l vas both
I

!'

commodit.ies,

.ffipeci f tc~.lly

inte'l~iledi steand

capital

tradeable

manufact'uring inputs

lndust,rie.~
with

and a aubs.t.I t,ution goods

O'f

imported

In.te rm.edi.ate importable

fins]'

suppl Led

by.

'El:i ther

the

or nontradeBble

sectors.

A cascading

tariff

structure

domestic

martuf acturer-s Thi.s struoture p:roductswhile

to

pro.duce

final

gpods

or

dire-ct

aonsu!1Imables. f'O;reign import.ed final

.iJnp.oses high levy.ing

tariffs
01"

on competitive no tariffs. ' on tariff

low' rat.es The

inte·.l'm.edlate

and capital

gQQds.

caac ad i.ng

16

'Fir-s,t" s~c·tor given t,o the

i.1:. obt.ain

'osnahledr,api high
profit~

tal

i s t s in

t.h~

import--:5ubr"titu monopoly external industri6S

t :Lng

du(;:'l ~,o t.he ir

advantage ly-ba5~d enjoyed
q:xport

prote.ctiveta..l'if·l' Second ,while

barri.er

.imposed' on

c~mpetH,.or5. a

inipor-t;~ Bub5tit.uting rat ( J 4:)
I

h}gb effe~"d:.\ve prot.~ci;ion

agr'icu1 turaland zeneR were

~tDduation

outalde

the export

processing

pe~~liz~ri

imported
mllteri.al
fi .

Tn tll~ C'alse of
waD t'm:PQ:5€d

the

1 attel'

iudtl'st,riE!5
'rhird,

I

an addi tioui':ll
ClU

tl% il!JiLplici t -tax

on exports.

the lCH'~ tariffs

irnpprted re§,trictBd

mate'ria

1. s

e s t.ab l. i shed

and lIlainta.l ned a funct,i'Qnal
between

but

t'nter~e'Ct'oral

Y.""elationship

the

nO,ntradeable

sector
emerg'eut wi.thout imported
capltal

and the importable
irnport-,suDst.H:.uting the or
goods.

since the, teohnical indust:ri
e!'[';'j;

requisjtes not which

of

the
met the and

could

hav·e be~n
5lJpplj

importable pa rtly

m.anufFl.(~tnri.ng secto'r processed

ed

loca,lly

intermt5diate

inputs

The ove eva Lued dome at.Lc

nU~relICY

poLley.

on the

other

hand,

malntatned
sectors

th~
des.pl.t.e

dominance later

of the
government

n~mtradeable attempts Lndu at.r Les ,

&nd t.o

importable t,he the

encoura~8 Reinforcing

development

of tbe

~xport-otiented t·ar1.:ff

e-ffeQts of the

cas.cading

strud:,ure ~ an over ..alued t
~he ape r .

dome~,t1.C

eur.renc y maf'Je impol"ts, earnings
p€r~o

.... 1. at i veLv e have to

5i nc(-,:f Qrfl: i gn exchange
flt

of

expar"te.rs

be !,",iu:rrende.red importers
1,€~.Ei, .

the

overvalued

r abe ,

the

policy

enabled
bj

and

the

impo:rttheir

su.psti tuting

indust.ri~5

finance

itlxpensivel,y

imported capital
t.he over~'Val!led
the

and in.termediate
curreul;;Y' pelic.y

input requirements.
re5ui'tsd

In effect,
exchange
and

in

an Iwmequal

betfl'~en

.nontradea,ble

andhil.portable
11

sector

on 'One hand ,

the

exportable The

sect("]'J;"

on t.he

(')t.h.;!r
by
for

policies

prnmulga'ed
r'e au

he 5tat~
tJ,e econ

since
my.

the Whil,~

postwar 1t would

Yr::1ar5 had contradictol"'Y

Lt

$

geem

on

Lhe

sIL1:rIaC'e
~t1·al:.p.gy W;'J5

thaJ,

the ~eJf-r
(~i.1g.cartlnl4

indlHstr;alliGaUon natura
uf thf.'

a .st.ep towards he

Ll ance ,

t,h·

'pol Le i e s ,

par'l.t~uhn"ly

PI'cd-,ect'ive

deptmdence lmport.!-lt t
f1

and

r e l Lanc e on t.hl

tt'>reltzn"~
delve lQpmr::nt

piiGl,!
(J

.'ilnil import;

":r''ldtL_

Chea,p

dl~coura'JJed wh \ c:h
~::r.l~ J 1

f

~mb5~. i I.~IU nw,
c-

i ru:1u,::;l'~ribl5 a:ocde views
I

Pt'OdUf~~

n .pnne

- i at. _

!nplJt.~

nd

(':IlP i t.lll

thereby

- educing

t he

I ,,_

e

t.Ool mpor

these

~OQdffl.

Wh~n

(')rt

this etf c

un the fOonomy

in the ll~ht of the it

development
flO

~hould

cume a~

Eiurpr:!::;e.
societies
f01"

In the historical
like the

development

of capitalism.

pAriphsral

Philippines products and

have ei t.her be,en v.lj.ewed as cap] t.al goods or
&._5 5'01.1

mal'kElLs

finished

rr.es

~)£1

che;:'n~li.'

manufactured
Despite expand absorb
measures

commDdities. the failun~: -oft-he imPQr substitution other policy and to to

and develop the

backwa_rd 1inkage.s with labor force, given

sectors

burgeoning the

-t.he ~xi sting
p. Li.o i.e s o

economic which
can

and
al.

-absence of

distributive

d-evelop

dynamic

interna,l the

mark,et"

the program

was maintained

in

cord uneb Lon
.indt15trializat1on
zam~ time in

with

neHly-formulated The 1atter
I

eiport, - or Len ted at about
t,hB

.strategy.

formulated

o·thaI Third: by

'Wloi"ld count.d es

I,

eal"nings advantage

utili~ing labor.

the

country's

comparat..ive
surface,

- its ma5s of cheap

While on the

lot

lA

and the. ,media, campaig.Il

far

export

deve Lopmerrt,

t.he e.xport,

5GCtol'

is

s'til1

secondary

rela.t.l, va to· the

notrt.r ade abLe and As noted

impn,r t,Gible earlier,

sed.orr.i

and remains

small

and verv

unstable.

in the ext,ernal
a.actor
hfl~

marketbeen unable

Gi v~n its

instabil

i ty.

I

t-he small

e)~p-ol"t
85

t.o

cornpLet.e Ly

subs idi z e The

i ndust:r;

oriented
importable on bhe

towards

the domestic m,rket.
have.

:non-t,radeable r,elied only

and

manuf ae t.ur-l ng aec t.or-a infusion of 8xt,e.rn<lJ
on

'therefo.re. which not

he-av._Lly
Ina.cIe the but,

credi't,

eqonmny

OhJre

dependent

external

.t',e.soU.:r;ce,!3

and developments pol iqy ,

which

has ·also

relnfo_l'ced

t,he overvalued 3.

currency

This

p.ointwl11
The

be 191abQl"'ated in Seotion
nontradeablB
J

Bud iooporlab10 to

sectors,

particularly

in

manuf ac1;,.uring

l.i.mited sub,sti tuting
5trategy and t,ne

achievem~.nts
reQ.Qgnition which in

of

the

impor-t

of tha: adverse rhetoric. the

impact. stat's of these

of pol ic.i,e:s on other exa l tIS ~ect,or~ (e. g. can agricul

sectors. t.ur-e and

ex!?o:rt) .

Thepredolllinance by

only· bepar-tially

explained
themselVes. 'Unless

the
cannot are

matrix
account

of

existing

P91ici~5. Policies
of wi t.h the·

by

fo;t" the

tJilaintan.ann~
groups

sectors

the5:e

auppc r+.ed by various

converging

19

The~e foreign the

are at least 3 interests investors th~ in tbese

at play;
58ct.OYAi.

the interests the 01 intel'est5

of
(/f

f.1.nd l.ooaI and of

stat.e'

inte:r;-nat.i0nal

pr,oducen:;

int.ermedia.te
8tand to

inputs lose

and capital .either a

gCbds. margin

Foreign ~nd of prof it

local investors
due ·to t.heir

wide

monopo ly in aud th~ the. in

advantage
C.::l5e

m th~ domes t.Lc JJl!!lrket, or thelr those
Wl

r ervt a 1 income. 'f the policies

of

th imJ;H)rtatj on rights. i t.se Lf ari;l changed ..

pl:oduot..i va 's'trllcture

The profit
tbe

margins

thi 5

aec t.o r 'may account

for

I~he pa hter1"l:5 in

f low of

foreign

investments Table
investmen'ts norrt.r-ade ab Le

in the 705' and early 80s. 18 ~how~
flowed sectors

tbat to

more
the

than

half

of

t

tal

foreign and
table.

manufactllt'ed

importables to the

tJuQughout.

all

the

pe r iods

The mo::;rl:. dramatlc. :i.ncreasel 'in faTel
1976: to th~ 1.9'80-1984
se·ctQ.t'

gn ;'ve st.merrt.a n from
occurred in the

the

1970-

peri od

ncntradeable It

manu;f.act;u,ring

followed

by t.he con.smr-uot.Lon indu,?'t:r:i'.
.capi.t,.;l,list~

is in

),nterestiug areas

to note

t.hat. foretgn

greatly
. tfunded,

invest.eo 1. ,e.

whel'l'a ext,er1l6l,1 c r-ed i,tflmJf1!d

or Hhich

the

banks and financial

institutions,

the construction

S.otO~,

and th.e purchase, Apart
who.

o:f :i.mport,s_ the inter~st5 of foreign
lflvol,v€l,d ox' ay'e

from

and

loeal
to invest

capital15ts
in the

s r-e

currently

planning

nontradeable
ar e served that

and importable
by the ~.xisti'ng

sectors.

the interestg

of the

state 19

domi.nanoe 0"£ t.hes9 st.a t.e '
5

se-ctm:-s.

Tahle

reveals

about

hali
duties -to

of the

1:..,otal

1'8Vemles

are den'ived It would

either from impClrt

or i;,axes

an :f ini.shad
that

products,

be too s i:mpl i.5 t i. c
:f ,0 I' the

assert"

however,

'the state 'W'iJ 1

work
the

Pl'~ :5~.l'va tion

ot

exi~ting
20

poliCies

and

for

l~ domin,ant
import,ahle

the

first

pla6e,
and

'out
s\':~t.C)r and an eql:),ally import.-de-pendent but

weak expc rL

payments exte:rna
]_iEli

dif:Fieulties d 0r
C l"€idit

which .

have, been

temporarily

a Ll ev I a t.ed

by

In ad~ition

to it~ revenues.

the state
~Ol.ll'·ces

has ,t.herefore,
to fj nsnce e~tensively is

be.erl abl~

to

drcfW fnnds
a p.oint

from

these credit

i ~,5 ex-pendi tures.

which

Hi 11 hE:' d,i sClJssed

more

In the

next

sectinn. of

In the second amDng

place!
OU5

the 5tat:~ competing exportable

CDnceptually

the arena

.\"!J.tr.uggl,e.s

va.r± in

rent.! e r- oap i 'tal i5t~

i nte'res t s .

Inv~3tor5.

t.he

Li ke

·~.he. Int,ernatiOJlal indus triali?ation

Monetary policy

Fund Hhich ,espouse
I

an

expor-t.-

ori6nt,ed

far

t~e country

(1 S) ,

Pressure It like should the be

from this group of capitAlists is to be
noted ·tha.t. w-hiLe ird:;sI'n.·a.ti.ona.l ac<mondc

~xpeQted.
agencies;

I HF f avo!' the d~ye;l 0Iilne'ntbf

expo rt -,or i en t,ed i ndu So tri es • t.he continued Ln
t.he

th~' onlY exp.li:ci t formula t..iQn which can go against dominan(~,e of the nontradeable is the and the privileged

groups

importable restrictions.
whioh

5ec~or

] i.ber~1i~ati()n of tariffs

and

],mport

A.s it. st.and s ,
local

'the cas cadi ng
undue

ta.l' iff

~t ruc',ture ]
f~('im imp 1'\e:5

protects of

inciust,ri1!!lEi from

cO,mpeti. t'ion re'JIdy

pr-,oducers

semi ~f.ini shed in the

and fin ished of

good sal . ntermediate of ~he

liberalir::.a:tion capital goods.

i:rnpor't,atioh

i.nput s

and

It is rtot th8 antithesis ,

liber~11zation

21

measure

dem~nded li'Y the

1M!! 5inde -t,·he ca:s.oading
in

tarLf·f1

5t.l'.'i.;lcture

is not

genuinely

pr

tectionist s•

natpre.

Apart

f r.omreve-r~ue

therefore,

t.he :=lt~a·te co.ntinu,es

..

to

other other

SOllrces lntere~ti5
th~

of

funds in

in the

pa.st;, and the
w·i thin

relat;,.ive: weakness

of'

'bhe

s·truggles

the

s-tate

(fI,ay have
MI..1.ch

weakened

pressure

on .1t. to- reexamine

economd c p(Jl:\.cies,

less

the

con tradict.ions

in t.he pl"odl.lctivB

~tructure

of

the

econo·my.

Foreign

p;t'oducers- of. itltermedi.at~ capitalist

produc~t.. and "'api tal s alS9 benefit

goods

in

tbe more advanced of a

countries

from

the

Bj(i5tence nantradeable
w·hich has yet

productive

structure

where

impc~t-dependent
policies res.·earch wh:i.oh these
l:

and importable
this identify

sectors dominate
Whi Le further

and of the
empirical bY'

sa.stain to

stl"lllcrture.

the

5peGif iG mechaf.!.isrns
WQl!"~i

int·ere:stsll1anl-r
state

e Sot thems e.IViS i'l in the it is qui t.e logical
system

ngs of ·the

Philippine the

and 'economY ~

to assert

-that wi thin

frameW6:rk of a world capitalist,

where periphera,l

:societies

·are assigned capital

the

role of cutlets

for

finished

products

and

goods o.r sources o'f qheaJ) laborr
tha.t allows the libe.ral

the maintenance
entry of capital

of any
goods

arrangement

functions this
r~gard. ,explore the'

to

support thE: intersfi.tJ5 .of speci fie
Two points should 'be.
noteq"

'calli.ta 1i 5 ts
in

in
this to
,

sector. First,
the

hOW€fV'er,

a.s merrt.Lone.d in pas~ing. ways by' whi'aTI these local

above.

it is

nece5S.ary converge

co:n.cre..te of

inte-l."ests

with

intere5ts

and

fO"r~dg·u en'ti ties q~cision-making avoid ~ purely

and:part.icipat·e on the level

di.red:;.lY in the process of the sta:te

of Bconomiq to

and cOl:·porations.

fi1,:mc"t.ional:ist

assertion

of the

existence
and

and strength

of fQl;elgn

p.r..odl\C€rr5

of

intermediate
lnte;i;es. ts are

inputs

capital
1n the

goods.
f! or

ref I ecrted 'fh:i.rd of World

IMF pre~ or i pt, ions threaten whole,

the

ccnmtry

and fo.r o,the.r and strengt.h

50cieti.eE1 wh:i.ch as

t,he e.g.

v i ab i.I i t;y

C6.pi t.a llsm

11bera.li21ation. Second, benef! t fro-l'Il whi Ie the pxodurae ex.is,ti
bf
1":5

of

cap), ta 1 goods of the

on

the

whole eo and

njg domin.ance th~ poJicles

nontraciflabl
them,

importable s6ctbre .nd
relativelY indifferent,

supporting t.hz-uat thi~

they are an

to

a mo.re vi,gorouB sectpl." since

to

develop

'eltport-oriented dependent. In

manufactu.l:'ing

se'eta}:

is

ju,st

as

on imported

raw mab~r! a ls and c ap I t·,a1. goods. the seemingly conf 1 i.ct.l_ng choi-ce bet.ween

other

words, and

'i:mport-substi Ioca] debat.e 'Fo eoonomy. heavily

t.ution is

expo.t' t-or.i~nLt.:ed to

Lndus.t r La'l.Lz a'tl.on
ex.t.e.rria.I capital major
a.nd ~xport .

if!

the

a non-- issue '~hi:$

.p.l:'- va t-e
I

conclude tha on

section

all:5

sect.ors :sectors 'Of

of
j

,~e'
rely

norrt.r ade.ab Le ,

importable
for

imllQrobe.d

inputs

a substantial reqluiremen ts.

portion S incethe

their foreign

interm.ediate

and capital

input

wh:i,ch could
theoret 1c:a 11),,"
:f in an(;:'e

t,he impo l'"t,,~ 1. OD. of t,

these

goods

ha.vp.;

been

Bx:tremely has come

.:i.nadequat.e. to and

the

reproCluQt ion

and

grow'~h of

the

economy 9xter'nal

depend on the availab~lity the malntainance
funds the

and

co~d~. of

credit

of

the

poli~~.ThB
state with to the

a.vailability the capaoi ty

of ~xternal t.o defend

:ha.s a.lsO' provi ded the
pe50 ,and

Qvel'val'll,ed seton

where.wi thai by

a11evi at.ethe

com:rtra in.t

import.

expenditu.res

23

country's
ere-cit t.,

export
t,h~ con

performance.

C~ ven the. i

dopefldeuce

on exi:,erna 1,
5
j

traqt. i Q n

0f

e xte rn [II f 1nano La.l. resource

if

not only

the

temp.orEll:'Y

wi thl'lrawaJ. of
bOIt.al1c;e

i -ts

accessil'1ili

1;..7;

ha s

not

resul ted
for

l

n s·evere

.of parm~nl,!5 dLf:ficul
a15Cl

tie6

nn.d pre5SUt~eS

oevalua'biOJfI

but

hat::

brought

t:.h~

import-and-credit

dependent

productive

struct.lll"e

head onto

a c.risi:%.
of
aI

The c:u_l'rent~ economfc

o r i ~i5 Qr

the crisis

'l:,h~

aos,

.... ,hieb
economy

merely w.i tlwut,

manifest.s e.xt,ernal

the

nonr-epr-oduc Ib.l 1 j,!:'y of and the

dependent

financing

nOD.;r.'ecogni·tion

of

the

contradictions
ha.s served ii-,s

of Lhe postwar productiv~ structure interests.
.reflect_.:;; the'
_i ens

years
t,he
5 ur-f

which
in The
5t.'lt .. e

role

of the

st,ate ace _ the

unwi t t:l ng 1y maldng next

t.he con t r.adi qt

r 1. oS e· to

s ec t Lon Ls ~n ~x:tended

d Lecua s Lon of -how precisely

reinfQr~ed
contradict:i.ons.

the

productive

structure

and

intensif"ed

1ts

'fUE AUTHORITARIANI STATE AND THE ECONOMIC CRISIS

Confronted with the structural
I1mited
p-ro.ductiY€ will not

features

of the econbmy,
of

the
the

level

of domestic
towards

savings, current

and the propen5ity
account clef i~' t,5;, but, will
j

'structure only to

any frtate a l.s.o be

be dependen·t. ba.l ance verge can

on lext~rnal

capi t.al tie)s

predisposed nation

of paym€mt~. difn.cul

which can put at
·of

on the

of an .4geon'-Jmic e r i.sLs .
ally pt;rt;;:a nation into

Ba.Lancre

payments of an

diff.ic-ul ties econcmi o crisis. ~efici.t5 wi thdr.avtals
and

potenti They are

on ·the verge a crisi

transla:c,gd

s when wide!1.ing

exces~iv.e domestic spendings from the inte1:'nationai reserve

have to and by

be

met

by

short-term.

24

ct'~di b , wit.h the

A poten -t, i 211
.fresh
.1:; be

ri. ~ i 5 can of

be tempora

ri 1~" 6,vGrted.
external
of

howevo.r , c r-ed Lt, .

in1.'nsion Ph.U ippine

.actf';Jqu.a;l,l'.e longer-term
0. .Xped.enc"l:l

In

,

balance

on short-term. eredit.
an economic crbd.s
tll-€l

tht'eatene:d

the

5t~d:;e Lwice,

before Latie

the

forma'! aft.or the

ins,t.t tu-bion of

,'3,uthod ta ri~n of
Q

:stdite an

in the rule.

605 and

mol'S

than

a decade

authorit.ar:i

However~
t.he crisis h:'om the

whil~

pre-au"cho.r·i ta,ria.ll when it

l;.a,te ~~'asable

1;0 t;.id~ over loans

in 1. 969 IHF and 3tate

zece Lved msctiurn

and lcmg-,·t:ertll

:fe'X'€ign

f inane i a L infl't i tut i on s ,

Lhe current ,

authoritarian

dose of fresh
A crisls

credit. d1dn·ot !'"~le emerge: wlthin mo.re t.han
613

a

decade. became of

of mo.r e

a~uthorj;ta.!'ian entl'enche.d . investment ;ext.ernal

a I thcol~gh ,contra·diotary Lo the t·o ;lnf lo~ the of

polied

Compared from 19(70

$2. £ bill. ion unprecedented

fnt·E.dg:t1

1983,

growth

of

credi t f z'om $2. 1 hi 11 i on 1n 1970 to e bout. $26 hi 11 ion in in th~

19B3,
Up

and "Ghe increase·

share
5,

o f lonf;{ and

medium-term

Loana

to

at.

le~u'iit the
5

m.id-70

seamed to

have

suocessfully

al1evia.ted t.he economv '
The conf Lueuce of external credi'r; of

structural

defioienci@s.
for t.he mas s Lve infu:Ed.(.m

~ fac:r!.:.ors.account. du.ring t.his to

period,

First, erecti
t

bilate.ral
1 nsti tuticliflS

~6,si6ta.nca

B1'I.d e8,SY acce~:s

mul t.ila-Leral 25

In~rt t aI law 1':..his
5llpport

regime. l1Y

The aotboL':i -t,;:;rr.iafl

~Qvernmel'"lt. e as i 1y ootained
WillS

proclaiming

that,

the

r€lpuhlir:

under

a

g;rowing

r::e.to:rm.

can be initiated
t.he

in partnershlp
by

wiLh a strong ruJcr (16)_
and the
WB-1l1F

Thjrd, gave

support

gj ven

the

US gOVej.f'nTll.ent

amassed

OPEG's

huge

p~2rtr.odoll at~ de po s Lbs and were

t n :search

for

eCOfiomie5

'l

"l)

rl'able

20 ,gives

501~te indi..cation

of' how external of long ·and med:J.llm
I'

loan~ ter.'m

were

Hore (from study
54

'f~han r~aLf

loans IMF

to

73%) went abou thaI

to' t.he
f

govaTfilnent.

,

According r-e u s,ed

t.o an
to

( l8 ) .

o.f th~ se· 1Clan s

W~

rep 1aoe

maturing obligations while the other half went to inlrastructucal
construction equi ty project5 (e.g. electrification ~nd transport),
go:vernmf'.lnt, cO:t:'porations, deve lO['lment, bank.s , and to funds

to an for on

invr3'~:rt,m8rl't in

re lend i.ng by· go... rnment c theot.her than imports ha.nd!

Short -term

e redi t,

was primarily

llsed

for

tt~ad@. £i nancing,
'the

MorE!

hal f of these
7

(50 t.o S3%) went. to l'em,aining MQreover
1

purch.1J/se

of and

non - oi 1
m;9.tu.r.tng

while

the

coveeed the

oil ]mports

debt obligation5. 't'hrough
gOVE'lrnment

!Share of and

short.-1:,e.rm

cl"edi t. grew and
th08

timE!!

relat.ive

to

long port,.'

medhnn-te.r.rn loans
5hort-t~~rm credit.

ab,sol'bsd a larger

'On of

These

26

O[

both

the'~ current t.he

aecoun+s
5e

and government

def lci,ts:.

l:t should
around

:ba 'uot,edthat.

d®ve lopmP,l1 t.s w-are· transpiring

1917

s ll ocab.i on •

bhe

following

Lnf eren-cas

may

hi?

not,en -

The

availability

.of

more

foreign

Loans

l."'.einIorced

and

credi't, .:::' ..

511ppor1~ed "tdle gx'owt,h

eLf impo_r'·t demand

of

the

impo,t;-table

r'!:1!£ltilcting importable

the

relcrlJive in ,the

dorni.nanoe ~t~te.

of

the

nor.rtradeabls sm~J 1 and

and

secrtCl.t'5

Gi venthe

uu::stable

~}'Hie-:rtak€l grea'ter investment expendi ta.l

S0115l:unptJ,on ·t,u.re~ such as

~xpendi tur"e

on

one

hand,

and

inf ra st i'u.ct.ural

pro.i i9ct.~ whi oh

and had

~quit.y-capi
dubrcue

for

hanKrupt g'OV6!l'mnent
retorhs"

corpora

t

i nn£i

eeonomf.e

on

the other.
mainly

:Siuc~

the

statei)js (Table
t,hey

consump~ian

expenciittlres consisted

of importabla~

i .. . ~ e

27

dl d not

s'ave nor

earn

e c a.t c e dollar

r es our'ce s ~

the loans further

only

by

investing

in bankrupt

government
w.ere not

entltiGs

but

also

in

structures-

~1hich by t.hemae l yes government if
.'!i t

income-generating

( e. g. ,

monnment:§1
auxf U.ary,
eQonomic

building~
pl. a i n I y

and bridges
t,Q

of love); which Were -Lhe
una rt i au 1at .. d e

not;

sUper f 1 uou s

l'"'uct,ul'e

{ e . g. p l.arrt j ;

the oversi~e~
or which

Bataan export enlfft;"ged

prcceB5ing
e]!,isting

zone

and

nuc l.ea r

merely

sugar
and hot,els 1f )_ Even if credit bee·arne more expene i VEl by 1978
t rigge the!S
1'6

mills
and

f u rt.hf.:·r· expend i tU1'"€S

d

i nf 1at', i on

and

the spend
which, the

a.ppreCi at i on of

the
to

exc trang~ r at.. , e
prevent

t.at~ cont,i nued t.o in the
I

Uhpl"oductively

a gr~f,lte.rsl4-rnp

econcmv

would ba~e been detri.ental
pro.ceS5 of

to .its survival.
a-cc armrLa t.Lon
l

While retarding

internal

,surplu.1'5

time.
'l'he

c etpaci ~y

of

t.he

5t ~ l:;.s

1',0

en gage!

.in

an

unchecked

unproductive
the

s,pendil1.g of

spree reflects fund'S mav

~ number of

hLng a :
La

Fit's"",,:,
c orrt.Lnue

ave Ll ab.I li ty

have been p~r.cBived

since
19B2) ,

hssed

on past

,'1969-1970) and current and rest

experiences

(1978-

loan!3i WElre ref In anced

ruct urea . S~ cond , bhe state agenc 1e s . Monetary the

wa.s

t_;reat.ed up to

1 i he.rall y by' €Ixterna 1 f tl.ndiugs
the ,early

!From the
Fund gave
5 t.ate

mid-70s stand-by postpone

80s, 1ight

'I;.he Intern.ationa,l conditions,

cl'edi t

with

enabling

to
in

adJus'bments. and giving

it a favorable

credit.

rating

28

th~ private international

oredit market.

Third. the authoritarian

,and

critical

public

which e~n hold

it

aCcol.mt~ble,

put,

st,ate

and mora.1 control. discretion
i:nternal

The use of funds was ther~~ore. authoritie~.
!'3¥s·t-,em

left to the

of

tha

moni tori.l1g'

or

i tsineff

iciellcy

waH funoti

anal

to

jconamiQ efficiency partly ref 1 e.ct :ingthe

did not feature
GOfiC8l'n

in th~ di~positibn
groUp

of credit, in t.he ~r~atp.

of

th~ dominant

for political
which
f'am.i ly,

survival.
go beyond

It also reflected
the

a limited con~ciou~nes~

cannot.

in t·€! res t, of the. cone reV'.!: i nd i v i dna J. , of t.he abstraC't nation or. soc ie,'i:,Y, the
Th~

OI' c1 ique t,o tJlat point.
t'etiSBS

fourth

arm-t,h~r p'pssible .
'of th~3·t.at@:.

re·as6n. beh tnd
It,
$ at

.

um::hecke-d members
of
'to

Vl;'1product i v~ spencliu,g

wo'ul d seem ·t.hat
i~:f Y'ing' ;l._mmed:t ate

the

st.at.e

have

apred3.

J..e,Gt ± on f or
,j

pel'f)ollCll

Herio.e

the preference for present income

and

~bich can

yield

future

iDcQm~.

In.

po Ii ti cal

terms,

the se

politl.O-ElJ rstht:lr than :5u:3tai.n{"..d employment

st.shili ty! and the.

and group

su rv i val ~ and

general

development

The

eorrt Lnued i:nfu5 ion of c.redi

t.

reprodncecl

the

productive

.

€l}<port performanoe.

It

a Lao .ena.bl~d ·the state

to

ex-panrl

t1he money

supply

and

Lt.a spending HowEver
I

actiYH~ies expansion
in:flati

and of

to maintai.n
kuoney

an

overvaluod go",r"ernmen~ ..

currency. ~;KPendi ttIre

the

fH,lpplyand

ex.acerbatea

on;

whidhJ

in

bu.rn , !'rIade

it. mQre

difficult

for

the

state

to maintain
managing

an
the

overvalu8d contradic'bory

currency
e·ffects

vd thou1~ c;redi t. Lnf lows,

Thus,

~ith increasing diffioult
capacl-ty

short-term

lCMns~

the Central Bank found it ratio. Its
creditors

to meet the demands
,to se.rvice mabur-Lng

of a rising debt-service
debt ob l i.gat.ioDs to all

concerned
l.;r:-onically possible of

depended
l-fa.s.

on

the

regular
in

flow

of

credi.t.
By

which
19B:)
I

·onlyavailable of

shnrt-term

no t.e s .

a

ormf lation

th_'t~efacd:.ors
by t,his time

l.ed .t.o t-he

inaCGB.i5

sLb L11 'by

ext.er na.I credit. t

which

was ~lref.ldy
I-

the 1 if~blo'ocl

of the state and the Dationjs
pay

economy:
-th!S: Aquino

the·state's incapacity to
a. S'sass i l'lBt.i on

all

its

credltors,

and

·the

int'ernatio:Qal
Q.£,

financiers'
~

p€!rc~ptian

of. U~'e political

instability on.

the

Phtl ippin,es
1:.0

and. ·t.he ~onse·quent

60 llee t i veacti

oJ

c'redit.or·s

LnvoLve the

I rrte rua t Lonal Hone'ta~'Y Fund t.o

ensure

The heightened
became unmanageable

stl'll.ctural contradictions
wht:l"n ·t;he cri

of the economy thus
of

regu.lar flow

credit
months r

ceased.

Ln

1983~

un 1€ltiH."!ih_\ng t.he

si s .

1n

recent

the of

Elt.a:te

f orrn.ulated

a recove

ry

pl"ogram. cons.i: stent.. Fund.

with

the demands

the
.011

Monertary stabil:lzing address the the
economy

This

program
repayment.

put~
It.

value
dmH5

and ensuring a

no I:: which

probleitD

of

d i~artiGula-t.ed

accumulation

pr.edi sposes

the

eConomy-

t6wnrd.'ei, C t::i:5 j s s:; t u at i ons _

by

some

eapficlty to produce
J.mpcse~l
,I ...I

and finance wi th
the

its own actlv~tie51
th~
acrcompany.i.ng;

the controls ideological in

by

financiers,
of keeping

llnde,rpinning

country

in a p. r t.Lcu Lae positio.n
I'

th~ international

di vL5 l_on of

labor.

make

i'b vi rtuallyirnpos~ible

for the
Nithout. relative

state
external
aut,on'Orny

to strike Dut on a different
funds r .t, ha-s l05t

path.

After
s8trr1blanc~

all. of

whatever

.it projected

Ln the

past .

.CONCLUSI ON Thl$
-of paper attempted economy, foreign

to descr'be
( 2) the
inV1B8

(1) the str~ctural
interpJay and of external and

featureB

tbe 'Phi' il?pin~ polJcies
I

contra,diotol"Y
credl t in

stat'8

Lments an

and pT.'oduct.i ve

reproduc.i ng which

im·:pot r

credi t-depeudent

structure

has

impo:sea

const,raints

on

the

(3) and role of the
5 tate

the

in ;r~infol'cing

t'he

strllctuJ:;"e.and

intensifying

its contradiction~, The paper further of the
productive

argue.d that the st.ructural.
were height~ned

contradict.ions by
the massive

stl-UG'ture

illfu$ion of external

ere-di t dur i ng the .allthori tarian
to

y.(:iars whose its
the

811oo~tiof.ll conformed
ide01ogica.l economi'c -credi.t

the int.erests
and the

oongealed,

in 'the at,ate,
on it by

orientation, These

1 imi t.s inrposed

5 trur.::-to.re. 1'10

c on t}' ad i c I~ on s became unmanage a b 1.8 when . on a morel t·egula r has i s on acuount sta.te ~s incapi~w tty of a

longe:t~ f lowerl

number of plausible

reasons ~ the

t.o p<SJ.y a.ll of indiv:l dual

its

creditors,

tn.€'

eredi to.!" s

collect!ve:

V0r5~S

31

act. ions
of t,he

to

el'lsure

loa ins

r paymE"'f . and ability
in of.he

t.he i.z co l l eo ti ve pe rceptiml
sta..,t.. rt'he unmanageabl",

iNlil:;.ioal

con:l.rad:1('!t.1Qn~ rl95Ltlt~d ex l ab pub} i c
beCl1l.H'le

an O;:!CQn m C C isis. was
511

which

did

hOI..

jllS-t.

obJ~cti''fer,y not,
0111 y

but

..,-hic1n

.ieclivel;.·
QfI

reallz4"ld
dY'

hy I I fa

the

beCal.150 1 t. Imp· nf{I'Hl
W:1 th:oncr~
>~

thei r eve rv

bu~,
t.h

it converl1ed
of

v 'fitS. A<-Illin r
,

pflrr.i

('111

rlr] y wi-t.h

a8s~siS"'nj{l,~ion Th
J

.X-P(:'l ator
c r i S l5

D· ninn!

C!onnm·\c

haa: ,~nR' r rl'~'r~d

d 1.

S'~IJ:5S r rma

Ilmi

\leba L'f;)s of

univP.lrait.y

ahar on

5'?;'I'tr"ch

iru~tiL

'.jIOtIS.

HUGh

of

the ,Ji~

u!ls:ion h'lS

centered

the roo"s and

ature of Lhe crisls,

time it will Laker economic h~5ten
position each

the natiQn to r Gover pr -crlsis
anc1 fhere he mea~mres are t.h
5t ... t';,~ a

l~vei~
1.ake

of
to one

abtivi .y, ~ecoy ty.

a hou Ld

m~DY ways of
0

dffferenbiating

in th~ debate

from tho

her

One way is to

cl~~sifv It an
can

pos1tl~~~s and
c z-ed.l t

an~lY5i5 and
address:es depend,ent

rograru on the ba5i~

of whe~her of

recognizes;
impo rt and

he st .. uc:~ural r
~con()my.

e,ontradir.tions
ba who
5iB
I

On thi s tho
59'

_pos it i. ons not

be the

roughly

divided roots have

into tw~ groups= of t.he crisis
safar

do

recogn l-.2'Ie

st..r'uctuJ",aJ wh.ic:n

and those belong
to

who do. the
f il'st

Host. of tb.e
gl·Ollp.

anal:ysBs

corne out

Working domestic to meet the

within

the givens

of the ehonomy

(e.g ..

t.he Ii Il1l ted and the need

Marke~,

the low level o~ d~mestic
r

savings,

-the count ry

5

loan

ob.l

jj

ga t.i on s ). thei
l:1

'many of

t.h,~ poa 1 t, i on 5 in the s h aek las
t.h&t

f i l:"'i:td~ grodlJ.p converge
Q'11

around

de.a that

of
'La

accumuls'b:i

can

be

brok'en

by

de.velopn:ulnt

str:ol t.emr

propelled

beth

by

~rnwth

in

he

agricultural

5~~tor

and

an

32

axp,o,d.-orie.nted ruanufact,uring. a:gricult\J.re
in

f;e(:!'"c.or he

it

h ased.

i n8

~ri c u 1. Lure

or

in
of

There
rih,e

i5

no

debat,€l

abold:.
effbrt

t.he

import03.nce
pl..lttlngthe

ove ra 11 development

hut,

que8tionab

le .

'Wh::l.l€ ):'ecDgn i. :z ing ecul.d belp tide

r.he l'l~ed to

cleve lop

an

ex-por

t. sector
and

which which

the ·ecunomy over
s,qppJ ement.a;r.y

t,he cr:l tical for

yeal"'$

.coul.d g'enerate

i ncome

future

a:b~:mmulation I
has

the
Urai tations. ~i.;r: st :ind!~st:tLes vulnerable development e.nsure
new
I

mut~r of the ac~umulatiQn

t.ne
has t.o of

nat, i on s experience
J

wi t,·hthe tqral

sugar and
are

coconut extremely The a l.ao The

s hown price

that

agricul

expo r t.s E!xtsJ;"nal export:5 foreign

f luctllations

in tht;:

market.. cannot
e.x:chant!r!!!i.

nontradi.t.ional and stable

ftH3.nuf,actured

.an ~,ncr.eae;ing

sou roe

of

simple,
country

any developing

wi tI1 cheap
and

J aboT re~mJrces
dem~rhd

and

ten.ds As.

to

be

highly

supply

elastic
cOlll'pe·ti iofi t

l€1s5

elastic.

sucht

cons iclers.bl e lik~ly

in t,hes~ ,count-ries

labor-int~-nsi wi th to a

y@ ·.ndust.ries labor.

is
'I'hese

;;.0

occ:ur

arilong

ch€l.ap downward

characteris·t,ics

also

tend

i:.o lead

prE'!.S5ure

on

,p'rlces and consequently
It should also

onefKport

earning-5.
la·t,e pronmti.on Phil :i.ppines of
."as

b,e noted

t;bat, bec.a\lse the
expo r t s wad ill the

nontra.di t:l,on.al

n~.anu:f.actur-ed by the

eventu:ally
protect

rapre:5f!;·ed in

d-wide

recession
I

and

ris'ing

ion ism

thE: ad-v-anced stories

C.;.i.p ta 1 i.!:it 'Count it-I,e 5 i

the' export-

oriented
cou'ld

success

of South Korea and Taiwan in
Philippines. Furthermore,

the

eos
even

no t. be replicated

. n t,h~

33

5ucceS5 Lmpl Loa b i on s of

s t.o r Le s g,rowing

are

now

reeling
sm in

f t"om iiiE'iJKets

t.he

p05sibl~
Urd ted

prot,ec'tioni

1. i ke th~

·thE

(!ontrove:rs ia]

Tex -lSi 1e

T ade

and

En f

0 rceUlE::in

t,.

Act

OJ:

the

Jenkins Bill
S~c'ond
j

in the US Congress.
the t,~chnical ntlt provide and m~rket,
L:he

charaC'r-ted rise ef a

r-d:.1C5

of

t.h€

~new

could

for

naw

aCf'~';:Imul&t:idn

domesticql11-oriented Prod lotion fa.cj,llt.ies

lndu~trie5 in

or ~ouTdes

of

new

materials.
established

hhe .Philippine

Viere Il\et'p.ly goods

with imported capital
supply norrt r ad l t.Lone I employment Given "propBlled

and intermediate labor. Moreover,
made
courrtrv

to tap the available
recent. On the rise of

oheap

t.he

e}(Port~ tief.'i

ha a not ill the:

a. dent, .

a t ruo tour€!

cif

opportuni ·t.he
by

above

lind t.atlJJn5, cannot
Oll

an the

aocumulation

process

~xport.5

make
it,

e9cnomy
t,he

I

ove~come the
,'i:rbrabagy

structural
temporari] y

limits blur

imposed the

At best, of the in

carl

cont,r2ldi ~tions con:tradictions

productive the

Si"i:..ruot.u.re.

Addr€H5sing the structural the development

Lortg x'un

eutaU s
a more

of indu5t~ies which are oriented
and

towards

expanded

dome."j,'I~j_c marke't

which

can goods,

a Lao 'P.:roduc~ apart from

importable finished

intermediate

inputs

and

c~pital

comm'Odlties. Expandln.e:
-t,ransformations

the
in the

domestic
5yst€:m.lf

ho-weV8:r

I

req_ucires income. property

distribution

of

Eu~ure
in

It

specifically

r'equirfllf5 5ubst.an tive

changes be

relations.

Ho.r eove r ,

for

such

change,f,i to

meaningfully

34

organizatio~a
r.i.ghts F~rt,hgr'rorJt~, 1l"Jn-e

which Kill

~R

vigilent

about needed.

In

the
Co Lon

distributiuo
<:onsci01l5UBSS

La 1

o~f the

dom~n5 b.Lo

m,arket

~~ t,O be sl.Jff'ici'ent 1y unde rmi.ned .

Discuss ions
p,fOCe:!1lS of accumu

on

the
a r-e

v l ab i lity
n~C€f'H'5~U·Y.

of

a

less. l ik~

d \ 5;:J rt.i L:ula ted
t.he aph ar e a of

Lat.Lon

l s sue s

~ffltaction and

spheres

of liberalj~ationthe
th.~

ID8chanisme
the dcmest.Lc
I

and

p,'ti:{;lclernHr associated

wi th

expansion

o:f

market.

the, te.ch.noh:lgic;al

.rF,iqui t·temen'ts Qf

indl~stri~d.i~ation have off

i::.he changes clarified.
feW'

in property
However
1

relahJQns,
di
SCU!55

to name a few.
h.arHy

to

be

auch

i errs have

taken

be oau ae very

reccgni
those

:l.e

i.he need

t,o change

t.he productive:

nt:r-u~ture. of

Some

of t.he

who

do may b0 wary

of the
the

impli.ca t,ions
changes

expanding

t1biilela~ic m,ark.et,
nd would,

p6xt,icularly
I

in property

r-e Lat.Lons ,

'therefore

pt tor ,f

accumu Le.t.Lon strategies

which

w 11

bJ;:~ the .stl"UcturqJ
It aee

givens

-the

',--oCOtlOnlY

f'Oll', granted. discussions there
of

Ls l.m:f'orttlnate

t.hat. w-ha:be·ver limi ted small. s.egment

are confined

'1.:.0 a very

f society_

1m.ages

M terl'lat.i ve
jj.tave

fl,l.'u:r.es

are not wi thin
thei r

i.he r-each of the In
or the

public
absence
~€H'l_

or

not

captivated
t.he

ii.nag:tlH'It.ion.
;i nter,nalizBd

of
t,h-p,

~He!:uat;.ivel$,

p1.;1bl:i.e hao

priv~ti

economic: cr.isi~. enlIect.Ive

'I'his

can

a.co urrt for

the

ra:l.at.ive once
very

lack
vi e l b le

of'

expreg.5i(:Jfl~ of proiesd",
the

whic_h were

tn the afte:r!l!Elth of

Aquino

assas5inat.ion.

35

FOO'fNOTES

22.
2.

1.

B&sea

1984.

on the> compuT!at,inr\

'rnad€ in

the

IMP' Staff

Re.port, J'une 5 o.

June' HJ 8 5 .

Ba sed

on t.hB e sot i mate 5 rna de b,Y M.aml~ 1 Hontef:.

:3 , The de:f LnLb i on of ~nont l'Cldeab 1e a ' i, s bas~.d on several definitions given by d1fferent e~onornists. namely Dornbusch et.al. Ronald Jonest and Roy Harrod.

4. in

tR80s.

The share of non-traditional manuf~cture~ exports rose to 9% tha early 19705, 25% by the mid-lOs, and 45% by the early
on a differi::h
t, su rvev

5. Income dat a for l 978 '1".9 1983 a t"a based design from that of previnus years,

6" 'Phe effective protect,Jon rate is a measur'e ;rf t.. he imp}) c:I."I:; e't n sub s i.dz (or penalty) gi ven 1'.0 domes b i <~ pt· dur-qer5" It may be mea.sured by

t(j) N'here
·t(j)

a(ij)t(i)!
thl'3 implicit!

1-

~ (ij)

rate on the pt"ot,8'cted t.M··iff t,he in te rme d i.a t~ j u·p~ 5 , . l't commodity, t (i) is the tariff rate on and a--(i. j is t.he input j cq.eff icient .. is

Philippine 1. See Germel Lno Balltista "Ftr.'c I:.ur-al Ba s.Ls of the IJebt Crisis' for an extens bn::' discussion 1:0'£ "Lhe be lanc'e of 17ayments and de bi:, or i.!3 Le ,
8. W,ald.en Belld the Philippines, 1982).

et.

al .• Development Debac Le . t.he World. Bank in (Sail Francisco: Inst]_'~ut® '\:·o:rFood and PoI Lcy , ~Eur-oma rk€l ts , Thi I'd Wor Ld Coun tri e s and
j

PQlit.icai Economi.c Changes; Order" (Sage Pub 1 j ca t t cna, 1983).

International

9.

13arba ra

Sta 1 - i ngs ,

P~litical Economy;

in N~il Smelsert et. a1. (eds). to the New Irrtern.ational EconQm.ic

t.he

36

T~ble 1.

Per~.ntage ni~t~Jbutinn of Output Frdm the 4 Majer Industrie •• By Typ~ of Comm6d1ty, 1969j 1974, 19'9

1969

1974
17.~

1&;179

2.1.3
Not'! t I" £I.dp.~~ 1 e

16•.0

E:i!:J'Jo'r'tab 1. eo Import eb 1 Ii
Liv~8tO~k?

17.4 3.8 0.2 14.6
9.6 tL8 3.0

lJ.4
5.4 0.4

!3.b
loB

0.7 12.2

other

agricultur~

fgrestry,

Non t ... a.d,~ab I e.

Expcrta,ble

10.9 3.6

9.8

2.3
3. 1

!E:H: ~~r tab

Impcr tab 1 e

ie

0.,5

3.7
64.2 33.3 i 1. '8

0.3

2.6
O,.~

61. J

NOfltr>El:deable
E)(~or tab l~ ,lm,rJQrtab 1e

2;'3'.8 9.3
17,,9

28.8 17. 1

19~O
100

22.8
100 52.2 23.13

All

indu5trle5
~lol1t r a<de~.b ).e' E~fJb!rt~b 1'e
ImpLll"tetbl e

100 61. 0 :ZO.t!
18.6

~5.7
24.3 19.8

24.0

Computed

from

ItHH.d;:.-ou"tput

the National

Tables

Cpnsua ~nd St9tigtic~
for-

1969',

1974.197"

Office

Tabla

2.

s~ctoral Di~t~jbuticn ~f Output in the Fou~ Major Industri~s

in All Industri~5.

1969

1974
11.3

1979 10.0

21.~ Live$tcek, for~str~, oth~r sg~jcu]ture
MJrdng

16.0 12.
o;'l, L

6.8

9.3
3.'0 61.J 100 2.6

JtJ . 5 4.0

7. 6
1 .9

1.4
47.0,

3. 1 68.7
-"""---

Manufacturing

41.6

-- -_ ....
100

64. 5

Q8. 1

100

CCln5t_ ....uc t, ion

4.3 30.6
100 30.3

8.II
29. 0
-,.,... _,_

_

100

computed

from

NCSO Input-O~tput

TabJes

for

1~69t

1-

1974, 1979

Tab 1~ 3.

by lnd~~tryGroup.
Sroup
tobal:!::CI

Il i '$ tr UlI,U,U em of

Va.l us' Added

in

Ph i 11 ppi

1",,:0'

I"laf'luf

a[:

'tuH ng

19~6, 1'60~ 1965~ 1~'9
J946

Ifldushy

J960
,41,. :2

196")

1969'

'oDd, beveragesr
U?!U 1~
~I::IDbl •• '" •

,60,,6

40.l

40.9

2. ,6 • ppai"~l pr Ddu.l~ is
prQcdl.lr;ts 6.6

'4~,' 3.0
2.3 3.,2 '0,.,3

4.7

», 0
2. 1

".

~

Li!I 2.6
2.=:1

Papar.
Lil
thl9'f'

pap'Sor

0.0

pr j hU rig-.

printed

3.,'
(1,.0 0.6

4. 1
0.3
2,9 9 ~1 '.'I. "I 8.5

0.2
2,,, "}

h:ubber
Chfil'M ~ ~B 1!!S,

3.2
lIO.O

2. '9
.2'. I

u .3
4.9
7.4

NCi,meh] 1 i c. nli lI'le<ral a~5JI:

a.7
8",0

meta!

1.9

1~l1ch nery i TNHI~FI~rt
I~

e. :5
qu i ,pme,r'i t
eo

4.2 2.2 9.2
1'00.0

4.9 2.8
'S. :2

3.9
3. !

J '. «I
5.7
j(:l(j,.O

,M t. Eu:e 1 l Illneou TOTAL

'1.7 100.0

100.0

Sources: ~~ldw!n, 1975l 1946-65 Bureau of C~nsu9 and Statjstj~e.
tiany. fat: t uri t'l9, .1 '96'?

Annual

Surv~y bf

Tab J e iJ.

R' :9.'t i [J of I rl t ~rmS''d :i .f;l.t ~ lJem~md. Over i rI the' ]J i f f'El'-r 6<"~~'tSec tt]'r 5

Tot a.l Ou tput

1969

1974

1979

e: x PC)!~t ab
Forestry~

Nw')tf'!l!l,deab

1 eo Impcw-t:ab 1 e

1e

.64 .60 3.53

",76

.46 2.07

2.57

.91 .26

Liv~~tock Oth~~ Agricultu~e
'e:xp-o~tab

Ncntri;l,d~able 1e

.42
• .'22

.59 .29

.49 .71

M i rlli t'1g
Ex ,POf'tab] e lmpo:t'" t-ab 1~ .01

4.13

12.4=.1

.01

.09 9.02

Ncn-t,..adeisble Expor-tableo
ImportabJe

.2ei • • 80

2e

• 69

·~3' • 23'

.

• 26

26 ·92 ·

T~b!e 5.

R~tia of 1mpart~~
1 n Jill

t. Deman d,

Inputs Dver Total int~rmediate 1969 a.rrd 1979, n~'i

1'969

1979'

A9r i C:UItUf"9

12 . .l
I! 7 " 14.3 16. 9

18. 5 10. 9 10. j"
15" :2

Importa.ble Noi"l t rad~~ti] eo
FereGtry. Liv~.tock Other A9rj~u]ture Exportable
N!:H)tr-ad~a,b 1eo

E: >t pOl" t.ab 1 ~

...

7. 0
9. 0 6. 1 39
"

7.3 9. C

7.0
1::3. 2 15. 9 10. S 23.2 48. ~ 9.2 10. I
8. 4

Mining
E~JJ(H ...te.~ leo

0

Importable

40. S
20. 0

23. 4

E)(port.abl~ Importable

Nb'HHrtEtQe-Bb 1 e Con,m,t rue: t i ell''!

E. 8 50. S 16 . .2 2.5.2

CDmput~d

from NCSO, Input-Output

Tabl~g

Co~pute~

from NeBCI

Input-Output

Tables

Tabl~ 6.

Import~ ov~r

GrD~s NatiRnal

product

% 1947
1950

1949

2i,

.7

..-

1954 1959

12.7

19~5

11.3
1 ;.1.9 17.4 2'0.9

1~60
1965

1964
1969

1970 - 1974
15175

19,79
198,3

23.7
24.9

198-0

Table 7.

Compa~itj~n

of Imports,

By End-Use

~%)

CCHl

5;

U file r·

Ca,l=!l

tal

I n-terIJ'H?d i a.te

GOLl~S

GO'LI d:;

Goods 53. 3. 45. 0
40.6

19f35
.1'60
19'65

25., 9

20. s 39., 1 37. 2 39. 7

is.

9'

22. 1
14 '8

197'0-74 .1 '975-79 1990-83

.

51 5 53. 1
54.,
$1'

.

16. 5
20. 9

:;to.

s

2:4 .2

T ~IH

e i8.

Fi~m$;

Impcr. t ed Ri~U·j ~ts.t t?l" 1a t s Ov~r Tot~J ]hp~t V~lu. (EV) of Zon~

Ptoportion

Firma

of

(IRt'O .:I.nd F".36: t.I:J f')' Su ~p 1 i E'S ~FS ~ ~TIV} of Export proc.~sin9 Zon~
Net

Export

in Total Export Value

RM/TIV
1979

IRMtFS/TI~
.91 .91 .86 .92 .92

E-:H~rr'I/E

E-flRMfFS)/E
.22 .33 .35 .35
,36

.S7 .87

.·25 .36

l?SO
1991

.83 .B9

.39
.38 .39

1983

.89

• '93

.40
~f

.S$?

Computed
EX~elrt.

Pr!Jc~5$

from

unpublished

i ngl ZLlI1e> Adm 1. n i 5trat

data

the
ion

T~b]e 9.

nist~'buti~n of the l~bDur Force Pr~du~t, By Majer Sector (%)

ah~

Net Dome$tic

1 9~'1$

1?61

19~6

1971

1976

i 9751

~opula.Uon
Rur.al
Labou.r. A.i"ea'!,

i f1 thp. 76

74

/3

7'2

71

70

F 0 ~~I!:e i n 61
15 2"'1 Prorlu.c:t 36 1,6
42

Agr.i cu l tur-e
Indu.'st ry S~rv i ce s

61

~55
Hi

49
1.5

";SO

~1
15
34

15 24

16
34

30

36

Net Dome~t ic: Agr
in:l!!
]

tUre-

.85. 18 42

34

33
~9

31

29 2Q
'10

I'1.!1Jlufac tur~ i tl';l

18 42

20
4:1.

Servic9>s
----~...... ,---= .....--.

42

Sou, FEe-

i

p~ i l ippi

rie,

Stat isti.ca.J

Yearbook

reb,1 eo 10.

Annua.l

Gr-mrth

Rates

by Sect.or"

1946-61

f61-65 4. 6 2. 7 4.'8 10. '8 3. Q A6
ill

165-69

'70~74 '75-79 3. tj, 5. 0
El. 0

'80-93

A'3Ir':i cuI ture Min ing
Man u of a'i:

5. 4
1 .i 0

4 .0
14. 6 6. ,6 -0 ,. oS
5, 3

4. 3 7. 9 5. 9
11 0

1- 1
-l.,EI 2. 0
19

.

t U:.r .i,n 9
i tH'I

11 1 2. 7 3. 9

.'

Co;nstru~t

9. I

.

.

Ut i 1 i t ieg
Serv1cee

7. B
.q

6. 7
3, :2

6. 1 2. 4

7. '3 6. :3

N@t Domest 1C Pn'}d~ct
_.",...

...,..._ ..

__

...........

-

. e.

.

4. Ii'

..,

.6

q .6 Y~,rbDck

'5 • 2

5 .•2

19

.

-.."."...,

- .....

Sbu~te:

NEDA, Philippjn~

Statistical

Proportion ThrE'~hcld ,

of Families

B~]DW

the T~tal Povert~

.1'961

82.1

,197~

1978 !';Iso
19:82

19~5 1971 1975

75.5
77.1' 70. ! ,61. "}

1981

60.4 60.3
62.:3 7'9.5

from th~t of the preceding ~~ar~ Sourc~: Palanc~~ E. P~verty and Ineq~ality

1975-82 data ar@ b-~~d nn ~ sampling

m~thodD]ogy

diffe~ent

Table !2.

R~al Wage Rat~ Ind~x fo~ Indu5t~ial
in Met~o M~nila (1972

=

Workers

100)

'Sk i 11 ed 19'69 1?70 123 ..3
.1 1"4.4

Unskilled
115.2 111. 6 104 • .J

1971 1972' 197:3

.i 05. 1 100.0
92.
lJ·

1974-

100.0 90.0 /2.9
72.372.6

7:l.6

1975 1976

72.7
71..2

1977 1978 H'79
1980

72.9 76. 1

70.4 68.4
,jlMJ. i6 53.tI

70.8
6'3 ..7

Tilib Ie

1. 3.

Propm-'t

1 nn

of

A9gr~9at~

D~mand

GovE'F-rll:neM I: Exp,~-tHl i hwe (%J

:i

1"'1

Gov·t Consumption
Ex pe ndi tur e 7.2. 7.6

Govjt

I nvest::Fi'I~n t Ex pendi

Consumption

~

t ur e

1947-49
1 SI'::iO-54

7. ·4 8.4 8.9 8.8
J918 19.7S' 1980 1981 i 98.2
1.9'83

1955-59 1960-64
.1965-69

14.6 15.3 14.~

1970·-74 19:75- 79

14 .. 1 14,.4 13.'l

1990-83

'9.3 9 ..0

Tablw 14.

Percenta9~

Shsr~ of rotal FamiJy Income by the Tap 20% and th~ LcWg~t 40 and 60% of Income Groups

Year
1961
.19'65

Top

20%

LD1"H~St

40'%,

LD~JE-.st

60"11

50.8
5.1

.15.3 11. 9 1 1- '7

2~.7
24,. 0

.6

19/1

52. 6,
6t1.3

24.3
J

1975
19713 197'9
1980 19'8j

7.·9 10.3

a. <1

57.7 58. 0
15701 4
58~6

22.3 22. 1 21 .8

lO. 0
9.7

9. :3
OfficE

21- 1

SCurc&:

Na~ia~~l

Cited

in Palanc~

C~nsus and Statistics
ibid.

TClib 1 eo I 6.

Pen:en
8ettor'!5

t.~g~

Changi1!'

j

n ·I1(l!'iIE"~U

E

·::3a\l i t"ISlS DfDi

f"f

E[r~n

t

Period 1946-50

Total

1950-'54
1954-~8

10.0

52."1

70.4
29.7'

U . .?

-6.3
'27.~

19.7

1955~62
28.9.

-1.3 8 . .1

-35 ..5
57.3 l6 ..5,

13.8 -1.0
52 ..9

41.0 1974-76 -7.6

24.11]·

2.• '7

-6.2

Effect 19tJ·~·-:70
J9;7Q-71.

on Income

-.Od3 -.013

1'971-72 1972-73 1973-74 1974-75 1975-76 19'76·-TJ

-.OlS

.056 -.030 -.081

-.034 .0'0.8
.018 ., GJ8 -.099

1"977-'8 B'l8-·79 1979-8.0
!9~O-EH

1981-9:2
19·B2-·83

- ..OW

.007

.ODS

lab 1 e' !6.

th~ Diff.r~nt

Ili!::it.

1: bu t 'i rrn

~H'fd

GI tJ~j

th

[J'~

For e i -=ifl

Se~tc~s

r I'IVP-S

tlnl?l')

[5

AT~rOl~I'9

P~rcentBg~ '70-76
~U

'7~-80 (2)

Distr'ibution 'BO-e4
13)

fer cera t .;:,I ':1 Eo C bengE' J-2 2-3 L-3

1.0.9
A,gr l LLI l

'.2.2 1.7. 0.6

-72 0.9 1.3
-3:2
8:1 -77

84
-J
!

-63

t i ~r: E- tit.
-37
-6j

FcJor"
M1nin9

e"'St!~')'

I'1c.HIUf oar: tu
Jrnpcr tab 1 es

t"

e

6. 1 2.3"

20~

0.4

O. J

-80
-8 130

-95

rIa t'w -F a.r:: 11;. u r e 14.3 Fi!O.hetYr 27.9

6l'l

52

':31.0
0.3 50.?

17.3 -8184

527
-~I(J

stotk ~ others
t ur e ~jnBnci~l

live

Manuf ac

0.8 13.5

27.4 12.5

0.5

-3'1 133

561 -t=J2 177

Banks,

t ns t i tut i o n

23.2
0.2

5.0

-25 .1J87

-SO -78
2

2.~
11..:2

COMM.~C~~ Se~vice~ UUlities1 eh:. TOT,tlL

14.,2

11
100

14
76

100

100

40

26

Computed

From

C~nt~ a) aank data

'fRANSNATIONALIZA'frON'j

'1'HE PHILIPPINE
RANJ)OLF

rrHE GLOBAL CRISIS

EXPERIENCE D1'I,V ID

AND FOREIGN DEBT:

S.

The

!lee 1i n e i tJ

hh·!'-),,erU']s j

t ,1'

'I'] L i rd

v.,Tq

1d t.r-ad e has

be en

·t.h@

inrp.Qrt~

from

the

Ii' t ra t ~1orld

and

L~b gl'.ow.lng e

vr. .l ume

of

au eh

imports.
One pl acea th.e
10$ S
t',L)

eFJt. i rna.teo

I.:;tl,e n Ol'"I-O]

1 expr:;rt

i.ng d eVe 1O'P ng ooun 1;.r i. e~ at i

'Phltd

~~ot'.1 d

expo r t;

earn i llli:t; wel~e $45
Wel~f7

bill iQ.n lowe r
f.lt. thair HJ.$9

tbt''.n:1 they
1

wouId hElve been
I'he most. dlt.-ast..;ic

if

PI' h!es

ma i ntatned

levels,

deeJ t ne .
'inCOl'l1~

oU-impOI"ting

mi dd Le

courrb r-i e s re~~-st.er.ed
2

a 10"'; decline.

in

tbeir ~ver-al1

terms of tr~de.

whi oh

Gimp.l.y indicates of 3' prod ue-i-.s

-that .:i -t did

'rb~

c.·cHmtry I !J'12
1":0

h ad to

eXPDrt s arne

double

bhe

am mt

in

buy

t.h F.!

va Iue

of

imports,

been th e Pe r s is t;en U(-l Clf ht.l~HB cu r re n t a,QC'Dunt d e f j_ c its

I

wh i ch , in

37

The .OPEC Rebellion

deviate

from

this
trad~.

bistorin

patlern

of

unequal ..

ex~haDge

In

iDterna~ion8l

6xpoirts;

the

e xamp l.e of OfE-C (ur'@;anisation d€mQnstr8be~ to

of

PetroleuID the

Exporting of

Countries)

the Third World

viability

against

the

uri i Lat.ez a l prl By

OR'-I

i'Ki D.g p t-rw En' of
I::.be t.r-ansriat.i

1':J.18

transnational 1. f j. t'ms more

demand ing from

ona I

0l

countrr iss of w8alth.

forn~~d, alb~it on A limited

~ glubal

redistribution

baRis.
wh i c.b wert~ follOWf;!d b' y

Tbe
s eoond

1973
upward

a

r-ound of

ad ju

~i":.t:J1Hn'l;..s

in

19'79, iaf f e oted

aIL tb e oi 1-

mo.st; eS'p~r::ial ] Yo t.b.os~~ f r-om the

Sou

to.
'rhe

whlcb
full wbi.ch

did force
were

not; have of
abs
0

'the

fa 11 back

PClS

i t.Lou

of

the'

r Lch Nr.)rth.
pOor,

't.he OPEC move was absorbed
l ut.e 1y dep!5!Oden.1:;. on
fLH... :d

by the imports.

cQl.lotr.ies

In ass
j

contrast,
mil.9.ting were increase

the the

transnational inc.reased ride on costs 'the

aU

ins:t.ead.

of

and takj_nf! a f~ut tn t.hedr profits,

ahl e ·~o

i1

ccrisis and even

mana.g8Q

ttl

their

corpcr~be earnings.

3B

b'OW8'lO:r' .

open i ng~:5'. ,

South, .of

1'-1'11is

me'ant

a -trem'~mdou!5 ,::-xpk1.ns'iXI

in

the v o l ume arid

price

tl:! e i r

export,s,

as

well as the easy
-4

availahiliLy

cf

low-

bulkf

t.hR

Lonrrs

h ing

~ilJsbF.d by nt' pe·trnri
I.)

1,l'v~ i ni;srna-t,:Lonal

1~70s reaUy

cf)n~d.,e- t.ed

1L'>1I,t"s

ft'Glll1

the

the 5 OPfEr.: oourrbr-i.e-s , What.

bank.s in

i~

irnpa r'G an t.,
resu

1.S

tb!8'
'ch e
0i1

,

r-i.se

Ul

,

.liquidity 10'wI"':'red i D l",i?l'BS t rates

whinh
6 and

1tad

from

prJ nf'l inc J~Aa::; es _like

.,.psl'mitted countr res

the

Philippinest-o:pursu8

a

frenetic

OOmmBt'c :iLal barrke

in

tb.p.: mi d-? tn;;

j

econ om i o nppnr-t.un

j

ties

we r e a 1 s a boom

b~ing opened

L-1P

it'll "t.:he M:i tid] e n;a5:t~ oourrbr-Le-s . ' The o i J price

deve l opmerrt,

i. mportat

ion.

l auriched almost

s iW1J

1tan~I)US; J;y and on a g:i.ganti,c scale,
"ba'I", r.he Phi.L i ppine

(over8eas

'7

Fd l ipi.no Qf.)~)st;:_"'l..lCt; J
i, on

l~ot'ilpf,-J.(1i-es

h ad

;:11_ (~ s;
I'lf

A

:i:P i r ed

Lo pa.rt i I::!ipat f.::'
8cms;tI'WYI'.i

in

tb e 'I'ha

htg-hly

dD.tOpst H~iv!f).

bus

_[_nE1~S

t rl Lerl,')at,ion~J

on.

-ndus try.

Most
I

of

tbe

t'irne,

t.herElfo:te, pe-t'
(?;'~

1~1 'errd ed up be i ng H~Y

Sllb-"c=ot'l:btac-LQrs

ass igr'J eel t~q t-·bj9 and

j

pi'lA'l' a 1 n~8 PC)'l'lS b i. ) i 1~y r.rf Damp 1 pt i rqg' th B i
P ('J.jBt~t~5',
fW

odds ~emi-

end s

o:F 1 P.l

nf" ~~ .imp l j/

!St..tPIlhri ug'

-t,hfl

ski .Ll ed and l.m::;ki 11,1';<1 ~l..or- re qu i,reulent.s I and a 11,

of

t.he"'1e proj r~(::ts. 'flak e of

Sti 11
the

the

con st r-uet. i (Jr.1 boom

wh i, oh oame it) the

rnuch:-need ed

t.h,8

[)c)]:'11:r;>1(lb workers

and

t.h(':l U'i L i.p i.no

con.s;trunt

i -)11 companies

came

~c

represent

~

JarRe

chunk of

the

oountryls

total

foreign

exchange ~arn ingfJ.

The Re'!cI'1Jd,esoence
It marked w iLl

of

Autbo ri tat" i an ism t.ha r.: 'Lbf:~ peri i sbn~$s and
ad of t~be~e::i:' y 1 'lOs was the

b® ret:a J I ed

by l=}'Of)norni C s lugg

pt.JI i t. iC~11 irlstabi1

i ty
j

in

Ph-j 1 j PPl11es. an

Tb.e MarC::Q~ gove]'·]jrnEil-d~j~"hicb was
S econd

eJ eotf':i:,l
to i

n

lH-6.9 to

LJnp rec~d8n t t!:!o

t~ rill,
g'ea r-

had pr-ov ed unab 1e

pu.l l

the,
t.o

C01,.int-ry

{I,Wfty f r om i~be

low

i n\,'1o

j_

eh

irj

wh i ob

+~ appe:::a
i VEl

red

be

tr-apped"

Meanwb i 18,
was-

tbr-;! P()Pu 1ar-L ty
y

on

wn inb

U-, t·ode- Iu

-the-

1969

elect-.ions

quick]

h'ei ng

e rod ed . were

.t~a.$S

st.uderrt ~nolJgh
about

demonstra-I:.ions

pt'ute~·tj_ng

i-t::s pol ici8S

attract,i.nS
At

atteqtjon

to

scare away potential

foreign

investors.

40

instilled and in th,e ooun t roy as a who le , 1-)oli I.•.teal political will, io the vj~w of many,

ID

the

the

attitude

Ji!;·i 11 't.o d eve lop . 'that

was b.ein.g abUtldat'lt.ly {lemons'Lx'Ed:

dp;J'] s ewhe r-e in the Asian region. 8 Seerl frl m cbd.s 8.ng' 1e. the

+hab ".,a~ in. s e ar-cb

of a r€!g:i,m~.

in

SE':rptiem.bel.~1972,

Pi. at

a:t or s b i P and Tr an,~.n a.ti on ali mat i aD

the Fh i I ippin~

econnmy

wi

'1;)'3

~s·t.r.n)i shing

.

d.e·termin& t: i cn,
I

doc.i 1p.

li:1:lg'1

:i.sh-:s:peak ing' labor

(aimed

at

f'or:ced

by

stri

ct

envi rO]JllIE:nta 1 lAW ·to

t'eloaate

tbe.j 'r

pl

an-ts

Loarr-Ftze.Ll.ed

Development

larg~

investments in in£rastru~ture
offit;ebu'i

ports,

f,:d. gbwa;ys,
power

hotels,
etc.

Id irq~Q} r.l"l'm,r-:p ,~~t €!qll Ipment.,

gerl~n'ators I '9

'rhese
way,

rn

an LU,LabC\sbpd

on its Qwn saving~. Tbu~) f~am 1075 to 1983, the Philippines

came

Inf~ernat.ion9,l conditions
iLl
e.[lA3'

s econd

h a 1f of tho
.f lushed
t,C)

70s

e!'l::lcH)l.traged

t.bi~

v i e.i ous

International pr-ttotical] the y pushing doll

hanks)

with
.'

pe'trodoll,e,:rs ~

a.r- Loeris

Tl-j:rd i

W,6't'ld oouri b~·ies. firm.
w i.t.h

Given
ttle

easy t~rm~,

prao-bio.ally
1

any busi:ne'Jss

ali

in:E 1uerrce

i r~ banks

gp'l'er!1mei:rL

.cred~t,ol:·

lent freely

for

as

long

as tbey

W8'rl'!!'

assured
J

of
'bhe:y

,gO've'rnm~mt guarantees show~d littl~

on these

de bt.a .

.As in

Lat in Amel" ca i

iudividual

concern for the ,fB~slbility or ecoriomic wisdom of 10 projects. M'on61Y depc)!l;j t,f']d with tbese banks must earn t,hey had 1 at~ed it.;
to put

in 'tar-est.r and. so

it to

Via

r k by 1end i ng it as fast debtors from tbe

.:ts

they

aCCUinU

On t.h~ other hand;

unde.rd eve loped which such funds

wcr ld wen~ en t iced by the
we·l'O be-lug 1ent.

1Q·W interest

ra tesat

The

ensuing

availabiljty

nf

large

amDunts

of

foreigb

~ffice were
bui 1t.

buildings,

and

convent; i on oent.er-s

one

aft.e'r

tbe

other-

mining

end logging equipment~

~eQth8r~al, dendro-therm~l, to feel p~ranoid s~re~

and nuclear. that

The government

had begyn
went on
a.

abou1, n_'1 price';!!:>

it practioally

spending

to acquire altarfiative

power senersting

plants.

wi thalmost
dominabe . be

un I Lm i.t.ed t-t'aDlsport

funds

in

i,t~ band,S

r

the

g r::;vernmsp-l;,

came

to

indL:lst.ry by

uri!

gin~

in

Lar-ge commuter and

AQ_Qelerllted, Consumerism Simu 1taneDiJ sly, IIi liphv.
found UlI;;:ms'elvP.'s
,

r{

!Ewj,mmil"H!t

.in

M~e important perhaps.

international

credit. which was under th~

as

it

Dame

ill .

In phenomena.I

U'le rise

e r ly

80s.

th is rat(~s

p.r ob

I em was

agg av~.'ted

by financi

the aI

In interSlSi..

in

ChB ini:ernat. iona1

market::,

cycle qf the in~ernatjonal capi~al market, had sel'vi
l.'10

the Marcos government
.ius ~ to be ab Le Loarie came to replace
to

othe

t'

opt.iou

but. t.o 1·7eep ';m borrovring

e its

moun i;; ing

indebtedrlBBS,

ltl"l:;

i me.

investmen.s
of lang-'berm

and s~crt-term
off l.cial

0ommerci~1 borrowings

took the

place

c:n\";ld' . t

Estimated

(US

of the
$:

bill i on ,un

To,tal Exte'rnal Debt of the· Phi 1ippine:s 1ess stated otb,erwi SB')
June

D@c.

19B1

D~c.

1882
.Iurie

Dec.

it18:3

1) Debt to Private
Creditor

11. is of banks of ncn-bank~ 6.jl of whioh: short ~erm (%) 52.S

17.·~1

HL 36 1:2.36

B.OO

~;O. 77 14.04 6.'7;' \

20.46

13.56
6.09

13.76
52.4
5.06

H~·.60· 5. 8~!

'67.0

56 ..~

21 Debt t6 Official
'cJ:'edit.o):'s

:".:l,47

3.5B
2.30

MUltilate:r-al Bi 1 atel·a.l

2.01 (%J

Tota.l r 1 & ~) ofwhiob: ODA Debt

1.4B

2U.74 a. 4 0.96

L 55 24.6.2
5,·6

24.08

3)

·to IMF (1+2+3')

O.H3"

0.94

Total

.~.ft ~.fj .. _

Jil,

Tbe Crisis

The war ld

$CHJn omYGnt6red

·another

period

of reoess ion

in

1882.

of which has gone ~awn ~Togres~ivel~

in tbe .1980s.

In turn

I

'chis

once+so 1id

b.l oe .

For

labor-exporting

oountrie~

like

the

"

C01.mtr i ~8 VI ih . s.t.rong i

eoon om ies

could

whi l e

at

tb e

S

ame t: im€ @ffeot i v e lysh

i el.d

their

OWl:':!

marke;bs

from

J ik~ the

o i l>

r i ch

count

r], es

"

s add I ed wi tb

have had no choice

but to absorb the

full

loeasure

of

IMF'-impQss.d

ad jus +merrt .

For th~se oountries.
vol urrbar i ly

tbe mode
chosen:

The Role of the IMF
As the gener.al over~HW:lr C'lf +he
~/mt'"

Ld.

capH:;~jdi.s:t

financ:ial

system

11

pr-ooes s

of .aci.jus·tment entails

of

the

b e av i Ly i nd ~bted

oountrr i es •

This

ba~ical1y

a carrot-end-stick

approaoh to

tbe

problem.

JJ.

sa-called

country

IMF Cond it i one lly
The IMF pac:ka.getypi oa Ll y i no Ludes the fol1o"'?in~ ;1tem$: the

grant

of

new

ncmmarcial

end

Qffiaial
and

loans.

restoration
o:E:'

of

revolving'
obligations.

r~-sch~duling

This i~ the carrot. measure~
f

The corresponding
which.

stick is a
inc14de

whole bundle nf punitive -the fo 11ow·ing ;
mopp i ng

again. typiaally

devaluation

the

local
:i n

currency,
I:)

1iqu id :ity

Dr reduci.~11. on

0 f money

i r-ou lat i on ~

new

rl Laman t, I j ng

of

pr

i eEl

oorrbr-o 1s
~

and

su hs id i es p

disma,'t.Ur!€' of tEi:ri if

barriers

in

impori':.ed goods_,

d i.StiH3,nt 1irlg' of

and d j_ :to (lon.t i ou 1i.".t, i on of all h:Gl.ust;dal project.s waih:i ng to bf" finar.ioed wi t:.h borrowed funds.

and,

second.

that every single

cent of

tb~

t~e e:a:pi tal.
In 'i;;;bs piJE'suit of

theseobjfrcrLi.ves

~

the

IMF

presori bes

exp.ort

il"lflation

(G It, IiH,.l~gar and cooomrt , ..

for hh-e Ph i.lippin,es),
l:;~hPi.rges) :for a g'i-ven

level

of remain ing

atn.arS

(unpaid

intpr'~'5t

period.

etc.

A

tJ!ndar:takeb'at

1easton

a qu a.r-ter 1.Y' bas:i. oS,

The

relea~e of new money as well as tbe

progress

of

ifOno'i'bl on a 1

1)pbn

f~.:! 1 f i Lmen t

of

thes.e

ttu".get:;;;

.

12 is

This

is

the

Tbe

whole

point

of tb is exercise
of

to

prevt&ni:.

an
a

open
publio

pa:rt

th~

debt:m:"

oountrr-v,

or

'f'RI§iatt~r l

is seen as v icd ouel v inj,urious

to th~ health

of

t.he

47

wh o 1 e

j. rrt.e

rna-r, i on a.I

f i nan

0 i at

:,;>:v~terfl,
r=.tt

and

therefore Aocordin~HY, Lriab i I i t,y

it

is we
pay

Slomething
are

t.bat

must

be pr-everrbed
r-ibua

a 11 costs,

wi tmti,:i"SSico ~leborat8 utrigbt default) is

l s by wh i.ch the

to

(an

coneea.Le:l thr'ough ~the gl:'a.nt ·a 90~d8.Y' of

Philippine

government

ba~ had tQ go through

bhe ridiculous

a.nd

for
me~nt

at

least 9 time~

~O

datB (October 19B5).
~I

All of

this

is

-to ma i n t.~ 'in t.he

i Ll us i on of

s morrt.h l y fur.w·t,ioning

sy:si:.em.

*

of
HI

.1,

The Phil i ppine gqV€H~nm~nt. recent ly sought its lOth ext-ens ion the rnoratol~i urn rm the rep·~ymel;1t on p r i nc ipa I l oari s 'whi oh bergen Ootober HH33.

2. 'l'b·etotel rie-hl:; 8et~vics f'o t: 1 98B (inte;resrh and principal paymen b-.o:) amoun 'bed. to $3. 1 bill i. on, wh i oh. Ls approx: inrately twothirds of a I I export earrdnas of ·$4,7 bj 11ion for 198.5; . ;) . 'The bu Lk 0 f tb e 19 S5 d elr'i;.--.c, r. vices 8 'went to inte r:-.est pa-ymenits 'to'ba] 1 j nl!i'··$·2.8 bill i on, s b iII a D'lU ch lower amcurrb than the $4.:3 bi 11 Lon that W{)I.j Ld ot,herwir;E'.! b,'j.VB -to be pa i.d if tbere was no ul"Oratclr"l. urn ontbe bu I k o.f pr:ii ned pal ];·epaYrr!'El!r)..ts.

4.

35%~ which 5.
'md

Deb.t-s'i";!'rvit;!8 i s l(jw~r'

Ra:bi
than

t.be 1984

fcrr 1985 .is et'tj.mated
t~at.io

of: 4'0%;

to

be between.

30~

The debt-service for Ll Lon -I;;p $3.4: bi U inn ttiOl"etor i urn on p r. inc j_ pal b i Ll I on }. (~ource:
R1gobm:ta· D. D~y, 14 January

19n6 is f'lxpect6d to rise by about $300 wit,h ,!;,he mDratorium (withou·t; the 1~ep?i.yltL'erl1:;s th is wi II lL1S ~ to $4, a
j

Business

Tig-lao,
18B61

"In" p. 3)

r:;

Debt-Servie~

Hi t~ $·4.:1.B"

j

~tle lnevit.~bil ity

of' Default

oftbt~

debtors

al'ld of

tbe

cr~-di,tors.

'fb~foreig'n
.~

d.ebt. sa big

ill.

the
.:i. t.

c.~se of countries

1 ike the Philippines

is simply

that

bbrrow. new monev.

Ni tb

;[oreig·n

bo row] rIgs amourrbi ng ttl more tb.~n

1:2·6bi 11 Lon , th·e Phil

i-ppin@,s has

to

p~y at

.i,east. $2. B bi 11 ion mor e than y~arl:1 ba] f of

per th e

'I'hi s amOlIn1~ is total
expQJ;'t earnings

of

th.13'C: l.mtrY

o

J

F,1.

basis.

And thi~

does not yet inolud~

the Bmorti~ation on the principal

loan.

For

annual
is

e:J<:p.ot't earn i 1.".I.gS to debt the

s ez-v ice..

Oth ~rwise be

, a debt.

of the

i.zeo:f

Ph i 1i:pp il~IFl'
B~t

d eo b't: r:a:n on l:y

s eI'vi ced

with

new

b.o.l"'rowings.

'this is exact ly whi'lt

is

.hetppBfling
IEISl·

at present..
the i r debt.s by

The IMF' ex."p~ct IS the

i nd e bt~cl count ri

to

pay

it'iputs,
P17itnari

and ,that ly is

t;ltt~ abi 1 i t~y t;.~

inOl'e,9.S8

e.:v;::·por.t 6a.I"ning~. d~pends ,

'Phat mark~t

sti 11 reel ing

t"t'Qm the

impac:'l~ of

a glchal

economic

o-ontra.oticJrl . in response to the orisis
j

the

economically

'~he:ir prodq.cts. traditionnlly

Sqg~r~
depended

fot'

8Xf-Jmp
JLtr.;

18',

OD

wh ich i;be P:hilj.ppinF.l~
"xdllange, was q1J.ote.d

had.
in

io.];,

foreifl7n

5uoha. ridiculous
dump 1,rig of

and. unr ea.Li.srb i.c pr.ioe' 13
exce:s s sugar

has
'W()l:']

bAet1 mAde

posiSible

by

'the
EEC

.

i Q t.he

d Olarket ~hc.l"I:'.ab.ly

by the

Bu t, e.VB.IJ l':b~ sU-.o
g armen ts _.

11 ed fLqn---t,rad 1. t.Lona I expor-t s ,

1 ike

'I::.exti Te

imports

into

the

US,

Jabor-

like

th~ Philippines
£l)TPlus

',jgbtem iibed [' b~lts' ~abt,
sr:;rvio8,

in

;<');1:'".1

effort

tq generate

errough

for.

Ul®:rt::: is

fSimp,ly no way by which

outstanding anew,
grows

obi igations meanwhile,

(~an be fully the foreign

met, wiBbou"~ b<"'1ving bo borrow

In th~
wi tlh

debt

is· like

a monst.er

that
be

every

pl'ill 51'i ng' day, S

d. evour i W1 BV.erytb i ng t.hat:; can

Behind:. the
But., Perh aps in

Cris Ls

j

an OpeniQS'
every ~loud ha~
B

silver
cud of

lining.
mount; ing.

th is

(las e .

·I:.h s i 1vp-r 1 in i,ng f.~

in

th eel

whlah tba.t

,

is' now t.br~atEH1ing to has r-u led the count.rv

1;j'l/eep as ide

·the

din l;i'.I(i~orial

regime painful

for

13

yeaJ:'s

now.

The

so

t'o:r.e nat

on] y the bl~t also,

pe:t'nici,ous

r8t1,ii t.y

of' tnm~:mat:;iQ:n,al
bankruptey

oap i tal is,t Marcos

otmtltol

I',he mor-al vanrl

pol H.ical to
tbf~

of tbe

R~g fme , Unab 1e to

prov id

1'3

~~'el ef i

~()'f)ncm i I~ dis 1 Doat i 01') tJ::ra t

wOl'kers.
years
I

the

Reli1: i-me..has

had

to

use

gr.-eater

repr.e~';;lS ion

ttl

m.aintain

in Lur-n, "rE':l;ater d.e'berminf.i t i on to nus t, the

Iieg 1me from,

r-owe r
.0:1;'"

J

arid t()g,ei::.ner

wi,tb it;', tbe economic

1t~e.main:tng srhred life.

or Am,Fll;'i.ean control

the

oourrbrv'

s

and p01itic~1 of a Or i sci s

The Ma.1dng

;p'ublio

view

the'

:shallownes~

and

tragi
most

J i ty,of

thl';'l

d~'V81opment

.;r,:lJ,:'ogralP it was

pu I ~'l1 i ng .

llnkncwn to of

l!' i .I ipi nos;

it had the
j,

oS ought

to

m€linta'n itlto af

an

i.llusion

prosperity
f01:"ei~n

thrOu,s'll
I,bnrl"owings

massi.ve a large

infw'liQt1 po.rtim'l loans, favored

tbtl QCJI.H"I"tl·Y o.t'C',Hrt.;.l;)I" (ne,ar.ly, 50%}

wh i ch

cons is;'1~,ed of

'shQrt-t!Eirm

commeroial

mod e

0f

fore

j

gn cap i tal

e[')"trY ..

~'hus 6'7% of the

capi'tal tor:m

was in the

Shtns rJf an impend itlg cr-I s i s h ad become ev iden'c e s ear ly

as
th,e

iasr,

when

·tb e

1 ooa 1

f i nan c i a 1 commun i ty

was

rocked.
,B

by

explosion,
bus Ine s sman

of

bhe Dewey Dee' scandal. who, bad
borl"owr:;d

Dewey De~ was

prominent
al]nf.H~ft and

eno rmou S sn;UIJ,S of

m.onc:.r from

all

the'!

rna.iDr banks

and f inan-e i IZt 1 hou.s as 1 eavinEr

in

the;
(:1;f

counta-v,

b eh i.nd a t r-a i 1

debts

amount ing

51

to

mor€,!

than

F ROO

ltd

11 ion. c;ornfrtunit;.y,

destabilize
~.dQption of

th8 errb i r-e finart(lia.l
greater

and

r1omp,el1ea.

the also
money

OI"H.l.t.l,O!).o:mess: tn, Bxbendi rut
it;j

eduo.at.ed

1-.118 .

depos

nr1, pub I i c tn

t;be

l"isks

..

'l oans .

It.
In

e.n.tai 1ed tim~

It

was

during

this

that

public

so-called friends

"crony"
and

.j

mpan

ii?:;::i.

f.~lIrpor&.tim'l$

owned

by known

Marcos

Qs~ociates_ of doms.st ic at a and fqr;eign pace. loans as they expanded

of mass iva amounts their operations

dlm~ying

The

most

at what
were

leas t in
The

name,

were
hotc)];'i

known

I'IS

tba

[{(~r.d s i

gUJI!lfJ

of

companies.

"or-on i as"

Ol.:tr:~ for

"h i jackirIg"

r~\H:Dess:ful

C!cu;-poratiorl:S;

by :forcing

withd0t
BontributA fresh capital.
th~y

h~vlQg

to

whioh

d ef t.Lv amp,l o~v-ed t.o f avo r ;

\

t.o prots9t,

sellout

.nd wait for more timid,

favorable

ti~~~,

progressively ooramun i ty . Bor:rowine

and

cynicism

·prevail~d in

the

business

Wibhou t t\c'Q:ountabi

1 i't;y

Inb~r.'n,atiana.l

banks

oorrbi.nued to

~1nCR the ]at~ar was willing

One pr-or: f. rif tl':d!':' 18 t.r,L[;I,t. they

a l Lowed , or

B:t

limit

of

20%

on

th~

debt-service

rabio

{i.e.,

interest

+

I n 19f1l, ~1ready earnimts bc.rt.:e.l1 eo far $1. 4 b i. 11 i on ,

i t:-:rt.!"!.res t. payments -to
24%

alone laxpart

equ, i va 1 en+

of

tha L ypar.

in

1982.

It, was not .. urrt.d 1 ·ths~ Arn<Ly PlH-t

Df

1983 that

the

IMIf

'''his

"t!ime~

-t.be f:\0vp.rtlmc:lnt

WiStS begi nn i ng t.o

f e'e I the

rear-ked to

s lowcover

d.Dwn Ln int!!lI'n:ation.al

I,ending.

l'!

Sh(JJ:'t~t;e;orm borrowings

obbai n,

Thus,

when

the

BOP target

$

_-1.. bY' t:he IMF for

·the whole

tbat

Y6ar,

thp.

l~emaining

ba I'anoe

from

a

1982

nw

loan

wa!'i

wibhheld.
deva lua.t Lou of '~;h~p'eso in June

1~r83.

The Aquino The senator

Assassin·a.tion final blow Dame on Atlgust l-\quinc 21 s
19t-l3,

the

day

f orme r

the

Manila

Goming in
midst

the
f r-om

qf..,., i despl'e~d theJse

s-per;:u 1at.i on

c on ce.rrJ:il'l/t the

state

of

MI!I.F."r!'Os

own healtb..

everrt.s

se r ved

to reinforce

the

tl~rVOU$ne$"s

l'8vQlving
1:; :rads

or ed.f ts

we.re su spend.cAd ,

new

loans were reoalled.

i:r.rtended

inye~tments

were

wjbhbeld~

1ar~ e amounts

th e

Cet) t:ral

went ..

dr;wll

to

$600

.rni 1 J.

IOU]

on~

morrt.h

aft.'lBr

IMF',
another-

it

had to

agree

to

round

of

deva 1u El.i~ ion. .. I-,b f~ " :i

t i. 1Ur.;,l

't,o ~ 14 t.o $1 r

in Oct obec

1983.

Impaot

of t.he ·:Crisis The effeot of all theRe on the whole ~conomy
W~R

simply

to 70% in O~tob~r 1994.
deva Iua t. i. ql:l ~ •

Cr~dib

bec&ma

tight.

f"Jf'81F.;'(ltrioit~,

wh t c::b wa.c:;; depend

8'nf~ on

1'b~negotiations

W'it;h the

]"IYW which.

involved

sva
an

i315 million

This

was

interesting

_opular

support

nbr respect

at home

or abroad~

It bad to

deal

with it; Bnywa.y, nf its control

not only becAUAA of the military~

it was still

in power hy virtue

i tlil ha-r.shes t, ~,ond i t i one.I i l.y ,

Firs.t, the g'cw.ernmfmt.was forced: to deva Iue the peso furt,ne't , to J! + Gt,o $1. arrd , later. 1-.Q ~ 2,.(} 1;,0 $ J. 1 t?US r-ound i ng off to 100%
IN.
I .

j

had
Invo l veri

to

, l~unch a
brinB'ing

Prior
,.d~m 8nd-'mana.g'
down
'.

to

this.

the

€!mF.H"l

t'. ;, of. money

e,s~f~ntia~] y
j,

tbealUou.rrb

in

c i rotrlat

on.

Ha.vin.!#mopped-up

this

of

inflatidn

to

m09nag~abl,di l eve l s .

The pric~ paid

for

this

market.

55

On cleva.l
U"{;i

top

01

thi~~

t-i on

p

In
either ca!'Se,

bhe i. r Jobs' .. new entrants into the labor fcr~a every year.

19S4, another r-equ i rei1h31'lt. of

the

tax

burciF.{n

m1,AS

t;

be

fJli.:i:r Led

a way

,

f r-om

i nt ernat i Dna 1 Accc rd in'g ly
I

the

government'. mu st, lift t.he O:-Jxist,inil ·transact. i oris an.. the 5% !Sl1rd:-large d
on the
USB-

1% t.ax

pn

al 1 foreign as w'el1

,exchange
a.s
t}3,X~S

on aJ 1 imports

r)i

V6!hJ. :les

(ddublh'Hi! o f .tbe r-oad i:a:x);
c~ p~trol.

incQme,

on travel.

oi~arette~ oonsuming

and aloohol, public in the final

eto,
form.

A],1 of

thes'@ mq.st. be ab~Ol"bed ·prices of .B'oods

by the
f;l.nd . >

bigher.

In

th~

analysis.

a11

fr-Qnts ,.

expenditures.

operat;ing

nut 1ays

1,"IfJ,v~ been

u]'"1f!1qUli '(N]t_f;l, 1 l.y pre-sari

b ed by

tb ~ rMF.

tbei r annual

budS ®'t;s.

n:qu.a] 1 y

irrrportant

:l s . the

rMF"

cond Lti on

that

grvernment

fin~l~ial

transfers

to

pub l do

Na.ti ona 1

rower

Co rpoh3 t, 1on wh i oh
hi.lS

n\~'ns t:h e BataanNuo

1ear

Phwel.~

Plant,

'I'he gavernmerrl:;

had -1:",0 k~(~'!:;J up

i-cs

cont.r i hut.'

ns to the

-p~r day"
r-ai s e

Yet r

a I J. ol:,her g:overnmernt.
own revenue. and E>ewe rage
'rhE\!~H';l

corpQra::tions:
j 11cLude
I

h~ve

been

asked

t:o

thai

1:he MWSS

(Me-tropcJil i tan 'flat et to

Wa.terworks

t1ys:i:;elfl

r

wh i h !StlLPP as II

c 1earl

N·lltional Fbi 1 ippine of
th8S'€

the

Kla:t.·ion~] 011

CmripfillY, de 1 i, vel:' goo.d s and s.e r v i c en

pu.b1 i c .corpcn:·at.if]UB 'rb,~

to

the

I MW P.'2{pects

them to

be

$8

J f --51 uff:i oi el1t

hencef artb tbese goods their

th

r'tfi.,tgb

t.he

51 imp

1e

r:;xpF'.!:d

i 8.01:;.

of r a ising
t:hAY are which

t:b F.l pri ce
to

of
sl!al

a.nd mervi cas. non-performing

Beyond

[,hiB'l"

expected

all

,assBt~j, 18 fl fi .

were

valued

at

appro;?;: i mat e ly

pa 0

b1 1 .L i nrl in

57

IMF-Irnpos,ed Adju.stment

bel t.sand

oorrt r ao c. ittg

ynur

F.l'GO'llcm V.

h_ave

been

@r'bcied

in

onl y

~

yr;rar5_;.

Installed

oapncihy

has

'I'hl?! r11 smCi] .... : i.l;{ht of

ft).rpign

mm~ehfill.ts

tractors;

b1.Jlld.Qz~rs

{om

r'nnF~tr-l.lct..'"11 j

eQ1lipmc""!ni:

is

replayed

everyday,

It

i5 not the humiliation
r-at.her

of literal
i ~, the is
i, s

foreclosure

that

t.hough't, -thattbe

Q01Jntl:'"'y

,

be inl:t r-edu qed to of
r.aw

what .it
and

was

during

the

oo J

H"J. a t

I 1".i e.s : m

~

f;a.lpp

~ ie-I"

materials

manpower

~upplier

of

al]

order

wive:s.
Up to bh is point; in -Ume. ·I~hp.Marcos ,reg'ime has played of

the

in spite outhursts
pract

occasional it. has

of

nAtjonalie~

f~rvor.

i ,!'}a lly

allowed

th~

visi~4ng

mechanics

af

the

IMF

to

Rut a year has
and th e PJ;og ram h as not
yj
F.i Ided
8VF.lU

passed
an ly

a g 1 hlme r of

t'€! oover-v;

further deteriora~ion in the ~u(momy.

e.Imos t a 11

58

add it tonal

t.-aXB!S ,

and ce i. 1i n[~ s

'-)7:!

bud g ~rl flU'y

clef i c Lt:s .

LikE.l

a

i r.sf-ll f a. cond i t.i.cn

for

the

Yet.

9~

if i~ ~pit~ful

~urrendBr,

th~ regime
SOIVA

it
be

yOUI'

own

w~y.

In
by

all

p r-o bab

Lli t.v , the

bb i9 ft~g i ml"l' OW'i
or-edi t.or-

11 Flv8ntually

ba'led

nut

·j:.Ile 1M}!' ,"jljd

banks .

Out.st.and i-ng

obligations w'll
but

rsmai~ unpai~.

but

~h~ banks will hava no choice

to r-es ohedu Le '·.he:m.
'I'b er~f ore ,
80;

in

a

interest

ar-r-e ar-s ma.y be and

W3Lt

i sf ied ,

Ths national
wi 1] o~:mtinue

debt

will,

of

1;1~ banks
.F.i 1 ip i n os LMIi'
111ft;':! S
f,'l

't..o hopE'J that t,he
and

futlj["s

g-!'~ner:'!l.I:;.il)ns

of
'I'he

wi 11
vP. the

hono r

repay

thair

in l.ernat, i ona.I

f inane: i 21

ifisma.n'bl l.ng o.f an
The

entire
Back

e-conomy?

People· Fi"ht.

1985 ,~al'tial Law in the

1

-lh e eve of the

1 ~lLh arm ] 'vers a ry

0f

Phi Li pp t ne s ,

"6 ,000 peop Le ,

mn~tly di~placed
a rally ~n the

were holding

59

t".1 '~{1,ro

r,

ha ~ h Po C:'J:"j

i:(ln[~; L

:=; ev·er

el y hit.

b,l

for

sugar;

I'o r

1~)85,
1:'h'l!\! Escoe Lan.t.e

d eo i s ion ,

Unar-med

and

'l'brs

It

I

JrH34~

to

April

J.'985 increasAd

by 51% from t.he

i

comp,i!'i.I: ab 1 e in

period Metro

of

1884.
wa 1.ked

It, Sl"'!ptl!lmber.
out~ of
tJ']J ~ 1 ,t"

1981., pu h 1 i c s ohool
r: l
:=l :~;

t'eacbers

Maoib of

:;,l"()U

mf',::-I-.Q (1emand

tnt"! urrpa.Ld

port i on

their

~alf;lt"ies"

thsresponse

itself

to

the

rMr

ami 'cer.m i.nati on.

the

dismanhli~~

of cr8dit

sui sidies

for the

purchase

of

farm

60

ippu.ts. ~cvemb~ r

()b the

ot:ber. trand , the: op8njng Like l;y r-ev t ve

of t,.he s!Scond5emester long

in

wil I

un ill e 1'5 ty s tUrlents' j

s i mme r i.ng

ad.j1.lst,ment

i?ol i oLe s impDsExl
of

by the

lMF ..

ie81 i:m.et}c~our.rts

the· Gr i sis To aooun+ for

tbe popular

a.g itat

i On a Ll

CIvet'

t.be

(;Ijl.

.m'l:ry~ it has

'Pointl'::d 1";0 t.he

d.i ff

i.ou H~i e's •

The

o r Ls 1.5

:i.ts~ 1f

l.~ o avaI te r 1y

e xp Le.i rred

as

ece's~ jon,

While

cominG
1987, im-paot
J

local
11'] I]f

ele~tions in 18H~
hv i OUG i·5.
a:j',
b~ltiiIpt,
.1":('1

an~

presidential

el~ction~

lU

an

C)

ri 'i v e r-t. popu 1. a'r at·,,·,p.11.t i on f rom ,the

t;.'be oris

pro f 1i g.a:~e

,

I-{owever,

~hRY do not telJ the full

story,

~hi li pp i n e.

c r:i

s i:'"~,

~

dimen~ion

that

it

shares

with many

other

t;1

indebted

countti~s

jn the Third World

today.

it

n cno possibly

Ij

-am 0 urrc

erf an

resuscitate

of

't.l1.e develo];'!ed Cri$es~

uap;i tal

i s;+, cc!u.ntries"

Between

Can Democr-aev
,'If

Last?
deb i 1ftating'

Caught people Interest
consumes irig ly] ·thei

Ln the gd:p

@.

cr i s.i s , economi c

the

Fi 1ipino

1"'0siliency.
problem
p,l'()spect

it
J:"

is not

so muoh the
now H~

eoonomic
;

that
of

ettteTftion

I:,hl:~ poJ;.i t.,i ce 1

ec'onamio

crisis: Reg

has cl(eatt";ci a I?'tllititR~ll.l

cr+si:s a
1')8""

\

for

this

Rl9gime.

ArJ!(:] the oha L1EH1ge.s

il1H!i " Sf

cz-a.s i s

bes

spawned

pol i t.i os rule
but

whi oh
also

tlot

onl,'? the

v a.l l.J.i·l~y of

rtu-tbor:i.tarian

pol i"I:.i_cs.

can

on ly strf.!ngt,b!E!tl

Lht";: Fi1 i pi1"):o b·wLion.

I

t cannot;

be

denied~

however,

tbst the

~tructures
Many

of

the old politioal especis]]y

culture from the .for of

p.sop Le ,

rural

are as

i

cQni;i'nu~

t·o look 1',0 i.:.he tt"adi tional

ward leaders,

po I i ti ea I

gt~ i d arro e .

:po it:i c s . 1 Phi l i.pp l ne
gover·.tLtn€h

In

sh o:d~, barr:i
t:.. ::, h

t11~ 'fl

l H:;

lrJ~.·I-,j, ~ A-t···~d
lS

i J1b:-lI'vsn·t tbat:

:ii. on

by the

military.
l"iA.)':'Cos

p r-rihab i.Li tiv

high

the

next

t afi"::er

wi 11 h~ dem()(~r·aJ:;j.o.
wi "I::,!! out

concrete.
ne·~ds to

ch81'1g'es in

t.he

~l('n~ld econDmic

oz-d e r ,

is:

'81.

prnblAmt,nat

The sr i tU8.'t1 OrJ of courrbr ies of the
i n wh 1 oh

bhos e

LAt.in

Am8rican

h:~mocrf.l.t.~ reg;. mes Lame: :lr:rto r:

bein.g yery

in the

wake

'W":i. thd:raws.l

of th~

gerJer.'ils

he s not

b~f:;O

~nC'i)uraging. last.

Ar-ge.nt,ina

und e r- Al ;F.onsj n arid !J8ru

under-

AJ;arl

C:~rt:i a may 'nat

'fCirwa.:rd the· IMF

now

t o prose
r.

l1ew ·ec (),I";) nn:d c ~ 0 1u+ i oms.

At. U'),~ s ame

t i m06,

i:-s 'awar-r--;r t h.El.T;.. ad.;ustrn~n are dealing

b i ~ nDt. qui ok I y LmpI amented with do not bohher to consult

when the

the

regimes they

peopli'!!.
Yet
pOl'"t.iol"J

the of

more j,mpnrtant.
~xisting dt'7bt.s: it

point

Ls ·thai, even. if and

a

substantial
rates

w.F;l'r~.can.ce Ll ed ,

inber~!'i!t the

ccn~iderably

lowered,

remains ~noartai~

whether

fragile

reg~rdless

of whet:.her thev

balance restruc+..u
r j p.g

if

no

r-adioal

of ~e

economic
to First. of tr.a.de

relations

were

undertaken .

are not ~eferrihg declinirlg terms

Wo~ld for

protectio~isrn 'rhini

aIons

or

t.he

World

Ainerioan
vi ci QU!S:

do 11 s:r

than

the:y des e rve .
wi tb 'l'NCs,

p rao"l:;i CH~S a s s de La ted

like

transfer-pricing~

the

dt mpir.l!'if. of

commod i ties!

referring

to ~he present

system

which permits

~he [MF and the WB

and

l:;be

BEe

'l'hi rd which

Wot'ld.

Finally,
!;!mploy

we

are ~eferring tb those practices
aJ ,
2!

by

,governments

rlffici

id

h.1 00l'Ot'H"

J[.~l·J...et.s f or- t.he i r

own ria't i.cma l.s ,

the

redipient

countries,

'The Need for

Sel f-Rel

Lance thfj' LJS dominated bhe world 'I'cday, P is i tiouof even
j_t

economy cun'bitllJes

from to

a rule This

pos it i on over is tho an

0f

nnequ aI I ed

s t reng,th .
1,l[

s.ame wo rLd eoonorny fz-om f~.ct, a scand:.al

bankr-upbcv.

i.r,Ot'l ],0

l~ba'b becomes

crisis Philippines.

irhe IM.F' has

simply coup Led

deore!8d

that

what

is

best

fpr.

the

ooun t r-y i~ d~valuath.1t'1 fn short .. a

cri.sisis b~ing

hobbled

by

for~iAn

excbange

~Qarcity.

are simply being tc ld is that
ad ju~tmen
,bs
mU5J

in the final analysis,
I
t, i ~n-ate ly

the costs of
the
POOl'

,t

l_~

be

bor-ne

by

OOJ.1fit r i ~8.

rJp

to

t h.i s

po i.nb ,

we have had little ~hojoe

but

to

pay

t.he

oost.s,

liberation the
past

from transnational 4\ denades is

su b rd i na.t.Lon.

Bub the lesson from

inesoO,pabJ~:

pa.rticipate,
s.ys~~em only
ijhat

mean i fig full.y

and

C!Ouf

Ld eri t ly ~ i 1'1 the 1iatrt.

wor-

Ld e-I:!onomi

when t.hey have become

bel f-re of

a ~e 1f -t'€ Li en j:; strategy

d.evelopm~nt

exact.Iv

means

10

ooncr et.e

·berms

mustSQ(Jll

o('";oupy Lbe minds

of Fi 1 i pinos

who

are

tiicrbatol"sb ip. The first Ls

Two prahl eOOSl'llUst. the que~tion cf

ol~,;Jj.rly
ElQonomic

be

fflced sooner' and

Ot- la-bo.!!:r'.

.ju[--l'tioe

wha.-c

bb is

Philippine society
to privllt,e
1.$

as well

as t.he role

to

be a~sir;;:ned, ecol1omr.
..

enterprise the
i.tl

hl tbe of

d.e've Lcpmerrt. ,of 'I:,h8 ecr;room-lo
allJton.omy

'rbe

second

question

the'

mode
and

of t:.he

:pll1'ticipat.iQr:I

t.he "r;orld

economy -I:;hat t.h i s

implies

s.elf-rel Lanoe,
It is perhaps
that.
,

Thes~

are

vital

~Jections

that cannot
people's

bB ignored.
fDr

a meaSl.l.re of' ·thf!! FU.ipitlQ ·up 1:0 n ow,
j

impatience-

ehang e

r':lpocalypl~ i o or rni 11 eria.r iari :poII t i. C:~

·6.5

NOTES 1. 'I'hl.rd Norld
.lu Lv

Network,
p.
"[)'r;>.'b"l.

(P~n.an£f.

J.913:F)),

l·r.

'I'h i rd World:,

Development,

Or

cr i.s is?

As ia at'J.d Sub, 5ah~:r3rl Aft' :L1~t-J" ~ j l! r';;h~rlji.:'1 Hag ."'tnd Car Los (eds. L Adjust.ment ,N:i.th Growth (r;1' ]l'lltfl"l.b,'O].d : North Round·Gable. 1984). pp, lj~9-j lfi,

:2.

Shah i d J.

Rulo'i,

and

A.LI LI1I,F.I'rt: The ju~:

~~xf.!larj enf~e 'lli Sou t.b
M:assad ~l,ou'tbe

3.

Emm~nLP'3'l

Crisis

tQu~Cln

De IHos

(ed _).

An Ana l ys is
H!8A} ,

of
p.

bhe Phi 1ippine
3.

Eooriomi,c

Ci'I:::v,: u, P.

PreE:~I'

e ,rflt,p' nfi nc rp..9!;:' f-"! of f.h r-:t (,),! t. s t, rmd i net d ebt~ 0.:1" Lf'1F' d e'v~~ bp i ng 1 ... ourrer-t es in nom i n a I t~~rm8 ~_~ .i_r'lr:~ 1 ::rn! has br-:eJ'J e~ I. imr-;I'r.p,-,] ~t 20% 'per YI"!;?tr-. 'l'h F-~ ~ !'H':rE',';;'1~l!"! i 11 tllt=l ri5'r.J.- t-;(J -GNP 'i':J I_.. i 0 SUID'$ up the p irrt.ur-e grllph i oe l l y; f r om l'i0 in 1::1'70 1-.0 2'7% 'i n J HB:) ( Bukr-L, or. cH,., 'p, 130), For exampf e , see DB Dins. op . o it.. p , ~l. U[1 lh~ Ql:h,l'w tu;md. Cher-;'I/I Payer d Ls miss 8.!:l tb e n nmmon l y r:H,wepbed view wh i ch aS~(Jc:li~rte!g the d,ebt (,~1' i E":: i t.h [';be aOOUlIlU l'a;ti on ,of petrodol1-ars. i~i w Paye!" ndte ~ th.'1t : (a }wb i l.e 'UIO(]pd v :;3. te Commerc i aL banks did lurirease tbair lemiihg after th8 oil ~risis, the bulk of the monev did rl()t: go ·t,(_) thR c.oun t ri ef;; trllyd:. si;lvA-rely hit by t.h e oil price inoreases; (LJI t',he: m mAY wr:!rd: t.o th~ government.s end thE! multiL'=1;t'er.al ins-titu,t<ion.'S wh~J LA1RD Lorrt: it ·to 'l~he impover-ish,ed oil-import,i1.l@T' cnuni-,rie~,; and., ~<t;) the o i l e}:por"t';eI'!il :int-.ere::d;.ingly '!:'s-nded -co bor-r-ow mor-e relative t,(J 1:IH'!'jr eX,port earn Lng s than thE! oil import;il1g oourrt t e s . See Cberyl P~:yc:r~, "Tiepudiating the East." NACLA Reportoh the Americ.a5>; VQ1. XlX, No.2', M,3,1"'ch-April 1985. p. U3.
,tj.
j

4. TJ:

J

6. As illusory.
interesil:

it

charges (p. 131)
incrElas;ed
l!:l-ter" ,

out,.., the errt.Lo i ng J.y low l,nt~:t"es;'t-, l_·"at~s were 'l'J::1El bi.. . k d of tl"H';>~;'~ loa_n~ w'o<;:r,P. con trac·ted at var i,e bl e ra+~emwh ioh permi tt . d bhe ban ka -GO i.uor-eas e the interest e in order bo rE:::.9. 1i,~~etbei r glH'llAG1.f'! beed s;preflids. Budd tu;:rbes, for irHJtan(.>~~ t~h,rd;" s:hort, term hrr.erestra,teSl
from lest:! than 5% i 11 tb!") early 'fOsto
t)VEH'

tur[H~d

I,

20% a decade

far 'i:lx~lnr.Jlsj An:leJ Dt1 tifl•.lrofrlan~ ..A Pr-~diminl'lry Ana lysis of Labor Out:.mlgr-atjol:"l', Kasar-ihlan, VoJ. 1, No.1, (Third lSI8..5 }. See o.Lso f(atherine gi,bson, !·Situat.ing Migr.ants io Then r'Y': Some c.oncept.ua 1 If: 1': U ef"i Pos r=d by If i J j pi no Contract Workers ". Pi';l.pP.t.pr<e$ent:;~!d at t.h Ins l,j' .ube of Atrs t r-aI ian Geographet'~' Conference., Bri:"J banF',. Mf.l;"-· 88 ~. 1 B. This
his

1. S~e. li~ilipintr Quarbe.r)

is

paper, Ll Lua ion".

that the prascnt a.uthOl~ d ev e Lops at lengt,b in "D'l ct.e t.or sb ip and Deve l opmerrt : 'I'b e End of the Nelfl As ian Vis ions, Vol. -':l, No.1. 1!J.3.5. a thes is

Gr.Jvernnle:rri;; and pri Vf.I.'1'f! eons:t,ruc·ting expelld~,ture,s al one ,gre'"'" from an aVl'!ll::~agE~ I")f f- a bi 11 ion d u r ing tbe f i rs:t. h a l f of ·tbe, 1970s to' fi? 2t'i bi]Jjr1n d u'r i rtg i.bA :Ren(.md h alf (De J)iOSlI 19134 'P. 11),

g,

66

See all'> Q Leon or ~i, 8r i ones., "l'hr~and Pr obLema ", Ph il ippcl.ne Journal ,XXVII. ·No. 4 (OnTrt'Jbsr 19t~:j).

I!eb't

Hur-d en ~ M<~£rl1 t;.Ud6:s ~ Cos'ts
C!!

of

Pub li

Admi.nistratioo}

VoL

10. As Alfl'ed J. W.i;lltkihSi plrt 1:1>: 'Fi r-s t. What ltlat,ta:t'sto 'banl:(£ is 'tiot, theat:onortrLc 'f e as i b i_ 1 i t,y o f '<+ny i t~di V id • ..tal pr.o j ec't but the ~C011.0mi pr(\~ p~c't~ 0 Qf ~ couo:try, t.h.f'\'t i:?oJ, wh 8ther a n,;rb.i on can ~no1Jgb do 1 1~r;,:: by exp~,.t'i;·]'ng gr,10(h; and s e r vi t::.;lS Lo repa,y i t.s lb;at'lS, If i t. can, e'ven ] rUJ;{m :fnr" ll(lprc~duGtjv'~ p'urpa~~.'::j> like luxury oorrd Oill:lni ums in Mi t'm::d. are perf'~ct; ly s ound ,. . Al fre(:l J. '1i&tk ins "Gcd ng for Bl"f.lk.e " ~ ~ACLA Report an 't:he Ameri cas, Vol.

e~rn

./1;.

\1"1-'-' ~"

j

-

U IL\! I)'

!

J) 6+ .~

):.I ..

-

IJ -,~•

~R

11. Bor an exoellent disnus~inn of recent oruoial obanges iD tbe ];''01 0-£ tb e IHF' in I)1tl int:a. 1.n i nF.j: t:;h~ g 101321 1. cap j.tA 1 i st 5';y:st-.~lIij e 8 ee .RbnPh i ] 1 ips, 'THe Ro 1e 'oT l.hB' I nb'eJ:'ITtl.'l:.i on e l Moneta r,Y Fund in the F-bs'c -Bretton Wood_~~ Era"! .Review' af Radioal_ Po I i tical Economics. Vol. XV 1 'No. 2 (S;UmmF.ll~ 19133). 1ri I :l.pl no
,sEJiies 1-2. See
Th,ere~a Di Okl'10. "The IurpaQt.of the H'o1F on tbe rj~QP I e" ~ The Ph i.l ippi nes - i nthe 'I'h i rd World Papers NQ, 86, Tb 1. r-d ~:Ol:' 1d:=:;:"j:-'1;14 i~~~ C~n te't', Sept.embc:H¥ 1883.
MEl"
j

a~Qiin ~
1985.

1:3,. Cononu t, o I j e'XpOl~'b:;', f-l. rna j or d oI lar eflrner, s uf fared a of 80%. dur ing" tb8 Pj=-lt", od ,J anu,ary-Au,glJs1; i 1~ 8:-5 _,Do.mparea ,tc! H184. On th1R O"tJH'':l:' hand , s·efJIi,-LwJ:)d~tct,Ol<· eKJ,llor-ts went, dQWU by 1_:3. 5% dur ing the s ~me per:i_ od . G~e Bus iues's Day, Novembe.r -1.?
j

1--4. LMF e~t i-mat,~~ s how tb-nt·, Vi U:hOt.:l t..,t.h 8 muoh -ntSecieci res Qhedu 1 iJl:1~ thE! Phi 1 ipp in~$ WOLl ld. h ~'V8 t:;("J sl':!ou ld.'~'l"'a -d~bt,~ s er-v i oe 01'1 I ig.at, i an -01 appr~,):d.m-;9'1:,~" J y 48. 1% hl j 984, .46. H% irJ ,188.5,. and 48. 4% in 19-66. These ;fi g!.H:SS at' E' tf.! l~enf rom -~l1unpl~ b 1L s.bed cl.Qcumen t of the IMF' 1llxe COL] i v e Bottrd t d at;~d N ~w6mb~1r fl, 1 €H34, ,
j j

67

ROOTS OF THE, AGRARIAN GRISIS IN ~rHE PHILIPPINES

Abstract In
the

tha

wake of the general
the

economic

crisis which
8 uff-er.·ed

gripp~d
1:1 !5

Ph i Ii ppine a in

eo s ,

-t.he a g!,,~r i au sec;tor

t.eep

decline. maiket
j

Deeply Woven into

tJ-u.~· f abri c of the global products were hit
wa.·y

capi t,alist

exports

of

.gricultural
whlch At the
and

by
bel()~
0.£

market
production material Beginning rice

oorrt.r-ac tions costs, i.nputs 1984,

quot.ed

prices

local imported

s ame i~im!;l) r Le a reverted

t.he pricA5 was

sQared the

production to

curtailed, role

country

tts famLU ar following

as

a

importer.

Neo-classical

e~onomi!5ts.

the

'World

Bank- IHF line;

have pinpoint,eo

exoe s s i ve gOr€·rnme.nt polltical ~a the ~auses
,

via

thl3.

au-thori'tarian-hLU"(~aUCl·atic and corrupt managers

~

.

i.nterventiQn

set-up,

and

its

inefficient

of the

economic been to

hreakdowndi smant.Le

Thus,

t,he

prescr;i ption

foi· reco-very has

government forces.
of ·the

ccnta-o l.e ,a·ndallow' the full

flowexlng

of

fre.e market The

roots

c.risis

~

noweve r,
l'l':1gime

run 0'£

de-epe!'.

Without
fot"

absolving
aggravating that are~ the

authori t az-Lan t.he problem, factors

TElsponsibilty
analysis about, advanoed strati.f ied

antore

rigorous

will
the

reveal crisis

principa.l the (2)

which have brought dependence on the

(1)

economy's the

capitalist internal

states,.
social

development

of a ~highly

structure

whioh continually

reproduces

s~ch

dependence.

68

and

(j)

i;,he format.io.n

.of! a c;:arlc.atm~ed

and
~

outwardly-oriented

capitali~t mode of production, today' han Lo be si tusted
wi. t,hin

the

above

framewQ·rk.

Also

t,o be

i".he tendency the main
stumbl.inll

to to

point.

to pre~8api tal i f1.t vestige.s as such oontiuued
remnant,s

b l.ocks

development Qr their

'have has

already

been ei t.her

tl~~nsforined

existence

BaS1C Components, of Agrarian programs
cuher .

Philippine

Agrarian

Po Lf.c.Le s governme.nt
consists of each 'through

pol ic~t

unde r- the Marcos; that, have

.and

st,rat€lgi.es
l

frequently

cOll.trad.ict:.ed ilgr'lcul ture the

For Lns t anoe
is:5

the

drl. ve to modernize

B.&!:ri eo i ne bu compol1€nb

e xparts i on c 1.eB!, 1y c 1. :ashe 5 with the land polioy
reform.
prQgXqID.

red istrfbu ti on
of

of

Al:1 analY-'sis reveal

the

v<'.u;-io.uf5

-aspec t.s

of this

will

hd"!ev6r

what the

t.h:rustEi

and

state

vis-a-vi~

the

~grarian

s.ecto:r._ the

Despite

public. of

pr-oncunoemen t,:5 sma.11 their produc.ers.

r.ega, rd i ng a com!'!] 1, ·tment, td and t.he Launoh i ng of ulterior to

..ema.nc i pa i~ ion" aimed as at tb~

programs

improvir'\g

conditions, a.Lway

~he
5,

ai.s as well

concrete
impoV"eri!3h

rA.mJ1. t.sha'1-E;:

been

f L\rlhe r margi na l Lz-e and

this partioular

rural 5ector.

69

Soo&11 Farme:t' Production This refers to tenant/sharecroppers
roost of these peasants
j

le~sehclders,
are in fObd

and

smilll.hold<ers production trice,

While corn

crop number'

roo'tc:r-oPs.
CI"(:>P

8tC.

J;

a si.gniiican.t. ·e. g..

axe

a I so in cash pineapples
;;IS.

and ex:po.rt
I

pr(')duction,

coconu b.s, t,h€lm,Qst is

bananas, import. ant

etc.

In -te;rms of numbe r , t.hey are agricu.lture

f'-".r a5 pre-capit,aiist

in the countxy

con.cerned.
dominant in cha.racter· stages stic of of
thi~

.sector _Thus to
<51

I

these

peas,ant5 mod~

are of

various

t.r6lf'lsit: on
a.s

capitalist

pr(;lduct.ion
corporations
l

e spa'of ally

they

establish institutions)

linkages

with

big traders;

finance

and other such

intermediarie.s. This was one of the -t.hat
~a5

s.tratel1!ies producers, known

or i gina 11 y intended rice farmers. The

'1:..0

bene-f it
I

the GR are

small

especially the As
rflyt.h.~

I'e au I -LS of

well
'been high
>

and

about, t.he

uItimate

ben~i icJJ,9,I"ie.s have in with the
U.5e

un.maskE!d, yi~ldinfl

GR

technology (HYV") 'se'eds, of have

was ti.ed

of zers

variety

m.assi VEl inputs
and

of fert:il.i other

and extensive ma.jor producing

applic.atiollbanef iciaries the,s~ iupu.ts.

pesticides

ohemicals, corpo:rations local

been t.ne transnationa.l bene:f icia.ries

Secondary

w'ers- the

dist.l'ibutor·1'j

as
~d th

well
credit. Th€l pB_asant.:t'Y, of seeds meaI\whi 1e
I

in
were

extBnd:in~ doen

agri.cultural

-w.eighed.

th.e high prices

and ,othli:ir technological

incp.=mlents.

70

ttrtosabe r ha,:rvest~ were
hi~'her, .cos b s of pr-oducrt.Lon.

t hus

negated

by

th~

di 6.p1'oport,iQnately

Despite

the operation

of a

5pecial
found

form

of

credit. 'ha.r-der t,Q pay back
One of i,he

'farmer">

it

:lncre'Q:singly
.1.snd

thei,r

production
decre'E:s

Loans .
up-on

reform.

firsT,

i~,sued by Marcos .2 which declared

the

declarat:lo·]1

of mart.i 03.1 1aw was P. D.
land reio rm arE) C!

·I;..he

whole country-a Plocl aimed the
o.f

P.D,

27 issued a month later ten ant
f rom

..emano i p.a.t ion
feudal. i!!l,m. "

of

t.he F iIi pil10

the
grand

bondage

Notwithstanding
~Hl1S

these
the $,tart
by

pr'onounnemerrb s , Hmtted s cope

Land

reform

crippled
t.enant
5

from

its

(i n area·..

number

0f

and crops

G9vered) ~ i t.!!l

treatment
transaction. the tenant last poln·t

of the

land tr,aosfer

prOC8·ssas on tre.at.ing eyes

a

ll

real

estate"

type

of
and the

and i t5 ins· st;ence as
1.5

both the law.·
j

landlord as,

"'equal

be:I'e

the the

of the
WQ,·S

As far

concerned,

Landl.oxd

a.lw:ays able to
I'

use hd s

power and in!

i uenoe

1:.0 be.nd the

law in hi. s f avo!' .

Even 'Within the limited
was unbeara.bly agribu.silles5 slow. The

scope

of the program~
of into commelicialized

"mplE;lm:.entation
farming and

expansion intruded.

f reqnantly

land reform
their
'fat"mEl.

areas

with t'he

re!5ult."in;g
,a·fter P. D.

displaq:ernent. .27 . Le ss of

of

t..en1lllol;:.sfrom

t,han. their

1%' of land

the

tsu:·gBtt,ad

benef icia.ries

had of

ac-qui:red ownership 1983 had the

parcels. exemptions

The eoonomtc crisis
for lands that

goV'ernmeut
I'

i.iSsuing

should

'tf)crm ical1y

'f a 11 unde

o-perat.i on 1 and tran.sf e r.

iJhi.s practi ,of t.arge

CE,l

insxtr

i ca b ly

l:i.. ks n

·the small

producer

to

the

wor ld

scale

capitalist

farming. corporations 71

Smallholders to exclusivelY

are

offered
a&sh

~Dtracts

by agribusiness

grew

ctopS banana Corn

for the export mark~t_ ex-pot"t industry. ins,ti of Lat.e.r , tuterlsimilar
agro-fo.restry

and

hyl:n-id

yeJ low

pr?duct,lon Studies

ar r angemerrt.s . in

gJ;ower. a.r r angemerrt.s ha VB: take·n prices. over

the barrarra

industry

shc::rw
Ofia~

tha.t well

corpor,ations.
and

a.l I a SP!l3cts of prodllcti
I

die-t.ate have

In addition wi t.h
5•

advances refiul (,ing

.on

production growth

expenses
i.n.d@btedne5S

ac cumu La.t.ed

the

in

among the sma 11 grower

Ag:·ribusineS5
"he

and Agro- Industr:i,ali.za.tion
dynami,C' aspect;.. pf

more the

Philj p1"l,ne

i'lg'rarif.lYl. policies technologt in

involves

utilization production,
reOEl ives

of capital

and modern and

agricultural
Agribusin€!55 Lncerrtd ves , .farm.er

moz-e arid In

~overnmen'~'.

support

in

terms

of small

Loane ,

poli t.icH;il one sense,

patron~,ge this

compared

to
,to

production. ascendancy and the
product

,.: co.r r-eaponde

the

historical
ag.ricu I ture
cbmmodi tv-

of

capitalist forces

of

p~oduotion

in

phaseout
I:node S .

of pre --cap it al i -? t (:£ eu.da 1 sud But s·tate apart
5up:port

pett.y

iOD)

fro.m keeping

wi.t.hin.

the
ab.Q

law.$ of

social the

development, agg~~ssive

:fo:ra~ribusines5 factors in

indicates

role of subjective

rural

dev~lopment.
the means ofproquction. t,he state has clearly drawn the lines of,

demarcation

in the context

of the class struggle.

72

EXl2,Q.;r.t..::.Q.!:.j,.§n.t.?t.tQ.t!.

Th~

c'hr-on.Lc nene55 i t,a ted

b .;lIane-A t.he

of

pa:ymen t 5

problems

of

the

Phi .I. i pp ines

1aunch i.ng foreign

of

an

Expert promotloD~
A}

drive to draw in much-needed

exchange.
[:'l.hare of

.!I-gricI.JI_1-t.1J.-:rtd f:u>;.p6r-r,oS ccrrt

mue

-to

corner

tbe

b~gger

t'tad~

I;"eC~ipt5

I'

i·1:. is

her-e where

,5lt-.tent10n

Ls

bein,go

focused ar~

..

Ineent.t ve s

dJ;awn

nIl' by the

goyer:nment

£'o.r ~g:d:cul t.une

often

This
legi8ia-titm L'edslature) j.ts , be:l..ng introcluC';ed in

includes

current
(National fo.t· be i ng in
'l;;h.e

the- Ba'l5cu~ang Pamban s e
unde::r widegpread

The pol icy- h.a.5
ElW

'dotnG

cri'tici!;iJTI
t-~!l'lph<;ls s i

di s t,o rt.ed vi

of

econonri_c

devp 1bpment,

wi t.h
1'.his

placed

rm

~.arn i.ng

fot~i

gn

~~cl1Emge. t,o

r e s'ul ts

relega,tion
p.riori, ty.

of

production
rnarkB-t,

Uleet donre.s,t;,ic

needs

to

"" lower and a

The. local

thBre:f-():t"€!,

i& ba1':ely

developed

se.l f - gBner·a"t i ng
-Ilon-e'Xl:!:rtel'lt,

a.nd.se

1 f - suf fie i en t. nat~Lon al

-erCOfl.omY'

vi -rtuC'd ly

C:t.Q!1,!!.§!D £!~S D:!;QD_Q.£R11~~.

Under

the t1arco~
LeveLe,

l"'f.'l

gime. po 1 itt cal
yes and close by

p'.atronag-e -f-riends taki ug
of

h{;i;s r~-ac-hed the t:1arcoses over 'would

it;.5

hj_gh~$'t gai-ned

R~latt

have

enormous

economic

powe'J."s

corrtro l

t,he more 1 rat i ve sect.ors ue be th.€:
sugal"

of "the

economy.

Includedhel'€
-col'lstit'ucti an ,

and

'coconut

i.ndustries,

au tombt. i "Ie Slss.emb

1y ,

bank;i, ng and. f J, n anoe "expor't rni,gmanage·mEfnt.

if'i'ui t.s,

-and

manY'

others.
and o-:ther

Gross

corruption ~
accompiJ;tnj,ed

~_±nancif.!.l scandals,
acti vi t. ie s of

controversies
croul

have
6-5 .

the

theIS-a

Pre$ ident. i a I

'fhe

he ightened of
19B3

economiC! orisi:s
PPPos:!:tlon

pr€'Jc1pi ta.'bed

by ,t.he airport.
,

aS5aB~dnation
21]j_ j

top
made

lea:cl~r
a,

Benigno Aq_u 1n:o

J1'.
CB

on August

qr..9nyi

SID

pEll i.ticall

y and economi

lly

unt.ena b Le

system.

The

Itrt.erna,tian:al

MonetarY'

Fund and '!:;h-.e Wor'ld B·al'fkoa..me
73

down. har-d 'On

He..rcos to
hqld the
OD

cut the cronies' l?Qwe.r. and dismantle

their

monopoly

vital ind~stri~s. 5uch as I t~ s., rea.ll,. the end
I

regime

o£ eX.port ,'rt,111 too

monopoli,€'l5

by

UNICOM

and

NAHUT,R,A . crony:1. em is nothing remains has
85

howeiV:er on

early

t.o determin€lwhether
have

'i:.he way orrt,
and

'('here

been char g~ 5 that of t,he. c ron ies

rea 11yo changf5ld strong as ever.

·that

the. inf 1uenoe

DeEp~te
eXP()l't,-orient.ation in current

the prominent
development

position po I Lcy
I

of
t.he

government

seemingly oontr~dictor' strategy
to operate. in Origina.lly tohe
fif1~.ies',

of impart ~ub~titution continues
of economic has deve.Lopmonb
GotfLe

th~

centerpiece

st.rat,egi85 identifted emphasis basic

itn'PQrt suba t I tution

to he

with on

neo+co l.onae I industrialh:atioh. and a:ilsemt ly tYI(f.l

U'oreign

control,
'0£

packaging

op€lTa.tions

im~'tead class

industries,

and a bia~ for the upp~r middle

market

polit.ical Alm~
EC'Oilomic .det.ermining e.cQnomic oocas, i ems,
becomes

fa.ctors

go hand,in of

hand

with

polj_tlc;3,l

factors

in

the
aspect the

u l timat·.g shape is

government:
in the

po.Ldc Les .
l'U01 C'EW

While the at certain· and

pre,d,omina.nt con text

long
5

pol i ti cal In

Qcc~lpie

te r
to enter

stage

pr Lma . ry

soci~tj_es; tpe ruling

with elit,e

a

highly

burer.;l!ucrat"io react; :into to the, both

gQvernment.&l economic

set.-up,

az-e Blow

:factors

un Ies e po I i t,;ical

interventions

M:a:ny gov'ernment covert.. and ove1,"t political

deve Iopmerrt programs aims which

thus

contain more

provide'

accurate

74

explanations

fol" the adoption of A

part; cu La r policies. resp0nse of and the rural

traditional

1'I1Jl,~8~S

to

cOr:ldi't,.ion~
has

of
been

economic
the

depriV;;I,t:i,on

continuing
to

[Jlij;rginal Lzat Lon
Q9n'front
..Il' ] ,; •

l.~tm,ching
of

of

mass

movemerrt s

t.he

local

represen'tat.ive.~

1:?tate

IwwBr.

In

the

I:'11L,lpp],nes,

mo~e particularly in C~ntral Luzon, agralian unrest

In
ia~'tsof the

r~cent re~r& this tr~dition
country and under
·the

has spread
of
th£l

to

other

leader.shi.p

a

Tevi ta,liz€d

Oommunist part.y

Ls se r'Lous Iv

challenging

rule

of

the

Pl'

,always in

fuel ed l"u,r.a1 unrest. the

The launGhing

of land of

reform the Huk

P.irOlt~,m5

50 s_ ~an be V.1 ewed w· th i nthe' ,5wept

context almGst
I,

Nhdlion

which

Central

Luzon

and

bro.ught

the

e'O'mmunist part.y

Lnt.o power. 'Cl",l,"ors on the

'rimely
ps.l"t

American

int.ervent.1,on
the

coupled party

fotith

seriQus

of "(,he leader.shipof

In

the

mid - 60' 5

I

however

r

the 1':e appe.ared

an

aggre s s i ve, ne'W' Peasants workers were
Were

d1>mendon to the phenomenon of ag,parian
being disclocat.ed from their by pla.ntation in a,gr.ioulture ",hi ch Iura.1 the wel"'~ unzes t , now

unrest.

lands and agricultural 'owners.

helM exploited

In ath8r words~

capitalist of
'f 0 r

wa~

breeding

a
the

new
ve.nll€!' programs

a~ tradi
aoincide
1)In!Mt

o'tier:!

S

prpv td i ng

r'ig~rge'fiCe of with become

Go vBrnmeBlt.

rtU'al

which

gt"owth of popular
for

organi.zat··

ons or
and

widespread take on a.

vehicl,ea

couut-er-insurg.encY' 75

political

color.
'I'he

i21itt:§ £.m:~:tJ:'.Q], 9.X.~1:iH~ri£lt1J,..Q1:~ been no t.oz'Lou s other of for than the lncreas

Marc,os

year:"

have 'aI so in

Lng role

of l:,h8. s1·.at~ arid legi51Zl.tion,

the
The has

economy

po 1 icy

fOl.'mJJ.'lation or

prolif~rat,i.on

gove 'nment-00n8d
-Pl·op.ort: 011.6

norrt.r o.Ll.ed corporat,ions
frolu

reached
bourgeoi3,ie capital groups have

epidemic thst
j

pi'ompt,ing cllarges

the
conoetrt

Loce l 0'£

Har co s was f :r:e.-a

nnde:rliJ'iining en t,erpri in se. , the

a ea.J:'"dillal

i Sill

name.1 Y.

Oppos i t.Lon i st
80 adem.e

bus i n·es s

and thus

U'l.ei.r 5poltes.pe r-s ems called for

and

in

the
as

pres s: the

t.l'9 restoI'a.tion

of ma.rket

forces

primary

determ~Dant in advancing
plu,mom.enon of of cou:rs e
j

economic state

growth.
intervention of crony in 1. sm the and

This aeon orny i,'3" the eoetting the

in~reas::l_ng cora llary' to

t,he grO'i-ft,h

up of monopolies one-man

eSPGciaJ

ly :ih '~gricul t.are, whe~e th~ state

Indeed.

under

rule of Marcos,

ha~

b~come

identified .ith the personal interests of th~ author~tarian ~uler and where
j

the power of the croni@s

is seen 'as an

extension

of

Mar'co s

ow"]""), concerns;

cronyism Not

become only

virtually

ldenti~al

with

each other.

o r-oni.es but

a l s o goverhn(ent

teohnocrats Host

acquire

enormous
officers Cabin;et.

economic of these m.smbe.l"s and

as:::;ets and earn huge incomes.
go,... rnment-owned .~ hi!%"h-ranking "Or controlled

of

the

Em~·.erpri5e5 are Pri vat.e

government,

off Lc i s I.s . banks are
of

compan 18 S with over loans for to

enormous

debt s 'l;o government;

bel ng· ta~Bn
governmerrt:,

defaulting equity

on payments.

The conversion rnore' state

pa »r ..:H:i. -the way for

t9k~ovel'5-

76

capitalist. World rulers.

deve lopme.nt

c'har.ac.t.e r Lat.Lc of bure-f'lncracies do not

underdevelQped
andauthori

'Third tar-ian

sociatie:s
ThtlS
I

wi·t.h ovargrow:n

necessarily

imply

nat10nal i :?atiob

or

~vena

tD·rlll" of

stat.e

capitalism.

Transnational i zat.i·on Aq oontrol
t1atiena.l i oS t de.tel'iliin ing
se.ctol:~S as

a

vestige

of bhe country's

colonial

past,

imperialist
by 5'91.:f -

considered the prj mary cbet.ac 1. e
and ind~p€ndent
tq gef:lui ~ n

g'l;owtb

devE:llopm,ent.

su'bS'lrtnption

of

the

national

-economy

Lrreo the. global role
"

capi t-alhi'~

system

as

t.he

d·o.min.ant
,

exe ro i aed

by

'I"rans.nat.ional

iz;at,ion

is

xletrimen:tal .

t;o the gl.'ol·rth o-f a self. .,

sUstg:l.inlng andself.-reliant
·extern.a1 market local or to to the

economy.

Prodhction
classes·.

ls geared to th~
An
dOBS

moOre aff lue.nt,

m:arket, ·fails In In

grow and local

indus·+'rialization assumes

not

'(l9:me about.

agricult,nre. farmer

;~ran.5na:~iona.liza.t.ion p.'rO"duct i on , fore ign

va-riO'li9
and lf~reen
are

stna 11 t~ke

lnf lu.enca of the inpu'tE!

place.

'bhroughthe
paokage.

adoption

If,ev:olutioh' .Iore1gn

technological

.Agric.!;l.l t.uz-a L

controlled
corpar:ations

and

the
ai·e either

prices

similarly or crontrolled

A,~ribu5ih8SS

foreign-·owned

Foreign trade in
a;gricultur,al products, is

a,t the mer:dy o f TNC importeTs

who

set

17

the

vo 1ume arl d p r ice

of

the

expo rt· good:3"

Tbe exten:sion

of

maj.or componerit, of
foreig.n

of

the

tranana:tlon.al in the

i zat.iQu

process,

This

type of and Glv.en

partioipation the d:irection

1,oC';,;;l1li'9conomy has as the

"l:.he effect
programs;

determining proj_ectsfunded

of development
fe.a.ture5

be come J)ermanAnt

of t.he

economy.

projects

tend

'1:.0 dominate

the

Land s c ape of

.'tl1l"al

deve l opment,

in

the host ~ountrie~. In
variet.y

agriculture.
of

generous

funding has b.eenprovid~d
irriga-tion,
I

for

a

programs
dams,

including

z-u ca.L

r-cads , re.form.

hrdl'o~lectric The "Green

product.ion

input.s

cr·ed;i, t, ~ and land

Revoluti.on" ,

fol' one,

is·a primary

recipient

of

£ or€! j_ gn f'u,ncl in g .

growth

and

economic i.n

deve Lepment, pursued

by

,

the

11Q.rcos ·governme.llt on

l

Lnve stmen s s:

agriculture

{wi -th special

.emphas Ls

f'o!"€ign

capit,al)
Investment

has

been

aggres .. :i,vely soliC'~.ited. s
U.I.e. E x.purt.

In addition

to
hot.h

the
of!

1m::::'::1"0 i v'e es ,A'u eCltl t t.

I w.Jer-I:t.i VE;:~. Act,

which

we.re

p.l;oniulgated

during wa.~

't.he

early

years i:ts

of own

Haroos '

adm.inistration investment
1159
j

agriculture

accorded

special Decre~

law in 1971 with the i5~uance of Presidential
known as th(;l re stored Agricultural had been Lnv.'es,tment
·t ak en

otherwise Thi s of 1,aw

Incent.i vas wi th t.he·

Act.

wha-t,

a1f1ay

~:J!:pira.tion in

t.h€) Pa_rit.y

Amenibnent

t.o 't.he Phili.pp:l.ne agr-icul ttlral

const,l.tut,lon enterp:ri se s ,

1974 - - 100% f or€d gn corrt r olover

7B

HaJor

agriaul ,tu r-a l.

i'3ubstant.i~l

foreign

seed

production

j

agricultural

machineries~

fertilizers

j

and

.. pest i e ides " and ~gr leu l·ttlral

c:redj_ t.

1.'he

theorY'
of

of

.social

deve l eprnerrt
ion

r-evcl.ves
that ocC"ur

d 1s·covary

de l'ta in

pat l>~rr.iS ofrnot

·at

fairly

schedules
de4uc'ed ·~bllncl
i

and

from

whi ch gene r.a,I
is that:

principles:
not

can

be
at

Th@ a.s!1iulJlp·tlon. h~,re man] s pac'e ~ such as relying

!E:()c:liety doe:5 em chance of

proc.~ed

.simply

and
1~ftde.r5,

su.bject,j,ve

',h.ctors
:ob.J€'ctive

the whims and capric.6s
are const,antly

Certat.n
bistorical
of

facto.rs
s are

a.t

work;

circum!5tancB

alWEty·g Fr'esent

th~:t:. arEl,

i nciep"€Incient

,the which

mind:;3·
hijman

of

men.

The 56 01 rcu.ffi$tanc.e·5
ab8

f'orm, the,' basi

s

upon

deei~iohS

made.

In other words,

mor~ often than not, a pertain logic alway~ In prder to correctly

be

continu~ll,
sometimes

cQnducte~
qu.ib:'l. rap.idly

as
~

historical oircumstances
fQl'~.i ng arefo.rrnula·t

often change~
elf

ion
j

~oc i a.I laws.

In till ~~ect-i on of' rural development 1aws
of

an at:tempt under the

wi 11 be made "t,o t.race
Ha·rcos
bSEln

the

log,ic

re.gime

by

des·cribing
f

,certain.

m.oti on

that, have
the

operating

or

quite

iE'ioJ:lletime n.ow.

The :s~, 1 aw·s de scri.be

1 ink Lng

mecll.ani sms between
how

the relat.ions

ofpr(,)duction
Also

and the

"forces into is

6fpro·duet,icli.s.fld

th~se are reproduced.

looked 79

th~ mode of pro.duct. ion

issue

and how t.his question

may b@ approa~hed

in the context

of

Phil·pp'oa

agriculture

at the present
thi!5 sec'tion:

time. first, the external und~r
laws of
laNE

,'hre€! part.s

com.pris~

of

moticn

which

define
secondly"

the conditions
the int.ernal

which

iDt~rna]
which

changes reg~late bases

occur;

mot.ion

't.he march of development

w.it.hin the

country of the

and form the'

for

chang~5 iv the economic

make-up

agricultural

sector'; t.hemse 1ve."
Hi. ~

r.~ gu 1ar

manne r and through

which over.

the

economic.

cont.radictions are brought External
A soci~tj.es La.ws of
fe·el,ture,

out and struggled

Motion
common,

t.c Third
long

World

a~:r8lriah
ot

systE!ll'llS

whose semi-

have

IHldenrone

periods

colonial

or

colonial in the
a

l'ule is the d€:t.ermining pole played
dir.lBction
ma,i6;t

by external
colonial
O'thel'

fo·ces
~ower,

of development. Lndus't r La I giant
1.l
i

The former
as well pl;"ofound

often

c~pi tal Lst formulation of strategies

.

as

deve Ioped
over

influ-el1ce

and policies.

This situation
How~ver "

appears
t.'l'hat

has hate

transpired

is

that

the internal foundations'

f~i
50

change

already been firmly now
wi.th

laid in plaoe by colonialism
reproduce themse!vs5

tbat they at~

able to cbntinuouslv
the external

in perfect harmon,
which the
One

demands of 1:;h,eglobal

sys'l::.ern to

national cons.equence of the pre:ponda:rant. local

'tho'roughl y

',n te grat€ld.

economy

18.

.

role

of ,external are

forcs,s

over

t.he

th.at

out~d.de factors

ab I B ·to

Bxercd.se

a

~t~ter

role than they would normally

play

if cQloni~lism

had not

intervened. All the t.he::se Le ad to of the neces~d
r,y tor

IJnclers·!:.anding extension

thorou.ghly of globa I

dynamics

imperial

i srt~ ~.S a l:9gical

monopoly
changing

capitalism

to
and
s.
.a.S

internation.al
prOC8S

nat:tonal

a t r-uc

t ur-e

s.

'The

trafnmation ali zat;i on mu.st PI'lma:r i;Ly be

it. i is cuz-r-en

t 1ybe ing

€xpe r Lanced

seen

wit hi, n t.he context

of

impel:'is 1 is t ef forts according

to re5trua~ure
priGritie6 within the and

the
to

world economic
r eso.Lve of internel

ord~r

to

their
from

r.ontI"adictionf5

arising

economies

the
'fhB

ad~anced

capi talist
Phil to

countri~s. i 'ppi.lil~S. to

']J§Eengent, fashion ·prLol"itie5 intel'nat>ional its

4,@.vel.Qpm~nt. ,own economic

Lnab l Lf,ty 0.1 the accord' ng

s.-trfd:.egies

national
of ·the as

leEH:ls to

a si t.uat i.on of

depend'ency. mistakenly

The needs

cap1:t.·;;'Ilist n.ational

systema,re

i den.tlfied

identical

to

needs. as

The priQrit:i~5
government, priori

0'£ tie~

transnation,Q.l and imposed on. is was O. S.

corpGrlllt.ions th~ I'sst

ar-e adopted country

of the

and people.

PHilippine being colonial Bobh 'the the

agr:icultul-e sector that;

.s,p'acifically dev:sloped 'need8 fQr and

situated nurtured

in this

light

bY' American products. creations.

ism to sugar tha

servicB and

primary
WB1"0

coconut

1.ndustrie'~
peri~d.
]:l:rqgra.m on,th8

American industry

During object

post-colonial

the .rice that

became the

of a "moiierniz.ation" firms to caah in

iEmabl~d trhnsnatiollCil.l

agribusiness inplJ.t.s_

exp·;;ID:d-ed m~rk61:t for

techno!og'ical

81

The

wh.ole

point

of

the

pl"oces1'l of

dependent.

dtl:!ve\opme:nt.

b:-i

and

self-sustaining

eoonomic growth.
unde r priorities and further

lnter~al that\'lould

needs

of

the

popu.l abLon

f,'I,t'e subsumed
marhebs

cont.i nue tc; control over growth'

servi.ce vital

global

ex.1~endforeign

economic.

sectors.

Export-oriented

¢lgl'i~ultura.l

Unde-r

the

MaredS,

r~gime! process,

and through

tha impetus

of

the

de.pendent
by

development presenCE:

exemplified

the

imposing

direct

produaerB

j

prooessinl
e~pOl"'ters

plantH,
of

machinery

I

and farm. inputs

j

or

as

buyers of
I

and the it'

a.gl'icul tural the capi,t,al

pr-oduct s ,

~'he magni'tude a.-I:. heir t comn'la.nd to

operations. tnterna.tiona.l :indel Lb.Le

and technolc)g;y
t,hey

and t.he
an and

cont.act.e

p05s:ess,

all ( se.rve rural

leave

and dbminant

lJnprint.

on Phil ippine

economy

5Qci~ty.
Whe l:-ever areas are
the,5~

fore ign

1 rrt.r us i on s of

occur, the

the global net

reo i piemt c~.pi talh~

transfort:ned t.hey but

Ln'to adJUIlcts enclaves

economY'~'

b~corn.
£01"

producing

for

domest~Q
of

require.rn€:.nts

:strange

.arid al ten needs, 'thoEie

The product.ion

food

crops

.sui f erwhi export are

1e

that

arB

crt
market

'the at

5 amet.

im~

eal"mark€!d for beyond

pe.gged

l.n t.he

local

p:r"ic·e.s war

t~6

means
of

of

the
crops

average
for

Filipi.no

family. Pl:OC@5!;1

aubs t i,tution of dependant

export.

food crops

complete the

development

in agriculture.

El2

consequenc-e coupled with

of

t,hE.~

ou.twa.rd-lo'0Idng presence

proQl.l.ction

str",tegy inter~5ts

;rnd ill

tbe

Dvel'oearing

offcn=~ign

from
'headquarters

Philippine in developed exchange of surpJ.us
~l'

'F.'HO
capt t.a Ll a t c()untr Le e .

corporate

Unequal
phenom.enon export

const.i tutes transfA_t'. Thi

t.he
5

ot.he r

half when

of

t,he

occurs

Phi 1 ip:p;i-ne weld 1e

product s are

iced

solow

and cent. 1. nue LLv. d~Grease prices.

impDrt~ are bought

at ever increasing

following mechani8ms:
pt:'oces50r-manu_f'a;ctuxer
ptodu.Q·er;~ and coaV i tal

1.

R~patri~tion

of profits
or i s t; 5 .

by

by TNC producer-grower
p.a,rtn·ers of

or lpoal

2,

and producrts.

Incomes,

g'ained

from s~,les bf on Loans

agr-i.cult,ural

inputs

3, Interest producers, 4, Royalty
subs i d.Uudes ,

paymen't';,s

~ra_nte(l

I.

to

Looa 1

and
I:6l"

franchise PhilipP:Lne'

payments

frDm

loc~l
pd.ma.ry

produqt exports, 6, Man:agBmen-~,
fees and salaries,

5 ."Lol4'

pric.es

ag:ricul·tural

t.eehn i c a 1 as s 1s t.an ce , and con su 1taney

DependeQt
I..lneSlu,al

development,
o-f

surplus transfers~ t.he histc.-H'i.cal J;jtage
out of the

and

exchange

are

manifest,ations
system

of-

impei.-ialisrn.

As an economic

al'l.:sring

capitalist
e.xpan£lon i is

imperialism

reflec r,at,he

log-ic of

inherent

during

t.he ~.t.age of mO'r19Poly

capitalism.

T'he latter

03

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