GOLDEN ERA???

The Economic Legacy of Martial Law

Has this historic dictatorship improved

the financial situation of Filipinos today?
Although President Marcos is an authoritarian,
one form of this dishonestly promoted historical
revisionism contends that he does not govern
with an iron fist, which hinders him from
managing the economy to its full potential. If
the Truth is to set the Filipino people free, it is
imperative to dispel the misconceptions and
illusions that have been perpetuated about the
economic performance of the Martial Law
regime.1
Although a nonviolent revolution overthrew the ruler, the prosperity narrative has
persisted for years. Typical examples of mini-narratives used by supporters of Marcos to
promote their argument include the tight peso-to-dollar exchange rate, early Marcos’s era
growth, free-flowing traffic, enthusiastic government investment, and the nation's
competitiveness in the region. To determine the efficiency of any administration's economic
policies, however, one needs look at how long growth has persisted and what benefits it has
brought to the public. Other aspects of economic policymaking "simply follow from those two
core concerns," since promoting economic growth maximizes opportunities for employment and
subsistence (Polvorosa, 2016).
Every time the tragedy is recounted, the economy in the years leading up to the ouster of
the Marcos family in 1986 is shown to be in a dreadful, record-breaking situation. “It is a story of
debt, deprivation and the spoils of a dictatorship”. 2

1
(2016, September 4). The Philippine Economy in the Martial Law Years. Caroline Kennedy: My Travels.
https://anywhereiwander.com/2016/09/03/the-philippine-economy-in-the-martial-law-years/
2
Diola, C. (n.d.). Debt, deprivation and spoils of dictatorship: 31 years of Amnesia. Philstar.com. Retrieved July 24, 2022, from
https://newslab.philstar.com/31-years-of-amnesia/golden-era

GOLDEN ERA???
TRUTH BEHIND THE GOLDEN AGE
A generation or more of Filipinos have been brought up to see the martial rule era (1972–
1981) as the "golden years" of the Philippine economy, which may be the result of false memory
syndrome, social media misunderstanding, or even the way the time is covered in school
textbooks.3 Those who promote or endorse this view often cite GDP growth—a common metric
used to assess economic performance—as evidence. Their assertion is lent half-credibility by the
fact that, in two years of the martial law period, the economy showed the highest annual GDP
growth it has ever attained since the 1960s—8.9 percent in 1973 and 8.8 percent in 1976.4
But just as it would be dishonest to grade a student's performance based simply on one or
two quizzes, it would also be strange to evaluate an entire historical era using only a few years'
worth of data. In these two years alone, even the extraordinary economic results of the martial
law era itself have been, from a long-term and comparative perspective, the salient exception, not
the rule.
Legally, martial lasted from 1972
to 1980, but in practice, aside from
fine-tuning, the period of de facto
dictatorship was extended from
1972 to 1985. (i.e., until the EDSA
People Power Revolution in
February 1986). The years 1972 to
1980 are referred to as the "martial
law period"; the period of
“dictatorship” or “authoritarian
rule” refers to the years 1972-
1985; and the “Marcos era” or the “Marcos regime” covers 1966-1985. In the simplest terms,
how did the economy perform in each period? Throughout the Marcos administration (1966-
1985), the average annual GDP growth rate was 3.8%. During the dictatorship (1972-1985), it

3
Examples of textbook treatment are provided by Go [2017]; significantly, nothing is mentioned regarding economic
performance or consequences. By contrast, post-war Germany made it a point to analyse and sum up lessons from its Nazi past.
Vergangenheitsbewältigung (i.e., coming to terms with the past) entails the renunciation of Nazism in all spheres of public life
and the mandatory treatment of its history and human cost as part of the German education system.
4
These however are not the highest growth rates ever attained in the entire post-war era. The economy grew by
15.5 percent annually in 1947-1951—a plausible development considering the rebuilding efforts that occurred immediately
after the war. (See official PSA statistics for the period as well as Baldwin [1975:3].)

GOLDEN ERA???
was 3.4%. It was 5.98 percent for the specifically defined martial law era, which includes the
unusual years 1973 and 1976.
Thus, it is evident that the years 1972 to 1980 saw the Marcos era's highest performance.
This comes before the fall that began in 1981 and was followed by the worst economic crisis to
hit the Philippines since World War II in the years 1984 to 1985. It will suffice first to compare
the country’s growth record with a similar stretch of history for its neighbors. Even the strongest
economic performance of the nation at the time, was unimpressive from a regional standpoint.
All other ASEAN-5 nations were able to achieve average GDP growth rates of more than 7%
throughout the same time span, which was almost ten years. Under martial law, the Philippine
economy barely surpassed 6 percent.
However, comparing the
"best" years of the
dictatorship to the more
recent and well-known era
of democratic rule is more
illuminating. In the most
recent nine-year period
from 2009 to 2017, annual
GDP growth averaged 5.76
percent, not far off the 5.98
percent rate in the nine
years under military
control. On a per-person basis, democratic leadership has been linked to GDP growth that is
quicker than even the best results
obtained under authoritarian
control, i.e., 4.03 percent in 2009–
2017 vs 3.17 percent in 1972–
1980. Naturally, the performance
of the authoritarian government
period (1972-1985) and the
Marcos era was overshadowed by

GOLDEN ERA???
the more recent performance (1966-1985). However, one can also compare the 20 years of the
Marcos government (1966-1985) with the last 20 years of democratic rule for like-for-like
comparisons (1998-2017). However, the most important question when analyzing the economy's
performance during martial law is why growth performance could not be maintained. It is crucial
to note that the "greatest years" of the dictatorship were followed by a time of crisis and collapse,
from 1982 to 1985, which is a key contrast between contemporary prosperity and that
experienced during martial law. There were "two lost decades of progress" as a result of real per
capita incomes declining in 1982 and not recovering until 2003. However, the progress that has
been seen over the previous ten years shows no signs of coming to an abrupt halt (at least not
yet).5

POVERTY
The shift in poverty rates during Marcos'
presidency is one of the earliest signs that
could indicate the economic effects of his
presidency. The following graph
compares data from 1965, when Marcos
first assumed office, 1971, just before he
proclaimed Martial Law, 1975, in the
midst of Martial Law, and 1985 to show
the percentage of poor households
throughout the Philippines and by area
(Just before the EDSA revolution).
Clearly, the figures show that poverty
increased during the Marcos administration. Prior to Marcos' election, around 4 out of 10
families were considered to be poor; by the end of his administration, that number had increased
to 6 out of 10. Furthermore, as the data shows, this is a general trend across the country, with
poverty rates in some areas as high as seven in 10 households living in poverty. The Ilocos

5
de Dios, E. S. (2021, November 17). (DP 2021–07) Martial law and the Philippine economy | de Dios | UPSE Discussion Papers.
UP School of Economics Discussion Paper. https://econ.upd.edu.ph/dp/index.php/dp/article/view/1543/1027

GOLDEN ERA???
Region and Cagayan Valley were the only two regions to notice a slight decline in the number of
poor families. 6

From the Times’s print archive entitled “Manila Squatters are an Eyesore for Mrs.
Marcos”, it is
mentioned that for
the Marcos
administration,
squatters have
developed into an
ongoing social and
political problem.
The National
Housing Authority
reported that more
than 1.6 million squatters now live in Metro Manila, including several satellite cities, a 38
percent increase from the previous year. The number has roughly doubled over the past four
years, leading to issues with crime, poverty, and health. In Manila, a city of more than 2 million
people, squatters make up nearly a third of the population. Most of the vacant land in Manila is
occupied by makeshift houses. Instead of using electricity or running water, these families dig
wells, and when they no longer need water, they fill them with garbage. A few of the squatters
occupy vacant homes and warehouses where numerous families coexist in close quarters and
filthy conditions. In fact, Pope John Paul II voiced alarm at the overwhelming number of
underprivileged people during his visit to the Philippines last year. The Pope's dismay added
impact to a World Bank report issued before his visit in February 1981, which showed that
poverty in the Philippines was worsening and that between 1975 and 1980 the number of poor
had increased from 24 percent to 40 percent of the urban population. The Marcos administration
has implemented a number of urban revitalization and community-based self-help programs in
an effort to enhance its image. At the same time, there has been no improvement in the financial
situation of the poor due to a sluggish economy and rising unemployment. However, certain
political groups have shown their willingness to resist government orders in court or in public

6
W. (n.d.). Martial Law in Data. Martial Law Museum. https://martiallawmuseum.ph/magaral/martial-law-in-data/

GOLDEN ERA???
with the help of Catholic Church personnel. Anti-government dissidents have found sympathy
and a small amount of support among this underclass.7

GOLDEN ERA FOR WORKERS AND EMPLOYEES?

According to the data, the daily salaries of Filipino agricultural workers decreased by
around 30%, such that a farmer making Php 42 a day in 1972 would only be making Php 30 a
day in 1986. In 1974, immediately following the imposition of Martial Law, farmers' salaries
dropped to levels that were less than half that of the pre-Marcos rates. On the other hand, the
graph depicts the change in the income of skilled and unskilled workers in metropolitan areas
from pre-Marcos values to EDSA values. skilled workers are those with special knowledge or
expertise who have often attended university or technical school; Unskilled workers are those
who have not received this level of training. Real wages for skilled employees in Metro Manila
decreased by 5.2 percent between 1982 and 1986, while real wages for unskilled workers
declined by 5.8 percent yearly. According to James K. Boyce, an assistant professor of
economics at the University of Massachusetts, farm earnings have decreased at the same rate. 8
Further, living under martial law is a period of unprecedented prosperity for the people, which is
untrue, as the rich get richer, and the poor get poorer. According to Charles C. McDougald's
book The Marcos File, the top 12.9 percent of Filipinos in 1980 got 22.1 percent of the nation's
total income, while the lowest 11 percent only received 16.6 percent. The richest 12.9 percent
7
Times, T. N. Y. (1982, June 30). MANILA SQUATTERS ARE AN EYESORE FOR MRS. MARCOS. The New York Times.
https://www.nytimes.com/1982/06/30/world/manila-squatters-are-an-eyesore-for-mrs-marcos.html
8
Boyce, J. K. (1993). The Philippines: The Political Economy of Growth and Impoverishment in the Marcos Era. University of
Hawaii Press.

GOLDEN ERA???
now collected 45.5 percent of the nation's income in 1983, compared to the lowest 11 percent,
who only received 6.4 percent.9 In addition, to debunk the truth about contractualization, it’s
untrue that contractualization began during Cory's administration. On May 1, 1974, 12 years
before Cory assumed office, Marcos Sr. really issued Presidential Decree 442, which is known as
the Labor Code of the Philippines. Contracting and subcontracting are expressly permitted under
Articles 106 through 109 of the Labor Code. Large firms, like PLDT and Jollibee Foods Corp.,
eventually abused this by failing to regularize thousands of their employees.10

INFLATION
As per the Martial Law
Museum, the cost of necessities
also gives us a means of
evaluating the so-called Golden
Age. The graph displays the
consumer price index (CPI)
change from 1962 to 1985
together with the prices of food
and non-food products. The
CPI provides a gauge of
average consumer pricing levels for commodities. It is evident that there really is a skyrocket
increase in the prices of goods. The technocrats in charge of Martial Law's inflation control had
utterly failed. The inflation rate (CPI) from 1972 to 1976 was an uncomfortably high 14.9
percent. Given that the large global oil shock happened during this time, there was only a slight
improvement from 1977 to 1981, reaching an average of 13.2 percent. Between 1982 and 1986,
the average annual price rose further to 18.9%, suggesting that this was structural. As a result,
the average inflation rate throughout the martial law period was in the teens, clearly worrying
economists as it required a slowdown in economic growth to contain inflationary pressures.

9
Mcdougald, C. (1987). Marcos File. San Francisco.
10
V. (2022, March 4). VERA FILES FACT CHECK: Marcos, not Cory, signed ‘endo’ law. VERA Files.
https://verafiles.org/articles/vera-files-fact-check-marcos-not-cory-signed-endo-law

GOLDEN ERA???
PLUNDER OF PHILIPPINE RESOURCES

In addition to internal economic concerns, the effects of the Marcos administration on the
country's environment and natural resources can also be considered when evaluating its
performance. It is estimated that more than 11 million hectares of the Philippines' 18.7 million
hectares of highland are under government control, including those officially designated as forest
land. Fewer than 200 people owned a sizable proportion of the nation's woodlands. Our forest
cover was significantly reduced because of the unchecked shipment of timber by Marcos and his
allies for commercial benefit. This has disastrous environmental effects, such as flooding,
landslides, and even the global warming phenomena.

INTERNATIONAL DEBT

The graph demonstrates how our

external debt increased from a trivial
amount of $0.36 billion in 1961 to an
appalling amount of $28.26 billion in
1986. The massive increase in our loans
provides an explanation for the
expansion, particularly in infrastructure,
that has been predominantly used by
some to judge the Marcos regime's economic success. Debt-driven growth, on the other hand, is
growth that forgoes long-term advantages in favor of instant satisfaction, which eventually
results in more load than gain for the generations who must pay off these loans. From US$599

GOLDEN ERA???
million in 1965 to US$28.3 billion in 1986, debt under Marcos multiplied by 50, mostly to
finance his "Golden Age of Infrastructure" and the massive bribes that went along with it. The
value of the peso relative to the dollar fell sharply from 3.91 pesos in 1965 to 19.03 pesos in
1985. Particularly during the last years of the Marcos dictatorship, corruption, cronyism, and
debt have all played a significant role in the nation's economic woes. Businesses are rendered
inefficient by cronyism and corruption, and governments and economies suffer from ever-
increasing debt servicing costs. Through industrial strategies, the East Asian Tigers protect
manufacturing companies, but they also expose these companies to domestic competition and
export-focused discipline. In sharp contrast, crony enterprises in the Philippines under Marcos
were only protected from competition. The markets for sugar, coconuts, and bananas were
dominated, respectively, by Roberto Benedicto, Danding Cojuangco, and Antonio Floirendo,
some of the Marcos' closest allies. Instead of a golden era of fierce competition in the Filipino
industry, this led to the emergence of a new class of monopolists, some of whom continue to
exert economic power in the nation today. However, the main cause of the continuing crisis and
the subsequent "lost decades" was how the productive sectors of the nation were severely
damaged by neoliberal policies. 11The $2.1 billion loan for the Bataan nuclear power plant is the
worst example of foreign debt. The transaction was flagged as fraudulent and dangerous (not up
to specification) due to excessive fees and commissions. Multinational commercial banks, the
U.S.-led IMF, and World Bank lend freely to the dictatorship, knowing that doing so will benefit
Marcos and his allies and widespread corruption. They backed the Marcos regime's neoliberal
economic restructuring since they were aware that this loan would be fully repaid, as was swiftly
confirmed by the succeeding Corazon Aquino administration. The crisis and the collapse of the
nation's Central Bank in 1983 were brought on by fraudulent, unproductive loans, excessive
expenditure, and high interest rates, which were made worse by Ninoy Aquino's murder. Marcos'
debt continues to be repaid by future taxpayers. When compared to the 18.7 percent debt ratio
recorded only ten years earlier, the nation's debt commitments by 1986 were more than 57
percent of GDP, or over 40 percentage points more. It is clear that internal problems such as
fiscal irresponsibility, extravagant elite spending and unchecked corruption make our country
vulnerable to external shocks. Debt crisis developed as a result of the debt-driven economy. 12
11
IBON Foundation. (2021, September 21). Golden years?: The real long-lasting economic damage wrought by Marcos.
https://www.ibon.org/golden-years-the-real-long-lasting-economic-damage-wrought-by-marcos/
12
N. (2022a, March 6). The economic legacy of Marcos. BusinessWorld Online.
https://www.bworldonline.com/opinion/2022/03/06/434082/the-economic-legacy-of-marcos/

GOLDEN ERA???
THE END OF AN ERA

In conclusion, it’s hard to sum up different studies, articles, research, journal etc. to
create an essay that would comprehensively describe the whole economic journey during the
martial law era. A lot of data needs to be analyzed, papers to be red, different stories to be
considered before you come up with what must be noted and included. National progress does
not follow a linear path. Despite its problems, the Philippines has long since emerged from the
fundamental political and social changes that have limited its ability to thrive economically over
the past few decades. For the country to go through respectable and sustained economic growth,
stability and decent governance are essential. However, the country needs to be vigilant and vote
wisely, as a rollback of good governance could easily plunge the country back into a new crisis.
As we face old tragedies, may we never get tired of educating the current generation of how the
façade of the Marcoses put the nation in the slumps of mud. May we never stop to pour our
hearts out the most affected sector, no matter how painful and challenging the era may be, it
would be tragic if the sacrifices made at that time were forgotten by the future generation that
was poised to commit the same mistakes.

GOLDEN ERA???