INSHIRA M.

DANSAL

ASSIGNMENT NO. 2

Question to Ponder:

Does Philippines follow the stages of development of the industrialized (develop) country?

Answer:

The experience of industrialized countries cannot be replicated. True, the Philippines underwent
a modified “slave system” but this process was interrupted by the Spanish colonization era and instantly
brought and imposed the feudal practices and established colonial financial system. Moreover the big
difference was that the financial system was for the benefit of Spain and not for the Philippines.

The Philippines is primarily considered a newly industrialized country, which has an economy in
transition from one based on agriculture to one based more on services and manufacturing. The
country’s primary exports include semiconductors and electronic products, transport equipment,
garments, copper products, petroleum products, coconut oil, and fruits.

The economic history of the Philippines Islands had been traced back to the pre-colonial times.
The country which was then composed of different kingdoms oversaw the large number of merchants
coming to the islands for trade.

Due to the Japanese invasion establishing the unofficial Second Philippine Republic, the
economic growth receded and food shortages occurred. Also during the World War II in the Philippines,
the occupying Japanese government issued fiat currency in several denominations; this is known as the
Japanese government-issued Philippine fiat peso. After the re-establishment of the commonwealth in
1945, the country was left with devastated city, food crisis and financial crisis. A year later in 1946, the
Philippines got its independence in America, creating the Third Philippine Republic. In an effort to solve
the massive socio-economic problems of the period, newly elected President Manuel Roxas reorganized
the government, and proposed a wide-sweeping legislative program. Among the undertakings of the
Third Republic’s initial year were : The establishment of the Rehabilitation of the Finance Corporation
( which would be reorganized in 1958 as the Development Bank of the Philippines), the creation of the
Department of Foreign Affairs and the organization of the foreign services through the executive order
No. 18; the GI Bill of Rights for Filipino veterans; and the revision of taxation laws to increase
government revenues. The Roxas administration also pioneered the foreign policy of the Republic.
When President Carlos Garcia won the elections, his administration promoted the “Filipino First” policy,
whose focal point was to regain economic independence; a national effort by Filipinos to “obtain major
and dominant participation in their economy”. President Diosdado Macapagal, during his inaugural
address on December 30, 1961, emphasized the responsibilities and goals to be attained in the “ new
era” that was the Macapagal Administration. He reiterated his resolve to eradicate corruption, and
assured the public that honesty would prevail in his presidency. President Macapagal too, aimed at self-
sufficiency and the promotion of every citizen’s welfare, through the partnership of the government and
private sector, and to alleviate poverty by providing solutions for unemployment. The GDP of the
Philippines rose during the martial law. This growth was spurred by massive lending from commercial
banks, accounting for about 62% of external debt. As a developing country, The Philippines during the
martial law was on eof the heaviest borrowers. The Corazon Aquino administration took over an
economy that had gone through socio-political disaster during the People Power Revolution, where
there was financial and commodity collapse. Most of the immediate efforts of the Aquino administration
was directed reforming the image of the country and paying off all debts, including those that some
governments were ready to write-off, as possible. This resulted in budget cuts and further aggravated
the plight of the lower class because the jobs offered to them by the government were now gone. The
Ramos administration basically served its role as the carrier of the momentum of reform and as an
important vehicle in “hastening the pace of liberalization and openness in the country”. The
administration was a proponent of capital account liberalization, which made the country more open to
foreign trade, investments, and relations. Although Estrada’s administration had to endure the
continued shocks of the Asian Crisis contagion, the administration was also characterized by the
administration’s economic mismanagement and “midnight cabinets”. The Arroyo administration, in an
Economical standpoint, was a period of good growth rates simultaneous with the US, due perhaps to the
emergence of the Overseas Filipino Workers (OFW) and the Business Process Outsourcing (BPO). The
emergence of the OFW and BPO improved the contributions of OFW remittances and investments to
growth. The Philippines consistently coined as one of the newly industrialized countries has had a fair
gain during the latter years under the Arroyo presidency to the current administration. The government
managed foreign debts falling from 58% in 2008 to 47% of total government borrowings. According to
2012 World Wealth Report, the Philippines was the fastest growing economy in world in 2010 with a
GDP growth of 7.3% driven by the growing business process outsourcing and overseas remittances. The
country markedly slipped to 3.6% in 2011 after the government placed less emphasis on exports, as well
as spending less on infrastructure. In addition, the disruption of the flow of imports for raw materials as
a result from floods in Thailand and tsunami in Japan Affected the manufacturing in the same year. The
Philippine contributed more than 125 million as of end-2011 to the pool of money disbursed by the
international Monetary Fund to help address the financial crisis confronting economies in Europe. This
was to the Bangko Sentral ng Pilipinas, which reported that the Philippines, which enjoys growing
foreign exchange reserves, has made available about 251.5 million to the IMF to finance assistance
program- the Financial Transaction Plan (FTP) for crisis-stricken countries. The economy saw continuous
real GDP growth of at least 5% since 2012. The Philippine Stock Exchange index ended 2012 with 5,812.
73 points a 32.95% growth from the 4,371.96 finish in 2011.

The Philippines is an island in Southeast Asia that consists of more than 7,100 islands. For a
small country, it has such a rich history. It has gone through colonization of various states such as Spain
and United States. According to the Fund for peace 2016 Fragility State Index, the Philippines is
categorized in the High Warning with a score of 84.7. This rank takes into account various factors: social,
economic, political and military indicators. In 1521, Ferdinand Magellan sailed to the Philippines, starting
its Hispanic Colonization. Spain ruled over the Philippines for more than three centuries. After the
Spanish- American war, it became a U>S colony until 1946. Finally gaining its independence (Harris).

According to the trade policy reviews conducted by the World Trade Organization, More than
70% of the exports of the Philippines consists of electronics, automotive products and garments. Within
four years, the number of exports, these markets are mostly owned by foreign companies such as the
United States (35% in 1997), the European Union (16% in 1997) and Japan (16% in 1997). Thus, the
economy and the people of the Philippines do not gain as much as the market owners from the other
countries. However, the three countries listed previously also provides most of the imports of the
Philippines. Policies regarding tariffs forced a more open economy because tariffs were reduced as well
as non-tariff barriers were removed. There are still remaining policies to protect markets that are import
substitution led creating more of a competition with export markets. Despite creating a more open
economy to foreign investment, there are still some barriers that exist to protect domestic markets that
practice import substitution (World Trade Organization).