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Module 3

REVISITING THE PHILIPPINE DEVELOPMENT EXPERIENCE

Introduction

The wind of change has engulfed the world and the Philippines is no exception. Like the rest of the world, the Philippines is striving hard to minimize poverty, disease and inequality. It has focused its thrust to improve the quality of life of the people via development program designed to give greater attention to the less fortunate, particularly those belonging to the “poorest of the poor”. Likewise, this development program recognized that civil, political, economic, social and cultural human rights are inseperable and therefore should be nurtured for their enjoyment by the people.

How this development thrust was crafted could have been inspired from the experiences of the Philippine government over a century of its existence. Whatever these experiences were the basis of discussion in this module.

After having read this module, readers are expected to:

1.  get themselves acquainted with the historical bits of development spanning from the pre colonial period and that of the Republic of the Philippines.

2.  describe the effect of each of these factors to the Philippine development, viz:

2.1 labor situation

2.2 agrarian reforms

2.3 communication technology

2.4 family

2.5 community problem

2.6 Poverty

2.7 population explosion

Historical Account of Development in the Philippines

Pre-Hispanic Period

The Philippine development effort can be gleaned from the pre-colonial period when the natives were settled along rivers and coastal areas near their ricefield, palm trees and equipment for fishing was located. The size of these settlements was defined in terms of size and strength of kin groups. They practiced subsistence agriculture; no private property; and individual participated in public ownership of land and in community production a group.

The system of relationship between and among members was informal, folk-sustained and decentralized. The community was held together by understanding that each member exercised its role. The village ruler, as a leader performed specific functions, like supervising the clearing of new lands, staging a festival, arranging fishing expedition or defending the community against enemies. The community members paid tribute to the leader in the form of the fruits of their toil.

Spanish Colonial Period

This era shaped the natives into the Spanish mold via concentrating the population in poblacion around the church plaza-tribunal complex; introduction of church Christian ritual/indoctrination; and conferment of tiles and privileges to ruling class.

The continued dominance of the ruling elite also strengthened their political and societal leadership; assumed important role in the Christianization of the natives; and acted as willing allies and intermediaries between the Spaniards and the natives.

Economically, the natives were subjected to taxation, and forced labor. Those who refused to pay taxes were tortured, imprisoned or get harassed by burning of their houses. Forced labor became the instrument in the exploitation of the natural resources; while taxes paid by native were not spent for public welfare, but went to the pockets of civil and church officials.

The Galleon Trade became an economic development obstacles, it was used as the main trading expedition between the Philippines and Mexico; disrupted and stunted the economic growth as it prevented the Philippines from being an important entreport in Asia. In addition, the conscription to build bridges, churches and galleons without regard for planting and harvesting seasons of the villages, disrupted the economic life of the people and often spelled the difference between bad and good harvest.

The evangelization of the natives was carried out by the church. The church as a powerful and influential factor in the political scene caused corruption among friars. Their acquisition of properties via illegal means; institutional exploitation; and exaction of fees of all sorts from baptism to burial caused resentment from the natives.

As the church gained success in the evangelization effort, it lorded over the state, gaining political power and thus the friars active participation in the colonial administration.

American Period

Manila was ceded by the Spaniards to the Americans in August 1898. A military government of the occupying country lasted in 1901. A civil government designed for happiness, peace and prosperity and respect for the human right for all Filipinos was established.

Many Filipinos did not believe the sincerity of the Americans, waged a determined war against the Americans. Guerilla resistance was widespread causing the American authorities to enact repressive measure to suppress the resistance movement.

Political development. Politically, the Americans at this period, thought that the Filipinos were not yet ready for self-government. They have yet to be nurtured for the rudiments of good government and the precept of democracy.

Fashioned along this idea, the Americans encouraged as many Filipinos to participate in the democratic system of governance. This was done via reorganization of local government in terms holding local elections with Filipinos who were vying for local positions for governor, municipal mayor and board members. It then recognized the Judiciary system by creating a Supreme Court in 1899; organized the First Philippine Assembly, which was inaugurated with Sergio Osmeña as its speaker and Manuel L. Quezon as majority floor leader on October 16, 1907.

The Americans established a national civil service system, placing all classified employees in all agencies of the government under the Bureau of Civil Service.

Economic Development. Economic development during this period was a result of free trade relation with the Americans. This trade relation with the United State of America made agriculture as the main focus of development. While substantial income was derived mainly from exporting raw materials, the inflow of import from USA affected industrial development of the country. The inflow of imported goods, made Filipinos preferred stateside goods, thus become americanized in taste and habits. This colonial mentality of Filipinos prevented the growth of manufacturing and industry.

Not even the grant of independence in 1946, helped the termination of free trade relation with USA. This relationship continued inspite of opposition from a number of Filipinos who looked at this pact as unilateral imposition to the people of the Philippine by the Americans

The Philippine Republic

In 1949, the Philippine experienced financial bankruptcy due to the free trade under the Bell Act, allowing the dollars to move in and out freely. The money that came in under the Rehabilitation Act flowed out as payment for import.

The rise in the GNP, national income and expansion of trade and commerce did not mean the growth of the Philippine economy. Foreigners controlled almost 50 percent of the total assets of the country. They controlled mining, electricity, commerce and manufacturing; while Filipinos controlled forestry and transportation. In the import trade, aliens enjoyed position of privileged which deprived the Filipino entrepreneurs in this kind of commerce.

The emergence of Filipino entrepreneurs challenged the foreign domination of traditionally non-Filipino enterprises. President Carlos P. Garcia joined Claro M. Recto, in denouncing the onerous free trade pact between the Philippine and the United states during that period. This period ushered in the emergence of Filipino nationalism and the enunciation of Filipino First Policy.

The free trade pact was repudiated when the Philippine government, with the consent of USA, limited the quantity of imports and even ban some of them completely.

The virtual abandonment of free trade checked the plight of dollars outside the Philippines thereby improving the country’s dollar reserved. By 1953, more industries and enterprises of light and semi-heavy industries sprouted. It was a decade for the establishment of food, wood, pharmaceutical, cement, fertilizer, shipbuilding, motor vehicle, machine parts, engineering and other numerous industries that became the industrial base.

This transformation from an agricultural-based economy to import-export economy was reflected in the sharp increase of industrial contribution to the nation’s over-all productivity.

In 1959, the light and semi-heavy industries were constituted as discernable market for heavy industries.

This however was short-lived as the exchange control and the protectionism it represented were shattered by combined opposition here and abroad. A good example of this campaign against exchange control was the rejection of the Philippine Central Bank application to the IMF for a stabilization loan of $25 million. The US government and the IMF wanted the Philippines to lift the exchange control and devalue the peso.

In 1961, President D. Macapagal, as the newly elected President lifted the exchange control. This decontrol program was virtually the reenactment of free trade. It reopened the uninhibited inflow of imports and the uninhibited outflow of profit to accommodate the demands and requirement of the multinationals.

The devaluation that accompanied decontrol and restrictive credit policy towards business, the uninhibited entry of imports, the freedom of multinational corporation to remit profit abroad and to borrow money from domestic financial institution, thereby competing with Filipinos for scarce credit wrecked damage on local businessmen and dollars reserves, as well as inflation and unemployment.

In 1966, Pres. Marcos who succeeded the Macapagal administration, chose to abide with the ideology of free enterprise and continued the decontrol program. In a year’s time, the country’s foreign debt ballooned to $1.9 billion. Dollars flowed out uncontrollably and trade deficits and other expenses were financed continuously by foreign borrowing. The outflow of remittances by foreign firms and their extensive local borrowings were among the invisibles that tend to increase current deficits of the country.

By January 1969, local subsidiaries of American-based corporations were instructed to raise working capitals from the Philippines and to remit to the U.S. as much of their earnings as possible. This decapitalization of the Philippine economy by foreign investments was made possible largely by the decontrol program.

In 1972, a reelected Pres. Marcos repledged the country to free enterprise without further peso devaluation. The President received assurance from the WB-IMF and monetary technocrats that the economic crisis would be resolved without resorting to devaluation or control. However this pledge was shattered when CB was requested by the WB-IMF to allow the peso to “float”. This floating rate devalued the peso by almost 40 percent. It threw the Philippines economy into deep economic crisis that increased inflation rate, foreign debt and virtual death of the manufacturing sector.

This trend of the country’s economic development has been the pattern up to the present dispensation. Will the Philippines ever extricate herself from heavy debts from external sources…WB-IMF? The Philippines has high debts ratio with an average interest of $125 million payment annually. Inspite of this heavy debt servicing, the Philippine government continued borrowing from WB-IMF. The Marcos Administration negotiated again another big loan with various conditions set by lending foreign banks. By all counts the Philippine economy has been suffering serious balance of payments problems. The economy has been identified in a disoriented direction, however it is still appealing to American investors due to oil discovery in Palawan and the over-all advantages the US economy would drive from debt conditions accepted by the Philippines.

The Philippines is not wanting in natural resources. In fact, her basic natural resources are far superior to that of most developing countries in terms of gold, copper, ore, iron, nickel and chromium. But amidst all of this abundance, majority of Filipino masses are in poverty since the concentration of material benefits is the hand of the upper 20 percent of the population; and controlling 53.3 percent of the total family income in the Philippines.

Labor and Employment

Unemployment and underemployment have become a serious problem in the country today. Unemployment means involuntary idleness of laborers who are able and willing to work but cannot find work. Underemployment is a condition where there is expressed desire for additional work by those who are employed.

The annual growth of working age population is about 4 percent; participation rate, 68 percent; underemployment, 29 percent; and employment rate, was at a fluctuating rate of 96 percent. Overtime however the unemployment rate increased from 6 percent to 7 percent, due to foreign exchange crisis that caused business companies to shut down. Other factors abetting the unfavorable business situation could be attributed to extended drought, tight credit, higher domestic interest rate and a major cut in government spending that resulted in lower productivity.

Most of the firms that closed down, dismissing the bulk of laborers were in Metro Manila. The reasons given were mainly due to poor sales, high rental fees and higher taxes.

Some of the dismissed workers were absorbed by overseas employment; and the remittances of the OFWs have been a major contribution to the country’s foreign exchange reserves.

The increase in the legislated nominal “effective minimum wage (EMW)” or the total take home pay consisting of the minimum wage plus the daily equivalent of cost of living allowance and the 13th month pay, still a steady erosion in the real EMW occurred. The real value of the peso shrunk and rampant violation of minimum wage, allowances and bonuses among employers. High prices of basic commodities would not match the EMW of laborers, leading to labor disputes and work unrest and stoppage. Laborer’s strikes increased in order to get whatever benefits due them.

The members, scope, duration of strikes as well as increase of repressions and harassment in the picket lines were phenomenal. Strikes became a question of survival as times became hard for every laborers.

The expeditious settlement of labor disputes was done via voluntary arbitration. It is defined as a mode of settling differences through investigations and determination by one or more persons selected for the purpose of disputed matter submitted to them by contending parties for decision and award in line of judicial proceedings.

Agrarian Reform Program

The agrarian reform program has been a long drawn and painful struggle designed to change the rice farming structure, freeing the farmers from their bondage of the soil; aiming to uplift farmers ways of life; and achieve equity in the distribution of the nation’s wealth.

The root of agrarian reform problem can be traced with the institution of the encomienda system during the Spanish regime and later into tenancy system with feudalistic structure. The sources and oppressions of the tenants caused the Philippine Revolution of 1896.