The author recently visited a bookstore and found a strange book: "Philippine Economy Moves to the First World". Originally, most people would not take this kind of book seriously, but this book also attracted the attention of the Marcos government. I have also been thinking that in fact, with every industry iteration, new latecomers will catch up. So is it possible that this time it is Philippines ? Before asking this question, we seem to have to summarize why from the 20th century to the beginning of this century, the Philippines went from being the hope of Asia after Japan to becoming the "patient of Asia".
has been thinking about a problem recently. In fact, the quality of the Philippines' labor force is not as low as imagined, especially the per capita use of English. Generally speaking, the average level of white-collar workers in CBD is higher than that in China. At least the quality of white-collar workers working in the Greater Manila area is not inferior to that of big cities in China. But why do Filipino white-collar workers work so hard in business centers and only get a monthly salary of two to three thousand yuan a month? The average salary of white-collar workers in business centers in big cities in China is at least six to seven thousand. Later, I thought about it and actually this question should be changed to: Why has the Philippines not developed in the past thirty years?
To put it bluntly, it’s like we play cards on the table. The Philippines’ card game style also inherits the country’s consistent style. Not to mention that the speed of adapting to the situation is a bit slow, even a good hand has to be taken apart for you to play. It seems that in the past thirty years, I suddenly missed 100 million! (It should be hundreds of billions)
Many people may have some inherent prejudice against Filipinos, because we can see Filipino men lying down everywhere, from tricycles to shopping malls, from home to... unit. Some people often say, "I'm just lazy." But there is no natural lazy person. If you have the opportunity of Bill Gates, I believe you will not become a lazy person. The Philippines’ lost thirty years are actually related to the missed opportunities for industrialization, and are more deeply related to the national culture and social structure. Perhaps it is not a missed opportunity but the incompatibility between Philippine society itself and the kind of development needs of Asian Tigers .
In these bleak thirty years, what makes an “Asian patient”?
In the past thirty years, looking back at the economic history of the Philippines, we will find that the Philippines has suffered a serious "failure" economically. Especially in the first two decades of the 21st century, the Philippines was ridiculed as the "Asian patient". I vaguely remember that in the 1950s and 1960s, when the Philippines was just independent after the war, it inherited the complete industrial system left by the United States, inherited unilateral trade with the United States, and the Cold War pattern of the "anti-red camp" frontier The Philippines was touted by economists at the time as an Asian country "second only to Japan" and had a bright economic future in all aspects. However, the good times did not last long. By the end of the 20th century, the Philippines' per capita GDP had fallen to the bottom in East Asia, and in 2000 it was officially surpassed by China, which had just started reform and opening up 20 years ago.
The ironic name of "Asian patients" cannot be dispelled for a long time.
failed to grasp the climax of the third technological revolution . The lack of technical talents and only service-oriented talents has been regarded by many scholars as the main explanation for the Philippines' lost thirty years. However things are not that simple. In fact, as long as the Philippines is compared with its successful neighbors (countries or regions) in the past thirty years, it is not difficult to determine the reasons for the failure:
1. The failure of inward-oriented and import-substituting industrialization economic policies has given rise to many permanent "long-term" economic policies. "Little baby" industries, such as the electronics industry in the Philippines and the chip industry are all in this form. You ask if there is one, yes, and it is an important part of the entire chip industry, but it is not big and has not formed a large-scale operation.
The country has almost criminally neglected agriculture and rural development. A large amount of agricultural land has been occupied, and various All rural problems are like "incurable diseases."If Marcos hadn't come to power this time and wanted to promote modern agriculture, ordinary people in the Philippines would probably only think of agriculture when the price of rice increases.
2. Poor government governance and rampant corruption. Due to the constant political turmoil from 1980 to 2004, Philippine democracy, which was completely destroyed by Marcos, has been in the process of "post-disaster reconstruction". How easy is it to rebuild the software? An entire generation of public officials has been rampant in corruption, which has made the Philippines' administrative efficiency and the operation of various institutions problematic in the past 30 years.
3. Development mentality is unbalanced. Especially the so-called "Philippines first" mentality in the industry, this mentality has pushed the Philippine economy towards a monopoly or oligopoly elite class, and directly shut out the foreign direct investment that the Philippines most desperately needs.
4. The most important and most ignored point: population and social structure are not suitable for Cold War economics. In fact, if we observe the four Asian Tigers, including China, which is overtaking in a corner, they all adopt the model of Cold War economics, resource concentration, and shouldering the spillover of European and American industries to build an economic building step by step. This model basically absorbs the population into several modern industrial cities or industrial zones across the country. The effect is obvious, the economic growth rate is super high, and industrialization can be achieved quickly. However, it also leaves behind a huge number of hidden dangers. The fertility rate of the urban population is declining rapidly, and the rural population is flowing to the city on a large scale, resulting in serious empty nests in the countryside. The final price is that rapid industrialization is facing rapid aging. This is actually a "pathological overdraft" growth model. Because of its solid religious community and strong family ties, the Philippines is destined to be unable to win in any sense in this "Cold War economics" that breaks up society and redistributes it.
The above points are basically the most comprehensive explanation for the fact that the Philippines has basically missed the opportunity of industrialization in the past thirty years. However, not all is doom and gloom in the last three decades of Philippine economic history.
Hope still exists in the lessons of thirty years
In fact, since the overthrow of the old Marcos rule in 1986, despite the uneven quality of political leaders in each period, the Philippines has always implemented the national policy of experts governing the country and professionals doing professional things. The various government economic agencies ( Central Bank , Ministry of Finance, National Economic and Development Authority, Ministry of Trade and Industry, Public Works and Highways, etc.) are always run by the best and brightest. You must know that the reconstruction of a solid and efficient administrative agency will of course take time. And these honest and capable technocrats are slowly but surely building stronger institutions, formulating and implementing more enlightened policies, so by the second decade of this century, the Philippines' GDP continues to grow at an annual rate of 6% to 7% % growth rate, and judging from the current situation, this rate can continue for more than 20 years.
Economic growth is expected to be above 6% in the long term
In the past 30 years, as the world has experienced three serious global crises (the East Asian financial crisis from 1997 to 2000, the Great Recession from 2008 to 2012, and more recently, The global economic crisis triggered and further exacerbated by the COVID-19 pandemic) due to the Russian intrusion into Ukraine. These crises have shown that the Philippine economy is one of the most resilient in the world, and every country and citizen who seems poor and miserable can survive. You know, the poorest people in the Philippines have survived the difficult years of the COVID-19 pandemic, and they can only pray for "God's blessing."
And we can observe the choices of President Ferdinand R. Marcos, Jr., who was sworn in today, for his economic team, which is composed of very capable and experienced technical experts. Old article: Interpretation of the Philippine new government’s economic team. Can high economic growth be successfully sustained in the face of multiple challenges?
For now, the Philippines can still expect to maintain GDP growth of at least 6% to 7% per year. If the Marcos government can significantly improve governance and minimize corruption, growth could even accelerate to 8 to 10 percent.
Interestingly - Bernardo M. Villegas (Bernardo M. Villegas)
Bernardo M. Villegas (Bernardo M. Villegas) is a PhD in economics from Harvard University and an honorary professor at the University of Asia and the Pacific , a visiting professor at IESE Business School in Barcelona, Spain, and a member of the 1986 Constitutional Committee. His recently published book - The Philippine Economy Towards First World Status also attracted the attention of the Marcos team.
I happened to see this very title-worthy book in a bookstore. This author firmly believes that today's people in their 20s and early 30s (the so-called Millennials and New Age generations) will live to see the Philippines become a first world country. (what I understand is moderately developed countries ) The banker Francis Sebastian who wrote the preface to the book said this, a generation from now, in the past ten years from 2040 to 2050 By mid-year, the Philippines' per capita annual income will exceed US$12,000. The newly appointed Economic Planning Minister Arsenio Balicasan also agrees with this view. More importantly, the new leader implements enlightened economic policies. $120 million is indeed not a particularly far-fetched dream, after all, compared to the astronomical income levels of today’s so-called true first world countries such as Japan ($40,113 in 2019) or the United States ($65,280 in 2019), the Philippines It is elusive, but a per capita income level of US$12,000 will make it possible for all Filipinos to enjoy a prosperous, comfortable and secure life.
Faith and family are the most special and tenacious bonds in Philippine society
When I first saw this book, I thought the title was too fanciful. I guess it came from some chicken soup novel. Who knew that the first chapter was very interesting. Different from other chicken-blooded inspirational books, the author clearly expresses in the opening chapter that the advantage of the Philippines lies in the stability of basic family and faith values. We can see that countries with extremely high per capita incomes do not prevent the frequent mass shootings of innocent children and adults by malcontents, nor the murder of innocent and completely defenseless babies in their mothers’ wombs. The author attributes many of these abnormal behaviors to the deterioration of traditional family and faith values in Western society. Many people in developed economies who tell the story of development forget that family and faith are the foundation of every strong, peaceful, happy society. As the saying goes, if the people have faith, the country will have hope.
Although the book is primarily about economics, the first chapter is filled with philosophical, moral, and theological exposition. The author believes that as the overall social and economic level increases, we must also grow in equal amounts in terms of truth, justice, peace, charity, respect for life and family, etc. Therefore, the conservative values of family and faith in Philippine society are the foundation for the future of high economic growth in the "first world" he believes. He believes that high per capita income is a necessary condition for being called a "developed economy", but it is not a sufficient condition. Philippine Islands , which has always valued family and faith values, can have this ambition.
Industrialization 4.0 - the era of the Philippines
Personally speaking, it is not easy to predict the level of long-term development of a country. However, if you only follow the "Cold War Economics" model and use indicators such as factory opening and OEM production to measure the future, you will undoubtedly make the historical mistake of the 1950s and 1960s when global economists were optimistic about the Philippines. Because just like every army is fighting the "last" war, if we follow the same example, we will definitely encounter tragedies such as Germany bypassing the Maginot Line, Egypt breaking through Barev Line , and Russia's Kiev defeat. . The era of Cold War economics has passed, and the high growth rates of the Four Asian Tigers and China are difficult to replicate in , Vietnam, , and India.
And the upcoming Industrial Revolution 4.0 is indeed the most suitable for the Philippines where English proficiency is still good and traditional industries are not strong.We need to have a clear understanding of the first three industrial revolutions . The Philippine economic growth certainly requires these industrial revolutions. For example, Lao Du's "Build, Build, Build" is such a catch-up mechanism. But the Philippines really does not need to "reinvent the wheel." If the Philippines learns important lessons from its neighbors in the Indo-Pacific region, it will find that Japan, Singapore , Hong Kong, Taiwan, South Korea, and the most miraculous and dramatic places in human history of China. Their success cannot be completely replicated. Moreover, their success is based on the Cold War and post-Cold War templates, and is entirely within the third technological revolution of and .
I wrote an article before about the technology that affected the Russian-Ukrainian war and settled in Southeast Asia. She was the first country. In fact, the Philippines is also aware of this problem. You do not need to use mobile base stations step by step. If there is new technology, this kind of late-developing country with backward infrastructure is suitable for large-scale popularization of new technologies. In the era of artificial intelligence, cheap foundries will be easily replaced by AI robots . But service staff with excellent English proficiency do not. Therefore, the right path for the Philippines is to focus on countries where new technologies, new energy, Web 3.0 and other applications have been implemented on a large scale, and to be the "first to eat crabs" among late-developing countries. If you have a hard time entering the factory in 2022, you will definitely go bankrupt in the future.
Industrialization 4.0 is a perfect fit for the Philippines.
Photovoltaic and solar power generation will soon reach a critical point where the price is cheaper than traditional electricity. The Philippine government is also gradually breaking the power monopoly in the past. Marcos has just signed a decree to allow foreign investment to enter the electricity industry. In the future, if a world where drones connect the islands, islanders have access to large-scale cheap power supplies, and Starlink is widely popularized and provides cheap Internet, can be realized in the Philippines, then the widespread English-speaking population can completely escape from the Internet with the help of the value of the Web3.0 era. Ignorant and poor. In fact, the Play to Earn game Axie, which was very popular during the epidemic in 2020, already has that meaning. We must know that it is most advantageous for new technologies to be implemented on a large scale in virgin lands with a low degree of development. Think about it, why can’t countries where high-speed rail technology was born fail to popularize high-speed rail on a large scale? What about China? Why does China go to Belt and Road countries to build high-speed rail instead of developing countries that don’t have high-speed rail?
There have been many lessons learned over the past thirty years, but don't just look at the bleakness of failure. The rise and fall of a country is like the stock market. The longer the bear market it experiences, the longer the bull market. The Philippines has experienced a long bear market from 1970 to 2010, and now new opportunities should be beckoning. I can’t say whether it can become a middle-income country with a GDP of 12,000 US dollars, but the Philippines will definitely not be bad in the future.
