Emerging tiger? The paradoxes of the Philippine economy

Abstract

The Republic of the Philippines is an exception in the East and Southeast Asia realm. One of the richest countries of the region at the end of World War II, its rankings have slipped, and its growth rates have been weak for several decades. We examine the main causes of the mediocre economic performance of the country since the 1950s. Many analysts have pointed out an excessive bureaucracy, high levels of corruption and the lack of industrial investment in a country dominated by landed interests. After the high debt incurred during the Marcos administration, Philippine leaders have made every effort to improve the debt situation, choosing to pay back loans, but under investing in infrastructure and under spending for education. The current situation of the universities and research in the Philippines is not conducive to the creation of modern enterprises. The economy, with a small industrial sector and much larger tertiary sector, appears split between a wide informal sector, symbolized by the ubiquitous sari-sari stores, and a “world-class” western segment (huge shopping malls of Manila). Since the mid 2000s, growth rates have been much higher, but poverty has not diminished. There is a typical pattern of growth without development.