by Alex Roldan
Newspaper reports are screaming like heck to the face of every Filipino that “Vietnam has achieved better economic performance and growth than the Philippines!”
I am not protesting, but the painful truth is blatant – that the country which, only three decades back was scrimping for anything to survive from a war — has fully recovered and is now overtaking the second most economically developed country in Asia in the 60’s next to Japan.
The Philippines accommodated Vietnamese refugees until in the eighties when the government decided to shut down the refugee center in Palawan after the Vietnam war ended in 1975. Filipinos were once ready and able to accommodate the desperate and impoverished people who fled from their country when the Socialists took over control of the government. As a matter of international policy, our institutions aided Vietnam rebuild their economy by helping them develop their agriculture sector, particularly rice production.
It was inconceivable then that this poor and war ravaged country could regain its feet and surpass our country’s development. But it came as a surprise to many that the country, which is popularly portrayed in the movies as the villains for fighting the mighty Americans, is now one of the most robust economies in Asia. Though not considered as the “new 10 economies” in Asia and Pacific, their economic growth and performance in the past decade came as a surprise to international analysts while it awed the Filipino nation. Contrary to Hollywood’s portrayal of Vietnam, American investors consider the country as the most potential investment area in the next decade.
Frankly speaking, this should not have surprised us at all, as this was inevitable. It is not only Vietnam that is beating us economically. Other countries near our shores such as South Korea and Taiwan were also devastated by wars after WWII, yet their economies have outstripped ours by leaps and bounds.
Our economic “drivers” have failed to shift the right gears to move the country’s economic engine in the desired direction. The country’s strategy prior to the 1980s was to capitalize on its natural resources and agricultural exports– coupled with an overvalued currency policy, tariff protection and government spending to support import substitution industrialization has worked itself out. The depletion of our forestry and fishery stocks and an underdeveloped agricultural sector simply cannot supply the needed industrial growth. This condition is worsened by the propensity of the government to rely on deficit spending, and external borrowing to finance public investments to prop up growth has become too costly.
The succeeding strategies didn’t work either. Aside from the political crisis that plagued the nation and the already depleted natural resources, the country’s adoption of the framework of liberalization to facilitate entry of foreign capital and the subsequent establishment of export-oriented industries only made matters worse because it lacks the institutional arrangements to make it work.
I agree with the conclusion of the professor of economics and former director of the Institute of the Philippine Culture at the Ateneo de Manila University, Germelino Bautista, in his published essay a few years back, that “the country needs strategic interventions to address the persistent problems of unsustainable growth, poverty, and environmental degradation.”
He stressed that in macroeconomic management, there is a need to give special attention to “issues emanating from the structure of the economy and the pattern of foreign investments” to enhance the potentials of liberalization. Obviously, everybody will agree that the government has a very large role to play in this aspect – controlled government spending, privatization of deficit-prone state operated enterprises, and the reform of political and judicial institutions — are necessary conditions for sustained growth.
Since the country’s natural resource base is in a depleted state, a sufficient condition for economic growth is the restocking, rebuilding, and overall restoration of natural capital.These efforts will enable the economy to go beyond the current limits that prevent it from building on and sustaining upward trends.
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