Economic history of the Philippines
Prior to Spanish colonization in the 16th century, the islands had a flourishing economy centered around agriculture, fisheries, and trade with neighboring countries like China, Japan, and Southeast Asia.
During the American colonial period (1901–1946), the country saw significant economic reforms and infrastructure improvements, while the Philippine peso was pegged to the US dollar, facilitating trade and investment.
After gaining independence in 1946, the Philippines experienced periods of growth and stagnation, with key phases of industrialization and agricultural reform, alongside challenges such as cronyism, political instability, and economic inequality.
In the modern era, the Philippines has shifted towards a more service-oriented economy, with sectors like business process outsourcing (BPO) and remittances from overseas Filipino workers playing critical roles in its development.
From the 12th century, a huge industry centered around the manufacture and trade of burnay clay pots, used for the storage of tea and other perishables, was set up in the northern Philippines with Japanese and Okinawan traders.
The Nation of Ma-i produced beeswax, cotton, true pearls, tortoise shell, medicinal betel nuts and yuta cloth in their trade with East Asia.
By the early sixteenth century, the two largest polities of the Pasig River delta, Maynila and Tondo, established a shared monopoly on the trade of Chinese goods throughout the rest of the Philippine archipelago.
Some historians have proposed that they also had regular contact with other Austronesian people in Western Micronesia, because it was the only area in the Oceania that had rice crops, tuba (fermented coconut sap), and tradition of betel nut chewing when the first Europeans arrived there.
Magellan's chronicler, Antonio Pigafetta, mentioned that merchants and ambassadors from all surrounding areas came to pay tribute to the rajah of Sugbu (Rajahnate of Cebu) for the purpose of trade.
He was also the head of an armada which traded and protected commerce between the Indian Ocean, the Strait of Malacca, the South China Sea,[15] and the medieval maritime principalities of the Philippines.
[25][failed verification] Former Education secretary Alejandro Roces also noted that the Philippines' literacy rate was even higher than mainland Spain and several European countries.
Anti-Japanese newspapers portrayed stories of going to the market laden with suitcases or "bayong" (native bags made of woven coconut or buri leaf strips) overflowing with the Japanese-issued bills.
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.
After the 1972 Martial Law declaration, Marcos continued his strategy of relying on international loans to fund the projects that would support the booming economy, prompting later economists to label this a period of "debt driven" growth.
In the two decades of Marcos's rule, Philippine economic development strategy had three central pillars: the Green Revolution, Export Agriculture and forestry, and foreign borrowing.
Development strategy in the Marcos era continued to rely on this sector as a major source of income and foreign exchange, between 1962 and 1985, export crop acreage more than doubled.
Marcos increased the stature of technocrats within the government and, through their public rhetoric in favor of policy reform, help to ensure the continued flow of loans into the country.
Crony capitalists "were businessmen who walk the corridors of the presidency and by virtue of this proximity to Marcos drove policy making and by doing so were able to control specific sectors of the economy".
Due to the sudden collapse of confidence and credit ratings from international financial institutions, the Philippine government, had difficulty borrowing new capital to cut the increasing budget deficit, much of it payments to interest from debt.
[citation needed] The Marcos regime, during the early to mid-'70s, focused primarily on improving the economy and the country's public image through major increases in government spending particularly on infrastructures.
Table 1: GDP Growth Rates from 1986 to 2010 The Corazon Aquino administration took over an economy that had gone through socio-political disasters during the People Power revolution, where there was financial and commodity collapse caused by an overall consumer cynicism.
This was largely the result of austerity measures imposed by a standard credit arrangement with the International Monetary Fund and the destruction caused by natural disasters such as the eruption of Mt.
He sanctioned the formation of the Legislative-Executive Development Advisory Council (LEDAC), which served as a forum for consensus building, on the part of the Executive and the Legislative branches, on important bills on economic policy reform measures.
The Arroyo administration, in an economical standpoint, was a period of good growth rates, due perhaps to the emergence of the Overseas Filipino workers (OFW) and the Business Process Outsourcing (BPO).
"The Philippines 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.
The 2008 global economic crisis started upon the bursting of the United States housing bubble, which was followed by bankruptcies, bailouts, foreclosures, and takeovers of financial institutions by national governments.
During a period of housing and credit booms, banks encouraged lending to home owners by a considerably high amount without appropriate level of transparency and financial supervision.
In addition, in 2007, an absolute poverty incidence of 13.2 percent—higher than Indonesia's 7.7 and Vietnam's 8.4 percent—was recorded, illustrating the unequal distribution of wealth and corruption that inhibits the growth and development of the Philippines.
This minimal effect on the stock market and the Philippine peso can be attributed to the recovery of asset prices across the Asia-Pacific region in early 2009 as foreign portfolio investments surged.
[98] President Benigno Aquino III planned to expand the Conditional Cash Transfer (CCT) program from 1 to 2.3 million households, and several long-term investments in education and healthcare.
