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THE PHILIPPINE ECONOMY

CHAPTER 1

The national economy is composed of business enterprises, households and the government.
They are the major sectors who give life to the national economy.

However, the government provides the leadership in improving the economy.

Market economy or free enterprise economy – means there are economic freedoms, like free
competition, free choice of investments and prices are determined by the interaction between
demand and supply.

Our economy has not improved much because of our colonial and primitive agricultural
economy.

Hence, Poverty grinds us up to now augmented by population explosion

Japan is a progressive country despite not having abundant natural resources

Economic development depends on the quality of the people of a given country. Knowledge,
skills and values are the main determinants of economic growth.

Philippine Economic Development

250,000 to 300,000 years ago – inhabitants in the country came from neighboring countries in
Asia through land bridges. They lived by hunting, fishing and food gathering.

Later on they were introduced to primitive agriculture and handicrafts. Then the barter system
was introduced where people were no longer nomadic. (permanent settlement)

10th century was the Arabs

13th century was the Chinese, Batanes to Jolo

The Colonial Rule

The Philippines became slave by three colonial masters: Spain, United States and Japan
Spain – colonized the Philippines for 300 years
Intramuros – Spanish colonial capital
Economic contributions – encomiendas
- Gallen trade
- Tobacco monopoly

United States – Colonized the Philippines for half a century


The Filipinos initially thought that American invasion was a great blessing;
They colonized the Philippines - to sell their surplus factory products
- to get raw materials
All US products entered our country tax free while Philippine products are with tax
when it entered the US soil except for primary products like sugar, tobacco,
coconut and abaca.
The designed the Philippine economy as an agricultural economy rather than industrial
economy.

Japan invaded the Philippines because of economic reasons:


Problems on population explosion
Shortage of raw materials
Surplus of factory products
Co-Prosperity Sphere – economic cooperation which asian countries did not buy
The Philippine economy was at worst during the japaneses times
Sugar production was stopped
Japanese prints fiat money

The Republic: 1946-1972

July 4, 1946 – the Philippines became independent


Bell Trade Act – in exchange of war damage payment, american businessmen have the
right to exploit our natural resources to operate public utilities and other
businesses.
Carlos P. Garcia implemented the import control program and introduced the Filipino
First policy.
Control program lasted only for seven years, in 1962, President Macapagal abolished the
control programn in exchange of 500M from the US.
Despite President Marcos criticism, he was forced to continue the program due to heavy
pressure from WB.

The Martial Law Regime

Martial law was declared to prevent further deterioration of the economy, it was
suppurted by the US.
It brought the economy further down
In 1984, inflation rate reached 50%
GNP growth rate was -7.1 %
PNB and DBP were bankrupt

Aquino Administration

Economic recovery – first priority of the Aquino government


Some of the government’s national policy thrust
- basic infrastructures
- tax reforms
- agricultural and industrial productivity
Growth rate becomes positive reaching 6% in 1988 but generally, the Aquino
administration has poor economic performance.

RAMOS ADMINISTRATION

Priority programs to energy, peace and order and strengthening of local government
units.

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