- Manila's Malaise
A year or two after the February 1986 "EDSA Revolution" that ousted President Ferdinand Marcos, the outlook seemed bright for the consolidation and maturation of Philippine democracy. An immensely popular new president had restored its institutions. A new constitution committed the state to various social and economic reforms and made presidential use of emergency powers more difficult. A new Congress was elected in May 1987, with President Corazon Aquino's allies overwhelmingly in control. Her cabinet, solidly centrist after the resignation or removal of some allegedly "rightist" and "leftist" members whose publicized disagreements had marred her administration's first year, had become an efficient and seemingly united instrument of presidential government. Some economic growth had been achieved after the negative growth rates of the last two Marcos years. A communist-led insurgency that had grown alarmingly during Marcos's time seemed to have passed its peak and negotiations were underway with Muslim rebels to give their region some measure of autonomy.
Now, with less than two years remaining in Aquino's six-year term, there is less optimism in the Philippines. Real GDP growth, which had been 5.6 percent in 1989, is expected to fall to below 2.5 percent in 1990. In July, unemployment stood at 8.5 percent in the nation and 16.8 percent in Manila. There is much underemployment and poverty remains endemic. The president's popularity has fallen in the polls. In October, she weathered the seventh in a succession of major and minor military [End Page 45] revolts. Some of her past and present cabinet members are publicly accusing one another of corruption. Congress is in a rebellious mood, while those who had nursed hopes that she might become the champion of social reforms have turned away from her in disappointment.
Responsibility for this gnawing pessimism and disenchantment rests in part on the president herself, in part on those who staff her government, and in part on the Congress. It lies more heavily on the antidemocratic opposition, the communist revolutionaries and military rebels who seek to install their respective versions of authoritarian rule, as well as on the "semi-loyal opposition" that gives them aid and comfort. In a larger sense, the prospects for democracy are dim because of the structure and values of Philippine society, especially its most privileged and powerful classes: those who own and manage its wealth, shape its political culture, and dominate its politics.
Failed Policies and Weak Institutions
The opinion leaders and lawmakers of the Philippines remain sadly devoted to discredited 1950s policies that have become major obstacles to both economic growth and a more equitable distribution of income. Filipino entrepreneurs who made their start in the early postcolonial years as highly protected manufacturers continue, three decades later, to demand protection for their no longer infant industries while supplying Filipino consumers with overpriced and often badly made products that cannot compete in overseas markets. Moreover, an array of monopolies and cartels—notably in cement, flour, shipping, and banking—continues to impede healthy domestic competition. Protectionism has hindered the country from attracting the flood of export-oriented foreign investors—Japanese and other East Asians—who in the late 1980s sparked rapid growth in Thailand, Malaysia, and Indonesia.
An additional reason for the Philippines' relative decline among the economies of the region is its deteriorating infrastructure, including a poor telephone system and frequent electric power failures that interrupt production. Added to the effect of falling world prices for the country's traditional agricultural exports, these impediments to manufacturing competitiveness explain why the Philippine economy over the past two decades has fallen from being the most promising to the most sluggish among the ASEAN states.
An overwhelming majority of Filipino economists endorse the efforts of Aquino's new economic team, led by the highly regarded finance secretary Jesus Estanislao, to move to a more outward-looking development policy. Estanislao's far-reaching "New Economic Program," approved by the cabinet in June 1990, mandates tariff reduction and simplification, currency devaluation, export promotion, the removal of various disincentives to foreign investment, and more progressive [End Page 46] taxation. It also includes measures to increase competition in...