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UNIVERSITY OF SAN CARLOS

School of Business and Economics


Department of Economics

An Institutional Analysis on:

PHILIPPINE UNDERDEVELOPMENT IN THE LIGHT OF


DEPENDENCY THEORY

Submitted to the Faculty Member of the Department of Economics


Mr. Jan Alegado

Name of the Reviewer


Vilpa P. Villabas

Number of Words: 1, 680

The paper seeks to understand the fundamental reasons of Philippine


underdevelopment. Specifically, it will use Dependency Theory as its theoretical
framework. It assumes that the Filipino people, with its weak institutionalpolitical
and economic setup, continue to suffer the effects of a defective bureaucracy and
that the widening population is greatly affected by poverty. Hence, Filipinos suffer
the ill effects of underdevelopment. The paper adapts the concept of Amartya Sen
with regards to development, which lies on seeing it as a process of expanding real
freedoms that people enjoy (Sen, 1999, Pp. 3). This focus on human freedom breaks
away from a view of development in its narrow sensethe growth of Gross
Domestic Product (GDP), an increase in income and revenue, and with
industrialization. As argued by Amartya Sen, although these economic factors are
important as means of expanding freedom of the members of the society, they are
not sufficient because freedom depends on other determinantssocial and
economic arrangements and civil and political rights. This paper would show that
within the Philippine context, underdevelopment includes not only the problem of
inclusive growth but also the increasing problem of lack of grassroots participation
among the agents (Filipinos) for honest and strong institutions.
Philippines is among those Asian countries which has a dynamic yet
repressive history of colonization. Starting from the Spanish regime, then the
Americans, followed by the Japanese, one can see the constant struggle among
Filipinos for independencein our elementary and high school years, we were
taught to understand this idea. As I started my college years, I realized that
independence per se is fought not only because of the nationalism and patriotism
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that our Philippine heroes have courageously shown those times, it is also because
our Filipino forefathers have understood, at a point in time, that independence is the
tool for them to utilize and nurture their own natural resources, necessary for them
to improve their living conditions, and thus, be free of colonial and tyrannical rule.
This forms the backbone of Dependency Theory as a way of understanding
Philippine underdevelopment. Colonialism, as argued by a Muslim author Salah
Jubair and other political theorists, is the mother of culprits. As a unitary and highly
centralized state (Rocamora and Hutchcroft, 2003) which historically, was an
arbitrary creation of the succession of colonial powers that invaded this country
(Jubair, 1999), Philippines has been characterized by natives who were ruled on a
kind of political system that they themselves were not knowledgeable. When
colonizers came, they built up institutions, set the rules of the game, leaving the
majority of the population ignorant about it. There remains only one choice: deal
with the institutions, even if you do not know the rules of the game.
The tragedy in this context comes from the Filipinos lack of control over our
own natural resources that is rightfully ours at the start of civilization. With the
impact of colonialism, the foreign invaders are the ones who till the lands of our
forefathers, and later on, slowly passed this authority to few landed elites, at the
expense of the greater population. Trade systems were organized, starting with a
barter system which later evolved into a more comprehensive money system, with
the increase participation of the market in sustaining the needs of the population.
But then again, only few people have the means to participate productively in this
process of improving ones living conditions. As societies developed, there was an
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increased division of labor but it was also marked by problems of exploitation and
alienation. At this point, some dependency theorists relate their discussions to the
Marxist ideology (Sunkel, 1969; Santos, 1971; Frank, 1972). Considering that there
is a struggle among classes, those who have the means of production (landed elites,
local natives with access to economic power) can maximize ownership of property
and gain large profits out from it while those who have been alienated and exploited
of ones labor (the common laborers) continue to live in a deprived society with no
means of improving themselves.
On the other hand, the institutional problem in terms of the economic setup
becomes even problematic in relation to politicswhere the same landed elites
have the means to access political power. This has become a viable tool to even
improve themselves in both economic and political sphere, at the expense of the
others. As argued by Hutchcroft and Rocamora (2003), patronage politics granted
immense benefits to political leaders with strong economic influence which started
from the organization of the first political party shaped by the American colonial
system, coated with the colonizers idea of making an independent Philippines
through expanding government positions to local Filipino politicians. This only
intensified the problem since political participation is limited to only few people
the same individuals who have access to economic resources.
We knew for a fact that economics is the study of scarce resources and it can
be considered that with constant deprivation among individuals who belong to the
have nots, the scarce resources seem to be exclusive only to those who belong to
the haves. One might not look at it but dependency theory, which encapsulated the
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struggle for increase ownership and control of resources among different relations,
remains to influence the state of Philippine underdevelopment.
Andre Gunder Frank, one of the earliest dependency theorists has argued
that historical research shows that contemporary underdevelopment is the
historical product of past and continuing economic and other relations between the
satellite underdeveloped and the now developed metropolitan countries (Frank,
1972, p. 3). This is true for the Philippines. With our historical colonial past,
Filipinos were dependent of the colonizers for survivals sake (they were forced to
play the rules of the game, without prior knowledge). With Filipinos dependency to
foreign invaders and with our rich natural resources, we have become a dependent
state that supplies cheap materials, agricultural commodities, and cheap labor to the
developed states. Our country, in the words of Ferraro on 1996, served as the
repositories of surplus capital, obsolescent technologies, and manufactured goods.
As a gain out from the bargain, money, goods, and services do flow into the
dependent states such as the Philippines, but the allocation of these resources are
determined by the economic interests of the dominant and the developed states.
Hence, we continue to face the problem of underdevelopment.
In the field of politics, the unequal distribution of wealth and economic
power resulted to political institutions that pursue personalistic rather than
programmatic policiesadministered by political leaders that rely on pork and
spoils from the central government. Implementing as well supporting institutions
face the problem of accountability, transparency, and responsiveness among
different government personnel. Based on the recent Transparency Internationals
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Corruption Perception Index, Philippines got a score of 2.4, a worse level of


transparency as indicated by the low number. New Zealand and Denmark had a CPI
score of 9.4 and 9.3, respectively.
The new era showed the same problem of weak institutions as shaped by
Dependency Theory for Filipinos continue to emerge in a failed bureaucracy
characterized by legislative institutions that are dominated by the same old
politicians, termed by Hutchcroft and Rocamora as trapos, with policies that are
driven by pork and patronage (Hutchcroft and Rocamora, 2003: 285).
To conclude, using Amartya Sens concept of development, there is still an
absence of the capacity of Filipinos to enjoy freedoms that they reason to value.
With the problems of underdevelopment, both economic and political, Filipino
cannot be able to start off a new era of development, considering that institutions
continue to reflect the ruins of colonialism. The actions of the state to pursue
inclusive growth are limited due to the problem of inefficient allocation of scarce
resources. Vested interests of government agents have deprived the equal sharing of
resources to the rest of the population. Dependency Theory, in this regard has
helped to perceive the problem in clarity, with a consideration of the economic and
political relations among groupsfrom the haves and the have nots, to
dependent and dominant states, to underdeveloped and developed countries.
As a recommendation, it is important to consider history and its relevant
undertakings to understand the evolution of economic and political institutions.
With this, we can trace properly the root of the problem. Furthermore, it is
necessary to look into the effects of colonialism in dealing with our daily
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experiences as Filipinos. There lies a problem as the result of seeing economic


growth and development as initiated by the Western countries. And this becomes
the problem faced by the people of the past and the present generation. We see
things as important ones based on a Western kind of thinking. From the words of
Rodriguez, a contemporary Filipino political theorist, Ever since our hearts and
minds were conquered by the West, we have always marked our progress as a people
by how fare in comparison with them, more specifically the USWe mark our wisdom
by how much we are accepted by their journals and their conferences. It appears that
we cant have our own identity outside the shadows of the West. But this dilemma
goes beyond the problem of establishing our own selves, an important aspect is the
way it affects our economic and political systems. People from the past suffer this
dilemma as they aimed for a good life yet they were deprived of the ability to
flourish as human beings (Rodriguez, 2005). The natives were being marginalized
and no matter how they escape from this situation, they would end up enlisting
themselves into the alien system because the land and waters from which they drew
life is no longer theirs to draw from (Rodriguez, 2005). A new system was being
imposed by the West; and they have to deal with it in order to survive.
If only we have been given the chance to be able to set the standard for
ourselves and indeed see the world in line with our means, we can build a
civilization worthy of everyones respect. The only way to change the connotations
given to us by the West is to strive hard with a projected sense of good life, by
measuring development as our ability to function not just the level of consumption
that benefits us the most.
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