Contents

5 Ways an Entrepreneur Stimulates the Economy.................................................................3

Why Entrepreneurs Are Important for the Economy...................................................5
Entrepreneurs Create New Businesses....................................................................5
Entrepreneurs Add to National Income....................................................................6
Entrepreneurs Also Create Social Change...............................................................6
Community Development........................................................................................ 6
The Other Side of Entrepreneurs............................................................................. 7
The Role of States................................................................................................... 7
The Bottom Line...................................................................................................... 7
Impact of Entrepreneurship on the Economy of a Country.........................................9
The History of Entrepreneurship............................................................................14
Philippine economic history since the 1930s in perspective.....................................21
ECONOMIC HISTORY OF THE PHILIPPINES..........................................................24
Economic Development in the Philippines in the Early 20th Century.................24
Economic Development in the Philippines in the 1950s and 60s.......................25
Philippines Economy Under Marcos....................................................................26
Impact of Martial Law on the Philippine Economy in the 1970s and 80s............26
Impact of U.S. Military Bases on the Philippines Economy.................................27
Philippines Economy Under Cory Aquino............................................................28
Economic Policy Under Cory Aquino...................................................................30
Economy Under Ramos...................................................................................... 31
Asian Economic Crisis in the Philippines in 1997-98...........................................33
Economy Under Estrada..................................................................................... 33
Economy Under Arroyo...................................................................................... 33
Philippines Economy Picks Up in the Mid-2000s.................................................34
Philippines and the Global Economic Crisis in 2008 and 2009...........................35
Philippine Economy Picks Up in the 2010s Under Benigno Acquino III...............36
Philippines Economy Improves But Doesnt Create So Many Jobs......................37
President Benigno Acquino III and the Failure to Create Jobs.............................38
Philippine Economy Grows 7.2 Percent in 2013..................................................39
 Philippines Gets First-Ever Investment Grade Rating.........................................40
Philippine Economy in 2014...............................................................................41
List of Business Laws in the Philippines....................................................................43
5 Ways an Entrepreneur Stimulates the
Economy
Posted by Amitabh Shukla / September 7, 2009

Entrepreneurs contribution to the economy is of immense value. He or she is indispensable to

the economic growth of the country. His or her products are valuable to the overall development
of the society. People need their products. They simply cannot do without them.

Ours is a consumer society now. Even in the developing countries consumerism is gaining
ground. Developed countries anyway thrive on consumerism. Naturally, the role of an
entrepreneur is of much significance in generating products valuable for the com forts and
luxurious living of the people of a particular country.

An economy is much dependent upon the performance level of its entrepreneur. He or she plays
a vital role in the growth of the national income as well as raising the per capita income of the
people.

How does an entrepreneur stimulate the economy?

1. Investment Then entrepreneur has to invest in what is required for the economy.
Economic progress will much depend upon his or her contributions. Any entrepreneur
will invest in products and services which the people need. His or investment will ensure
a better life for the people. More goods and services will be at their disposal.

2. Employment An entrepreneur by setting up various businesses and establishments is

generating employment in the economy. People need jobs. This is a major contribution
 that an employer can make to provide income to an employee who can meet his or her
needs.

3. Diversity in products and services An entrepreneur can provide various types of

goods and services to the consumer. The latter has much to choose from. A consumer
after all would like to have a good bargain, and if his or her choices are more than he or
she can get these products or services at reasonable rates. Also personal desires are met if
there are products and services to choose from. A person may like a particular type of tie
and he can perhaps locate it in his local market. His desire to purchase a tie of his choice
is thus met.

4. International trade An entrepreneur promotes international trade by selling his or her

products abroad. Any entrepreneur would like a wider market. If there are more
consumers to purchase his or her products, the higher his profits.

5. Contributes to gross national product An entrepreneur makes much contribution to

the national exchequer and to the national economy as whole. The GNP of the country is
calculated based upon the total number of products and services available in a respective
country. The more products and services available the higher the GNP. It indicates the
economic prosperity of the country.

The entrepreneur is essential for the economic development of a country. The progress of a
country will depend upon his skill and talent as well as hard work to deliver necessary goods and
services required by the citizens of his or her country.
Why Entrepreneurs Are Important for the Economy

By Shobhit Seth | Updated December 29, 2015 2:02 PM EST

Entrepreneurs are frequently thought of as national assets to be cultivated, motivated and

remunerated to the greatest possible extent.

Entrepreneurs can change the way we live and work. If successful, their innovations may
improve our standard of living. In short, in addition to creating wealth from their entrepreneurial
ventures, they also create jobs and the conditions for a prosperous society.

The following are six reasons why entrepreneurs are important to the economy.

Entrepreneurs Create New Businesses

Path breaking offerings by entrepreneurs, in the form of new goods & services, result in new
employment, which can produce a cascading effect or virtuous circle in the economy. The
stimulation of related businesses or sectors that support the new venture add to further economic
development.

For example, a few IT companies founded the Indian IT industry in the 1990s as a backend
programmers' hub. Soon the industry gathered pace in its own programmers domain. But more
importantly, millions from other sectors benefited from it. (For more, see: Top Indian
Billionaires And How They Made Their Money.)

Businesses in associated industries, like call center operations, network maintenance companies
and hardware providers, flourished. Education and training institutes nurtured a new class of IT
workers offering better, high-paying jobs. Infrastructure development organizations and even real
estate companies capitalized on this growth as workers migrated to employment hubs seeking
new improved lives.

Similarly, future development efforts in underdeveloped countries will require robust logistics
support, capital investment from buildings to paper clips and a qualified workforce. From the
highly qualified programmer to the construction worker, the entrepreneur enables benefits across
a broad spectrum of the economy.

Entrepreneurs Add to National Income

Entrepreneurial ventures literally generate new wealth. Existing businesses may remain confined
to the scope of existing markets and may hit the glass ceiling in terms of income. New and
improved offerings, products or technologies from entrepreneurs enable new markets to be
developed and new wealth created.

Additionally, the cascading effect of increased employment and higher earnings contribute to
better national income in form of higher tax revenue and higher government spending. This
revenue can be used by the government to invest in other, struggling sectors and human capital.

Although it may make a few existing players redundant, the government can soften soften the
blow by redirecting surplus wealth to retrain workers. (For more, see: Starting A Small Business
In Tough Economic Times.)

Entrepreneurs Also Create Social Change

Through their unique offerings of new goods and services, entrepreneurs break away from
tradition and indirectly support freedom by reducing dependence on obsolete systems and
technologies. Overall, this results in an improved quality of life, greater morale and economic
freedom.

For example, the water supply in a water-scarce region will, at times, force people to stop
working to collect water. This will impact their business, productivity and income. Imagine an
innovative, automatic, low-cost, flow-based pump that can fill in people's home water containers
automatically. Such an installation will ensure people are able to focus on their core jobs without
worrying about a basic necessity like carrying water. More time to devote to work means
economic growth.

For a more contemporary example, smartphones and their smart apps have revolutionized work
and play across the globe. Smartphones are not exclusive to rich countries or rich people either.
As the growth of China's smartphone market and its smartphone industry show, technological
entrepreneurship will have profound, long lasting impacts on the entire human race.

Moreover, the globalization of tech means entrepreneurs in lesser-developed countries have

access to the same tools as their counterparts in richer countries. They also have the advantage of
a lower cost of living, so a young individual entrepreneur from an underdeveloped country can
take on the might of the multi-million dollar existing product from a developed country. (For
more, see: Time For Chinas Smartphone Revolution.)

Community Development
Entrepreneurs regularly nurture entrepreneurial ventures by other like-minded individuals. They
also invest in community projects and provide financial support to local charities. This enables
further development beyond their own ventures.
Some famous entrepreneurs, like Bill Gates, have used their money to finance good causes, from
education to public health. The qualities that make one an entrepreneur are the same qualities
that motivate entrepreneurs to pay it forward. (For more, see: Encouraging Good Habits With An
Incentive Trust.)

The Other Side of Entrepreneurs

Are there any drawbacks to cultivating entrepreneurs and entrepreneurship? Is there an upper
limit for the number of entrepreneurs a society can hold?

Italy may provide an example of a place where high levels of self-employment have proved to be
inefficient for economic development. Research reveals that Italy has in the past experienced
large negative impacts on the growth of its economy because of self-employment. There may be
truth in the old saying, "too many chefs and not enough cooks spoil the soup." (For more, see:
The Real Risks Of Entrepreneurship.)

The Role of States

Regulations play a crucial role in nurturing entrepreneurship, but regulation requires a fine
balancing act on the part of the regulating authority. Unregulated entrepreneurship may lead to
unwanted social outcomes including unfair market practices, pervasive corruption, financial
crisis and even criminal activity.

Findings from United Nations University also indicate the possible implications of over
nurturing" entrepreneurship. Wim Naud argues that while entrepreneurship may raise
economic growth and material welfare, it may not always result in improvements in non-material
welfare (or happiness). Promotion of happiness is increasingly seen as an essential goal.

Paradoxically, a significantly high number of entrepreneurs may lead to fierce competition and
loss of career choices for individuals. With too many entrepreneurs, levels of aspirations usually
rise. Owning to the variability of success in entrepreneurial ventures, the scenario of having too
many entrepreneurs may also lead to income inequalities, making citizens more not less
unhappy.

The Bottom Line

The interesting interaction of entrepreneurship and economic development has vital inputs and
inferences for policy makers, development institutes, business owners, change agents and
charitable donors. If we understand the benefits and drawbacks, a balanced approach to nurturing
entrepreneurship will definitely result in a positive impact on economy and society.

Read more: Why Entrepreneurs Are Important for the Economy | Investopedia
http://www.investopedia.com/articles/personal-finance/101414/why-entrepreneurs-
are-important-economy.asp#ixzz4dY5PwkTe
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Impact of Entrepreneurship on the Economy of a Country

by Francis Nwokike Published March 25, 2015 Updated January 25, 2017

Entrepreneurship play a vital role in the development of a countrys economy as this is the key
contributor to innovativeness, product improvement and reduction of unemployment.

Entrepreneurship, which is basically the practice of starting a business in order to earn profit on
new found opportunities, can go a long way to stabilize the economy of a nation as well as
generate massive returns to the government.

Entrepreneurship can impact the economy of a country in diverse ways. According to Dr. Ercan
Ekmekcioglu of Kyrgyzstan Turkey Manas University, it is through entrepreneurship that
important innovations enter the market leading to new products or production process which
eventually increases efficiency through bringing competition in the market.

Various factors have deterred emerging entrepreneurs from successfully starting their own
business. Among the numerous factors cited by some failed startups in Africas most populous
country Nigeria from a personal survey I conducted include, high and multiple taxes, lack of
funding, electricity and security.

In such environments, starting and sustaining a small business could be very tedious and only
few entrepreneurs with extra personal qualities can survive. Creativity and a strong work ethic
are vital as well as being detail oriented and willing to research thoroughly and accept risks.

According to a research by The Global Entrepreneurship and Development Institute, it was found
that USA is a world leader when it comes to supporting its entrepreneurs in respect to business
formation, expansion, and growth. They also finance new businesses through venture capital.
This type of financial capital is provided to early-stage, high-potential and riskier start-up
companies. Countries like Canada, Australia, came second and third respectively according to
the 2014 statistics. These countries economies are ranking very high because they understand the
impact entrepreneurs play to the growth of their economy. Their GDP are always on the increase
thereby increase in their economy.

Related: 10 Principles of Entrepreneurship

Small businesses are the heart of any countrys economy and a country that does not play with its
entrepreneurs has a better chance of an improved economy. The future of African economy
depends largely on its entrepreneurs as well as government policies on entrepreneurship.
WHAT ENTREPRENEURS CAN OFFER TO THEIR COUNTRY
Entrepreneurs have a lot to offer to their country of residence. According to Strive Masiyiwa,
CEO Econet Wireless, an entrepreneur can do the following for his country;

1. Create jobs

2. Provide services and products needed in the country

3. Create wealth (For themselves and their country)

Entrepreneurs pay tax when they sell goods, when they pay their employees and when they
import goods, they pay the duties that are due, according to the law.

Using Apple as a case study, Strive said we all know what Apple sells: iPhones, iPads, iPods, etc.
These are consumer products, manufactured by the company, mostly in China, and sold around
the world. The founder of Apple computers, Steve Jobs, died in 2011. The company that he left
behind generates billions of dollars in tax revenues, for his home country, the United States. This
is used to pay the salaries of civil servants, build roads and other infrastructure, build schools,
hospitals, civil defense and a powerful armyThis is wealth!
I could also say that about Dangote Group, Coca Cola, Toyota, Alibaba, Econet Wireless,
Innoson Group, to mention a few.

According to Carree and Thurik, the concept of entrepreneurship is multidimensional and largely
ill-defined. Understanding the role of entrepreneurship in the process of economic growth will
therefore require a framework because of the nature of intermediate variables and connections
which exist (Bygrave & Minniti).

The best examples of these intermediate variables include innovation, competition mainly
characterized by exit and entry of firms, variety of supply and particular energy and efforts of
investment by entrepreneurs. Other conditions of entrepreneurship also add up when it comes to
their contributions to economic growth (Robbins, Pantuosso, Parker & Fuller, 2000). These
conditions include personal traits, cultural and institutional factors.

Recommended Read: 10 Startup Lessons For Young Entrepreneurs

While entrepreneurship is all about the activities carried out by individuals (entrepreneurs), the
concept of economic growth has often been relevant at firm level, industrial, national and
regional levels(Robbins, Pantuosso, Parker & Fuller, 2000). This implies that linking
entrepreneurship to economic growth will be to amalgamate individual to aggregate levels.
Considering this linkage however requires revisiting the definition of entrepreneurship, whereby
entrepreneurs, either as individuals or a team, manifest their willingness and abilities to create
new opportunities in economy (Todtling & Wanzanbock). In this manner, novel products,
production modalities, organizational schemes and product-market combinations are created. The
entrepreneurs seek to introduce their newly crafted ideas in the existing market in the face of
obstacles and uncertainties. They also make critical decisions in terms of business location,
forms and the utilization of available resources and institutions.

Every great business, in the world, no matter how large it is today, was started by entrepreneurs.

Also note that it is not just large companies like Apple, Econet and Dangote Cement that create
wealth. Even a street vendor, is creating wealth, when he is successful. Even the guy who sells a
packet of sweets or airtime, is creating wealth or the shop owner who sells provisions or wears
also, they all pay tax thereby creating wealth.

To sum up the impact of entrepreneurship to economic growth Carree and Thurik (2002) have
provided five strands of empirical evidence to show their involvement;

1. The first evidence mainly deals with the turbulence effect of entrepreneurship
on the growth of economy. Turbulence can be viewed as the total entries and
exits in regions or industries and can easily be interpreted as one of the
powerful indicators of entrepreneurial activities.
 2. The effect of and changes in size distributions in regions represents.

3. The number of market participants in any industry will finally have an

important effect on economic growth and this is recognized as another strand
of evidence of the role of entrepreneurship in economy expansion

4. The effect of the number of business owners and self-employed individuals in

economic growth

5. The economic history of previously centralized and planned economies will

also have an influence in economic growth of countries

IN CONCLUSION

Entrepreneurs are nation builders. I therefore urge entrepreneurs to be more creative and move
up with trends. Countries must learn to value their entrepreneurs, as real partners of
development. We must acknowledge their contributions, and celebrate them.
http://www.marketing-schools.org/types-of-marketing/entrepreneurial-
marketing.html
The History of Entrepreneurship
inShare22

The early silk trade routes, dating from the Han Dynasty in 200 BCE

By Ryan Allis

The Beginnings of Trade

The original entrepreneurs were, of course, traders and merchants. The first known instance of
humans trading comes from New Guinea around 17,000 BCE, where locals exchanged obsidian,
a black volcanic glass used to make hunting arrowheads for other needed goods. These early
entrepreneurs exchanged one set of goods for another.
The first known instance of humans trading comes from New Guinea around 17,000 BCE when
locals exchanged obsidian, a black volcanic glass used to make hunting arrowheads for other
needed goods.

Around 15,000 BCE, the first animal domestication began taking place, and around 10,000 BCE,
the first domestication of plants. This step toward agriculture was critical for the advancement of
the human species. Now, instead of having to continually move around as nomadic tribes,
seeking new places to hunt and to gather, we could stay in one place. Agriculture allowed us to
start to form larger stationary communities and cities (the basis for civilizations), which set the
stage for the development and spread of human knowledge. Agriculture changed everything for
humans, enabling the formation of stable rather than migratory populations and laying the
foundation for human populations to grow from 15 million to over 7 billion in
the millennia ahead. 1

As more people moved into these stable communities, one of the most important advances took
place with the advent of specialization. Instead of each tribe hunting and gathering their food,
different individuals within each tribe would become experts at certain tasks, such as farming,
hunting, gathering, fishing, cooking, tool-making, shelter-building, or clothes-making. The
importance of specialization in various tasks (versus self-sufficiency in all) cannot be overstated.
As some individuals in a community focused on one activity or another, they got much better at
it, speeding up the pace of innovation. As different people got better at different tasks through
specialization, they were then able to exchange with one another for the various goods and
services needed, increasing the benefits for all.

As methods of agriculture improved, the first towns and cities were seen. Dependable food
supplies allowed people to build permanent houses and settle in one area. As settlements
increased in size, new social institutions such as religious centers, courts, and marketplaces
developed. The advent of towns produced further specialization, creating jobs in tool-making,
pottery, carpentry, wool-making, and masonry, among others. The specialist created items faster
and of a better quality than each family making its own, increasing standards of living.

When the last Ice Age ended around the year 8,000 BCE, the poles melted, raising sea levels and
creating a divide between Siberia and North America. This divide created two separate human
civilizations for nearly 10,000 years, until European explorers reached the Americas again in the
15th century.

The First Cities

The Middle Easts fertile crescent between the Tigris and the Euphrates had the right mix of
plants and animals to sustain the foundations of civilization. Around 4,000 BCE, people in
central Asia tamed horses, giving them a major advantage in both agricultural work and
warfare. By 3,000 BCE, the first settlements and cities formed in Sumeria (modern day Iraq).
During this timeframe, the city of Uruk along the banks of the Euphrates River was home to
50,000 people in an amount of space that would have previously supported just one hunter-
gatherer.2. Humans had become much more efficient at generating the food and
energy necessary to support their communities.

Human civilizations began to spring up near rivers like the Nile, the Tigris and Euphrates, the
Indus, and the Yellow and Yangtze. In the first cities, writing was developed to keep track of
crops. In this period, the first armies developed and the first city governments were formed.
Agricultural settlements had put humanity on a rapidly developing path toward intellectual and
scientific advancement.

Trade Routes Allow Ideas and Memes to Spread

Trade routes between the new cities soon sprang up. Donkeys, horses, and camels enabled trade
caravans between civilizations, moving both goods and ideas. Ships were built to carry trade
over the seas. Networks and hubs soon formed and more complex structures emerged. Great
Pyramids were built in Cairo. Temples were built in Sumeria.

Around 2000 BCE, iron was discovered, leading to advances in warfare and a very tumultuous
few centuries. Around 600 BCE, human warriors with iron weaponry on horseback led to the
creation of empires. Between 500 BCE and 117 CE, small cities turned into the Persian Empire,
Alexanders Empire, Han Chinese Empire, and Roman Empire with complex political systems
and philosophies and beliefs. Judaism, Christianity, Hinduism, Buddhism, and Islam formed and
became the worlds five major religions between 1300 BCE and 600 CE.

Trade routes expanded. Salt from Africa reached Rome, rice traveled from China to Asia, and the
secrets of making paper were transferred from China to Europe. Arab traders brought coffee,
lemons, and oranges into Europe for the first time. Around 800, gunpowder was discovered in
China when carbon and sulphur were combined with potassium nitrate. Around the year 1200, an
Italian trader named Leonardo Fibonacci brought the standard system of numbers that we still
use today from Arabia to Europe.

Separated from the rest of the world, the Aztecs, Mayans, and Incan empires had formed in the
Americas. Starting in 1492, Columbus voyages connected Europe and the Americas, bringing
guns, horses, and disease. With the importance of Atlantic trade, power would shift toward the
West in the coming centuries as Europeans colonized and laid the foundations for a globalized
world. The reconnection of the hemispheres marked a major turning point for our species.

The Invention of Money

Early trade consisted of barter (one good for another). If Tom had twenty cows and Igor had
eighty hens, and Tom and Igor agreed that one cow was worth four hens, then the trade could
take place. The problem with the barter system, however, was that in order for a trade to take
place, both parties had to want what the other party had. This co-incidence of wants often did
not happen. Thus, the demands of growing business and trade gave rise to a money system.
Silver rings or bars are thought to have been used as money in Ancient Iraq before 2000 B.C.
Early forms of money (called specie) would be often be commodities like seashells, tobacco
leaves, large round rocks, or beads.3

While the money system still had much development to go through (credit and paper money did
not yet exist), its invention over four thousand years ago was of crucial importance to the world
we live in today. The use of money, an accepted medium to store value and enable exchange, has
greatly enhanced our world, our lives, our potential, and our future.

By the year 1100, the prevailing cultural system in the Western World was feudalism. It was a
world of kings and lords, vassals and serfs, kingdoms and manors. Long-distance trade was
expanding and new worlds of foreign spices, oriental treasures, and luxurious silks were
discovered. Three hundred and fifty years later, after weathering a Black Death and the Hundred
Years War, Europe emerged by expanding trade to new levels and building the foundation for the
start of the competitive market economy we know today.

The Creation of Markets

With a population spurt starting around 1470, cities, markets, and the volume of trade grew.
Banking, initially started by Ancient Mesopotamians, grew to new heights and complexities; the
guild system expanded; and the idea that a business was an impersonal entity, with a separate
identity from its owner, started to take hold.4 Silver imports from the new world drove expanded
trade and bookkeepers created standardized principles for keeping track of a firms accounts
based on Luca Paciolis accounting advances. Early entrepreneurs, called merchants and
explorers, began to raise capital, take risks, and stimulate economic growth. Capitalism had
begun.
Early on in the history of capitalism, the idea of monetary gain was shunned and shamed by
many. The practice of usury, charging interest on loans, was banned by the Christian Church.
Jobs were assigned by tradition and caste. Innovation was stifled and efficiency was forcefully
put down, sometimes punishable by death. In sixteenth-century England, when mass production
in the weaving industry first came about, the guildsmen protested. An efficient workshop
containing two hundred looms and butchers and bakers for the workers was outlawed by the
King under the pretense that such efficiency reduced the number of available jobs. Makers of
innovative shirt buttons in France in the late 1600s were fined and searched and the importation
of printed calico textiles cost the lives of 16,000 people.5

The world would soon see, however, that innovation was generally a good thing, making lives
better, and that efficiency was a path toward a higher standard of a living. As Robert L.
Heilbroner says in The Worldly Philosophers,

The precapitalist era saw the birth of the printing press, the paper mill, the windmill, the
mechanical clock, the map, and a host of other inventions. The idea of invention itself took hold;
experimentation and innovation were looked upon for the first time with a friendly eye.

The Hochelaga Cotton Factory in 1860, near Montreal, Quebec on the banks of the Ottawa River
Markets & Machines
Just when it seemed we had reached our human limits we found the energy and technology to
carry us into the future. On Earth, the seeds of the past have bloomed into a present filled with
energy creativity. The stories of billions of lives have played out against a backdrop of a universe
almost too vast to comprehend. In everything that we do, in all that we are, we remain living
monuments to the past, as we continue to make history every day. The History Channel6

The story of the last 200 years is truly one of machines and markets.

With the advent of a complex marketplace and a system of capitalism, a battle of ideas raged to
explain the sources of wealth and to explain the workings of the market. Between approximately
1550 and 1800, a philosophy called mercantilism was at the forefront. The mercantilists had the
misguided notions that a countrys wealth was solely based on how much treasure and gold it
could obtain and how much more it exported than imported. Monopolies and tariffs were
promoted and competition and trade were discouraged. But they had gotten it all wrong.

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner,
but from their regard to their self-interest. Adam Smith, The Wealth of Nations

Fortunately, new schools of thought sprung up in the 18th century that promoted commerce as
the source of wealth, rather than the mercantilist notion of the hoarding of gold. Adam Smith
further backed this idea and was the first to capture and explain the essence of the marketplace.
He did so in his seminal 1776 work An Inquiry into the Nature and Causes of the Wealth of
Nations, slaying the mercantilist dragon in the process. Smith explained that self-interest acts as
a guiding force toward the work society desires.

While one would naturally assume that everyone simply following his or her self-interest would
not create a very positive society, there is another force that prevents selfish individuals from
exploiting the marketplace in a healthy economy. That regulator is competition.

This principle can be explained best with the following excerpt from Robert L.
Heilbroners book The Worldly Philosophers:

A man who permits his self-interest to run away with him will find that competitors have
slipped in to take his trade away; if he charges too much for his wares or if he refuses to pay as
much as everybody else for his workers, he will find himself without buyers in the one case and
without employees in the other.

Those customers will go to the competitor who charges less and those workers will go to the
competitor who is willing to pay more. The wonderful paradox of the market, through the
interaction of supply and demand and competition, creates a price that properly allocates industry
so as to produce the proper quantities of goods and services. No intervention, planning, or
forethought is needed to create exactly what society desires, in the exact amount it desires. What
a wonderful contraption the market is. As long as society can promote competition and
innovation, standards of living will continue to grow and wealth will increase.

The Start of the Industrial Age

The Industrial Age truly began in 1712 with the invention of Thomas Newcomens steam engine
in Devon, Britain. But it wasnt until James Watts steam engine in 1763 that things really got
moving, enabling work to be done through the movement of pistons rather than the movement of
muscle.

By the time of Adam Smiths death in 1790, the nascent Industrial Revolution had already reared
its head. The effects of the Renaissance, the humanist movement, and the Enlightenments focus
on science and empiricism would translate into the launch of a movement that would impact the
world as none before it had. It was this revolutionoften dirty, harsh, and cruelthat prompted
thoughts of communism and created robber barons and industrial titans. It was this same
revolution, however, that led to the development of the innovations, technology, and standards of
living we have today.

From the Industrial Revolution, the concept of mass production and economies of scale came
about. Bigness, trusts, and vertical integration became the key to riches at that time. It was
Andrew Carnegie and J. P. Morgan in steel, John D. Rockefeller and Frank Kenan in oil, and
Henry Ford in automobiles. While some of these titans had questionable ethics, no one can deny
that they were innovators. They forged alliances, developed new ways of doing business, and
created efficiency across industries.

It was the combination of energy and engine that freed man from the constraints of muscle
power, making the Atlantic world the greatest military power and laying the foundations for the
locomotive, the internal combustion engine, the automobile, and the discovery of oil. The
telegraph and telephone connected humanity around the world. With electricity, we lit up the
night.

While critical governance institutions are required for the effective functioning of capitalism, the
market system has been one of the most significant innovations in the history of humankind.
Philippine economic history since the 1930s in perspective

CROSSROADS (Toward Philippine Economic and Social Progress) By Gerardo P.

Sicat (The Philippine Star) | Updated June 17, 2015 - 12:00am

10 347 googleplus1 2

In 1946, our flag was raised at the Luneta to announce the formal start of our status as an
independent republic. That was 59 years ago, six decades of independence. Our economic history
presents a mirror of our growth as a nation.

The timeline of Philippine recent economic history

Close Ad X

. Though Philippine independence begins in 1946, it is important to move the

timeline back to the mid-1930s.

That was when the country achieved victory in its fight for independence through legislative
efforts in the US Congress. Finally, Philippine political independence was foreseen with the
passage of the Tydings-McDuffie law.

I start with a capsule economic history. In the coming months, I shall complete this story in
between my normal commentaries on economic and business affairs in this column. (Every time
I deal with economic history, I will mark it as such.)

The period I would call immediate colonial legacy begins with the defining moment when
restrictive economic provisions to foreign capital were introduced in the Philippine Constitution.
Afterwards, efforts were undertaken to understand the nature of the post-colonial relationships.

This important transition period was interrupted by the Japanese invasion of the nation during
World War II. That experience brought large problems of its own: the wartime destruction of
output and of industries, social dislocations, and a drastic fall of GDP.

1946 to 1949: post-war rehabilitation and growth. This period marked the early years of
independence after emerging from the Second World War. With political independence achieved,
rapid rehabilitation would be financed by extraordinary post-war US military expenditures in the
country, war damage payments and a bilateral trade agreement with the former colonial master.

1950s to the 1960s: import substitution and exclusivistic economic nationalism. Even these
developments could not forestall balance of payments problems that would lead to import and
exchange controls. These controls would introduce and perpetuate incentives for inward-looking
development. They would create and strengthen incentives for more protection despite persistent
BOP problems being promoted.
The succession of presidencies of Elpidio Quirino (who succeeded the first president, Manuel
Roxas), Ramon Magsaysay, Carlos Garcia and Diosdado Macapagal (and even beyond) would
administer and embellish this period of inward-looking import substitution. During this time, the
growth of import substitution would also see the rise of exclusivistic economic nationalism in
which efforts were made to displace or minimize foreign participation in the economy.

1970s to the mid1980s: martial law reforms and crisis. The mid 1960s saw the emergence of
Ferdinand Marcos as president. After almost eight years of rule as president, Marcos declared
martial law.

This enabled Marcos to continue to rule the country as dictator, during which he oversaw major
gains being made in economic and social reforms and redirected the nations political
construction. At no time in the countrys history was the pre-occupation with infrastructure
investments undertaken as a component of the economic development program.

Dissatisfaction with the strong man rule became strong after the assassination of Benigno Aquino
Jr., the returning political oppositionist. This would lead to the loss of international support for
Marcoss government especially in financial affairs, plunge the country into a serious double
crisis -- economic and political and finally cause his overthrow and exile during the EDSA
revolution.

Restoration of political institutions and economic liberalization. Corazon Aquino restored

political institutions to pre-martial law framework through the adoption of the 1987 political
Constitution. However, her naivete in many aspects of leadership led her to commit major
mistakes.

Foremost among these was the neglect of energy and the failure to properly mobilize her political
capital to restore public spending with the sustenance of international financial flows. This came
about when she mulled radical solutions concerning the countrys debt obligations.

The outcome was political instability with periodic threats of military coups, the running down
of the countrys infrastructure investments without maintenance and the setback to long term
growth, as energy capacity and infrastructure inadequacy plagued the nation.

Though economic growth had been restored after the economic collapse following the Marcos
crisis years, the new government failed to take advantage of the opportunities for the future that
the immediate legacy of Marcos in terms of energy and infrastructure construction handed over
to the next government.

The Cory Aquino years ran down the infrastructure investments without any future investment
and caused a crisis in energy that would set back growth for years.
Nevertheless, Mrs. Aquino continued the reforms in industry and trade that helped to open the
countrys economy to the world. Fidel Ramos, her successor to the presidency, advanced further
the economic liberalization of the economy and introduced privatization of key government
corporations. These economic efforts were advanced through the Estrada and Gloria Macapagal
Arroyo presidencies.

It would take a second Aquino presidency, that of Noynoy Aquino, the son, to live up to some of
the reforms in governance that the first Aquino presidency tried to bring to the nation. By this
time, too, the benefits of the opening to the world economy would support economic progress.

Overall economic performance assessed in comparison with neighbors. Throughout all these
periods, the Philippines performed relatively well, but well below that of economies that
undertook more rapid economic reforms and which integrated their economies with world trade
and with much higher inflows of foreign capital.

Up until the 1980s, the Philippines was in pace with large economies of Southeast Asia that were
co-founders of Asean (Association of Southeast Asian Nations): Thailand, Malaysia and
Indonesia. During the uncertainties of the 1980s and the economic crisis that hit the country
toward the end of the Marcos regime, sustained economic reforms and large foreign direct
investments made these economies surge faster.

In East Asia, there have been countries that have done much better. Within four decades, they
essentially obliterated poverty and unemployment. They transited the developing country stage
into industrial economies.

South Korea and Taiwan have been exemplary in this regard. China, the most recent example,
and the biggest country of all, has not only replicated the experience of these two countries, but
has done even better in terms of overall economic performance.

Singapore and Hong Kong, both city-states and confined territories, were highly successful
because of long held policies of open economic regimes to world trade and a sensible market-
based domestic investment in infrastructure and industry.

Philippine development efforts is unique in that it is the only country where the political system
tolerates open dissent. In the other countries, strong governments have reduced the level of
political opposition.
ECONOMIC HISTORY OF THE PHILIPPINES
The Philippines was once a model of development and second only to Japan among east Asian
economies. In the 1960s, when South Korea was a land of peasant, the Philippines was one of
Asia's industrial powerhouses. It produced consumer goods, processed raw materials and had
assembly plants for automobiles, televisions and home appliances. Chemical plants produced
drugs. Scrap metal was imported and made into steel for ships and factories produced cement,
textiles and fertilizer.

Prior to 1970, Philippine exports consisted mainly of agricultural or mineral products in raw or
minimally processed form. In the 1970s, the country began to export manufactured commodities,
especially garments and electronic components, and the prices of some traditional exports
declined. By 1988 nontraditional exports comprised 75 percent of the total value of goods
shipped abroad. *

In the 1970s and 80s, the Philippines declined while its neighbors grew and became one of the
poorest non-Communist governments in Southeast Asia. The gains made in the 1950s and 60s
were lost to corruption, cronyism, and mismanagement during the Marcos years and ineptitude
of the Aquino years Now the Philippines is sometimes referred to as "sick man of Asia" and a
"Latin-style banana republic in the South China Sea." Its per capita income is about one tenth of
that of Taiwan. Many of its most talented people work overseas.

According to The Economist: What distinguishes Manila from other South-East Asian capitals
is the ubiquitous Jeepney, the loud rickety bus used by the city's poorer inhabitants. Once
modified American Jeeps, nowadays most Jeepneys are cobbled together from second-hand
Japanese lorries. They have become a metaphor for the Philippine economy: inefficient and
easily overtaken. In the 1970s the Philippines was richer than its neighbours. Yet while it
chugged along at growth rates of around 2 percent, other countries stepped on the gas: it was
passed by Singapore, Malaysia, Thailand and, more recently, by China. A former American
colony, it could have made more of its cultural affinities with the United States, including the
widespread use of English. The incompetent and crooked rule of Ferdinand Marcos from 1965 to
1986 bears some of the blame for its failure to do so. A sluggish economy combined with a fast-
growing population has forced some 8m Filipinosequivalent to almost a tenth of the resident
populationto seek jobs abroad.[Source: The Economist, August 16, 2007]

See Agriculture, See History, The Philippines under Spain and the United States.

Economic Development in the Philippines in the Early 20th Century

In the mid-nineteenth century, a Filipino landowning elite developed on the basis of the export of
abaca (Manila hemp), sugar, and other agricultural products. At the onset of the United States
power in the Philippines in 1898-99, this planter group was cultivated as part of the United States
military and political pacification program. The democratic process imposed on the Philippines
during the American colonial period remained under the control of this elite. [Source: Library of
Congress *]

Access to political power required an economic basis, and in turn provided the means for
enhancing economic power. The landowning class was able to use its privileged position directly
to further its economic interests as well as to secure a flow of resources to garner political
support and ensure its position as the political elite. Otherwise, the state played a minimal role in
the economy, so that no powerful bureaucratic group arose that could pursue a development
program independent of the wishes of the landowning class. This situation remained basically
unchanged in the early 1990s. *

At the time of independence in 1946, and in the aftermath of a destructive wartime occupation by
Japan, Philippine reliance on the United States was even more apparent. To gain access to
reconstruction assistance from the United States, the Philippines agreed to maintain its prewar
exchange rate with the United States dollar and not to restrict imports from the United States. For
a while the aid inflow from the United States offset the negative balance of trade, but by 1949,
the economy had entered a crisis. The Philippine government responded by instituting import
and foreign-exchange controls that lasted until the early 1960s. *

Economic Development in the Philippines in the 1950s and 60s

Import restrictions stimulated the manufacturing sector. Manufacturing net domestic product
(NDP) at first grew rapidly, averaging 12 percent growth per annum in real terms during the first
half of the 1950s, contributing to an average 7.7 percent growth in the GNP, a higher rate than in
any subsequent five-year period. The Philippines had entered an import-substitution stage of
industrialization, largely as the unintended consequence of a policy response to balance-of-
payments pressures. In the second half of the 1950s, the growth rate of manufacturing fell by
about a third to an average of 7.7 percent, and real GNP growth was down to 4.9 percent. Import
demand outpaced exports, and the allocation of foreign exchange was subject to corruption.
Pressure mounted for a change of policy. *

In 1962 the government devalued the peso and abolished import controls and exchange licensing.
The peso fell by half to P3.90 to the dollar. Traditional exports of agricultural and mineral
products increased; however, the growth rate of manufacturing declined even further. Substantial
tariffs had been put in place in the late 1950s, but they apparently provided insufficient
protection. Pressure from industrialists, combined with renewed balance of payments problems,
resulted in the reimposition of exchange controls in 1968. Manufacturing recovered slightly,
growing an average of 6.1 percent per year in the second half of the decade. However, the sector
was no longer the engine of development that it had been in the early 1950s. Overall real GNP
growth was mediocre, averaging somewhat under 5 percent in the second half of decade; growth
of agriculture was more than a percentage point lower. The limited impact of manufacturing also
affected employment. The sector's share of the employed labor force, which had risen rapidly
during the 1950s to over 12 percent, plateaued. Import substitution had run its course. *

To stimulate industrialization, technocrats within the government worked to rationalize and

improve incentive structures, to move the country away from import substitution, and to reduce
tariffs. Movements to reduce tariffs, however, met stiff resistance from industrialists, and
government efforts to liberalize the economy and emphasize export-led industrialization were
largely unsuccessful. *

Philippines Economy Under Marcos

The Philippines economy grew at a relatively high average annual rate of 6.4 percent during the
1970s, financed in large part by foreign-currency borrowing. External indebtedness grew from
$2.3 billion in 1970 to $24.4 billion in 1983, much of which was owed to transnational
commercial banks. In the 1980s the Philippine economy was hurt by political instability,
authoritarianism, increasing foreign debt, falling commodity prices, corporate mismanagement
and vast unemployment.

The Philippines found itself in an economic crisis in early 1970, in large part the consequence of
the profligate spending of government funds by President Marcos in his reelection bid. The
government, unable to meet payments on its US$2.3 billion international debt, worked out a
US$27.5 million standby credit arrangement with the International Monetary Fund (IMF) that
involved renegotiating the country's external debt and devaluing the Philippine currency to P6.40
to the United States dollar. The government, unwilling and unable to take the necessary steps to
deal with economic difficulties on its own, submitted to the external dictates of the IMF. It was a
pattern that would be repeated with increasing frequency in the next twenty years. *

In the early 1980s, the economy began to run into difficulty because of the declining world
market for Philippine exports, trouble in borrowing on the international capital market, and a
domestic financial scandal. The problem was compounded by the excesses of President
Ferdinand E. Marcos's regime and the bailing out by government-owned financial institutions of
firms owned by those close to the president that encountered financial difficulties. In 1983 the
country descended into a political and economic crisis in the aftermath of the assassination of
Marcos's chief rival, former Senator Benigno Aquino, and circumstances had not improved when
Marcos fled the country in February 1986. *

Impact of Martial Law on the Philippine Economy in the 1970s and 80s
In September 1972, Marcos declared martial law, claiming that the country was faced with
revolutions from both the left and the right. He gathered around him a group of businessmen,
used presidential decrees and letters of instruction to provide them with monopoly positions
within the economy, and began channeling resources to himself and his associates, instituting
what came to be called "crony capitalism." By the time Marcos fled the Philippines in February
1986, monopolization and corruption had severely crippled the economy. *

In the beginning, this tendency was not so obvious. Marcos's efforts to create a "New Society"
were supported widely by the business community, both Filipino and foreign, by Washington,
and, de facto, by the multilateral institutions. Foreign investment was encouraged: an export-
processing zone was opened; a range of additional investment incentives was created, and the
Philippines projected itself onto the world economy as a country of low wages and industrial
peace. The inflow of international capital increased dramatically. *

A general rise in world raw material prices in the early 1970s helped boost the performance of
the economy; real GNP grew at an average of almost 7 percent per year in the five years after the
declaration of martial law, as compared with approximately 5 percent annually in the five
preceding years. Agriculture performed better that it did in the 1960s. New rice technologies
introduced in the late 1960s were widely adopted. Manufacturing was able to maintain the 6
percent growth rate it achieved in the late 1960s, a rate, however, that was below that of the
economy as a whole. Manufactured exports, on the other hand, did quite well, growing at a rate
twice that of the country's traditional agricultural exports. The public sector played a much larger
role in the 1970s, with the extent of government expenditures in GNP rising by 40 percent in the
decade after 1972. To finance the boom, the government extensively resorted to international
debt, hence the characterization of the economy of the Marcos era as "debt driven."

After martial law was declared Marcos's cronies amassed huge fortunes while the Philippines ran
up a huge national that brought the economy to edge of collapse. Real incomes declined by half
between 1956 and 1985 as the wealth of richest 10 percent rose from 27 percent to 37 percent. In
the latter half of the 1970s, heavy borrowing from transnational commercial banks, multilateral
organizations, and the United States and other countries masked problems that had begun to
appear on the economic horizon with the slowdown of the world economy. By 1976 the
Philippines was among the top 100 recipients of loans from the World Bank and was considered
a "country of concentration." Its balance of payments problem was solved and growth facilitated,
at least temporarily, but at the cost of having to service an external debt that rose from US$2.3
billion in 1970 to more than US$17.2 billion in 1980. *

There were internal problems as well, particularly in respect of the increasingly visible
mismanagement of crony enterprises. A financial scandal in January 1981 in which a
businessman fled the country with debts of an estimated P700 million required massive amounts
of emergency loans from the Central Bank of the Philippines and other government-owned
financial institutions to some eighty firms. The growth rate of GNP fell dramatically, and from
then the economic ills of the Philippines proliferated. In 1980 there was an abrupt change in
economic policy, related to the changing world economy and deteriorating internal conditions,
with the Philippine government agreeing to reduce the average level and dispersion of tariff rates
and to eliminate most quantitative restrictions on trade, in exchange for a US$200 million
structural adjustment loan from the World Bank. Whatever the merits of the policy shift, the
timing was miserable. Exports did not increase substantially, while imports increased
dramatically. The result was growing debt-service payments; emergency loans were forthcoming,
but the hemorrhaging did not cease. *

It was in this environment in August 1983 that President Marcos's foremost critic, former Senator
Benigno Aquino, returned from exile and was assassinated. The country was thrown into an
economic and political crisis that resulted eventually, in February 1986, in the ending of Marcos's
twenty-one-year rule and his flight from the Philippines. In the meantime, debt repayment had
ceased. Real GNP fell more than 11 percent before turning back up in 1986, and real GNP per
capita fell 17 percent from its high point in 1981. In 1990 per capita real GNP was still 7 percent
below the 1981 level. *

Impact of U.S. Military Bases on the Philippines Economy

The economy of the Philippines in the Marcos years in many ways was propped by the Subik
and Clark American military bases, trade with the United States and income from overseas
workers. The World Bank played a major role in planning and running the Filipino economy
under martial law.

In early 1991, the Philippine government was in ongoing negotiations with the United States on
the future status of United States naval and air facilities at Subic Bay and Clark Air Base. What
would normally be an issue of foreign policy and national security became a major domestic
political issue and took on an economic dimension of considerable importance. At the domestic
level, the conflict was between those who argued that the continuing presence of the United
States bases was an infringement on Philippine sovereignty and a continuation of a neocolonial
relationship and those who, for a combination of internal security, foreign relations, and
economic reasons, saw the need for maintaining the presence of the bases. President Aquino,
through 1990, refused to publicly commit herself to a position; however, it was clear that her
government was working to reach accommodation with the United States. As negotiations
progressed, the economic issue became prominent. [Source: Library of Congress *]

There were three economic considerations from the point of view of the Philippine government.
First, the proportion of the Philippine budget allocated for its armed forces was the smallest in
the region, a fact linked to the presence of United States air and naval forces in the Philippines,
as well as direct military assistance. Second, in the latter half of the 1980s, the bases directly
employed between 42,000 and 68,000 Filipinos and contracted for goods and services from
Filipino businesses. During this period, yearly base purchases of goods and services in the
Philippine economy (when corrected for the estimated import content of the goods purchased)
was in the range of P6.0 billion to P8.3 billion. *
A third and politically very important consideration, was the sum given to the Philippines by the
United States in connection with the presence of the bases, referred to as aid by United States
officials and as rent by the Filipinos. Base-related payments were first agreed to in 1979 when
United States president Jimmy Carter made a "best effort" pledge to secure US$500 million for
the Philippines from the United States Congress over a five-year period. In 1983 another five-
year commitment was made, this time for US$900 million. In October 1988, the Philippines'
Secretary of Foreign Affairs Raul Manglapus and United States' Secretary of State George
Schultz signed a two-year agreement for US$962 million, an amount double the previous
compensation but substantially less than the US$2.4 billion that the Philippines initially
demanded. In 1991 talks over the future of the bases and the size and terms of the aid or rent that
would be given in consideration for continued United States access to military facilities in the
Philippines was the most important unresolved issue. The decision of the Philippine
administration to bring Secretary of Finance Jesus Estanislao into the negotiations in March 1991
was a further indication of the economic importance of the bases to the Philippine government. *

Philippines Economy Under Cory Aquino

The Philippines economy floundered under Corazon Aquino. Power shortages and brownouts
were common. The American military bases were closed down. Economic growth revived in
1986 under Aquino, reaching 6.7 percent in 1988. But in 1988 the economy once again began to
encounter difficulties. The trade deficit and the government budget deficit were of particular
concern. In 1990 the economy continued to experience difficulties, a situation exacerbated by
several natural disasters, and growth declined to 3 percent. [Source: Library of Congress *]

The Philippine economy experienced considerable difficulty in the 1980s. Real gross national
product (GNP) grew at an annual average of only 1.8 percent, less than the 2.5 percent rate of
population increase. The US$668 GNP per capita income in 1990 was below the 1978 level, and
approximately 50 percent of the population lived below the poverty line. The 1988
unemployment rate of 8.3 percent (12.3 percent in urban areas) peaked at 11.4 percent in early
1989, and the underemployment rate, particularly acute for poor, less-educated, and elderly
people, was approximately twice that of unemployment. In 1988, about 470,000 Filipinos left the
country to work abroad in contract jobs or as merchant seamen. *

In 1990 the Philippines had not yet recovered from the economic and political crisis of the first
half of the 1980s. At P18,419, or US$668, per capita GNP in 1990 remained, in real terms, below
the level of 1978. A major thrust of Aquino's 1986 People Power Revolution was to address the
needs of impoverished Filipinos. One of the four principles of her "Policy Agenda for People-
Powered Development," was promotion of social justice and poverty alleviation. Government
programs launched in 1986 and 1987 to generate employment met with some success, reversing
the decline of the first half of the decade, but these efforts did little to alleviate the more chronic
aspects of Philippine poverty.
After Aquino took office the most immediate task for here economic advisers was to get the
economy moving, and a turn around was achieved in 1986. Economic growth was low (1.9
percent), but it was positive. For the next two years, growth was more respectable--5.9 and 6.7
percent, respectively. In 1986 and 1987, consumption led the growth process, but then
investment began to increase. In 1985 industrial capacity utilization had been as low as 40
percent, but by mid-1988 industries were working at near full capacity. Investment in durable
goods grew almost 30 percent in both 1988 and 1989, reflecting the buoyant atmosphere. The
international community was supportive. Like domestic investment, foreign investment did not
respond immediately after Aquino took office, but in 1987 it began to pick up. The economy also
was helped by foreign aid. The 1989 and 1991 meetings of the aid plan called the Multilateral
Aid Initiative, also known as the Philippine Assistance Plan, a multinational initiative to provide
assistance to the Philippines, pledged a total of US$6.7 billion. *

Economic successes, however, generated their own problems. The trade deficit rose rapidly, as
both consumers and investors attempted to regain what had been lost in the depressed
atmosphere of the 1983-85 period. Although debt-service payments on external debt were
declining as a proportion of the country's exports, they remained above 25 percent. And the
government budget deficit ballooned, hitting 5.2 percent of GNP in 1990. *

The 1988 GNP grew 6.7 percent, slightly more than the government plan target. Growth fell off
to 5.7 percent in 1989, then plummeted in 1990 to just over 3 percent. Many factors contributed
to the 1990 decline. The country was subjected to a prolonged drought, which resulted in the
increased need to import rice. In July a major earthquake hit Northern Luzon, causing extensive
destruction, and in November a typhoon did considerable damage in the Visayas. There were
other, more human, troubles also. The country was attempting to regain a semblance of order in
the aftermath of the December 1989 coup attempt. Brownouts became a daily occurrence, as the
government struggled to overcome the deficient power-generating capacity in the Luzon grid, a
deficiency that in the worst period was below peak demand by more than 300 megawatts and
resulted in outages of four hours and more. Residents of Manila suffered both from a lack of
public transportation and clogged and overcrowded roadways; garbage removal was woefully
inadequate; and, in general, the city's infrastructure was in decline. Industrial growth fell from
6.9 percent in 1989 to 1.9 percent in 1990; growth investment in 1990 in both fixed capital and
durable equipment declined by half when compared with the previous year. Government
construction, which grew at 10 percent in 1989, declined by 1 percent in 1990. *

Economic Policy Under Cory Aquino

In 1986 Corazon Aquino focused her presidential campaign on the misdeeds of Marcos and his
cronies. The economic correctives that she proposed emphasized a central role for private
enterprise and the moral imperative of reaching out to the poor and meeting their needs.
Reducing unemployment, encouraging small-scale enterprise, and developing the neglected rural
areas were the themes. [Source: Library of Congress *]
Aquino entered the presidency with a mandate to undertake a new direction in economic policy.
Her initial cabinet contained individuals from across the political spectrum. Over time, however,
the cabinet became increasingly homogeneous, particularly with respect to economic
perspective, reflecting the strong influence of the powerful business community and international
creditors. The businesspeople and technocrats who directed the Central Bank and headed the
departments of finance and trade and industry became the decisive voices in economic decision
making. Foreign policy also reflected this power relationship, focusing on attracting more
foreign loans, aid, trade, investment, and tourists. *

It soon became clear that the plight of the people had been subordinated largely to the
requirements of private enterprise and the world economy. As the president noted in her state-of-
the-nation address in June 1989, the poor had not benefited from the economic recovery that had
taken place since 1986. The gap between the rich and poor had widened, and the proportion of
malnourished preschool children had grown. *

The most pressing problem in the Philippine international political economy at the time Aquino
took office was the country's US$28 billion external debt. It was also one of the most vexatious
issues in her administration. Economists within the economic planning agency, the National
Economic and Development Authority (NEDA), argued that economic recovery would be
difficult, if not impossible, to achieve in a relatively short period if the country did not reduce the
size of the resource outflows associated with its external debt. Large debt-service payments and
moderate growth (on the order of 6.5 percent per year) were thought to be incompatible. A two-
year moratorium on debt servicing and selective repudiation of loans where fraud or corruption
could be shown were recommended. Business-oriented groups and their representatives in the
president's cabinet vehemently objected to taking unilateral action on the debt, arguing that it
was essential that the Philippines not break with its major creditors in the international
community. Ultimately, the president rejected repudiation; the Philippines would honor all its
debts. *

Domestically, land reform was a highly contentious issue, involving economics as well as equity.
NEDA economists argued that broad-based spending increases were necessary to get the
economy going again; more purchasing power had to be put in the hands of the masses.
Achieving this objective required a redistribution of wealth downward, primarily through land
reform. Given Aquino's campaign promises, there were high expectations that a meaningful
program would be implemented. Prior to the opening session of the first Congress under the
country's 1987 constitution, the president had the power and the opportunity to proclaim a
substantive land reform program. Waiting until the last moment before making an announcement,
she chose to provide only a broad framework. Specifics were left to the new Congress, which she
knew was heavily represented by landowning interests. The result--a foregone conclusion--was
the enactment of a weak, loophole-ridden piece of legislation. *
The Aquino administration appeared to be unable to work with the Congress to enact an
economic package to overcome the country's economic difficulties. In July, as the government
deficit soared Secretary of Finance Jesus Estanislao introduced a package of new tax measures.
Then in October, stalemated with Congress, Aquino agreed to seek a reduction in the budget gap
without new taxes. The agreement met with resistance from the Congress for being an onorous
imposition on an economy in crisis, growth would be stifled and the poor would be impacted
negatively. The willingness of the Congress to pass the tax package called for in the IMF
agreement was in doubt. In 1990 Congress placed a 9 percent levy on all imports to provide
revenues until an agreement could be reached with the administration on a tax package. In
February 1991, however, it was learned that in its agreement with the IMF for new standby
credits, the government had promised that it would indeed implement new taxes. *

Accusations were widespread in Manila's press about the 1990-91 impasse. On the one hand, it
was claimed that Aquino and her advisers had no economic plan; on the other hand, the Congress
was said to be unwilling to work with the president. Traditional political patterns appeared to be
reasserting themselves, and the technocrats had little ultimate influence. One study of the first
Congress elected under the 1987 constitution showed that only 31 out of 200 members of the
House of Representatives, were not previously elected officials or directly related to the leader of
a traditional political clan. Business interests directly influenced the president to overrule already
established policies, as in the 1990 program to simplify the tariff structure. Business and politics
have always been deeply interwoven in the Philippines; crony capitalism was not a deviant
model, but rather the logical extreme of a traditional pattern. As the Philippines entered the
1990s, the crucial question for the economy was whether the elite would limit its political
activities to jockeying for economic advantage or would forge its economic and political interests
in a fashion that would create a dynamic economy. *

Economy Under Ramos

President Fidel Ramos (1992-1998) was given high marks for handling the economy. By
breaking apart monopolies, liberalizing foreign investment laws and privatizing business and
industries by controlled powerful families, Ramos was crediting with transforming the
Philippines from a country with a history of poverty, corruption, rebellion, foreign ineptness and
tax evasion into an economic powerhouse that was not yet an Asian tiger but was sometimes
referred to as Asian tiger cub.

Oliver Teves of Associated Press wrote: For a brief period of the 1990s, the Philippines under
the presidency of Fidel Ramos registered high growth rates and was touted as the next Asian
"tiger" economy. But the ingrained poverty, corruption and crime rate, and the abiding threat of
another popular uprising conspire to scare away investors and drain the country of its best brains
and hardest workers. [Source: Jim Gomez and Oliver Teves Associated Press, February 25, 2006
+^+]
The Philippine economy showed some improvement in early 1992, spurred by increases in
agricultural production and in consumer and government spending. Budget deficits were well
within IMF guidelines--P3.2 billion in the first two months. At the end of April, the treasury
posted a P5.5 billion surplus as a result of higher than programmed revenue receipts, mainly
from the sale of Philippine Airlines. The increased revenue permitted the early repeal of the 5
percent import surcharge, stimulating both import spending and export growth. The money
supply grew more rapidly than desired, but was kept under control. Treasury bill rates fell to 17.3
percent in March 1992 from 23 percent in November 1991, and inflation was down to 9.4
percent for the first quarter of 1992, from 18.7 percent in 1991. *

One of the greatest threats to the Philippine economy in 1992 was the power shortage. The fall in
the water level in Lake Lanao caused a 50 percent reduction in the power supply to Mindanao in
December 1991, and the resumption of full power was not expected until almost the end of 1992.
The power shortage in Luzon continued to be chronic. Power cuts of four to five hours per day
have been common; in May they reached six hours on some days in Manila, the country's
industrial hub. To help to meet this chronic shortage, the government reactivated the contract
with Westinghouse Corporation to restart construction on a 620 megawatt nuclear power plant on
the Bataan Peninsula that had been abandoned in 1986. This plant however was not scheduled to
go on line until 1995. *

To get the Philippines economy going, Ramos and the Philippine Congress abolished tariffs and
preferential terms that enriched the rich families. He reformed the banking system and drove
down interest rates. He overhauled the electricity infrastructure so that energy shortages and
brown outs became a thing of the past.

The growth rate during the Ramos years was a robust 5 percent a year and inflation was in the
single digits, down from 25 percent in 1990. Under his leadership, fiber optic lines were
installed, property values soared, five star hotels and condominiums were built, the stock market
showed big gains, overseas workers began returning home and the former American military
bases at Subic and Clark became thriving trade and industrial centers.

Foreign investment increased. Companies like Acer (a Taiwanese company) and Intel moved into
the Philippines Much of the prosperity was linked to investments from Hong Kong by tycoons
like Gordon Wu, who shipped their money to Manila before the reunification with China. In the
early 1990s, the Philippines was regarded as an economic rival of Thailand and Malaysia now it
lags far behind them.

Asian Economic Crisis in the Philippines in 1997-98

During the Asian Economic Crisis in 1997-98, the Philippines the stock market declined by 32
percent and the currency against the dollar had depreciated by as much as 48 percent and later
level off at 30 percent at end of December 1997. Because many of its exports went to Europe it
was not hurt that badly by a lack of demand from crisis-hit Asia. The level of bad loans never got
that high. Money sent home by Filipino workers abroad helped stabilize the currency. Most
currency speculators were Filipinos.

The IMF offered some help. Foreigners were not allowed to sell pesos. Businesses responded to
the crisis in a favorable way. They reduced debt, closed money-losing factories, and agreed to
mergers and joint ventures with foreigners. Even so the Philippines recovered more slowly after
the cris than some other Asian countries that were much harder hit.

Economy Under Estrada

There was a sense of optimism when Joseph Estrada was elected. Investors shared this sense of
hope and initially poured money into the Philippines but it didnt take long for this optimism to
evaporate. Foreign investors were turned off by cronyism, scandals and favoritism towards
Philippines companies.

Estrada moved to tighten securities regulations, liberalize the trade of grains and privatize the
electricity industry. His effort to change laws limiting foreign ownership of businesses to 40
percent was halted by his impeachment trial.

In the end Estrada proved to be a friend of big business. He revived the culture of corruption and
was plagued by charges of cronyism. This was on top of inconsistent monetary policy, slow
economic growth, and uncertainty brought about by terrorists and insurgencies. He said he was a
friend of the poor yet he failed to launch one meaningful anti-poverty program. Most of his
efforts consisted of parading around with movie stars that were reminiscent of what Imelda
Marcos did. There also wasnt much of an effort to pave roads, set up irrigations projects or build
school or collect taxes to pay for them.

As Estrada became embroiled in scandal, the peso, the stock markets and confidence in the
Philippines as a place to invest dropped as did his approval ratings dropped. Foreign companies
like Philips Electronics and Johnson & Johnson pulled out of the Philippines. After his ouster in
2001 he left behind a huge budget deficit and debt payments that were double what the country
sent on health, education and agriculture combined. The sick man of Asia was sicker than ever.

See Corruption

Economy Under Arroyo

Gloria Macapagal-Arroyo was welcomed with great fanfare when she became president in 2001.
The day she was sworn in, the stock market surged 30 percent and businessmen praised her skills
and abilities, Arroyo launched free market and anti-corruption policies that were welcomed by
both the local and international business communities. Again there was a sense of hope.
But again the sense optimism didnt last long. Investment dried up as a result of global
slowdowns and security concerns. Direct foreign investment was only $319 million in 2001
compared to $1.8 billion in 1992.

Growth was 3.4 percent in 2001, 4.3 percent in 2002 and 4.5 percent in 2003. In 2004 the
economy was hurt by high oil prices. Still more growth was needed just to keep pace with 2.36
percent population growth rate. Inflation was less than 6 percent but the deficit grew at an
alarming rate as the government spending increased and tax revenues fell. Raising revenues
became one of the main problems. In 2003, the deficit reached $3.6 billion and debt was
estimated to be over $100 billion. The governments debt burden reached its peak in 2004 when
it settled at 74 percent of GDP.

Arroyo began her second term in 2004 with promises of austerity and simplicity and the
announcement of a reform package to fight corruption, attract foreign investment, and make the
Philippines less dependent on foreign energy. She promised to create 10 million jobs by 2010
and announced that power rates would be doubled to avert an energy crisis, She also promised to
provide clean water and electricity to every village in the Philippines and build 3,000 schools.
The plan called for the seemingly impossible combination of increased spending, higher taxes
and a balanced budget in five years.

Arroyos economic drive quickly lost momentum. She was unable to over come political
opposition to privatizing companies like the National Power Corporation, which lost $1.8 billion
in 2003. Instead an effort was made to make them efficient. By the end of her term much of her
time was spent responding to charges that she rigged the 2004 elections and he was husband was
involved in kickback scheme with a Chinese company involving millions of dollars.

Growth in 2003 and 2004 was around 5 percent due in art to rising demand for Philippines
electronic exports. Growth occurred despite continued hikes in oil and consumer prices on top of
typhoons and floods. Growth was 4.7 percent in 2005. That year exports amounted to 40 percent
of GDP. Many of the export items were electronics. Two-thirds of Philippine imports are used to
build exported computer parts, disks and other electronic products made by local units of
companies such as Texas Instruments Inc. and Toshiba Corp.

See Debt and Deficit, Taxes, Tax Evasion

Philippines Economy Picks Up in the Mid-2000s

Arroyo was an economics professor after all and not everything that happened under her watch
was a failure. In fact she had many good ideas and policy schemes but they were overshadowed
by her political troubles and bogged down in Congress. In 2007, before the global economic
crisis took hold, The Economist reported: Things are looking up. The economy has grown by at
least 5 percent in each of the past three years, for the first time since the 1970s. In the first
quarter of this year, growth was 6.9 percent, year-on-year. Soaring remittances from Filipinos
overseas help. Last year they added up to $12.8 billion, equivalent to 11 percent of GDP. Exports
especially to China and most particularly of microchipsare also booming. [Source: The
Economist, August 16, 2007 *-*]

Better economic management also helps. Inflation is now 2.6 percent, down from 8.6 percent in
2004. Changes made in 2005 have increased tax revenues without hurting growth. Despite recent
wobbles, the government should still come close to balancing the budget next year, compared
with a deficit of over 5 percent of GDP in 2002. The country's banks, hurt badly in the 1997
Asian financial crisis, have been slow to recover, but now they are starting to lend again. Foreign
direct investment is picking up from a low base. Texas Instruments recently chose the Philippines
over China for a $1 billion electronics factory, while Hanjin, a South Korean shipbuilder, will
spend $1.7 billion on its Philippines yard. Foreign mining firms have started to develop huge
untapped mineral reserves. *-*

The Philippines has rapidly emerged as India's main rival in business-process outsourcing
(BPO) and now hosts the call-centres of many American firms. A recent study by the Asian
Development Bank reckoned that BPO could provide jobs for up to 11 percent of those joining
the Philippines' labour force between now and 2010. *-*

All good news, but worries remain. However welcome the growth in call-centre jobs, it is
engineering and business graduates who are queueing to take them. A recent International Labour
Organisation study noted that the country's average annual productivity growth between 2000
and 2005 was just 0.9 percent, compared with 10.3 percent in China and 4.9 percent in India,
suggesting that many new job entrants are underemployed. *-*

A chief problem, despite foreign interest, is a rate of investment that is at 20-year lows as a
share of GDP. Poor infrastructure, especially roads, hampers businesses of all sorts. Gil Beltran,
a senior finance-ministry official, says the government intends to increase annual infrastructure
spending from 2.8 percent of GDP to 5 percent. Successive administrations have had a poor
record of keeping such promises. The public finances still need a lot of fixing. Tax revenues as a
share of GDP are still below pre-1997 levels, while public debt is high, at around 75 percent of
GDP. The next big job, says Mr Beltran, is to simplify the mess of illogical tax breaks that cost a
fortune in lost revenues. Efforts to drag big-business tax-dodgers to court have so far got
nowhere. A swingeing tax rise on Jeepney owners looks like squeezing the poor to spare the rich.

Perhaps a virtuous cycle will develop. The government might boost revenues and spend them on
sensible works, so encouraging business, which would boost tax revenues further. It is easier to
imagine the Philippines slipping back into complacency, relaxing its efforts and letting this
golden opportunity pass by. *-*
Philippines and the Global Economic Crisis in 2008 and 2009
The Philippines was affected by global economic crisis in 2008 and 2009 as was nearly
everywhere. Clarissa Batino of Bloomberg wrote in December 2008: The Philippine peso
headed for its worst year since 2000 and stocks had their biggest annual loss in at least two
decades on signs the global slowdown is hurting sales of the nations exports. A drop in trade
flows is a bad sign that the economy will be slowing pretty rapidly, said Simon Wong, an
economist at Standard Chartered Plc in Hong Kong. The global downturn puts pressure on
Asian economies and currencies, including the peso. [Source: Clarissa Batino, Bloomberg,
December 24, 2008 |::|]

The currency is poised for a 13.4 percent loss this year, the most since shortly before former
President Joseph Estrada was ousted in a revolt. The Philippine Stock Exchange Index slumped
48 percent this year to 1,872.85, the biggest annual drop since Bloomberg started tracking the
data in 1988.Overseas sales account for a third of the $144 billion economy. The Philippines
imports electronics components and exports mobile-phone chips and computer parts. Gross
domestic product may expand 0.7 percent next year, compared with an estimated 3.8 percent this
year, Wong said, citing contractions in exports and remittances in 2009. The government expects
growth of as little as 4.1 percent this year and 3.7 percent in 2009, versus last years three-decade
high of 7.2 percent. |::|

The World Bank expects global trade to shrink in 2009 for the first time in more than 25 years,
threatening export-reliant economies in Asia. The Philippines last week cut interest rates to
support growth as the global slump weakened demand for Intel Corp.s computer chips and other
electronics goods, which account for two-thirds of the nations overseas sales. |::|

Philippine Economy Picks Up in the 2010s Under Benigno Acquino III

The Philippines economy picks up in the 2000s under Benigno Acquino III. The Philippine
economy expanded by 7.2 percent in 2013, 6.8 percent in 2012, 3.7 percent in 2011 and 7.6
percent in 2010. In 2012, gross domestic product surpassed the governments forecast for growth
of 5 percent to 6 percent. The Philippines had the second-highest growth rate in the world 2012,
after China, according to Reuters. Government expenditure in the Philippines jumped nearly 12
percent in 2012, while private spending, which was bolstered by remittances from abroad, was
up 6.1 percent, Reuters reported.

In 2012, Floyd Whaley wrote in the New York Times, With $70 billion in reserves and lower
interest payments on its debt after recent credit rating upgrades, the Philippines pledged $1
billion to the International Monetary Fund to help shore up the struggling economies of Europe.
This is the same rescue fund that saved the Philippines when our country was in deep financial
trouble in the early 80s, said Representative Mel Senen Sarmiento, a congressman from
Western Samar. [Source: Floyd Whaley, New York Times, August 27, 2012 /^\]
The Philippines has certainly had a steady flow of positive economic news recently. On July 4,
2012, Standard & Poors raised the countrys debt rating to just below investment grade, the
highest rating for the country since 2003 and equivalent to that of Indonesia. The Philippines is
the 44th-largest economy in the world today, according to HSBC estimates. But if current trends
hold, it can leap to the No. 16 spot by 2050. The Philippine stock market, one of the best
performers in the region, closed at a record high after the recent S.& P. rating upgrade, and the
countrys currency, the peso, reached a four-year high against the dollar at about the same
time. /^\

The gross domestic product of the Philippines grew 6.4 percent in the first quarter, according to
the countrys central bank, outperforming all other growth rates in the region except Chinas.
Economists expect similarly strong growth in the second quarter. We have made a very bold
forecast for the Philippines, but I think justifiably so, said Frederic Neumann, a senior
economist at HSBC in Hong Kong. /^\

Trinh D. Nguyen, an economist with HSBC in Hong Kong, said the Philippines had benefited
from an increase in government efficiency and revenue collection, as well as aggressive actions
to address corruption, like the impeachment of the chief justice of the Supreme Court and the
arrest of former President Gloria Macapagal Arroyo on suspicion of accepting kickbacks and of
misusing government lottery money. It is not only short-term growth that draws investors to the
Philippines, Ms. Nguyen said. The fundamentals are there./^\

But there are also real weaknesses in the country. Recent flooding, which by some estimates
submerged 50 percent of Manila, illustrates a shortage of modern infrastructure that makes the
Philippines highly vulnerable to disasters. The Philippines is hit with several deadly and
devastating natural disasters every year, Ms. Nguyen said. But government officials have said
that the recent flooding might actually help economic growth, because reconstruction will
require an increase in public spending and the country will have to put into place programs to
make it more resistant to the effects of natural disasters. /^\

Another hurdle is the fact that the Philippines has traditionally underexploited its natural
resources. The government estimates that there are 21.5 billion tons of metal deposits in the
country, including large deposits of nickel, iron, copper and gold. But they have never been a
significant driver of economic growth because extraction has been mismanaged, Mr. Neumann
said. In the shorter term, there are concerns that the countrys newfound prosperity has not
sufficiently eradicated poverty. /^\

Philippines Economy Improves But Doesnt Create So Many Jobs

Floyd Whaley wrote in the New York Times, At his vegetable stand on a busy street in the
Philippine capital, Lamberto Tagarro is surrounded by gleaming, modern skyscrapers, between
which a river of luxury vehicles flows. The Philippines is the rising tiger economy of Asia, Mr.
Tagarro said. But only the rich people are going up and up. Im not feeling it. Mr. Tagarro
earns the equivalent of about $5 a day working before dawn and after dark, battling petty
corruption to maintain his improvised sidewalk stand and dealing with rising wholesale prices
for the onions and tomatoes he sells. [Source: Floyd Whaley, New York Times, June 19, 2013
==]

The Philippines, with a 7.8 percent expansion of gross domestic product in the first quarter of
2013, has the fastest-growing economy in East Asia, surpassing even Chinas. The country has a
red-hot stock market, a strong currency and a steady stream of accolades and upgrades from
international ratings agencies. But Mr. Tagarros experience of being left behind by the
countrys newfound prosperity mirrors that of many Filipinos, according to the latest
government poverty and employment data. ==

An estimated seven million Filipinos, about 17 percent of the work force, have gone overseas in
search of jobs, according to the Asian Development Bank. For those who stay home, options are
few. Despite the rapidly expanding economy, the countrys unemployment rate increased to 7.5
percent in April, from 6.9 percent at the same time a year earlier. About three million Filipinos
who want to work are unemployed. Higher rates of economic growth over recent years have not
made a serious dent in the employment problem in the Philippines, the Asian Development
Bank reported in its recent Asian Development Outlook report. ==

In some cases the number of unemployed has risen as the economy has grown. Earlier Whaley
wrote in New York Times, The robust growth in the Philippines in 2012 has not translated into
significant job growth, according to government figures. Unemployment was at 6.8 percent in
October, up from 6.4 percent a year earlier, and the number of unemployed in the country rose to
2.76 million from 2.64 million. [Source: Floyd Whaley, New York Times, January 31, 2013]

President Benigno Acquino III and the Failure to Create Jobs

Floyd Whaley wrote in the New York Times, President Benigno S. Aquino III ran on a platform
of clamping down on corruption, improving the business environment in the country and
addressing widespread poverty. In his first three years in office, Mr. Aquino removed high-level
government officials accused of corruption, cracked down on tax evaders and aggressively
courted foreign investment. Though his efforts to improve the economy have received accolades,
he has had less success in addressing the countrys persistent, widespread poverty. [Source:
Floyd Whaley, New York Times, June 19, 2013 ==]

Mr. Aquinos political opponents argued before recent legislative elections that his actions had
further enriched the wealthy and left the poor behind. The Philippines still has a strong service
sector. In 2011, it overtook India as a top provider of offshore call centers. But the country lacks
the manufacturing base that has lifted millions of people out of poverty in other Asian countries.
In countries like China, the rural poor increased their income by finding jobs in factories. That is
rarely an option in the Philippines, and few poor people from the countryside are qualified to
work in a call center. ==

In early 2013, Amando Doronila wrote in the Philippine Daily Inquirer, The Aquino
administration flooded the media with the report that the economy expanded 6.6 percent in 2012.
The result however was not good enough to have any significant social impact on alleviating
poverty and reducing the wide wealth chasm between the rich and the poor. Growth in the past
two years of the Aquino administration has not translated into creating enough jobs for the poor
that will allow them to break out of the poverty trap.[Source: Amando Doronila, Philippine Daily
Inquirer, February 4, 2013 /*/]

The President, however, acknowledged that the gap between the powerful and the powerless
has become too huge. Too many people are being left behind and it has also become clear that
inequity is borne of corruption. The few at the top have been allowed to run roughshod over the
many and have [manipulated] the system to benefit themselves, while the rest wallow in
poverty, the President said. The greatest challenge for any modern society, then, is how to stem
the corruption that has feasted on the very moral fabric of our society, he added. /*/

Socioeconomic Planning Secretary Arsenio Balisacan said the impressive 6.5-percent growth
for 2012 should be sustained for several years to allow its effects to filter down to the grassroots
and benefit ordinary Filipinos. Asked about how long would it take for the broad section of the
population to benefit from the growth, Balisacan was evasive. It should be happening, but dont
expect a miracle [where poverty would be] wiped out or substantially reduced, he said.The 6.5-
percent growth figure reflected only one year performance of the economy. If you note
experiences of countries around us, it takes several years of sustained or rapid growth before
you can reduce poverty, say by one-half for the population, Balisacan said. /*/

Benjamin Diokno, a professor at the University of the Philippines School of Economics, agreed
that 6.6 percent for 2012 was a strong growth, he expressed doubt that the growth rate would
be sustainable. Diokno pointed out that based on the October labor statistics, the recent growth
may be characterized as labor-shedding growth. Close to 1 million jobs were lost. Most
Filipinos still depend on agriculture and related sectors for a living, he said. /*/

Philippine Economy Grows 7.2 Percent in 2013

Beating government expectations, the Philippine economy expanded by 7.2 percent in 2013.
Combined with 2012 Philippines experiences its strongest two years of growth since the 1950s.
Karl Lester M. Yap and Cecilia Yap of Bloomberg wrote: Gross domestic product rose 7.2
percent in 2013, the Philippine Statistics Authority said, after gaining 6.8 percent in the previous
year. That was the fastest two-year pace since 1954-1955, data compiled by Bloomberg show. A
recovery in advanced economies may help President Benigno Aquino achieve his goal of
bolstering growth to as much as 8.5 percent by 2016 as he transforms the country into a
manufacturing hub. Rising exports have helped counter the impact of Super Typhoon Haiyan,
and the central bank said today it will act if needed to contain inflation expectations. The
Philippine economy clearly still has strong momentum despite the typhoon, said Edward
Teather, an economist at UBS AG who covers Southeast Asian markets from Singapore. That
sort of strength in the context of an acceleration in developed nations increases the risk of
overheating, something policy makers should keep an eye on. [Source: Karl Lester M. Yap and
Cecilia Yap, Bloomberg, January 29, 2014]

The Philippines won its first investment-grade scores from Moodys Investors Service, Fitch
Ratings and Standard and Poors last year. Aquinos pledge to curb corruption and spur faster
growth has seen foreign direct investment almost double to $2.8 billion in 2012 from 2008,
World Bank data show. Consumer spending rose 5.6 percent last quarter from a year earlier,
according to todays report. Investment gained 5.7 percent, while manufacturing increased 12.3
percent. [Ibid]

Jovan Cerda wrote in philstar.com: Socioeconomic Planning Secretary Arsenio Balisacan said
the economy grew better than the government's official target of 6 to 7 percent for 2013, but
added that it could have been higher had the country not been affected by various disasters.
"Indeed, growth could have been better, had we not been perturbed by various disasters that hit
the country such as the Bohol earthquake, the Zamboanga siege and typhoon Yolanda," he said.
[Source: Jovan Cerda, philstar.com, January 30, 2014 ||||]

The Philippines remains as one of the best performing economies in the Asian region in the
fourth quarter of 2013, second only to China, which grew by 7.7 percent, Balisacan said. On the
supply side, the services and industry sectors continued to be the drivers of economic growth,
expanding by 7.1 percent and 9.5 percent in 2013, respectively. "The services sector contributed
3.6 percentage points of the real GDP growth in the fourth quarter of 2013. This was followed by
the industry sector with 2.8 percentage points and agriculture with 0.1 percentage point. Fourth-
quarter growth on the supply side was mainly propelled by manufacturing, trade, finance and real
estate," Balisacan said. ||||

Meanwhile, on the demand side, growth was boosted by household consumption, which
contributed 4.2 percentage points, and net exports, which contributed 1.6 percentage points.
Despite the better-than-expected growth, however, some sectors tamed overall growth for 2013,
Balisacan said. "Construction had the biggest setback in the fourth quarter. The subsector
contracted by 0.8 percent due to stricter rules imposed on real estate lending in compliance with
prudential regulations. The Board of Investments has also tightened mass housing incentives.
The rule requiring developers to allot 20 percent of their total housing investment for low-cost
mass housing units is now being closely monitored and enforced." ||||
Government spending also slowed down by 5.2 percent, dipping from the 9.5 percent growth
posted in the fourth quarter of 2012. The deceleration was due to lower disbursements in
personnel services and maintenance and other operating expenditures. For the full year, however,
government spending jumped by 8.6 percent. Imports also slowed down by 1.9 percent during
the last quarter of 2013 from the 8 percent posted in the same period in 2012. ||||

Aside from slowdowns in certain sectors, the combined impact of typhoons and other disasters
may have also reduced the full year real GDP growth by at least 0.1 percentage point, Balisacan
said. Looking forward, Balisacan said the agriculture and industry sectors are expected to be
vibrant this year, as the government promotes linkages between the two sectors to increase value
added as a key strategy identified in the Philippine Development Plan midterm update. Major
infrastructure projects, especially in the transport sector are also expected to boost growth this
year and beyond....[W]e are optimistic that the Philippine economy will remain strong in 2014,
especially that the outlook on the global economy is becoming more favorable and as the
domestic economy remains robust," he said. ||||

Philippines Gets First-Ever Investment Grade Rating

In March 2013, the Philippines achieved its first-ever investment grade rating after international
debt watcher Fitch raised the countrys rating to BBB- from BB+. Daxim L. Lucas wrote in the
Philippine Daily Inquirer, Fitch Ratings the first of the three major international debt
watchers to upgrade the Philippines also assigned a stable outlook for the countrys credit
rating. Fitch cited the countrys sovereign balance sheet as being comparable to those of A-
rated nations, while a persistent current account surplus, underpinned by remittance inflows
has made the country a net creditor from its previous deficit position. Fitch also noted the
economys 6.6-percent economic growth for 2012 and the expected strong growth for 2013, both
of which are stronger and less volatile that BBB-rated peers over the last five years.
Improvements in fiscal management begun under President Arroyo have made general
government debt dynamics more resilient to shocks, Fitch said. [Source: Daxim L. Lucas,
Philippine Daily Inquirer, March 27, 2013]

In May 2013, Standard & Poor' increased the Philippines a long-term sovereign credit rating of
"BBB" from "BBB-", and upgraded its short-term rating to "A-2" from "A-3". The outlook is
stable. "We raised the ratings because we now believe the ongoing reforms to address
shortcomings in structural, administrative, institutional, and governance areas will endure
beyond the current administration," Standard & Poor's credit analyst Agost Benard noted in an e-
mailed statement to reporters. [Source: Danessa O. Rivera, GMA News, May 8, 2014 <=>]

GMA News reported: The debt watcher also noted the upgrade "reflects the country's strong
external liquidity and international investment position, combined with an effective monetary
policy framework relative to the country's income level," while maintaining low inflation and
interest rates. Malacaang said it was "gratified" by the latest credit rating upgrade from S&P.
"And we are hopeful that this will eventually translate into increased investments, and
accelerated jobs generation," Presidential Communications Operations Office head Herminio
Coloma Jr. said. The Aquino administration is "committed to strengthen public institutions, and
build increased capacity among citizens and communities, and thereby promote the attainment of
inclusive growth. This is the path that leads to sustained economic development and the raising
of the Filipino peoples quality of life," Coloma added. <=>

S&P gave the Philippines an investment grade rating on May 2, 2013. It was the second
upgrade from practically junk status since Fitch Ratings gave the Southeast Asian country its first
ever investment grade status in March 2013. In a statement Friday, Budget Secretary Florencio
Abad said S&P basically validated the progress in good governance reforms under the the
Aquino administration. For one, this credit upgrade recognizes the gains brought about by the
public financial management reforms we have instituted," Abad noted "We are on the right track
in terms of continuously improving our public spending efficiency, primarily in ramping up
investments for infrastructure projects, among other key priority and substantial programs and
projects," he added. <=>

Philippine Economy in 2014

Karl Lester M. Yap and Cecilia Yap of Bloomberg wrote: Aquino plans to increase spending to
a record this year while seeking more than $8 billion of investments in highways and airports to
improve infrastructure and create jobs. San Miguel Corp., Ayala Corp. (AC) and Megawide
Construction Corp. are among companies building schools, power plants and roads. The
government estimates reconstruction of the typhoon-affected areas will cost 361 billion pesos ($8
billion). [Source: Karl Lester M. Yap and Cecilia Yap, Bloomberg, January 29, 2014]

Disasters slowed the Philippine economic growth down to 5.7 percent in 1st quarter of 2014.
Cliff Venzon of Nikkei wrote: Philippine economic growth slowed a year-on-year to 5.7 percent
in the first quarter of 2014, as natural disasters weighed on production, the government reported.
This makes the Philippines the third-fastest growing economy in Asia after China (7.4 percent)
and Malaysia (6.2 percent), National Economic and Development Authority Secretary Arsenio
Balisacan said in a briefing. The growth, the slowest since the fourth quarter of 2011, was also
below market and government expectations. Meanwhile, the January-March expansion was
driven by the services and industry sectors, which climbed 6.8 percent and 5.5 percent,
respectively, the Philippine Statistics Authority said. Balisacan said natural disasters that hit the
country late last year -- particularly typhoon Haiyan -- pulled economic growth down. "The
effects of the typhoon went beyond the Yolanda-affected areas through the supply chain,"
Balisacan said, using the local name for Haiyan. "That affected investment plans of companies
and individuals...so private construction suffered in the first quarter," he added. [Source: Cliff
Venzon, Nikkei, May 29, 2014]
In November 2013, Haiyan killed around 6,300 people in the Philippines and destroyed $2
billion worth of crops and infrastructure. In October, a 7.2-magnitude earthquake struck the
province of Bohol, also in central Philippines, causing widespread devastation. Balisacan said
the effects of Haiyan are "expected to diminish" while reconstruction efforts in typhoon affected
areas should also prop up the economy in the coming quarters. "We remain confident that we
will meet the growth target of 6.5-7.5 percent for 2014," he said, pointing out that the Philippines
is still poised to become Southeast Asia's fastest growing economy -- a position it held last year.

Image Sources:

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of
London, Lonely Planet Guides, Library of Congress, Philippines Department of
Tourism, Comptons Encyclopedia, The Guardian, National Geographic, Smithsonian
magazine, The New Yorker, Time, Newsweek, Reuters, AP, AFP, Wall Street Journal,
The Atlantic Monthly, The Economist, Foreign Policy, Wikipedia, BBC, CNN, and
various books, websites and other publications.

2008 Jeffrey Hays

List of Business Laws in the Philippines

June 1, 2013 By Victorino Abrugar 2 Comments

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In every country there are business and commerce

laws that every business owner and entrepreneur should be aware of. In the Philippines, there are
also laws and regulations that govern businesses from registration, operation, up to termination.
It is important that business owners and entrepreneurs know what business laws are applicable to
their type of business and activities. These laws and rules should be followed to avoid
punishments, charges and penalties from the government or authorities that are implementing
and enforcing them. Some of these laws are not only created to obligate business owners to do
their duties but they are also made to obligate the government to protect these business owners.
To make sure you are doing business legally and to know the decrees that give your business
protection and privileges, the following is a list business laws in the Philippines that
entrepreneurs should be aware of.

1. Tax Reform Act of 1997 (Republic Act No. 8424) which amended the National Internal
Revenue Code (NIRC) is the law that governs the national taxation in the Philippines and gives
the Bureau of Internal Revenue (BIR) the power and duty to assess and collect national internal
revenue taxes in the country.

2. The Local Government Code of the Philippines (Republic Act No. 7160) is the law
governing local taxation in the Philippines, including the taxation on real properties.
3. Labor Code of the Philippines (Presidential Decree No. 442) is the law that governs
employment practices and labor relations in the Philippines.

4. Intellectual Property Code of the Philippines (R.A. 8293) is the law that governs the
registration of patents, trademarks and copyright, and the enforcement of intellectual property
rights in the Philippines.

5. The Corporation Code of the Philippines (B.P. 68) is the law that governs the registration
and regulation of corporations in the Philippines.

6. Civil Law of the Philippines (R.A. No. 386) the civil code of the Philippines includes the
laws on obligations and contracts. It also governs special contracts such as contract of agency
and partnership.

7. Social Security Act of 1997 (R.A. No. 8282) the law that mandates employers to register
their business and their employees with the Social Security System (SSS).

8. National Health Insurance Act of 1995 (R.A. No. 7875) the act that mandates employers to
register their business and their employees with the Philippine Health Insurance Corporation or
PhilHealth.

9. Home Development Mutual Fund Law of 2009 (R.A. No. 9679) the act that mandates
employers to register their business and their employees with the Pag-Ibig Fund (HDMF).

10. Food and Drug Administration (FDA) Act of 2009 (R.A. No. 9711) the law that governs
the inspection, registration, licensing and monitoring of establishments and health products.

11. The Philippine Fisheries Code (R.A. No. 8550) the law that governs commercial fishing
in the Philippines.

12. The Animal Welfare Act of 1998 (R.A. No. 8485) the act that governs the supervision and
regulation of the establishment and operation of all facilities utilized for breeding, maintaining,
keeping, treating, or training of all animals in the Philippines.

13. Securities Regulation Code of the Philippines (R.A. No. 8799) the law that governs the
registration and regulation of securities, pre-need plans, and securities market professionals
and the protection of shareholder interests in the Philippines,

14. Financing Company Act of 1998 (R.A. No. 8556) the Act that governs the registration and
regulation of financial companies in the Philippines.
15. Truth in Lending Act (R.A. No. 3765) An Act to Require the Disclosure of Finance
Charges in Connection with Extensions of Credit

16. Consumer Act of the Philippines (Republic Act No. 7394) The law that protects the
interest of the consumers in the Philippines, promote their general welfare, and establish
standards of conduct for business and industry.

17. Electronic Commerce Act of 2000 (R.A. 8792) an act providing for the recognition and
use of electronic commercial and non- commercial transactions, penalties for the unlawful use
thereof, and for other purposes.

18. The Magna Carta for Micro, Small and Medium Enterprises (MSMEs), as amended (RA
9501) an Act to promote entrepreneurship in the Philippines by strengthening development and
assistance programs to Micro, Small and Medium Scale Enterprises in the country.

19. Barangay Micro Business Enterprises (BMBEs) Act of 2002 (R.A. No. 9178) a law that
promotes the establishment of Barangay Micro Business Enterprises (BMBEs) in the Philippines,
and provides incentives and benefits such as income tax exemption and access to financial,
infrastructural, marketing, and knowledge support from the government.

20. Insurance Act of the Philippines, as amended the law that governs the insurance business
and insurance transactions in the Philippines.

21. Foreign Investments Act of 1991 (R.A. No. 7042) the law that governs foreign
investments in the Philippines.

22. Anti-Violence Against Women and Children Act of 2004 (R.A. 9262) a law that protects
women and children in the workplace.

23. Philippine Cooperative Code of 2008 (R.A. 9520) the law governing the registration,
regulation and promotion of cooperatives in the Philippines.

24. Anti-Money Laundering Act of 2001 (RA 9160) An Act that aims to protect and preserve
the integrity and confidentiality of bank accounts and to ensure that the Philippines shall not be
used as a money laundering site for the proceeds of any unlawful activity

25. The Anti-Red Tape Act of 2007 (RA 9485) an act enacted to improve efficiency in the
delivery of government services to the public by reducing bureaucratic red tape, preventing graft
and corruption in all the offices of the government.

There are still other laws in the Philippines that are applicable to your specific business or
industry which Ive missed to include above. Furthermore, there may be subsequent laws that the
Philippine government might enact in the future to partly or fully amend the laws listed above.
There will also be new laws that might be applicable to your business in the future and may
affect its operation. Hence, always be updated with the business related laws in the Philippines.
Remember that these laws are not only created to give you duties and responsibilities, but they
are also created to mandate the government or the state to protect and promote you and your
business.

11 Business Trends Entrepreneurs Need To Be Aware Of

Billee Howard ,

Contributor

I cover marketing, storytelling and the collaborative economy

Opinions expressed by Forbes Contributors are their own.

Tweet This

The sharing economy will truly take hold

The trend will be to become a CEO, Chief Engagement Officer of either a

large company, or your own life.

As 2017 approaches, it has become apparent that the collaborative economy is not a blip or fad,
or something that is related to just Uber or Airbnb, but rather a vital engine powering the future
of global business and entrepreneurialism.

cc Pixabay

Following are some key issues and trends to take note of as our world of We-Commerce, and
palpable shift from the me to the we, continues to evolve:
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1. We will go from quantity to quality, and wont be consumed by

speed, but by art. Commerce for commerce sake is no longer acceptable.
Anything put into the world for a profit, must find a way to give back to
society in kind, and to beautify, enhance and interpret its community and
environment.

2. Collaborative commerce will reduce costs through shared

infrastructures and collapse business cycle times. Through the creation
of shared infrastructures and ecosystems the principles of We-Commerce will
apply as much to how things are imagined, created and produced as to how
they are experienced and enjoyed. In the future everything from office space
to servers will be shared with an eye on driving efficiencies and creativity of
scale that only comes from meaningful collaboration.

3. Brands and consumers will continue to come together to form a

more cohesive and fluid business ecosystem. When you combine
crowdfunding platforms, collaborative consumption portals, community hubs,
the whole framework for conducting commerce starts to shift. Rather than
being driven by competition in a top-down fashion, commerce is being
initiated by the community from the bottom up based on real needs. The new
era of business is about creating enterprises that work together in tandem to
drive commerce that matters. Instead of buying a cheap product from Asia,
people can start to buy great products from the people they know the best
and reestablish trust in the business environment. Technology has enabled
the connections to occur; now its time for the next generation to capitalize.

4. The regulatory environment will catch up to the business

environment. The sharing economy will truly take hold . As new
models of business take shape predicated more on access than ownership,
the rules of engagement will need to change on both a state and federal level
to reflect this new environment. In the new world, entrepreneurialism
flourishes and as a result new industries will continue to appear daily.
Consequently, laws that viewed certain behaviors like renting and leasing as
prohibitive, will need to be examined with more pertinent regulations
appearing in their place.

5. Customer service will emerge as a critical function from inception.

Tomorrows winning brands will not only have a plan A, based on the product
they are offering, but also a plan B, designed to offer a heightened rescue
component or experience as part of the package. This means including back
up chargers on cellphones, or video valets to guide an online shopping
experiences in case anything goes awry. Immediacy is also part of the rescue
package with customer-centric companies like Amazon offering things like a
Mayday! Button to hit if anything emerges to sour your experience. The
 common thread of each of these add on features and plans is that we are
seeing brands respond in ways that are designed to elicit emotion, in this
case love, trust and reliance.

6. How companies are owned will change, shifting to a cooperative

ownership model. With profits in the hands of the many, rather than the
few, companies will be created with an eye on inspiring community
experiences that elicit joy while also bringing art into commerces full view.
More people will own their own small companies, or invest in them through
movements like Slow Money, and work together toward a common good.

7. It will become more and more acceptable to choose passion and play
over work. The trend will be to become a CEO, Chief Engagement Officer of
either a large company, or your own life. The only thing that matters in
todays environment is finding a way to forge connections that lead to deeper
and more meaningful paths to profitability, whatever those may be.

8. Consumers rally together to bring justice to Main Street and

businesses work to succeed for Wall Street by taking on the responsibility of
profiting only with purpose. As a result brands become much more than
purveyors of goods but purveyors of goo

9. Brands continue to emerge as publishers, in essence, becoming

purveyors of content, taking on similar roles of old school journalism in
profiting by purpose. So what you might turn to tomorrow's brands for might
be everything from news to insurance to healthcare to community Products
are of course created but embedded with "new life inside" ideas that solve
sustainability issues.

10.We will be less tethered to technology and more empowered by the

freedom it provides-making us less isolated and communicative. As a result,
the worlds of the physical and digital will begin to increasingly coalesce.
Additionally, technology that succeeds will likely emerge as wearable,
capable of offering mobile technological discovery.

11.Women will take their moment on the global stage. After an

uncomfortable alliance between the sexes - with women mimicking traditional
masculine power relations to get ahead in a 'man's world' - we are now
witnessing the emergence of the new woman. Many women are now better
educated than their male counterparts. Already, there are more female than
male entrepreneurs and these female icons inspire others around the globe
and have influence across culture and class. This phenomenon is best
showcased in the newly anointed trend of betapreneurialism, which is
interestingly being powered forward largely by women.

Betapreneurs are truly 21st-century professionals who operate through a process of trial and error
to make disruptive innovation happen. Resilient, self-reliant, and extremely potent, they are
crafting the future working solo, in small teams, or within large companies. Currently, only
30% of European entrepreneurs are women, but by 2020 in advanced economies, 2 in 3
graduates will be female, so their contribution will change the landscape of entrepreneurship.
This new movement will make the idea of leaning in obsolete as power women realize it is in
leaning out where the pathway to success is found.