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Pamantasan ng Lungsod ng Pasig

Alkalde Jose St., Kapasigan, Pasig City

Macroeconomic History of the Philippines

In Partial Fulfillment
Of the requirements
In The degree of Bachelor
of Science in Business

Proposed by :
Reyes, Gian Anamae


Prof. Emmanuel Ogbac

August, 2016


I am grateful to my thesis adviser Prof. Emmanuel Ogbac, for his guidance and support.
His expertise in order to improve my research skills and prepared me for future
challenges. I thank my relatives and friends for their helpful suggestions and comments
during my study. I also thank to my cousin Mark Ian Magallano for his assistance in
reconstructing my research paper. And specially to my parents and others who in one
way for another shared their support, either morally, financially and physically, thank
you. Above all, to the Great Almighty, the author of knowledge and wisdom, for his
countless love.






















A. Importance






I Background of the Study

Since the end of the Second World War, the Philippine economy has had a mixed.
History of growth and development. Over the years, the Philippines has gone from
being one of the richest countries in Asia (following Japan) to being one of poorest.
Growth immediately after the war was rapid, but slowed over time. A severe recession in
1984-85 saw the economy shrink by more than 10%, and perceptions of political
instability during the Aquino administration further dampened economic activity. During
his administration, President Ramos introduced a broad range of economic reforms and
initiatives designed to spur business growth and foreign investment. As a result, the

Philippines saw the period of higher growth, but the Asian financial crisis triggered in
1997 slowed economic development in the Philippines once again. President Estrada
managed to continue some of the reforms begun by the Ramos administration.
Important laws to strengthen regulation and supervision of the banking system (General
Banking Act) and securities markets (Securities Regulation Code), to liberalize foreign
participation in the retail trade sector, and to promote and regulate electronic commerce
were enacted during his abbreviated term. Despite occasional challenges to her
presidency and resistance to pro-liberalization reforms by vested interests, President
Gloria Macapagal - Arroyo has made considerable progress in restoring macroeconomic
stability with the help of a well-regarded economic team. However, despite recent
progress, fiscal problems remain one of the economys weakest points and its biggest

A. Topic History
The Marcos era and Martial Law (1965-1986) - Diosdado Macapagal ran for reelection in 1965, but was defeated by former party-mate, Senate President
Ferdinand E. Marcos who had switched to the Nationalista Party. Ferdinand E.
Marcos, who succeeded to the presidency after defeating Macapagal in the 1965
elections, inherited in the territorial dispute over Sabah: in 1968 he approved a
congressional bill annexing Sabah to the Philippines. In 1969, Marcos began a
major military campaign to control them. Civil war also threatened on Mindanao,
where group of Moros opposed Christian settlement. As president, Ferdinand

Marcos embarked on massive spending in infrastructural development, such as

roads, health centers and schools as well as intensifying tax collection which
gave the Philippines a taste of economic prosperity throughout the 1970's. He
built more schools than all his predecessors combined. The Presidency of
Joseph Ejercito Estrada in the Philippines spanned for 31 months from June 30,
1998 to January 20, 2001. Estrada reached the pinnacle of his political career
when he was selected President of the Republic in the May 11, 1998 national
elections. With almost 11- million Filipinos writing his name on the ballot, his
margin of victory was the biggest ever registered in Philippine electoral history.

B. Sub-Topic
1970-1980 Growth Rates of GDP per capita (in %)
The GDP of the Philippines rose during the martial law, rising from 55 million to
193 million in about 8 years. This growth was spurred by massive lending from
commercial banks accounting for about 62% percent of external debt. As a
developing country, the Philippines during the martial law was one of the heaviest
borrowers. These aggressive moves were seen by critics as a means of
legitimizing martial law by purportedly enhancing the chances of the country in
the global market. Much of the money was spent on pump-priming to improve
infrastructure and promote tourism. However, despite the aggressive borrowing
and spending policies, the Philippines lagged behind its Southeast Asia
counterparts in GDP growth rate per capita. The country, in 1970-1980, only
registered an average 3.4 percent growth, while its counterpart like Thailand,

Malaysia, Singapore, and Indonesia garnered a mean growth of 5.4 percent. This
lag, which became very apparent at the end of the Marcos Regime, can be
attributed to the failures of economic management that was brought upon by
State-run monopolies, mismanaged exchange rates, imprudent monetary policy
and debt management, all underpinned by rampant corruption and cronyism
main characteristics distinguishing the Marcos years from other periods of our
history has been the hands of the government, and the use of the governmental
functions to dispense economic privileges to some small factions in the private
C. Terms to be defined

Economy - the process or system by which goods and services are

produced, sold, and bought in a country or region careful use of money,
resources, etc. Something that makes it possible for you to spend less

Economics - can be defined as a social science that deals with the study
of allocation of scarce resources among unlimited and competing uses. To
satisfy human needs. Economic Growth - increase in real GDP.
Expansion of total output relative to population results in rising of real

wages and income and thus having a higher standard of living.

Trigger - something that causes something else to happen.
Macroeconomic - from the Greek prefix (macro - meaning large and
economic) is a branch of economic dealing with the performance,
structure, behavior, and decision making of an economy as a whole rather
than individual markets.

Microeconomics - from the Greek prefix (micro - meaning small) is a

branch of economics that deals with the study of behavior of individuals

and firms regarding in the decision of allocation of limited resources.

Revolution - the usually violent attempt by many people to end the rule of
one government and start a new one a sudden, extreme, or complete
change in
the way people live, work, etc. The action of moving around something in

a path that is similar to a circle.

Gross Domestic Product (GDP) - is a measure of the final output
produced by the factors of production located in the domestic economy

regardless of who owns these factors .

Gross National Product (GNP) - is a measure of the market value of the
final goods and services produced by the nationals and citizens of a
country in a given year. It measures the total income earned by the

citizens of economy.
Monopoly - complete control of the entire supply of goods or of a service
in a certain area or market. A large company that has a monopoly.

Complete ownership or control of something.

Unemployment - the state of not having a job the total number of people
who do not have jobs in a particular place area. Money paid by the

government to someone who does not have a job.

Underemployment - the condition in which people in a labor force are
employed at less than full-time or regular jobs or at jobs inadequate with

respect to their training or economic needs.

Unemployed - not employed, not being used, not engaged in a gainful

occupation and not invested.

Decentralization - the dispersion or distribution of functions and powers;

specifically the delegation of power from a central authority to regional

and local authorities. The redistribution of population and industry from

urban centers to outlying areas.

Martial Law - the law applied in occupied territory by the military authority
of the occupying power. The law administered by military forces that is
invoked by a government in an emergency when the civilian law

enforcement agencies are unable to maintain public order and safety.

People Power - "People power" is a political term denoting the populist
driving force of any social movement which invokes the authority of
grassroots opinion and will power, usually in opposition to that of

conventionally organized corporate or political forces.

Political Crisis - A crisis is any event that is, or is expected to lead to, an
unstable and dangerous situation affecting an individual, group,
community, or whole society.

D. Current Issues and Concerns

Philippines Struggles with unemployment despite economic growth despite rapid

economic growth in the Philippines in recent year unemployment. Remains a
persistent problem for the sprawling Southeast Asian Nation of more than 100
million people. Under former President Benigno Aquino, in office since 2010,
unemployment has fallen. The last figures show the rate of 6.4 percent in the
second quarter of this year, down from 7 percent a year earlier. But progress has
been uneven and the Philippines still has one of the highest rates of
unemployment in the ASEAN region. One reason is that job creation has
struggled to keep pace with an ever expanding population. In three of the past
five years, the number of five people entering the job market has been greater
than the number of jobs created. The conundrum highlights the difficulty of
spreading the benefits of economic growth and suggest they have yet to trickle
down to more deprived areas. Participation in the labor force remains relatively
low. Only about 65 percent of the population aged 15 and above is looking for
work are of the lowest levels in the region. This compares with 78 percent in
Vietnam 72 percent in Thailand and 68 percent in Indonesia.

II - Economic Implication
Despite government efforts to pump-prime the economy to increase
income and encourage spending, unemployment and underemployment
grew. The unemployment rates rose from 5.2 to 5.9 percent from 1978-

1983, while underemployment was a problem, the latter tripling, in the

same time period, from 10.2 to 29.0 percent. Concurrently, the labor force
of the Philippines grew at an average 4.47 percent in 1970-1983. This can
be attributed to an increasing number of women seeking work in the
market. Poverty and income distribution Income inequality grew during the
era of martial law, as the poorest 60 percent of the nation were able to
contribute only 22.5 percent of the income at 1980, down from 25.0
percent in 1970. The richest 10 percent, meanwhile, took a larger share of
the income at 41.7 percent at 1980, up from 37.1 percent at 1970.[1]
These trends coincided with accusations of cronyism in the Marcos
administration, as the administration faced questions of favoring certain
companies that were close to the ruling family.

A. Importance of Research topic

One useful analogy of studying the importance of it is to think of a
country as a person and its history as a person's memories and
experiences. A person learn, grows and matures based on his
experiences. Good experiences serve as his source of pride and
confidence, while based experiences serve as his source of learning.
The Important thing is the person should process these experiences
and apply the lessons to what the plans for in the future, History works
the same way for a country. By understanding, learning, and
processing our experiences as a nation, we obtain "national pride"

from our good experiences and hopefully learn from our bad ones. If
history is taken with just dates and events then it is limited and may not
truly answer the "why". If history is taken with a multidisciplinary
approach then it can explain a lot as you are looking under different
lenses such as psychology, Political Science, Sociology, Economics
among others. In the context of Philippine History the answer is the
same. If we know and understand the reason behind the smalls events
that led to our current situation than we may know how to solve our
that situation.

III Summary
The Post-EDSA macroeconomic history of the Philippines covers the
period from 1986 to the present time, and takes off from the acclaimed
People Power Revolution in the EDSA Revolution of 1986 ( named
after Epifanio de los Santos Avenue in Manila) that brought democracy
and development potentials back to the country that was once in the
perils of the Martial Law Era. From days, months and even years of
economic and financial collapse towards the end of that Martial Law
Era came revolution, reform and sustenance spearheaded by the
Aquino, Ramos, Estrada, Arroyo administrations that saw the
Philippines get back on track and even through some of the wildest
financial and political crisis, such as the succeeding EDSA
Revolutions, the Asian Financial Crisis, and the most recent bubble

bursts, among others. Revolutions, liberal ideas, and reforms aided

the country towards robust growth, and crucial policies were
conceptualized, developed, and enacted by the presidents and the
advisers who supported them. The period also featured the emergence
of civil society as important proponents of development, trade reforms
and protections, improvements in exports and export-oriented
manufacturing, and decentralization as an important take-off point for
regional development.

As the time goes by, The Philippines is considered a newly
industrialized country, which has an economy transitioning from one
based on agriculture to one based more on services and
manufacturing. In 2016, GDP by Purchasing power parity was
estimated to be at $811.726 billion. The Economy of the Philippines
is the 33rd largest in the world, according to 2016International
Monetary Fund statistics, and is also one of the emerging markets.
Primary exports include semiconductors and electronic products,






products, coconut oil, and fruits. Major trading partners include the
United States, Japan, China, Singapore, South Korea, the
Netherlands, Hong Kong, Germany, Taiwan, and Thailand. The
Philippines has been named as one of the Tiger Cub Economies
together with Indonesia, and Thailand. It is currently one of Asia's

fastest growing economies. However, major problems remain,

mainly having to do with alleviating the wide income and growth







socioeconomic classes, reducing corruption, and investing in the

infrastructure necessary to ensure future growth. The Philippine
economy is projected to be the 16th biggest in the world by 2050.
My recommendation in making our country to become a better
economy we need to develop some things to improve it. First is
Agribusiness Linking small crop farmers to domestic and global
markets and large corporate integrators for the agribusiness sector.
Improved infrastructure, lower transport cost, less government red
tape. Business Process Outsourcing Information drive to widen
public understanding of industrys present and potential contribution
to the economy. Raise quality and quantity of labor supply available
to the industry. Infrastructure Prioritize investments in airport
terminals, runway and communication facilities. Each region should
have one international airport or convert existing local airports.








Manufacturing and Logistics Develop an industrial master plan,

identify opportunity sectors for exports of goods and services to
global markets. Reduce utility costs, reduce red tape, and establish
an export development fund. And Tourism Improve international

connectivity by eliminating common carrier tax. Develop and

implement national destination master plans. Reduce cost of doing
business and mobility for travel and tourism enterprises.