A Research Paper On
Why Capitalism Succeeded In Generating
An Industrial Revolution In Other Countries
But Failed In The Philippines

Submitted by Manuel Ortega Abis
Student No. 11-71-003, BPA
Special Program Batch 8-A
CAPA, Universidad de Manila
Professor Ronaldo J. Navata
PREFACE

The research materials and references used in this research paper were managed to be gathered through unlimited internet hours and limited library hours, but the pages on the web and the pages of the book offered equal enlightenment and enjoyment. The premises and conclusions built and reached in this paper are products of the researcher’s serious analysis of the Philippine economic situation. The researcher, however, is praying that his objectivity and the sincerity of his language shall not fail him in his own humble attempt to bring this mini-thesis to its just and proper course and closure. The twin causes formulated in this paper are generally subdivided into two: the concept of economic will (policy system of governance) and the concept of economic ownership (property system of the governed). Further reading is advised on critical and related topics of this paper. For the economy, these words: there is no such thing as the co-existence of freedom and equality. God bless the Philippines!

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I. INTRODUCTION

DROPPING THE TORCH AND BURNING OUT THE FIRE:
The Mismanagement Of Philippine Capitalism
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In the ADB report, titled “Taking the right road to inclusive growth,” Norio Usui, the senior country economist of ADB’s Philippine Country Office, said the Philippines must now revive its manufacturing industry to propel the economy to not only higher economic growth but, more important, inclusive economic growth.[1]
Also at the time, de Dios said the peso became overvalued and the UP School of Economics, he added, produced several papers that stated that the government could have been more aggressive in making the peso more competitive.[2] At no other moment in our national life is it more just and proper to tackle the ever-growing issue of why capitalism succeeded in generating an industrial revolution in other countries, but failed in the Philippines. And, dismally, it did fail. HOW DOES CAPITALISM SUCCEED IN GENERATING AN INDUSTRIAL REVOLUTION IN A COUNTRY?
In layman’s terms, capitalism is used to bolster the industry sector of a country by increasing its manufacturing capabilities in an economic environment of free trade and competitive commerce, while modernizing its agricultural sector with the end purpose of sustainable national development, as well as dominating the home/domestic market and keeping in pace with the international/foreign market, and – in past stories of successful countries, especially in the Asian region – the service sector followed suit in this framework of industrialization.
Time and time again, this research paper will dwell on the two proposed causes: the policy of the government and the property of the governed. This synoptically explains the question of whether our economy should be agriculture-based or industry-based, and the question of how successful is the agrarian reform program in terms of proper (formalistic) land distribution and ownership. For a clearer perspective, let us have a look-see first on where the country economically stands right now, and why we have to constrain our use of the term “fail or failure” as presently the means and not the end of this paper. The statement of the problem also reveals that it is actually a two-part question: the success of capitalism in other countries, and the failure of the former in the Philippines. Before we begin, however, in giving out a brief description of the Philippine economy today, the researcher would like to indulge the reader in explaining the metaphor used in the title of this introductory chapter. Its importance will be unraveled since the fire metaphor will be alluded to by the researcher time and time again. Comparing capitalism to a spark of economic endeavor and industrialization to its fruition sets the Philippine experience as a running torch-bearer who suddenly lost his pace and stumbled economically into the oblivion of poverty and underdevelopment. The story seems to be mutating itself all throughout the chapters of our country’s history, until we tire ourselves from procrastinating and finally burn the fire, “The Promise of Industrialization,” into ashes and charcoals literally. There is a reason, perhaps, why our country has been tagged as the “sick man of Asia.”
The Economy of the Philippines. A newly industrialized country, the Philippine economy has been transitioning from one based on agriculture to one based more on services and manufacturing.[3] In our Wikipedia source, the highlighted areas which hold great prospect for the country’s realization of full industrialization are, as follows:
1. The Private Sector – As a newly industrialized nation, the Philippines is still an economy with a large agricultural sector; however, services have come to dominate the economy. Much of the industrial sector is based on processing and assembly operations in the manufacturing of electronics and other high-tech components, usually from foreign multinational corporations.
2. The Automotive Industry – The ABS used in Mercedes-Benz, BMW, and Volvo cars are made in the Philippines. Ford, Toyota, Mitsubishi, Nissan and Honda are the most prominent automakers manufacturing cars in the country. Kia and Suzuki produce small cars in the country. Isuzu also produces SUVs in the country. Honda and Suzuki produce motorcycles in the country. A 2003 Canadian market research report predicted that further investments in this sector were expected to grow in the following years. Toyota sells the most vehicles in the country.[28] By 2011, China's Chery Automobile company is going to build their assembly plant in Laguna, that will serve and export cars to other countries in the region if monthly sales would reach 1,000 units.
3. The Electronics Sector – Intel has been in the Philippines for 28 years as a major producer of products, including the Pentium 4 processor. A Texas Instruments plant in Baguio has been operating for 20 years and is the largest producer of DSP chips in the world. Texas Instruments' Baguio plant produces all the chips used in Nokia cell phones and 80% of chips used in Ericsson cell phones in the world. Until 2005, Toshiba laptops were produced in Santa Rosa, Laguna. Presently the Philippine plant's focus is in the production of hard disk drives. Printer manufacturer Lexmark has a factory in Mactan in the Cebu region.
4. Mining and Natural Resources – The country is rich with mineral and geothermal energy resources. In 2003, it produced 1931 MW of electricity from geothermal sources (27% of total electricity production), second only to the United States, and a recent discovery of natural gas reserves in the Malampaya oil fields off the island of Palawan is already being used to generate electricity in three gas-powered plants. Philippine gold, nickel, copper and chromite deposits are among the largest in the world. Other important minerals include silver, coal, gypsum, and sulphur. Significant deposits of clay, limestone, marble, silica, and phosphate exist.
5. The Business Process Outsourcing Industry – According to an IBM Global Location Trends Annual Report, as of December 2010 the Philippines has overtaken India as the world leader in business support functions such as shares services and business process outsourcing. The majority of the top ten BPO firms of the United States operate in the Philippines. Total jobs in the industry grew to 100,000 and total revenues were placed at $960 million for 2005. In 2012, BPO sector employment ballooned to over 700,000 people and is contributing to a growing middle class. BPO facilities are located mainly in Metro Manila and Cebu City although other regional areas such as Baguio, Bacolod, Cagayan de Oro, Clark Freeport Zone, Dagupan, Davao City, Dumaguete, Lipa, Iloilo City and CamSur are now being promoted and developed for BPO operations.
The economic status of the Philippines as a newly-industrialized economy remains relevant, but seems to be hollow in meaning and as to its effect in the day-to-day lives of most Filipino families.
And although the Philippines has expressed its desire for a capitalism-generated industrialization, there is still a wide gap between what is reality and what still exists in the whelm of “an old camp-fire tale.”
What is capitalism and why did we fail to utilize its strengths and expunge its weaknesses to generate an industry-driven and progressive economy? Why did the spark of capitalism forced upon us by our colonial masters fail to light the fire of industrialization?
Capitalism defined. Capitalism[4] is an economic system where the control of enterprise is in the hands of individuals and the private sectors. It is where the ownership and use of the means of production as well as the production and distribution of goods and services are determined by the individual producers in the private sector.
The characteristics of capitalism are: property ownership, freedom of enterprise, competition, and profit motive. Some of the disadvantages are: exploitation, and inequalities.
The researcher decided to focus on one aspect of the traditional view of capitalism, which is the Smithian concept of laissez-faire.
Industrialization defined. Industrialization is the period of social and economic change that transforms a human group from an agrarian society into an industrial one. It is a part of a wider modernization process, where social change and economic development are closely related with technological innovation, particularly with the development of large-scale energy and metallurgy production. It is the extensive organization of an economy for the purpose of manufacturing.
The social and environmental consequences of industrialization are: urbanization, exploitation, and change to family structure.
The Lichauco Torch. The researcher is referring, of course, to the analysis of Alejandro Lichauco’s book, “Towards a New Economic Order and the Conquest of Mass Poverty.” Lichauco tackles the problem head-on and – as the primary reference guide of our research paper – shows invaluable lessons on the whys and hows of our case in concern.
The De Soto Torch. Based on Hernando de Soto’s book, “The Mystery of Capital.”
Industrialized Asian Countries. This research paper will present six brief rundowns on the industrialization of Japan, China, Singapore, Taiwan, South Korea, and India. Being close neighbors, we are not locking our doors, however, to capitalism-generated industrialization as pioneered and embarked upon in the Americas and in Europe. Albeit industrialization is generally a world-wide phenomenon, there is the safe assumption that it is more easy to compare countries in the same region.
It seems the question fleshed out in this case analysis is: will the Philippines try to adopt a foreign economic system or improvise a system according to its own local culture?
The twin concepts. The researcher will try to generalize the two causes which seem to elude previous papers on the subject case. He identifies them as: the concept of political will and the concept of economic ownership.
Later on, and along the way, the researcher will present the many constitutional provisions and laws directing the country to take the long road to being industrialized, and discuss what still are the missing elements which can constitute sustainable and inclusive growth for a richly resource-diversified country like ours. The researcher is also tempted to discuss the mismanagement of Philippine capitalism in the light of the four (4) factors of production: land, labor, capital, and entrepreneurship. Its significance will be noted during our analysis of the causes of our case study.
These will, in turn, enhance further the notions we shall be developing and the recommendations we shall try to build to arrest the weakening effects of poverty and underdevelopment.
Objectivity and rationality. Contrary to some traditional concepts of the subject, this paper will be veering away from the theory that bad government caused the degeneration of an industrial revolution through the capitalist economic system. It may be biased to think of the whole private sector as capital-devouring monsters of “cronyism,” “kamag-anak system,” and “private capitalism” as Lichauco’s book[5] deftly puts it. This, of course, is distinct from but, more or less, related to “state capitalism.” It is, thus, imperative for this paper to take into account a clear statement of the problem in order to produce a set of alternatives viable and practical for recommendation and subsequent implementation. The same also holds true to the overpopulation issue since it is more of an urban development bungle than being anything else. A case in point is if not for the population increase, the manpower resources which is very much in demand in the services sector would not bear the golden fruits of overseas workers’ remittances. Labor force by occupation (2011 estimates) is comprised of agriculture (33%), industry (15%), and services (52%).[6]
Focus on the second part of the question. The second part of the statement of the problem brings attention to the country’s failure of industrializing. We will be focusing on the solutions strategy in the view of what I qualify to call as a Philippine Industrial Policy plan (PIP) which invariably may consist of Economic Will and Economic Ownership.
The role of the agricultural sector as the leading economic player of our domestic market and the further encouragement of the burgeoning services sector will both improve the manufacturing capability of our industry sector. This thought is what is behind the concept of PIP plan and makes the strategy reachable and do-able.
The Light at the End of the Tunnel. These solutions shall make reference to such principles as the nationalization of the over-all industrialization plan in our country, human development index[7] as an economic indicator, the methods, motivations, and mechanisms for inclusive growth, the debate over de Soto’s formal property view and Scott’s culture-driven property system, and finally viewing capitalism as both an economic and a social system, and why and how it can work disregarding any political framework and organization.
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II. THE ECONOMIC WILL

LIGHTING THE POTENTIAL FIRE:
The Lichauco Torch
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Hitting the ground running. Pimhee Aidel D. Rengel’s book report on Alejandro Lichauco’s definitive work on Philippine economics does not beat around the bush. The first report which is entitled similar to our problem statement ignites the fire of our discussion. Rengel reported that a growing conventional wisdom states that if a country would adhere to capitalism, it would certainly be able to evolve into an industrialized country. However, this was not the case in the Philippines. While other capitalist class is associated with a dynamic transformation from agrarian economies into industrial ones, in the Philippines, capitalism has failed to turn the agricultural economy of the country into an industrial economy and has produced nothing better but an impoverished agricultural economy, together with a number of shameless cronies. This failure of capitalism in the country’s transformation engenders to a number of basic questions, most of which centers around the question, “Why had capitalism succeeded in the Western world and other Asian countries while it dismally failed in the country?”
Rengel continued in stating that Lichauco gives us some valuable reasons why the Western world and other Asian countries’ capitalism were able to do so. According to him (Lichauco), it is the Western world that started the industrial revolution because of reasons that include:
a. The enthusiastic attitude of the Western countries to promote and encourage capitalism as a national goal by ensuring that it is the domestic industries that control the home market through their intensive program of protectionism, and
b. The absence of an international economic police like the International Monetary Fund (IMF), which would usually insist in economies to function on the basis of free trade.
Before proceeding with the rest of Rengel’s book report of Lichauco’s work, the researcher would like to say a few words about free trade vs. protectionism in the Philippines.
Igniting the Fire through Natural Sunlight or the Artificial Lighter? What is best for the Philippine Market Economy? Free trade or protectionism?
First, let us define what the formal market economy of the Philippines is. A market economy[8] is another way of solving the basic economic problems. Here, individual consumers and businesses interact to solve the economic problem. The price of commodity dictates what goods and services will be produced, how and for whom it will be produced.
The decisions made by buyers and sellers help in determining the price of a particular good or product. The price in turn signals the ways our society decides what to produce, how to produce, and for whom to produce. The quantity and quality of strawberry on hand in any major city, for example in the Philippines, is determined by hundreds of freely-made producing and buying decisions. Each one of these decisions involves someone’s conscious or unconscious assessment of opportunity cost.[9] The local farmers in Baguio may think twice whether to plant strawberry or flower; the buyer may think also whether to buy a strawberry or flower.
The formal market system in the Philippines has been the greatest engine for production of wealth and income over a long period of time.
Despite this, however, the informal market system in the Philippines also thrived and flourished, giving it the title “the underground economy.” Existing primarily to avoid taxes and other regulatory constraints, the informal market system seems to enjoy the economic environment of our country, even producing goods and services on which it has comparative advantage in. For example, the kuliglig, whose motor is for a water and not for a land vehicle; thus, escaping formal regulation and registration.
Does this mean that free trade is also encouraging unfair and malicious trade practices which would otherwise be quelled by protectionism?
Later on, this paper will try to resolve this question by incorporating recommendations that can eventually draw the strengths and positive values from these two economic concepts.
Back to Rengel’s explanation of Lichauco’s theory, the student-reporter stated that it was only with Adam Smith that the idea of anti-protectionism and formal adherence to free trade started. Concrete examples of economies in the Western world include that of England, Germany, and the United States.
In England, which is considered as the home of the industrial revolution and the free trade philosophy of Adam Smith, the British government greatly espoused the protection of its domestic industries (how ironic!). In fact, the government prohibited any of its colonies to engage in any industries that would compete with the industries of the mother country. This was further strengthened through conquest and colonialism. Meanwhile in Germany, Bismarck, though first adhering with free trade and making the country a modern state, turned the protectionist policy as the official state policy in order to make Germany an industrial power and, thus, made industrialization a national goal. And when protectionism was firmly established in the country both in industry and agriculture, the country then developed into a modern state. Then, in the case of the United States, still, industrialization was made by their government as the national objective and protectionism as the official policy and the means in achieving such objective. When the said country succeeded in becoming an industrial power in the world, it organized the Bretton Woods Conference with the purpose of creating a new economic order based on the idea of free trade and the establishment of the IMF, an agency with the sole purpose of enforcing the free trade rules and regulations. And this occurred after it rapidly developed within the protecionist-enclosed environment the country itself demanded.
Closer to home, Rengel started saying that in Asia, on the other hand, six countries, which include Japan, Singapore, India, China, Taiwan and South Korea, were able to successfully industrialize.
This paper will now provide overviews for the six Asian countries which used capitalism to generate an industrial revolution in their respective economic territories.
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JAPAN
A mountainous, volcanic island country, Japan has inadequate natural resources to support its growing economy and large population. Although many kinds of minerals were extracted throughout the country, most mineral resources had to be imported in the postwar era. Local deposits of metal-bearing ores were difficult to process because they were low grade. The nation's large and varied forest resources, which covered 70 percent of the country in the late 1980s, were not utilized extensively. Because of political decisions on local, prefectural, and nation levels, Japan decided not to exploit its forest resources for economic gain. Domestic sources only supplied between 25 and 30 percent of the nation's timber needs. Agriculture and fishing were the best developed resources, but only through years of painstaking investment and toil. The nation therefore built up the manufacturing and processing industries to convert raw materials imported from abroad. This strategy of economic development necessitated the establishment of a strong economic infrastructure to provide the needed energy, transportation, communications, and technological know-how.[10]
In the dusk of the XIX century, Japan awoke to a world where dragons and Samurai were not as powerful as they had once been. Japan’s emperor, Meiji, understood how far his island was behind Europe. He therefore put all his power to gain “recognition of [Japan’s] considerable achievement [and strove] for equality with Western nations”[11]. Of course this served as the main cause for the Industrial Revolution to sew its seeds among their rice, but one other circumstance collapsed all walls of doubt and acted as the final impetus for the start of this Revolution in Japan. As this island moved into modernity, it imported manufactured goods from both Europe and the United States which resulted in the small Japanese producers becoming undersold at the market and many even proclaiming bankruptcy.[12] This fact led to even more aggression from the side of the Japanese emperor who therefore refused to buy any foreign goods; he resolved to grow Japan into an invincible nation which did not require anybody’s help. Even though Japan’s modernization began a century later, in less than 30 years it had completed what had taken Europe three centuries, as it "built on the work of another."[13] This immense speed was due to the Japanese seeking “to establish an advanced industrial society without adopting any of the ‘negative western traits’.”[14] _____________________________________________________________________________________

CHINA
Industrialization of China did occur on a significant scale only from the 1950s, in the Maoist Great Leap Forward (simplified Chinese: 大跃进; traditional Chinese: 大躍進; pinyin: Dàyuèjìn). This was the plan used from 1958 to 1961 to transform the People's Republic of China from a primarily agrarian economy by peasant farmers into a modern communist society through the process of agriculturalization and industrialization. Mao Zedong based this program on the Theory of Productive Forces. It ended in catastrophe as it triggered a widespread famine that resulted in millions of deaths.[15]
As political stability was gradually restored following the Cultural Revolution of the late 1960s, a renewed drive for coordinated, balanced development was set in motion under the leadership of Premier Zhou Enlai. To revive efficiency in industry, Communist Party of China committees were returned to positions of leadership over the revolutionary committees, and a campaign was carried out to return skilled and highly educated personnel to the jobs from which they had been displaced during the Cultural Revolution. Universities began to reopen, and foreign contacts were expanded. Once again the economy suffered from imbalances in the capacities of different industrial sectors and an urgent need for increased supplies of modern inputs for agriculture. In response to these problems, there was a significant increase in investment, including the signing of contracts with foreign firms for the construction of major facilities for chemical fertilizer production, steel finishing, and oil extraction and refining. The most notable of these contracts was for thirteen of the world's largest and most modern chemical fertilizer plants. During this period, industrial output grew at an average rate of 8 percent a year.
At the milestone Third Plenum of the National Party Congress's 11th Central Committee which opened on December 22, 1978, the party leaders decided to undertake a program of gradual but fundamental reform of the economic system.[16] They concluded that the Maoist version of the centrally planned economy had failed to produce efficient economic growth and had caused China to fall far behind not only the industrialized nations of the West but also the new industrial powers of Asia: Japan, the Republic of Korea, Singapore, Taiwan, and Hong Kong. In the late 1970s, while Japan and Hong Kong rivaled European countries in modern technology, China's citizens had to make do with barely sufficient food supplies, rationed clothing, inadequate housing, and a service sector that was inadequate and inefficient. All of these shortcomings embarrassed China internationally.
The purpose of the reform program was not to abandon communism but to make it work better by substantially increasing the role of market mechanisms in the system and by reducing—not eliminating—government planning and direct control. The process of reform was incremental. New measures were first introduced experimentally in a few localities and then were popularized and disseminated nationally if they proved successful. By 1987 the program had achieved remarkable results in increasing supplies of food and other consumer goods and had created a new climate of dynamism and opportunity in the economy. At the same time, however, the reforms also had created new problems and tensions, leading to intense questioning and political struggles over the program's future.
The researcher opines that China could easily and officially deny this, of course, while it consistently uses quasi-capitalist tools and principles to make significant strides towards industrialization. So it isn’t unimaginable anymore to walk into a McDonald’s fast food which is just a stone’s throw away from the forbidding Tiananmen Square.
The first few years of the reform program were designated the "period of readjustment," during which key imbalances in the economy were to be corrected and a foundation was to be laid for a well-planned modernization drive. The schedule of Hua Guofeng's ten-year plan was discarded, although many of its elements were retained. The major goals of the readjustment process were to expand exports rapidly; overcome key deficiencies in transportation, communications, coal, iron, steel, building materials, and electric power; and redress the imbalance between light and heavy industry by increasing the growth rate of light industry and reducing investment in heavy industry.
In 1984, the fourteen largest coastal cities were designated as economic development zones, including Dalian, Tianjin, Shanghai, and Guangzhou, all of which were major commercial and industrial centers. These zones were to create productive exchanges between foreign firms with advanced technology and major Chinese economic networks.
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SINGAPORE
Industrialization Policy[17]
The manufacturing sector was a mainstay of Singapore's economic growth despite the absence of natural resources or an agricultural base. By the mid-1970s, the country had undergone a quarter-century of rapid industrial advance based on low-cost labor, low- to middle-level technology, and a rapid increase in exports. At that time, Singapore's planners settled on a policy emphasizing high technology, particularly information technology. In 1988 Singapore's 3,694 manufacturing establishments, employing 352,600 workers, were responsible for 29 percent of the GDP. Industrial production, valued at S$14,509.7 million, was fractionally higher than earnings from financial and business services, double those from commerce, and nearly equal to the total of commerce and transport and communications. This represented a 20-percent increase over 1987. The manufacturing sector's continuing success was largely a function of Singapore's ability to attract foreign investment through a favorable business climate and then provide investors with an educated, trained, and disciplined labor force.
Singapore entered nationhood with a mixed legacy. The industrial sector was small, its productivity low. Manufacturing in 1960 was a mere 11.4 percent of the GDP; commerce, far and away the largest sector, accounted for 32 percent. The industrial policy in 1959 sought to promote industrialization as a way of diversifying from Singapore's traditional role as an entrepôt. Reliance was placed on private enterprises whose basic decisions were determined on the expectation of a common market with the neighboring Federation of Malaya. A system of import quotas was introduced for a limited number of goods, along with controls on how many enterprises could enter a particular field. Circumstances altered strategies. After separation from Malaysia in 1965, quotas were mainly replaced by a low level (for developing countries) of protective import tariffs. A traditional import substitution strategy was implemented.
In 1968, when the British announced their intention to withdraw from their Singapore bases, import substitution was succeeded by a strategy promoting export-oriented, labor-intensive industrialization. At that time, the government began its central role in formulating and implementing the industrialization program through the Economic Development Board.
The new approach became official policy in 1967 with the government's proclamation of the Export Expansion Incentives (Relief from Income Tax) Act and was further enhanced by the 1968 Employment Act. Direct foreign investment was welcomed both to help Singapore penetrate export markets and to bring in advanced technology. As early as 1970, when full employment was attained, there was some thought given to upgrading the industrial structure in order to provide more higher paying jobs. By 1979 efforts to upgrade the overall industrial structure and to accelerate the trend toward skill- and technology-intensive, higher value-added economic activity were intensified. The government implemented the large, three-year wage increases recommended by the National Wages Council, which began the easing out of labor-intensive, low value-added activities in Singapore.
The machinery industry was increasingly in the forefront of technological innovation as a result of the Economic Development Board's promotion of computer-controlled production, industrial robots, and flexible manufacturing systems. The industry's output increased by 17 percent in 1987 and 20 percent in 1988.
Domestic enterprises played a lesser role in industrialization. The government argued that the emphasis on large industry was a more effective stimulus to increased productivity and long-range economic development. Major promotional efforts sponsored by the government were focused on high-productivity projects, creating industries that officials claimed would not otherwise have been established in Singapore. Although institutional assistance for small-scale local industry, the majority of enterprises, was provided through a subsidiary of the Economic Development Board, the effectiveness of this aid was limited until after the mid-1980s recession, when greater emphasis was placed on encouraging and upgrading small-scale local industry.
Following a decline in the textile industry in the mid-1980s resulting from increased international competition, automation and the upgrading of product lines were encouraged. What had originally been a textile industry and then a mass-market clothing industry was encouraged to target high-fashion markets. A 10 percent growth in the fashion industry in 1987 reflected both the new trend and a strong market among Western trading partners.
Information Technology
After 1979 there was a single-minded emphasis among policy makers on escalating the level of technology in order to implement the succeeding phases of Singapore's industrial revolution. They relied on information technology as the strategy's principal instrument. The Telecommunications Authority of Singapore (Telecoms) was a key to the strategy because of the high caliber of its services and products and because Telecoms and the telecommunications industry had an important role in the progress of every industry in Singapore.
A second key was computers and related electronics, which in the late 1980s constituted Singapore's largest industry, measured both in numbers of jobs and in value added by manufacturing. In 1981 the 65,000 to 70,000 electronics workers comprised about 7 percent of the labor force; gross production of electronics at about S$5.9 billion was about 15 percent of total manufacturing output. By 1987 electronics accounted for 28 percent of manufacturing employment and contributed 31 percent or S$11 billion in output. By 1989, Singapore had become the world's largest producer of disk drives and disk drive parts. Other related products included integrated circuits, data processing equipment, telecommunications equipment, and radio receivers.
The electronics industry began a calculated transition away from labor-intensive products toward higher technological content and worker-skilled products in 1974. Potential investors were encouraged to look elsewhere for low-wage, unskilled labor. Aside from producing high value-added exports, the computer and electronics industries played a vital role in raising manpower productivity in other technology-intensive industries through computerization and computer communications. The National Computer Board was formed in 1981 to establish Singapore as an international center for computer services, to reduce the shortage of trained computer professionals, and to assure standards of international caliber at all levels.
Copyright and "intellectual property" issues served as an impediment to computer and other industrial development in the early 1980s, when Singapore, as well as other Asian countries, was known for producing pirated versions of everything from computers and computer software to designer handbags. Following threats by their major Western trading partners to impose trade sanctions and by international computer and software companies not to do business, Singapore passed its first copyright law in 1986. There was fairly rigorous enforcement in areas in which Western pressure was applied (computer software, films, and cassette tapes), and nearly full compliance in the book trade, which had not been as serious a problem. The Asian "copyright revolution" (Singapore's was one of several such laws enacted in the region) was significant as a realization by those countries that they had joined the international knowledge network as producers as well as consumers.
By the mid-1980s, the small but growing printing and publishing industry had entered the high-technology world with computerized typesetting, color separation, and book binding. Its high-quality printing facilities and sophisticated satellite telecommunications network made Singapore a regional publishing and distribution center in 1989.
Petroleum
Petroleum and petrochemicals were another base of Singapore's industrial and economic life. In the late 1980s, Singapore was the world's third largest oil-trading center and also the third largest center for petroleum refining. It was the second largest builder of drilling rigs, and its facilities for repairing and maintaining rigs and tankers were the most competitive in East Asia.
When oil prices began eroding in 1981 and collapsing toward the end of 1985, Singapore felt both negative and positive consequences. The collapse of oil prices dealt a severe blow to oil exploration. The impact was felt widely and immediately in everything from reduced orders for rig construction to lowered occupancy of luxury apartments as foreign petroleum workers returned home. With both of its immediate neighbors, Indonesia and Malaysia, heavily dependent on oil and gas exports for revenue, Singapore had a resulting loss of trade in both goods and services.
Singapore benefited, however, from the availability of cheaper energy, which in 1986 amounted to a savings of about S$2.5 billion (US$1.12 billion). Furthermore, Singaporean refineries invested in the equipment and technology necessary to enable them to refine a wide variety of crude oils and obtain a greater proportion of highvalued products from the refining process. Petroleum refining alone made up 28 percent of Singapore's manufacturing output in 1985, although by 1988 it had dropped by half as a result of a decline in petroleum production and growth in other industries. Singapore also benefited indirectly when large oil importers such as Japan and the United States obtained higher real incomes from lower oil prices, enabling them to increase their imports from Singapore and other countries.
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TAIWAN
A land reform law[18], inspired by the same one that the Americans were enacting in occupied Japan, destroyed the landlord class (which also happened in Japan), and created a higher number of small peasants whom, with the help of the state, increased the agricultural output dramatically. This was the first excedent accumulation source.[19] It inverted capital creation, and liberated the agricultural workforce to work in the urban sectors. However, the government imposed on the peasants an unequal exchange with the industrial economy, with credit and fertilizer controls and a non monetary exchange to trade agrarian products (machinery) for rice. With the control of the banks (at the time, being the property of the government), and import licenses, the state oriented the Taiwanese economy to import substitutive industrialization, creating initial capitalism in a fully protected market.
It also, with the help of USAID, created a massive industrial infrastructure, communications, and developed the educational system. Several government bodies were created and four-year plans were also enacted. Between 1952 and 1982, economic growth was on average 8.7%, and between 1983 and 1986 at 6.9%. The gross national product grew by 360% between 1965 and 1986. The percentage of global exports was over 2% in 1986, over other recently industrialized countries, (like South Korea), and the global industrial production output grew a further 680% between 1965 and 1986. The social gap between the rich and the poor fell (Gini: 0.558 in 1953, 0.303 in 1980), even lower than some Western European countries, but it grew a little in the 80's. Health care, education, and quality of life also improved.[20] Much of that was made possible through US economic aid, subsidizing the higher cost of domestic production. The flexibility of the productive system and the industrial structure meant that Taiwanese companies had more chances to adapt themselves to the changing international situation and the global economy.
In 1959, a 19-point program of Economic and Financial Reform, liberalized market controls, stimulated exports and designed a strategy to attract foreign companies and foreign capitals. An exports processing area was created in Kaohsiung and in 1964, General Instruments pioneered in externalizing electronic assembly in Taiwan. Japanese companies moved in to benefit of low salaries, the lack of environmental laws and controls, a well educated and capable workforce, and the support of the Government. But the nucleus of the industrial structure was national, and it was composed by a large number of small and medium sized enterprises, created within families with the family savings, and savings cooperatives nets (會 Pinyin: Huì). They had the support of the government in the form of subsidies and credits loaned by the banks.
Most of this Huì appeared for the first time in rural zones near metropolitan areas, where families shared work (in the parcels they owned and in the industrial workshops at the same time). For instance, in 1989 in Changhua, small enterprises produced almost 50% of the world's umbrellas. The State attracted foreign companies in order to obtain more capital and to get access to foreign markets, but the big foreign companies got contracts with this huge net of small sized, familiar and national companies, which were a very important percentage of the industrial output.
Foreign investment never represented an important component in the Taiwanese economy, with the notable exception of the electronic market. For instance, in 1981, direct foreign investment was a mere 2% of the GNP, foreign companies employed 4.8% of the total workforce, their production was 13.9% of the total production and their exports were 25.6% of nationwide exports. Access to the global markets was facilitated by the Japanese companies and by the American importers, who wanted a direct relationship with the Taiwanese brands. No big multinational corporations were created (like in Singapore), or huge national conglomerates (like South Korean chaebols), but some industrial groups, with the support of the government, grew, and became in the 90's huge companies totally internationalized.
Most of the development was thanks to the flexibility of family businesses which produced for foreign traders established in Taiwan and for international trade nets with the help of intermediaries. But the importance of the state must not be forgotten. It was the central organism which coordinated the industrialization process, it created the infrastructures, it attracted foreign investment, it decided the strategic priorities and, when necessary, recurred to impose its conditions.
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SOUTH KOREA
South Korea has a market economy which ranks 14th in the world by nominal GDP and 12th by purchasing power parity (PPP), identifying it as one of the G-20 major economies. It is a high-income developed country and is a member of OECD. It is the most industrialised member country of the OECD. South Korea is the only developed country so far to have been included in the group of Next Eleven countries. South Korea had one of the world's fastest-growing economies from the early 1960s to the late 1990s, and South Korea is still one of the fastest-growing developed countries in the 2000s, along with Hong Kong, Singapore, and Taiwan, the other three Asian Tigers.[21] South Koreans refer to this growth as the Miracle on the Han River.[22] The South Korean economy is heavily dependent on international trade, and in 2010 South Korea was the sixth largest exporter and tenth largest importer in the world.
Korea hosted the fifth G20 summit in its capital city, Seoul, in November 2010. The two-day summit was expected to boost Korea's economy by 31 trillion won, or 4% of Korea's 2010 GDP, in economic effects, and create over 160,000 jobs in Korea. It may also help improve the country's sovereign credit rating.[23]
Despite the South Korean economy's high growth potential and apparent structural stability, the country suffers damage to its credit rating in the stock market due to the belligerence of North Korea in times of deep military crises, which has an adverse effect on South Korean financial markets.[24][25] The International Monetary Fund compliments the resilience of the South Korean economy against various economic crises, citing low state debt, and high fiscal reserves that can quickly be mobilized to address financial emergencies.[26] South Korea was one of the few developed countries that were able to avoid a recession during the global financial crisis,[27] and its economic growth rate reached 6.2 percent in 2010 (the fastest growth for eight years after significant growth by 7.2 percent in 2002),[28] a sharp recovery from economic growth rates of 2.3% in 2008 and 0.2% in 2009 when the global financial crisis hit. The unemployment rate in South Korea also remained low in 2009 at 3.6%[29]
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INDIA
India[30] has become one of the fastest growing economies in the world over the last two decades, arguably aided in this performance by economic reforms. One of the striking aspect of India’s recent growth has been the dynamism of the service sector, particularly Information Technology (IT) and IT enabled services (ITES), while, in contrast, manufacturing has been less robust. The contribution of the services sector was particularly striking in the 1990s, which not only saw rapid growth (averaging over 6 per cent in 1992), but also a high contribution – over 60 per cent (Hansda, 2001) – from services. This growth trajectory, which has been termed “services-led” industrialization, or even a “services revolution” (Gordon and Gupta, 2004), seems to stand out from the previous experience of economic development, which followed the traditional path from agricultural to manufacturing, with services becoming important at a later stage.
The Indian experience is quite similar with the Filipino experience, but, of course, the economic unfolding of both countries have yet to be fully realized and fulfilled.
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Rengel summarizes Lichauco’s analysis of why capitalism succeeded in generating an industrial revolution in these six (6) neighboring countries of the Philippines. Although these nations espoused different ideologies in the course of their development, all of them were able to industrialize because they all have the direct role of the state, in particular, as an industrial pioneer and entrepreneur.
In the case of Japan – Rengel continued – its government started and led the industrialization process without waiting for the private sector to act. Hence, it is the government which began the different enterprises in a number of fields. Because of the pioneering role of the government, its people were also into it. Same goes with Singapore. The government pioneered the industrialization process. In fact, its government owns and operates about 450 state corporations. In addition, in India, although guided by the socialist idea of Nehru, capitalism still succeeded. This is because the government adopted industrialization as the national goal since their independence in 1949. It is said that industrialization is the affair primarily between the state and the Indian industrialists, and where foreign investors only have a secondary role. China, on the other hand, through following the socialist path, adhered to industrialization, wherein the state played the pioneering, major and dominant role and controlled the means of productions. In Taiwan and South Korea, both their governments directly own and operate a number of industries and enterprises, along with the collaborative partnership of the private sector.
However, in the Philippines, the government policy towards industrialization is directly opposite to what the Western world and other Asian countries have followed. National policy has been hostile towards industrialization. In fact, there is still the presence of the opposition towards heavy industries. It avoids discussion regarding industrialization and protectionism and still insists in preserving an unmodernized agriculture as the main source of development.

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III. THE R.P.-U.S. ECONOMIC RELATIONS

STOKING (OR CHOKING?) THE FLAMES:
Political Will Always Precedes Economic Will
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Rengel gives special mention to the so-called colonial nature of the Philippine-American relations Lichauco’s book highlighted, which traces back the failure of Philippine capitalism to generate an industrial revolution.
As the student-reported summarized, according to Lichauco, free trade and the anti-industrialism condition of the Philippines can be traced back to the formulation in the U.S. Senate in the reasons of their annexation and colonization of the country. It was in the year 1890 that a US Senator named Albert Beveridge, who introduced a resolution, which allowed the United States to continue its hold and to establish its sovereignty in the country. In defense with this resolution, Beveridge argued and asserted in the floor of the Senate that the Philippines is theirs forever and that it is strategically located in the world, on which they could have wide access to all the countries in the East. He also spelled out in his speech entitled “The March of the Flag” that free trade should be established in the relationship between the Philippines and the United States which would facilitate the implementation of their colonialist vision. However, with this, it inhibited the Philippines to take any further steps in industrializing the country and in limiting the flow of goods coming from the United States. Such policy also continues to persist even when the Philippines already received its independence from the American government. Moreover, the policy forced the country to open its market to the American exports.
Furthermore, there are events that facilitated the injunction of the Free Trade principles in the Philippines since 1909. These events include the Payne-Aldrich Law 1909, the Bell-Trade Act of 1946, the DeControl Program of 1962, the 1972 Devaluation and adaptation of the floating rate, the Labor-Intensive, Export-Oriented development strategy of the Martial Law government, accession to and membership in General Agreement on Tariff and Trade (GATT) and Virata’s 1976 Letter of Commitment to IMF pledging that the government will refrain from the use of import and other foreign exchange control as a means of protecting the domestic industries.
The Payne-Aldrich Law. The Payne-Aldrich Law was enacted in 1909 by the US Congress and passed with the objection of the Philippine Assembly. This law made free trade as the basis of Philippine-American relationship. However, with the presence of this law, it deprived the Philippines the right to control, limit and discourage any importations coming from the United States.
The Bell-Trade Act. Meanwhile, the Bell-Trade Act was enacted during the eve of the Philippine Independence by the US Congress. Such act required the country to continue its openness and its practice of the principles of free trade in its relation with the United States. This is in exchange of the post-war financial and economic support coming from the US government.
The DeControl Program. The DeControl Program was enacted after the country had borrowed a stabilization loan of $300 million from the US and IMF Group in 1962. As a requirement, the Philippines had to adhere to the IMF Charter, which prohibits the application of controls on imports and all foreign exchange transactions. With this program, we had to eliminate the system of import and foreign exchange controls that had been present in the country during the period 1950-1961. However, the said fact was that, this program embarked on the direct involvement and intervention of the IMF in our policy processes and the rise of Filipino technocracy. This program also marked the beginning of the country’s foreign debt. In 1962, the presence of the foreign exchange crisis forced the Philippine government to apply for another stabilization loan. However, in exchange for this, the country was forced to commit to the “devaluation and adoption of floating rate” agreement which entails that the country had to allow the seeking of the dollar value on the basis of market forces. But then, the concept of “floating rate” required the country to refrain from interfering with the free market from foreign exchange. This means that the country had to restrain itself in limiting and controlling the importation processes.
The Labor-Intensive, Export-Oriented Development Strategy. The Labor-Intensive, Export-Oriented development strategy was enacted after the declaration of Martial Law in the Philippines. This was prompted by a situation wherein the international reserve position of the country had deteriorated. With the adoption of this strategy, the country had to continue to float the peso as a means of achieving a “realistic foreign exchange rate,” and to refrain from engaging in industries that are capital-intensive and instead concentrate on labor-intensive industries that are export-oriented.
One industry the researcher of this paper would like to point out is the Philippine garments and textile industry.[31]
Case Analysis: the Philippine Garments & Textile industry. Overview: the garments and textile industry remains to be one of the country’s top foreign exchange earners garnering a total of US$848.744 Million in exports in the first half of 2009, or 4.93% of the total US$17.225 Billion Philippine exports. Top export markets include the US, Japan, Great Britain, Germany and Canada.
The industry currently employs close to 400,000 workers making it the largest employer in the manufacturing sector with 11% of the national total. An additional 700,000 people are employed as home-workers and small subcontractors.
The key strength of the industry is the availability of skilled, well-educated and creative labor force who can easily assimilate the technology and skills required by the industry. Likewise, the Philippines has the geographical conditions strategically suited for natural fiber and natural dye production, coupled with available technologies that are ready for transfer and commercialization.
Major production sites are geographically dispersed in the National Capital Region (Metro Manila) and Regions III (Pampanga, Bulacan), IV-A (Rizal, Cavite, Laguna, Quezon), V (Bicol region) and VII (Cebu).
Investment opportunities/industry prospects. Presently, the industry is optimistic on the chances of the passage of a US Bill (HR 3039) dubbed as “Save Our Industries Act (SAVE)” that will give Philippine-made apparel duty-free access to the United States. It is designed to facilitate higher levels of trade in textiles and apparel between the United States and the Philippines, to enhance the commercial well-being of their respective industries, and to sustain and create jobs in times of global economic hardship.
For the first 2 years of its implementation, the industry sees fresh investments of US$480 Million and the entry of 60 new companies the garments export business. It is to be noted that this series of events in the garments and textile industry were the effects of a massive displacement caused by the elimination of quotas in 2003. It is to be hoped equally that, this time around, the Philippines would not be at the downspiraling end of a trade agreement.
No GATT, no glory. With the then leadership of Virata, the country joined and applied for membership in GATT. And in 1975, it finally became a member of GATT. However, the country had to commit in dismantling the tariffs and at the same time refrain from direct import control measures. With this, the country really has to commit on a total and absolute free trade.
Case in point about GATT. On an intervention speech of then Senator Rodolfo G. Biazon last June 7, 2001, at the Special Session of the U.N. General Assembly (speaking as a Senator of the Philippines and Head of Delegation to the United Nations General Assembly Special Session for an Overall Review and Appraisal of the Implementation of the Habitat Agenda), he stated: “There have been many impediments encountered by the Philippine government in the provision of adequate shelter to its people. These include governance problem, the El Nino and La Nina phenomenon, the Asian Financial Crisis and the continuous influx of people from rural to major urban centers.”
“The Philippines has one of the highest levels of urbanization among the Asian countries, estimated recently at 52% as against 48.6 in 1990.”
“The Philippines accession to the GATT-WTO has in a way further exacerbated our urban problems. The GATT-WTO was expected to bring some benefits to the country in the form of improved market access, increased prices of commodities through the reduction or elimination of trade-distorting domestic supports and subsidies to agriculture and a more efficient allocation of resources in agriculture and across sectors of the economy.”
“However, these optimistic predictions have yet to materialize. Our agricultural sector, wanting as it already is in government assistance through land reform, farm to market roads, irrigation facilities, sufficient credit, high quality seeds and far greater capital, has yet to benefit from our country's experienced an exodus of migrants from rural areas to major urban centers. Our farmers, ironically, are slowly being driven to search for greener pastures in the asphalt jungles.”
“Continuous increase in population in major cities and towns in the Philippines has exacerbated the housing shortage as manifested in the proliferation of informal settler colonies.”
“As expected, this increasing migration magnified other urban problems such as traffic congestion, difficulties in urban administration and management and the lack of employment opportunities. Be that as it may, our country affirms its commitment to resolve these problems.”
Another Virata brouhaha. Virata also sent a letter of commitment to the IMF, pledging that the Philippine government would commit to refraining from the use of import and foreign exchange controls as a means of protecting the domestic industries.
It is true that the course of development of capitalism in the Philippines has been controlled and dictated by the United States ever since the country received its independence. As we can see even though the Philippines was given independence, the United States still controlled the country and was not allowed its own economic governance like pursuing protectionist policies in order to protect the domestic markets against foreign competition.
However stands the R.P.-U.S. relations right now, we must always remember that political will precedes economic will.
Do not blow out the candle of economic friendship and keep the flame of political optimism alive.

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IV. THE ECONOMIC OWNERSHIP

FINDING OUR WAY HOME THROUGH THE DARKNESS:
The De Soto Torch
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According to Dia Montgomery’s summary and commentary[32] of Hernando de Soto’s “The Mystery of Capital: Why Capitalism Triumphs in the West & Fails Everywhere Else,” de Soto looks at the market economy of developed (Western) and developing (non-Western) nations to build his thesis about how nations accumulate wealth.
Although the researcher believes that the phenomenology of industrialization may be more constrained than what it appears to be. True, the comparison with the success of capitalism and industrialization in the Western world and in the developing Asian nations may contain certain similarities. But this may be a perversion in the light of unique social realities of each and every country in our discussion.
The researcher is even tempted to infer that the ongoing industrial development being enjoyed by the non-Western nations may be the product of external control and influences far beyond the generally-accepted market and economic factors.
In a working paper entitled “Development Paths at a Crossroads: Peru in Light of the East Asian Experience” by Maxwell A. Cameron and Liisa North, their abstract states: “Drawing on a growing literature that compares East Asian and Latin American development paths, this paper argues that the neoliberal reading of the lessons from East Asian experience is perverse and misleading in several respects: it misidentifies both the keys to East Asian NIC success and the causes of past failures in Latin America, and it leads to policy prescriptions that are bound to deepen the Latin Amrican region’s social-economic and political crises. A one-sided and inaccurate reading of the lessons of East Asia
This, of course, is not to pre-empt, but rather to enhance our revelation of de Soto’s work on capitalism.
Montgomery’s summary of de Soto’s “The Mystery of Capital” starts, as follows: “De Soto looks at the market economy of developed (Western) and developing (non-Western) nations to build his thesis about how nations accumulate wealth. Western nations, according to de Soto, preserve and multiply ownership holdings through a formal property system. That is, by creating mechanism for streamlined, accurate records, Western nations more easily convey their society’s shared concept of what is “economically meaningful” regarding a particular asset, which works to increase its value.”
Montgomery continues: “De Soto argues that capital is dormant. It is only brought to life by identifying and converting its potential value through use of an asset.”
The Agrarian Reform Rationality in the Asian Region. The researcher believes that the Western industrialized countries convinced the then underdeveloped Asian nations to formalize property ownership through agrarian reforms. Two events in the Philippine local scene which greatly affects the direction of industrialization here in our country: the success or failure of our own agrarian reform program for equitable land distribution and ownership, as well as the rapid urbanization of our cities which made negative impacts to our rural areas (displacement of labor with the introduction of new technologies and government inaction) and our cities themselves (primarily, the rise of informal settlement).
On with Montgomery’s assessment: “Capital flourishes where property rights are protected. Notes de Soto, property-protecting systems abound in Western societies, not specifically because of their capital-creating properties, but due to the importance Western societies placed upon publicly secured methods of tracking ownership. Within Western nations, assets (houses, land, merchandise) retain and augment value – not due to their immediate functional worth but because they take on the additional dimension of value as collateral towards potential future acquisitions. (“capital”). De Soto strongly believes in the value of capital and likens its potential to expand wealth to Einstein’s breakthrough discovery of atomic energy.”
“To bolster his argument, de Soto turns to other classical economists, including Marx, who defined capital as a value detached from a product to become transcendent. (p. 43) While money assists transactions, it is not to be confused with capital as money cannot fix the abstract potential of any particular asset.”
“In contrast, de Soto remarks upon the lack of fixed formal property systems in developing nations. De Soto calls the mammoth informal property system in operation in many developing nations an “extralegal” system of ownership (as it falls outside the bounds of the formal legal structure). Due to the enormous effort and unreliability involved in determining ownership before trading an asset, most assets within these nations are restricted to local buyers only and thus do not reach their capital potential. This lack of capital, de Soto is careful to point out, is not a lack of entrepreneurial spirit in non-Western nations but rather the lack of easy access to adequate property mechanism.”
“In analyzing this extralegal arrangement, de Soto notes the formal property systems of the West produce six effects which allow citizens to generate capital. These are: 1) Fixing the economic potential of assets; 2) Integrating information into one system; 3) Individual accountability; 4) Making assets tangible; 5) Networking people; and 6) Protecting transactions.”
“In chapter six, de Soto attempts to explain the failures of developing capital within developing nations. He pontificates that these nations’ legal systems often operate under basic misconceptions about the motivations of ownership. One prominent misconception, according to de Soto, is that people operate outside of existing laws due to the desire to avoid taxes. As de Soto points out, owners do engage in ways that increase accountability, albeit informally. Property is still being “registered” by owners, albeit in informal arrangements. An interesting example of this is presented in the variance of ad hoc Haitian property titles illustrated on page 185. Extralegal social contacts are undesirable to owners due to the cumbersome of custom, improvisation and selective official regulation.”
“De Soto concludes that property owners in developing nations would rather operate within intricately structured systems so long as those systems reflect the norms designed by local operatives. De Soto is convinced that non-Western nations already adhere and desire further adherence to property recording structures similar to Western constructs and desire to record their property in similar ways.
Montgomery surmises: “While I appreciate de Soto’s argument as a very detailed and interesting analysis in how capital increases property value, some questions remain. Firstly, is the solution articulated by de Soto (identifying and gathering all existing property representations scattered throughout unofficial sources and bring them into one system) feasible or necessary? How will it change already existing property structures? It is unclear how much of the “barking dog” systems of local boundaries de Soto would keep in his proposed property regime. Does his world view reflect a narrow perspective on what property is for and how it can be used? I am unsettled by de Soto’s certainty that implementing Western values elsewhere will be effective. Finally, how does de Soto’s view of prosperity through amalgamation with Western property regimes mesh with Scott’s argument regarding the retention of informal property as part of a vibrant local culture?”
One offshoot of de Soto’s argument about the informal property system is: Does this system influence the increase of informal economic activities of our country? Strictly speaking, is it directly responsible for our country’s so-called underground economy?
The researcher suggests further reading on this topic and prefers to move on to the next topic of presenting the four (4) factors of production as the forces of capitalism.
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V. OF FACTORS & FORCES

THE FUEL OF INDUSTRIALIZATION:
Land, Labor, Capital & Entrepreneurship
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Land: Policy Issues. On a seminar entitled “Urbanization, Industrialization and Land Conversion in the Philippines: Policy Issues and Problems” conducted last October 31, 2007 in Hawaii, Professor Benjamin V. Cariño of the School of Urban & Regional Planning at the University of the Philippines, Diliman had this to say: “The conversion of agricultural land into urban and industrial uses has raised an outcry from many quarters due to the possible adverse effects on agrarian reform, food self-sufficiency, and environmental sustainability. Moreover, the policy restrictions on land conversion are complex, full of contradictions, and in need of rationalization. The lecture examines the theoretical and empirical bases for the conversion of agricultural land into non-agricultural uses, and suggests that policy reforms should aim for the progression in the use value of land assets in the Philippines.”
Land: Property Issues. Republic Act No. 9700 avers the policy of the state:
AN ACT STRENGTHENING THE COMPREHENSIVE AGRARIAN REFORM PROGRAM (CARP), EXTENDING THE ACQUISITION AND DISTRIBUTION OF ALL AGRICULTURAL LANDS, INSTITUTING NECESSARY REFORMS, AMENDING FOR THE PURPOSE CERTAIN PROVISIONS OF REPUBLIC ACT NO. 6657, OTHERWISE KNOWN AS THE COMPREHENSIVE AGRARIAN REFORM LAW OF 1988, AS AMENDED, AND APPROPRIATING FUNDS THEREFOR
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
Section 1. Section 2 of Republic Act No. 6657, as amended, otherwise known as the Comprehensive Agrarian Reform Law of 1988, is hereby further amended to read as follows:
"SEC. 2. Declaration of Principles and Policies. - It is the policy of the State to pursue a Comprehensive Agrarian Reform Program (CARP). The welfare of the landless farmers and farmworkers will receive the highest consideration to promote social justice and to move the nation toward sound rural development and industrialization, and the establishment of owner cultivatorship of economic-size farms as the basis of Philippine agriculture.”
"The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform, through industries that make full and efficient use of human and natural resources, and which are competitive in both domestic and foreign markets: Provided, That the conversion of agricultural lands into industrial, commercial or residential lands shall take into account, tillers' rights and national food security. Further, the State shall protect Filipino enterprises against unfair foreign competition and trade practices.”
"The State recognizes that there is not enough agricultural land to be divided and distributed to each farmer and regular farmworker so that each one can own his/her economic-size family farm. This being the case, a meaningful agrarian reform program to uplift the lives and economic status of the farmer and his/her children can only be achieved through simultaneous industrialization aimed at developing a self-reliant and independent national economy effectively controlled by Filipinos.”
Labor: Policy Issues. Rene Ofreneo, a trustee and fellow of Action for Economic Reforms and a Professor at the UP School of Labor and Industrial Relations, wrote an article entitled: Labor and ADB against “Stagnant Industrialization.” It unfolds, as follows:
“In an ironic and historic twist, the trade union movement and the Asian Development Bank (ADB), which normally do not see eye to eye on development issues, suddenly found themselves united on one: reversing the industrial hollowing out of the Philippine economy. The ADB wrote that the Philippines has an ampaw economy whose growth cannot be sustained unless its eroded industrial base is rebuilt and fortified. The ADB study, aptly titled Taking the Right Road to Inclusive Growth: Industrial Upgrading and Diversification in the Philippines (2012), has been circulated in the business community and members of the Cabinet.”
“The Philippine civil society movement has long been denouncing the jobless and industry-less growth pattern under three decades of aimless economic liberalization and globalization. What is new is the bold admission by the ADB that growth has indeed been jobless and industry-less in the last three decades, from the 1980s up to the present. The share of manufacturing in total employment has gone down from 12 per cent in the 1960s to roughly 8 per cent today. In contrast, manufacturing in our ASEAN neighbors such as Vietnam, Indonesia, Thailand and Malaysia accounts for between 28 to 35 per cent of total employment; China and the NICs have, of course, higher manufacturing employment. The author of the ADB report, Norio Usui, also wrote that the Philippines was a leader in industrial dynamism in Asia in the 1950s and 1960s; yet today, it is an industrial laggard in the region.”
“To the trade union movement, the above ADB findings are not new. Domestic industry and jobs are being clobbered by widespread and unchecked smuggling and the deep and unilateral tariff liberalization measures adopted by the economic technocrats without any clear adjustment and even information program for the affected. Even the Philippine Ambassador to the WTO in Geneva was shocked when he saw that actual or applied Philippine industrial and agricultural tariffs in 2004-2005 were only one-third of the tariffs imposed by Thailand and China, both big exporters to the Philippines and to the world.”
“So where else do ADB and the trade union movement converge? The two sides recognize the need for an “industrial policy” to revive the industrialization process in the country. Industrial policy, ignored by many mainstream economists at the height of neo-liberalism in the 1980s and 1990s, is now being resurrected by the ADB and the World Bank, obviously due to the failure of the neo-liberal dogma in preventing the global financial crisis.”
“The ADB now thinks that industrial upgrading and diversification are not only desirable but also very much doable. Why indeed should the Philippines, a labor-intensive assembler of electronics for four decades, remain a labor-intensive assembler of electronics in the next four decades? Why can it not replicate the experience of South Korea, which made a successful transition from an electronics assembler in the 1970s to a diversified electronics manufacturer in the 1980s? This is best illustrated by Samsung, which started as a parts assembler for Sanyo, and which has now become a dominant global producer of a wide range of electronics products.”
“And why should the Philippines remain stuck at the customer servicing side of business process outsourcing? Why can it not emulate India’s experience in scaling up the IT ladder, designing and offering varied IT programming and ICT-enabled services to the outside world and to India’s domestic industry?”
“For such upgrading and diversification to happen, the ADB study argues the need for “public intervention” in order to improve information and coordination and “help entrepreneurs take advantage of market opportunities.” Had the ADB made this recommendation in the 1990s, this would have been denounced by the free-market disciples as an economic blasphemy, a hazardous formula for economic inefficiency and rent-seeking by the local industrial elite at the expense of the public coffers. Yet historical records show that Japan, the Asian NICs and now China have all taken this “public-private” industrial policy coordination as the guide in their steady march towards higher and higher levels of industrialization. As the World Bank Chief Economist Justin Lin put it, the global financial crisis revealed that all the developed countries have an industrial policy and prodigiously take care of their own in times of crisis.”
“The reality, however, is that industrial policy need not be translated into an expensive high-tariff program, or a program of nurturing a few selected winners. What some local producers and exporters have been asking for in order to survive and grow in the Philippine market are very elementary.”
“How can local industry prosper in a market flooded with un-taxed smuggled goods of varying shapes and sizes, a big percentage of which are global rejects being dumped in the Philippine market? Why are customs officials of other countries able to decisively reject shiploads of imports simply because there is doubt about their declared values, and yet here in the Philippines there is a lot of hemming and hawing about the validity of questionable imports? Why are there continuing reports that imported agricultural products, including swine, are able to get import permits only upon arrival? Why does the burden of proving injury always fall on the injured industry, which, very often, no longer has the resources to pursue safeguard cases? And why does Congress keep enacting laws creating duty-free ports just to be able to import fleets of duty-free cars and auto parts?”
“Relatedly, there should be “tariff calibration” or equalization, meaning Philippine tariffs should be pegged at a level equal to (need not be unilaterally lowered than) those of other exporting countries. And yes, there should be policy coherence and consistency in the implementation of tariff adjustments.”
“Rebuilding the industrial base means a revival of the industrial culture. This means above all some industrial visioning accompanied by public-private cooperation and consultation on industrial programming. To a certain extent, this is what the DTI is now doing, as illustrated by the recent industry road mapping it has done with the petrochemical industry. Such road mapping should involve the academe, especially the science community. Look at how the partnership between Taiwan’s Hsinchu University and Hsinchu Industrial Park has succeeded in producing Acer and Asus, the world’s leading notebooks.”
“The program to rebuild the industrial culture should also benefit from the positive attitude of the labor movement towards industry revival. This time, the trade unions themselves are asking for a clear-cut policy of industrialism and its all-out promotion nationwide. In Japan, in the 1960s, the miracle industrial economy was consolidated with the help of new-found cooperative partnership between Japanese employers and trade unions in support of the zero-defect program in manufacturing and the highly equitable productivity gain sharing program (roughly one-third of the gains to the corporation’s shareholders, one-third to the employees as added benefits, and one-third to the consumers in terms of cheaper products). Can the Philippines not forge a similar labor-management partnership in support of industry revival?”
“Finally, the Buy-Philippine movement also needs to be revived. However, its revival should not only focus on the value of tangkilikan but also on the value of excellence in product development in terms of quality, price, delivery and durability. For this, the government has a central role to play because it has a big say on whether the supporting infrastructure for doing business such as power are available and affordable (which can make and unmake industry) and whether the nation is able to produce the skills and talents needed by the emerging industry. Truly, a genuine public-private partnership in industrial policy is unavoidable, if the country wants to catch up with industrial East Asia.”
Labor: More Policy Issues. Republic Act No. 1826 avers the policy of the state:
REPUBLIC ACT NO. 1826 - AN ACT ESTABLISHING AN APPRENTICESHIP TRAINING SYSTEM AND A NATIONAL APPRENTICESHIP COUNCIL, DEFINING THE POWERS AND DUTIES OF THE SAID COUNCIL AND PROVIDING FUNDS THEREFOR

(REPEALED BY PRESIDENTIAL DECREE NO. 442)

Section 1. This Act shall be known as the "National Apprenticeship Act of 1957."

Section 2. In order to meet adequately the progressively increasing demand for a skilled-labor force necessary to the industrialization of the Philippines and to increase productivity, it is hereby declared to be the policy of the Government: (1) to establish a national apprenticeship system through the voluntary cooperation of employers and workers and interested governmental and non-governmental agencies; and (2) to provide for the establishment and furtherance of apprenticeship standards to safeguard and promote the welfare of apprentices.
Capital: Policy Issues. Dr. Bernardo Villegas wrote an article in the Philippine Inquirer last August 25, 2009, which partially reads, as follows: “…Then why is the Philippines poor? The main answer is that for 30 long years after the Second World War, our leaders adopted economic policies that fostered an inward-looking, import-substitution industrialization based on protectionist, anti-market, and ultra-nationalist ideologies not very different from what most Latin American countries implemented with the same dire consequences. Over-reacting to our colonial past (as did the Latin Americans), we equated economic development with capital-intensive industrialization that did nothing to address our massive unemployment and underemployment problem. The worst consequence of these failed economic policies was not the eventual demise of the so-called infant industries that never grew up. The most devastating result was the almost criminal neglect of countryside and agricultural development. Because we used up our capital resources in the white elephants of the manufacturing sector, there were no resources left to build farm-to-market roads, irrigation systems, post-harvest facilities, seaports, and airports that were essential to making our small farmers productive. Agrarian reform failed, not because of the fragmentation of land, but because we did not provide the small farmers with the wherewithals to be both productive and cost-effective.”
“For some of our economic policy makers during this sad stage of our history, the neglect of countryside and agricultural development was more of a sin of omission: They were so obsessed with industrialization that they were blind to the needs of the rural populations, which accounted for 50 percent or more of the labor force. For a few others, however, the neglect of the countryside was based on an ideology that agriculture was a despicable sector that was the very symbol of colonial servitude. I remember debates that the late Jimmy Ongpin (who served as Finance Secretary under President Cory Aquino) and I had with some leading economists who were hell bent on investing more heavily on capital-intensive industries oriented to the domestic market. Because we were arguing for more investments in agriculture, we were accused of wanting to keep the Philippines as a "hewer of wood and a drawer of water." Jimmy Ongpin even made a trip to southern Spain to present evidence to these critics of agriculture that agribusiness can be even more high-tech than the old-fashioned manufacturing projects that the fanatics of industry wanted to push.”
“The rest is history. The bias against agriculture was so ingrained at the highest levels of Philippine society that it took almost till the end of the last century before a real shift toward agricultural and rural development could take place. In the meantime, our non-identical twin in the late 1970s and early 1980s, Thailand, was busy building farm-to-market roads, irrigation systems, post-harvest facilities, etc. The result was dramatic. Whereas we were well ahead of Thailand in almost all indicators of human development in the late 1970s, today Thailand?the agribusiness superpower of Southeast Asia?has twice our per capita income and a poverty line one-third ours. It has become the largest rice exporter in the world and a large exporter of many other high-value agricultural products. Because of the enlightened policy of focusing on rural and agricultural development, Thailand has been able to attain a higher level of development and significantly reduce poverty, despite the fact that corruption has also been rampant in that country.”
“Our story does not have to have an unhappy ending. In 1998, when Senator Edgardo Angara was the Secretary of Agriculture under the Estrada Administration, we saw a definitive shift away from inward-looking, import-substitution industrialization toward rural and agricultural development. Fortunately, this redirection of economic policy has been retained under the Administration of President Gloria Macapagal-Arroyo. Witness the significant improvements in countryside infrastructure represented by the Philippine nautical highway which has greatly improved the efficiency of transport of agricultural products from one island to another. The very visible improvements in Central Luzon (Clark-Subic-Tarlac highways) are being replicated in the Northern Luzon Agribusiness Quadrangle, in many regions in Mindanao, in very poor provinces like Aurora and Bicol, etc. As long as the next President will continue the focus on countryside infrastructure, we can be optimistic that we can make a dent on our serious poverty problem in the next 10 to 20 years. After all, 70 percent of the Philippine poor are in the rural areas.”
Entrepreneurship: Policy Issues. In Mary Grace Ampil-Tirona’s review of the book “Philippine Industrialization: Foreign and Domestic Capital” by Kunio Yoshihara, she summed its gist in this manner:
“There are three vantage points from which a country’s economic development and progress, or lack of it, can be viewed: the policy side, the statistical side and the human side. It is when dissecting the human factor that studies on key economic activities of production and consumption meet with difficulty considering that, notwithstanding elaborate policy and programming, resultant statistics could reflect an inadequate if not contrary response. Patterns of consumption are somewhat easy to rationalize. Purchasing power, quality, pricing, basic needs fulfillment, status-seeking, taste – are among the obvious criteria that prompt consumer behavior. However, while productivity factors can be similarly enumerated, they do not readily explain the real motive forces behind a positive response. Land or raw materials, labor, capital or credit may be available. But the push to utilize and manage a combination of these resources, let alone with long-term efficiency and success, is a phenomenon that defies easy explanation. Thus in tracking the character of a country’s industrial development, a concomitant systematic analysis of entrepreneurial behavior – the human side – is a must.”
“The study of this human side requires painstaking effort by individuals like Dr. Kunio Yoshihara who, in a decade’s work, has sought to fill in an often underestimated gap in our understanding of economic development success and failure occurrences. Perforce we draw from business history, for numerous other studies have already shown that so much hinges on that one elusive element – the Entrepreneur. Yet more often, the general public tends to conveniently point out government’s singular responsibility in stimulating productivity especially when all signs point to a downtrend. Actually, government merely sets the stage and provides the stimuli. Ultimately, the critical response is largely a matter for the change agent, that individual “gutsy” entrepreneur, to decide upon at an opportune time.”
“Dr. Yoshihara’s book is titled Philippine Industrialization: Foreign and Domestic Capital, and as such, might be expected to concentrate on the application of funds and the typology of sectors that benefitted from capital infusion. Instead, he provides a sharper focus. He documents Philippine industrial transformation by identifying the prime movers in very precise ethnic terms, their sources of funds, and the particular circumstances that occasioned their participation, i.e., the “entry patterns.” For example, the general picture that emerges is that industrial entrepreneurs who have figured in the Philippine setting usually shifted from trading to manufacturing owing to the onset of import controls and consequent import substitution policy of the government in the postwar era. Pioneers generally engaged in backward or forward integration of existing operations or undertook licensing activities that in due course developed into full-blown independent manufacturing concerns. Although Dr. Yoshihara limited his study to the top 250 manufacturing companies circa 1970, the evolutionary profile drawn goes back to the early decades of the twentieth century when the first significant large-scale production activities began to stir. The historical perspective has yielded a significant insight into the peculiarities of entrepreneurial behavior in Philippine society. Dr. Yoshihara lays down the painful truth that by and large, so-called “Philippine Industrialization” has been the handiwork of non-Filipinos. To use his own distinctions, the role of the Malay Filipino (as against foreigners, Chinese and Spanish mestizos) has been minuscule in the charting of his own country’s industrial growth.”
“To an economic nationalist, this is no revelation, but Dr. Yoshihara (no matter how discreetly he has put it) rubs the truth in rather strongly. For indeed, noteworthy Filipino entrepreneurs who have actively and successfully shaped our economic fortunes have been of few and of recent vintage.
“And when they did appear on the economic scene and dared to participate (a development which Dr. Yoshihara only begins to outline faintly, owing to time and sectoral limitations of his study) from purposive government policy manipulation, or their astute cultivation of political connections. The reality was that structurally, the colonial scenario and the international economic order had always militated against a prodigious indigenous entrepreneurial response.”
“Dr. Yoshihara has, however, taken a contrary view. He points nebulously to some sociocultural underpinnings in the Filipino character that he claims serve to explain the relatively poor showing of Malay Filipinos in the matter of industrial entrepreneurship. He implies a nonmaterialistic orientation, although he does explain exactly what it is or wherefrom it sprung. Certainly, in the absence of a definitive and genuinely Filipino spiritual or philosophic tradition, there can only be a historical explanation. In terms of the Philippine experience, it can be very simply put; the colonial superstructure proferred opportunities to Spanish (though underrated historiographically), the Chinese and American elements and their half-breed kin, subsidiaries and collaborators. Meanwhile, the Filipino was tied to the soil or preoccupied with political resolve”
The researcher believes this part underlines the policy and property issues of a capitalism-generated industrialization in the Philippines.
Moving forward with Ampil-Tirona’s review of Dr. Yoshihara’s book:
“He did not have the luxury of attending to the requirements of a maturing economy in a significant way.”
“It has taken another foreign observer to dish out – albeit tactfully and knowledgeably – the hard facts and the harsh lessons of business history to the Filipino people, and to suggest that we would stop feigning not to see how we have relegated our national economic aspirations to the backseat while we grapple with our political misadventures. That in so doing we have let the material opportunities slip into the hands of those less politically engaged, and having no political stakes in the country. That given Dr. Yoshihara’s account of the human side of Philippine industrialization the disproportionate role of Malay Filipinos should no longer evoke a sense of wonder, except in foreign scholars discovering for the first time the Philippine economy’s historical experience. That instead, indigenous entrepreneurs should be made to subvert the economic status quo with the full backing of political powers that be.”
“Indeed, despite his remarkable diplomacy as researcher and writer, Dr. Yoshihara expresses acute amazement at our national permissiveness evidenced by the unduly prominent role of aliens in Philippine industrial development. And when he subtly expresses surprise at how promising industrial projects (e.g., textile) can be undermined by the irresponsible connivance of opportunistic businessmen and a coddling financial bureaucracy – he gives cause for national embarrassment. However, Dr. Yoshihara’s familiarity with the ASEAN economies has enabled him to provide a few consoling insights. There is the fact that in the parallel experiences of Malays in the region, Filipinos have displayed far better ability to undertake ventures and have been more successful in limiting Japanese participation in domestic industrial development. Moreover, the author avers that the American colonizers have a “Philippines for Filipinos” policy, whereas in Indonesia and Malaysia, the colonizers did very little to foster native entrepreneurship.”
“In substance as well as in sentiment, Philippine Industrialization affords a rather starling review of the realities of Philippine business history. It is unquestionably founded on very solid facts that Dr. Yoshihara was made privy to by accommodating and reliable informants. Having come up with a veritable dossier on Who is not Filipino in Philippine industry, his findings can serve as points of departure for policy formulators. They lend credence to the demands of a struggling and sluggish national bourgeoisie currently being invited to lead the uphill climb to country-wide reform and recovery. Similarly, the Filipino entrepreneur himself must face up to the historical-structural odds that Dr. Yoshihara’s account has clearly made manifest before he sallies forth to claim the center stage of Philippine business.”
“The Filipino entrepreneur must seriously consider the following factors:
1. The long process of sinification of Philippine business – The entrenchment of Chinese elements in the economy was accomplished through a masterful combination of the much bruited about high need for the achievement of the Chinese and their mestizo offspring and the multifarious subterfuges that have given unlimited access to Philippine resources, e.g., dummies, intermarriage, expensive naturalization, and overseas Chinese equity participation.
2. The self-inflicted failure of Filipino entrepreneurial efforts – All fingers point to the Filipino himself who at one period or other formulated a mixed bag of self-defeating policies (e.g., import liberalization). It is a collective misfortune that the Filipino as economic man has shown an incurable colonial mentality, a lack of quality consciousness, willing collaboration, a weak sense of economic nationalism, and an absence of pro-Filipino consumerism.
3. The invincibility of market forces – These have always served to undermine the most sincerely and judiciously mapped out productivity policies and programs, the best management and technical education, the most governmental and entrepreneurial response.
4. The ersatz “Filipino” business pioneers – In effect, the achievements of industrial personalities which include the likes of Elizalde, Aboitiz, Ayala, Madrigal, Tuason, Ortigas, Araneta, Palanca, etc. or of the captains of giant domestic firms like Mariwasa, U-Tex, Philippine Blooming Mills, La Perla, Union Chemicals, etc., do not represent the efforts of true Malay Filipinos. Entrepreneurial achievements among indigenous elements have been few and far between, (e.g. Puyat, Guevara, Marcelo, Silverio, Floro etc.), or perhaps the ethnic Filipino’s mark has been made elsewhere (a matter for other researchers to document).
5. The deep roots of Philippine-style of crony capitalism – Contrary to recent popular views, the beginnings of cronyism and government entrepreneurship date back to the foundation years of Filipino nationalism and political awakening. Antedating the Marcos era, the practice was inaugurated by the mestizo cronyism practiced by Quezon. The politics of business opportunity was played by businessmen-bureaucrats like Araneta, Elizalde, Madrigal, Yulo, Cojuangco, Durano, Montelibano etc., and even by the American proconsul Worcester.
6. The truism that capital begets capital and political acumen begets entrepreneurial ventures – As Dr. Yoshihara has pointed out in the Japanese experience, the power of government must be used buttress national efforts at productivity and economic development. That political force must then be used behind the Filipino entrepreneurs to secure their dominant role, considering capital constraints and the now highly competitive environment within which the younger generation of Filipino businessmen must operate.”
The National Economic Protectionism Association. The National Economic Protectionism Association (NEPA) is the oldest local non-government organization in the Philippines having been established in 1934. The non-government organization was established by Filipino industrialists with the intention of protecting domestic industries, owned by Filipinos, against dominion by foreign interests and competition. Through the years of its existence, it has gone through a number of leadership changes and policy tacks. During its heyday, its leaders held key positions in the government and were actively promoting Filipino industries. It has offices at Francesca Towers, along Epifanio de los Santos Avenue (EDSA) in Diliman, Quezon City. In the 21st century, NEPA is under revitalization with mass organizing and networking with other Filipino organizations. From local organizations of small and medium enterprises (SMEs) and Filipino industrialists to inventors societies and producers. From a network of nationalist government officials and employees to ordinary Filipino consumers. It is a registered non-stock, non-profit private organization founded by 15 pioneering Filipino entrepreneurs and industrialists. NEPA has always been an active participant in the formulation of national economic policies. NEPA fosters the spirit of economic nationalism and national industrialization, and promotes the protection of Filipino interests in the country’s polity, economy, culture and environment. NEPA in History.
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VI. CONCLUSION

PICKING UP THE TORCH AGAIN:
Proposed Solutions to Philippine Industrialization
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Creating A Philippine Industrial Policy Plan (PIP Plan).
Industrial policy can have a significant influence on the environmental character of industrial growth and thereby on the sustainability of economic growth as a whole. Industrial policy has affected the rate of growth, the sectoral composition and the location of industry in the Philippines.
Immediately after independence, the government concentrated its efforts on reconstructing and rehabilitating the war-damaged economy. In 1949 import and foreign exchange controls were imposed to alleviate a balance of payments problem. Imports fell dramatically, providing a stimulus for the development of light industry oriented toward the domestic market. Manufacturing growth was rapid, averaging 9.9 percent per year during the 1950s. Initially, textiles, food manufacture, tobacco, plastics, and light fabrication of metals dominated. There also was some assembly of automobiles and trucks and construction of truck and bus bodies. By the early 1960s, however, manufacturing growth declined to slightly less than the growth of Gross National Product (GNP). The share of the labor force in manufacturing in 1988 was 10.4 percent, less than it was in 1956, although the share had grown to 12 percent in 1990.
By the late 1980s, and in part the consequence of local content laws that were intended to enhance linkage among various manufacturing industries and increase self-sufficiency, the industrial structure had become more complex, with intermediate and capital goods industries relatively large for a country at the Philippines' stage of development.
Manufacturing output fell in the political and economic crisis of 1983, and industry in 1985 was working at as low as 40 percent of capacity. By the middle of 1988, after economic pump priming by the Aquino regime, industries were again working at full capacity. In 1990 the Board of Investments approved investment projects valued at US$3.75 billion, including US$1.48 billion targeted to the manufacturing sector.
Manufacturing production is geographically concentrated. In 1990, 50 percent of industrial output came from Metro Manila and another 20 percent from the adjoining regions of Southern Tagalog and Central Luzon. Prior to 1986, government efforts to distribute industry more evenly were largely ineffective. In the post-Marcos economic recovery, however, investment grew in small and medium-sized firms producing handicrafts, furniture, electronics, garments, footwear, and canned goods in areas outside of Metro Manila, particularly in Cebu City and Davao City.
In 1990s the industrial sector was inefficient and oligopolistic. Although small- and medium-sized firms accounted for 80 percent of manufacturing employment, they accounted for only 25 percent of the value added in manufacturing. Most industrial output was concentrated in a few, large establishments.
National Industrialization.
Solons push for the creation of a national industrialization authority
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26 March 2010 09:19:10 AM
Writer: Lorelei V. Castillo, MRS-PRIB
Lawmakers have proposed the establishment of National Industrialization Authority as the lead agency to achieve a modern and diversified industrial economy that can secure the livelihood of the Filipino people.

Rep. Neri J. Colmenares (Party-list, Bayan Muna), one of the authors of House Bill 7185, said the bill aims to eradicate widespread poverty and structural inequity on account of domestic industrial and agrarian underdevelopment rooted in the colonial history of the country and in its unequal economic relations with the highly developed world economic powers.

"The bill also seeks to recognize the Philippines as economically self-reliant because of its competent labor force, technologically adept managerial and entrepreneurial force and a comprehensive natural resource base," Colmenares said.

Colmenares said the liberalization of trade and investment, privatization of state assets and deregulation policies of the government have denationalized the economy at the expense of the toiling masses of workers and peasants, overseas contract workers and the entire Filipino people and losing the economic sovereignty as a nation.

"The manufacturing sector has continuously declined to produce capital and consumer goods for sustainable and self-sufficient production. We merely become a part of the global assembly-line of semi-manufactured products owned and controlled by foreign big business," Colmenares said.

Colmenares said the country's own labor resources and productivity cannot develop under these exploitative conditions and balance of payments is perennially short to cover the required national expenditure as government revenue has no strong domestic base and suffers chronic deficit making the Philippines dependent on foreign loans.

"The leading factor towards a self-reliant and sustainable growth is the development of basic and heavy industries using our agrarian base as foundation and light industries as a bridge between the two. National industrialization is a must if we are to survive as a people," Colmenares said.

Rep. Raymond V. Palatino (Party-list, KABATAAN), co-author of the measure, said as the declared policy of the State, national industrialization shall be developed to achieve a self-reliant and sustainable economy, provide the basic needs of the people, employment, develop science and technology, improve national revenue, protect national patrimony, prevent destruction of the environment and attain national economic sovereignty.

"Achieving this capacity, competitiveness in the global economy shall follow to serve the global market thereafter," Palatino said.

Under the bill, the NIA Board shall be composed of the President as chairman and representatives of the Socio-Economic Planning and the National Economic Development Authority (NEDA) and the Departments of Trade and Industry (DTI), Finance (DOF), Energy (DOE), Environment and Natural Resources (DENR), Transportation and Communication (DOTC), Public Works and Highways (DPWH), Labor and Employment (DOLE) and Philippine Export Zone Authority (PEZA).

Other authors of the measure are Reps. Joel B. Maglungsod (Party-list, Anakpawis), Rafael V. Mariano (Party-list, Anakpawis), Satur C. Ocampo (Party-list, BayanMuna), Teodoro A. Casi�o (Party-list, BayanMuna), Liza L. Maza (Party-list, Gabriela) and Luzviminda C. Ilagan (Party-list, Gabriela).
Inclusive Growth. See attached related paper on inclusive growth.