Analysis 
Growth for Whom?

Did the government fudge the 2002 growth figures? In a way it doesn’t really matter because, whatever the real growth figures are, the bottom line is that there was record unemployment and staggering poverty last year. The biggest number of Filipinos will hardly feel economic growth as long as the country’s economic policies are skewed toward foreign and elite interests.

BY SANDRA NICOLAS 
Bulatlat.com

President Gloria Macapagal-Arroyo’s announcement last Jan. 30 that the Philippine economy grew rapidly in 2002 was met with widespread disbelief. Growth of the country’s gross domestic product was 4.6 percent and of gross national product 5.2 percent. People were understandably skeptical if the glowing growth figures – the highest since the 1997 Asian economic crisis, the president gushed – were really true. Especially coming so soon after hundreds of millions of dollars worth of corrections in the country’s trade figures.

In a way it doesn’t really matter what the growth figures were. The bottom line is that there was record unemployment and staggering poverty last year. The people are painfully aware of this – even if the economist-president and her economic managers do not seem to be – as most strikingly shown by the president’s plummeting approval ratings.

At 11.4 percent for the whole year, unemployment in 2002 was far above the Medium-Term Philippine Development Plan’s (MTPDP) target range of 10- to 10.5- percent. It is also the highest recorded since the 1950s and worse even than the rates during the severe economic crises in the mid-1970s, mid-1980s and early 1990s.

The 3.9 million jobless Filipinos in 2002, or 220,000 more unemployed from 2001, is an all-time high. On this point alone the president’s and the government’s deceitfulness is clear: they cite about 900,000 jobs created without also citing the many more jobs lost and the many more jobs needed by a growing labor force.

And that unemployment is on top of the 5.1 million underemployed who still don’t earn enough from what meager jobs they have for decent living. Even the kind of jobs to be had is great cause for concern: the number of low-earning own-account and unpaid family workers continued to increase last year, up to 51.3 percent of the labor force in 2002 from 50.5 percent the year before, and increasingly outnumbers wage and salary workers.

These have resulted in more poor and hungry Filipinos than ever before. In 2000 there were already at least a staggering 52.6 million Filipinos, or 67 percent of the population, living off just P77 (US$1.74) per day each. Some 16.5 million Filipinos were below the subsistence threshold and going hungry every day. The next poverty survey will be in 2003 but the 342,000 more jobless Filipinos since 2000 and their dependents will undoubtedly bloat these already dismal numbers.

These are why the reaction of the masa is understandable. “Nakaka-high blood (It makes my blood pressure rise),” Ruel from Pampanga phoned-in to a radio talk show. “Masakit pakinggan ang salita ng gubyerno (The government’s statements are painful to hear),” said Aling Dulia, a street vendor whose family has been living under a bridge in Manila for several years now. Even high-flying J.P. Morgan, one of the world’s biggest investment banks called the figures “one for Ripley’s Believe It or Not” and said “investors may take this piece of good news with a grain of salt.”

Growth for the few

But even if the 2002 growth figures are on the mark there is really no paradox in why the people’s welfare hasn’t improved. Economic growth is assumed to be a quick and simple indicator of economic development. But with an economy such as the Philippines’ that has been distorted through decades (centuries even) of foreign and elite domination, such an assumption is wrong to make.

If the economic growth came about while jobs were being created, incomes raised, and the goods and services needed by the majority provided then growth figures might usefully reflect whether the people’s welfare is improving or not. Unfortunately the reality is that the Philippine economy isn’t so designed.

More and more, especially since the reckless “globalization” from the 1980s, what has been most important for government social and economic policy makers is to please foreign investors and domestic big business. Narrow interests, in truth, hardly concerned with the people’s jobs, incomes, and needs unless they stood to profit from them.

The result is that agricultural production per capita is below levels in the late 1970s – we were the world’s third biggest rice importer last year – and the manufacturing sector is already smaller as a share of the economy than in the 1960s. Many billions of dollars in capital have either been steered away from domestic production toward financial speculation or otherwise simply repatriated abroad.

More than anything else, this agricultural backwardness and industrial decline have caused the record unemployment and soaring poverty besetting the country today.

Yet, it is true, the country has in the main been growing (save for during the three major economic “globalization-era” crises in 1984, 1991 and 1998 when the economy actually shrank – the only times that’s happened in our post-World War Two history). But the sources of growth have persistently been of the wrong kind. Growth, therefore, turns out to be quite a bad indicator of the economic health of the country and a worse indicator of the welfare of the people.

Consider for example the sources of growth last year. The services sector posted the highest growth at 5.4 percent particularly driven by the 8.4 percent clip in the telecommunications subsector. Industrial sector growth of 4.1 percent was driven mainly by the high 49.2 percent growth in the mining and quarrying subsector, largely due to increased natural gas production from the Malampaya field in Palawan. Mining, however, is mainly extractive and pseudo-industrial; the more important manufacturing subsector on the other hand grew a tepid 3.3 percent.

The problem with the growth in telecommunications and mining is that its benefits are cornered mainly by foreign and domestic elites. They are very capital-intensive activities that employ a few thousand workers, at best, out of a labor force of some 34 million. Furthermore, the overwhelming share of earnings is eventually paid out to foreign corporations as profits or technology payments. Ninety (90) percent ownership of the Malampaya project for instance is evenly split between foreign energy giants Chevron-Texaco of the US and Royal Dutch/Shell.

The massive foreign presence is often justified as out of the country’s lack of technology and capital. That may be true and valid over the short term but the more important point is that the country’s industrial strategy must be designed to diminish this dependence over time. The opposite, however, is happening as the government showers foreign investors with benefits and they come in here for their grossly one-sided benefit.

Needed: an economy for the people

The boost to GNP due to over 7 million overseas Filipino workers’ remittances, said to be anywhere from US$8 to over $12 billion through formal and informal channels, also cannot be taken at face value. The immediate economic gain to OFWs and their families – and the national economy – is clear. Breadwinners may have resigned themselves to being forced to go abroad and be separated from their family and put up with atrocious working conditions but that is nonetheless an undesirable social cost.

Simply put, the domestic economy must be designed to provide decent livelihood opportunities for the people at home not, as this government is so eager for, to train Filipinos to be “globally competitive” for the modern day slave trade. The importance of a domestic economy that serves Filipinos’ interests is also highlighted by how ultimately uncertain foreign jobs are. Saudi Arabia for instance has exercised its sovereign right to lower the number of foreigners working in the country which threatens the jobs of 500,000 Filipinos working there.

Economic growth of some kind is of course needed because the economy’s potential to provide for a growing population must continuously increase. But growth is not the end in itself for, as the Philippine experience dismally shows, there can be growth of the wrong kind.

To reiterate, the people need economic growth that creates jobs, provides livelihoods and raises incomes – the people must be given the capacity to consume the goods and services for decent living. Furthermore, economic growth must be the result of producing the goods and services needed by the majority. Finally, economic growth must benefit the domestic economy in terms of capital accumulation and technology development.

Unfortunately these are impossible given Philippine administrations’ pathological bias against true agrarian reform and national industrialization. The democratic state needed to ensure that national production, distribution and exchange work to the benefit of the majority still has to be built. In the absence of this the country’s economic policies will continue to be captured by the interests of imperialism, foreign transnational corporations in export enclaves and of the narrow domestic comprador elite. Building a genuinely people-oriented democratic state remains the order of the day. Bulatlat.com

We want to know what you think of this article.