Benjie Oliveros | One Economy, Different Views


The Arroyo government is once again gloating over the 7.3 percent GDP (Gross Domestic Product) growth for the 1st quarter of 2010. The National Statistical Coordination Board called it a “glorious ending” for the Arroyo administration. The last time it registered a 7 percent GDP growth was in 2007: 7.5 percent in the second quarter and 7.4 percent in the fourth quarter. The Arroyo administration considers economic growth under its watch as its crowning glory. Official statistics show an average of 4.5 percent GDP growth during the nine years of the Arroyo government; 3.9 percent in the six years of the Aquino administration, 3.8 percent under Ramos and 2.4 percent in the three years under Estrada.

Incoming president Noynoy Aquino belittled the most recent GDP growth saying that it was propped up by the elections. True enough, the highest GDP growth rates achieved by the Arroyo administration were during election years. This is not surprising as government construction projects boom during the period right before the election ban; printing, transportation, communications, as well as the service sector experience increased activity during campaign periods; and money flows during elections thereby stimulating consumer spending.

Ibon Foundation’s research head Sonny Africa, on the other hand, believes that despite having the highest GDP growth rates the Arroyo administration failed in achieving development and progress because it had the longest running unemployment and underemployment rates in the country’s history. “True unemployment,” according to Ibon, averaged at 11.2 percent while part-time workers comprise 12.3 million of the 35,992,000 million employed as of January 2010. It also cited the 530,642 or 13 percent increase in the number of poor families since 2000 reaching a high 4.7 million in 2006 and the increase in the number of poor Filipinos by 2.1 million over that same period reaching 27.6 million individuals. Household real incomes, said Africa, fell by an average of 20 percent across all surveyed homes between 2000 and 2006.

Ibon also said manufacturing’s share in GDP was down to 21.8 percent in 2009 or as small as in the 1950s, while agriculture shrunk to 18.1 percent of GDP or its smallest share in the country’s history. The Arroyo administration also had, according to Ibon, the steepest increase in national government (NG) deficit in the country’s history– an increase of P286 billion ($6,217,391,304) or 2,300 percent over just two years from P12.4 billion ($269,565,217) in 2007 to P298.5 billion($6,489,130,434) in 2009. Thus, revealing the fundamentally weak state of the Philippine economy.

The problems being cited by Ibon were not caused merely by corruption – although corruption watchdogs estimate that corruption siphons off around 10 to 20 percent of government resources. These were caused by flawed economic policies that have been implemented not only by the Arroyo government but by previous administrations as well. The export-oriented, import-dependent character of the Philippine economy has made it fundamentally weak. Chronic trade deficits have made the country cash and capital-strapped, thereby making it dependent on foreign loans and investments.

The more recent worsening of the people’s living conditions was caused by the Arroyo government’s faithful implementation of globalization policies, specifically liberalization, deregulation, and privatization. The worsening of the economic crisis that hit the centers of capitalism – the US, Europe, Japan – hard and underdeveloped, backward and dependent countries such as the Philippines hardest is proof that globalization is a failed project. It has plunged the world in a deep economic crisis the burden of which is being shouldered by the poor majority.

The inequities in the country is reflective of the inequities in the world. Globally, the richest 50 million has the same income as the poorest 2.7 billion. In the country, the net worth of the 20 richest Filipinos, including close Arroyo allies Lucio Tan, Enrique Razon, Jr., Eduardo Cojuangco, Enrique Aboitiz, among others, amounted to P801 billion (US$15.6 billion), which was equivalent to the combined income of the poorest 10.4 million Filipino families.

According to the 1999 report of the United Nations Development Program, the income gap between the fifth of the world’s population living in the richest countries and the fifth in the poorest was: 3 to 1 in 1820; 11 to 1 in 1913; 30 to 1 in 1960; 60 to 1 in 1990; 74 to 1 in 1997. In the country, according to Ibon, the net income of the Top 1,000 corporations in the country rose from P116.4 billion ($2,530,434,782) in 2001 to P416.7 billion ($9,058,695,652) annually from 2002-2008 while the minimum wage in the National Capital Region – which has always been relatively the highest in the country – increased by a mere P5 ($0.108) in real terms from 2001-2009.

The number of poor families and individuals in the country could have been more if not for the low P42($0.91) per person per day poverty threshold set by the government. According to World Bank 2001 estimates: 2.8 billion people in the world live on less than $2 a day (nearly half). In 2005, 1.4 billion people or one out of four in the developing world live on $1.25 a day.

Addressing corruption would enable the government to maximize its available resources, including the 10 to 20 percent that go to the pockets of corrupt officials. However, this would not necessariy result in the betterment of the people’s lives. If the incoming Aquino administration opts to pursue the same failed policies of the Arroyo government – liberalization, deregulation, and privatization – and maintains the export-oriented, import-dependent character of the Philippine economy and thus, not address its underlying backward, agricultural and pre-industrial state, the crisis would remain, nay worsen.

Sadly, the impending appointments of Cesar Purisima, the former finance and trade secretary of the Arroyo government, and Alberto Lim of the Makati Business Club indicate that the incoming Aquino administration does not intend to deviate from the track being pursued by the outgoing Arroyo government. It seems it does not have the intention of reorienting the economy to enable the country to produce for its own needs in the long-term. It appears that it would not support and protect local businessment to enable them to compete with imported products and in the process, help in mechanizing manufacturing, nor would it take a direct hand in modernizing industry and agriculture and implementing a truly comprehensive agrarian reform program.

Actually, incoming president Benigno Simeon Aquino need not provide favors to his campaign contributors from big business. He just has to implement the same economic policies and programs of the Arroyo government and surely, they would be able to recover their campaign contributions and even more. Just look at the exponential increases in their net income from 2002 to 2008. The problem is, at whose expense? (

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