Wild yarns and stunted exports

Across East and Southeast Asia, the Philippines was second only to Japan in terms of average income in the late 1950s, according to data compiled by the late British historian. British economy Angus Maddison. Ours was among the fastest growing economies in our part of the world during the post-war decades, notes Dr Florian Alburo in a 2018 article. In particular, only Malaysia and Taiwan did better than the Philippines in merchandise exports in 1970 (with $ 1.6 billion and $ 1.4 billion respectively, against $ 1.1 billion). We were tied with Indonesia, we had more than South Korea and Singapore (both with $ 0.8 billion), and Thailand was even further behind with $ 0.7 billion.

The 1970s then saw us fall behind our neighbors, one by one. By 1980, these countries had left us all behind. Our export earnings of $ 5.7 billion were less than Thailand’s 6.5 billion, Malaysia’s 12.9 billion, South Korea’s 17.5 billion, Singapore’s 18.2 billion, 19, 8 billion from Taiwan and 21.9 billion from Indonesia. And another 10 years later, we were still at a single digit level of $ 8.2 billion, but the same neighbors already had three to eight times ours (Thailand had $ 23.4 billion and Taiwan 66, $ 2 billion). Far from the common thread that the Marcos dictatorship brought a so-called “golden age” to the economy, those decades were lost to us as our neighbors progressed while us languished in relative stagnation.

The 1990s were catching-up years for us, when our total export earnings increased almost five (4.7) times from 1990 to 2000. Indonesia, Singapore, Thailand and Malaysia did saw theirs increase by only 2.4, 2.6, 3 and 3.3 times, respectively. . Vietnam exceeded our export growth even then, however, increasing 5.7 times over this decade. But our apparent export surge was not to last, and we fell behind in growth again after the turn of the millennium. Over the next 20 years, our total export earnings increased only 1.7 times to $ 65.2 billion. Meanwhile, our ASEAN counterparts’ exports grew faster from already much higher levels: Malaysia saw its exports increase 2.4 times to $ 233.4 billion, l ‘Indonesia 2.6 times to reach $ 163.3 billion, Singapore 2.7 times to reach $ 373.7 billion, Thailand 3.3 times to reach $ 226.7 billion and Vietnam a whopping 19 , 5 times to 282.7 billion dollars, which makes our exports paltry in comparison.

It is no exaggeration to describe our export sector as lagging behind our ASEAN peers, and it begs the question of why. Alburo offers answers. All of the above seven countries “began their reconstruction with import substitution as an immediate means of restoring domestic industries” – which meant a “wide range of controls on international transactions” and high levels of trade protection on goods. industries competing with imports. But given the limitations of the domestic market, they turned to export-oriented industrialization and reoriented their policies towards export promotion. The Philippines, however, “stuck too long in import substitution long after others gave up. [it]And although it also professed an export promotion policy, it maintained a system of protection against import substitution. “Indeed, the two incentive systems offset each other, have reduced potential backward linkages between industries and have given confusing signals to economic agents,” he noted.

The country also stood out from its peers by three essential elements for exports: supporting infrastructure, foreign direct investment (FDI) and exchange rate policy. Alburo cites how, even with relatively high road density, the proportion of paved roads in the Philippines remains among the lowest, and ports and telecommunication facilities have been inferior to our neighbors. Complex rules and regulations, a cumbersome registration process and other non-economic factors have led to the “relative drought of FDI in the Philippines”. And while our “export tiger” neighbors have deliberately undervalued their currencies to boost exports, Alburo shows evidence that we have “overvalued [our] currency for so long. We have heard a lot about how stunting children amid growing hunger poses a long-term threat to the future of our country. Going forward, the other stunting – that of our export sector – deserves similar urgent attention.

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