The Philippines to which I returned in the mid-1960s had a highly regulated economy with all types of controls and restrictions  of the market and a proliferation of state-owned enterprises.  This anti-market structure was the result of well-meaning government technocrats who sincerely believed they were protecting the interests of the Filipino consumers from undue influences of profit-hungry capitalists and foreign investors.  Two of them whom I respected for their zeal in protecting what they considered the national interest were the prominent economist and nationalist  Hilarion Henares who headed what then was called the National Economic Council (NEC), the precursor of what is now the National Economic Development Authority (NEDA).  The other was the late Atty. Alejandro Lichauco who was a  brilliant lawyer and sincere economic nationalist.  I just learned that Larry Henares  turned 100 this year.  The two of them  often took me to task for my pro-market views. We had friendly debates  and sometimes not so friendly exchanges of views in the media.  I always respected their contrary opinions.  To my dismay, however, they were highly influential among the economic policy makers which stuck to the Filipino First mentality inspired by the famous Quezon dictum.

In this regard, let me mention to honor his memory, my late brother Dr. Edberto (Eddie) Villegas who considered himself a Marxist and committed his whole professional life to rid the Philippines of what he considered the bane of U.S. imperialism and capitalism.  He was one of the founders of Kabataan Makabayan (KM) with Jose Mari Sison and Nur Misuari.  He taught for decades several generations of U.P. students in the Development Studies program (both in the Manila and Baguio campuses).  Until the end of his life he would frequently appear in front of the  U.S embassy to protest against what he considered U.S. imperialism. During martial law, he was incarcerated for two years  in Camp Crame.  I greatly admired him for his love of country and even willingness to die for it in his frequent trips to the mountains to conduct teach-ins for the New People’s Army.  Needless to say, we were on opposite poles as regards the presence of foreign investors in the Philippines.  This is  another dramatic illustration that corruption was not the main reason for the Philippines to have lost its initial economic advantage in the Asia Pacific.  Ideologies, whether from the right or the left,  spawned erroneous economic policies which in turn were the main reasons for mass poverty and economic stagnation.

Fortunately, in the mid-1960s there appeared a small group of returnees from the US like me who were also uncomfortable with the ultra-nationalist and anti-market policies that prevailed among government officials.  Towards the end of the Diosdado Macapagal Administration, an economic body attached to the Office of the President was established to ensure the implementation of programs proposed by the NEC.  I observed that the ones heading what was called the Program Implementation Agency (PIA) had more pro-market views.  I started to be more hopeful of the future of the Philippine economy.  These were the technocrats like the late Armand Fabella, Placido Mapa Jr., Alex Melchor, Antonio Ayala and  David Consunji.  There was also Jesus Estanislao, with whom I coincided in the School of Economics of Harvard. Thanks to their positive influence on the formulation of economic policies during the first four years of martial law, the Philippine economy grew at a respectable annual rate of 6 to 7%.  Unfortunately, in 1976 President Marcos decided to replace these highly regarded government officials and began to listen more to the advice of what then were considered his political cronies.  This led to the monopolization of strategic industries like coconut, sugar, construction and other industries.  It was this episode in the later years of martial law that that led to massive corruption, explaining, in my opinion,  ten percent of Philippine poverty.  The health of the Philippine economy began to deteriorate and actually crashed after the EDSA revolution. 

The years immediately following the EDSA  revolution were characterized by political turmoil, with numerous military coups  attempting to overthrow the Cory Administration.  Fortunately, the quality of leadership President Cory exercised was such that the Filipino people as a whole supported her so that she was able to put down all the attempts at rebellion, thus laying down the foundation for long-term political stability for the subsequent Administrations.  The Presidency  of Fidel Ramos was the golden age of  market-oriented economic  reforms consisting of measures to privatize, deregulate and decentralize the Philippine economy—all proceeding from the human-nature-based principle of subsidiarity.  I compare the game-changing leadership of FVR to that of Deng Xiao Peng who in I978 opened up the Chinese economy to the rest of the world leading the economic miracle of liberating some 700 million Chinese from dehumanizing poverty. The previous Chinese Administration of Mao Zedung was another perfect example of mass poverty resulting from erroneous (anti-market) policies and not from corruption. Mao could hardly be accused of being a corrupt leader.  In fact, he had such an aversion for corruption that he had many corrupt government officials summarily executed.

Despite the varying qualities of the political leaders who succeeded FVR and President Cory, as I have discussed in many of my articles in the past, the Filipino people were fortunate enough in that the best and the brightest technocrats were always appointed to head all the agencies that had to do with economic policy making.  In  a slow but sure process, the spirt of the market reforms introduced by FVR was respected and the appropriate economic  policies implemented and corresponding institutions established (e.g. the Philippines succeeded in building one of the best Central Banking systems in the world).  From 1986 to about 2010, the competent economic officials appointed even by the worst politicians worked laboriously in policy reforms and institution building so that by the second decade of  this millennium there was already a critical mass of the right policies and strong economic institutions.   By 2011, the Philippines was no longer known as the “sick man of Asia.” Since then the Philippine GDP has been growing at 6 to 7% (except for a short spell during the pandemic) and is expected to grow at least at that same rate, if not higher for the rest of the Administration of President BBM.  As foreign governments, international economic bodies like the World Banks, private financial institutions and think tanks are united in heralding, the Philippine economy is one of the fastest growing economies in the world today, together with our two Indo-Pacific neighbors, India and Vietnam. The most recent good news was the announcement by the heads of state of the U.S. and Japan, during the tri-partite meeting in Washington, D.C. that they expect FDIs from their two countries to amount to a total of $100 billion for the remaining years of the BBM Administration.   Let us make sure that we in the academe work closely with private business and government in bringing in such FDIs which is one of the means (together with improved agricultural productivity)  to attain an annual GDP growth rate of over 8 %--the rate needed for us to have a ghost of a chance to bring down our poverty rate to at least 9% by 2028.  For comments, my email address is bernardo.villegas@uap.asia