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Philippines and the WorldBank
The race to the bottom
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1968 ......Marcos won his 2nd term in office but atthe cost of
the nations foreign
exchange, the country is on the verge ofeconomic collapse.
Marcos approachesthe World Bank for help.
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World Bank demands60 % Devaluation of the peso
Liberalization of the Philippine MarketExport Processing Zones
(EPZ)
Weaker Labor Laws (lower wages)
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Devaluation of the PesoThe prime motivation is to make
Philippine Goods globallycompetitive.
The actual result was hundreds of entrepreneurs whorequired
importation of raw materials and equipment wherethrown into
bankruptcy overnight.
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LiberalizationLiberalization basically means free market,
noprotectionism , reducing the size of regulation bodies
andelimination of any barriers. (laisse-fair economics)
Its highly unusual for a country to develop successfullywithout
some degree of protectionism
The United States itself did not practice Liberalization whenit
was a small country
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EPZsJust like the taiwan models
Actual effect : the Bataan EPZ costed the Philippines$150M
Due to special regulations the government lost more moneyas the
EPZs operated
Basically the Philippines was forced to build infrastructure
toloan, but to build these infrastructure we had to loan first.
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It was a very nice arrangement forthe richer countries, because
they
have all these poor countriesdesperately competing with
eachother to see who can produce goods
most cheaply.
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Martial Law The American Chamber of Commerce wishesyou every
success in your endeavor to restorepeace and order, business
confidence and
economic growth... We assure you of ourconfidence and
cooperation ... We arecommunicating the feelings of our associates
andaffiliates in the United States
-Telegram
The World Bank funneled $2.6B to 61 Marcos Projects
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10% GNP growth to the crash
1973, saw the Philippines hard work could have paid offfroma
$120M deficit in Agriculture to a $270M surplus. $55Million in
foreign investments
1980-1981 : Australia, Canada, Europe , Japan and theUnited
States set-up trade barriers against the Philippines
The World Bank just watched as the country fell into ruins.
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Rural Poverty Unrest Reduction
The world bank forced farmers to adopt
expensivemechanization.
The ones who truly benefited are the large landlords
andcommercial farmers not the small farmers that make thebulk of
the rural population
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$11 B Heavy IndustriesIf the Philippines developed its own
industrial base, thecountry would no longer be such a good customer
for the
multinationals. What finally brought the demise of theprojects
(heavy industries) was the cold shoulder given byprospective
financiers who had learned of the Banks veto
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Effects of the World Bank relationship
OFW dependent economy
Mini-Size Me
90% of budget goes to debt servicing
Privatization (Meralco, Water Services, Philippine Airlines
etc)Way behind compared to our counter-parts.
