Why Are We Poor?

By Mortz C. Ortigoza

The 2004 column below of Tony Abaya influenced me a lot about my insight on the Philippine Economy since my favorite subject in the late middle and late 1990s and early 2000s when I was an Assistant Professor in universities in Manila and Dagupan Cities was Economics.

To those who follow up my political blog could notice how I wrote those economic analysis like Liberalization and others supported by data I culled from the World Bank, Central Intelligence Agency (Yes Virginia, the effin’ CIA compiled too the latest Gross Domestic Products (GDP), Per Capita Income (PCI), and other economic barometers of a country), Philippines Statistics Authority (PSA) that I even used to tear out the hubris of a former congressman and mediocre national reporter whose economic ignorance became his folly in our debate at Facebook.

Why Filipinos Are Poor? Photo Credit: Ibon Foundation

Tony Abaya, who is frail now, gave me an imprimatur in 2007 as my only syndicated columnist when the colored fledgling weekly newspaper’s Northern Watch in the mammoth Pangasinan province landed its maiden issue in the newsstands. Why Are  We Poor?, Abaya version was the first two Op-Eds, the other was from this wannabe writer, editor, and publisher teh-he, the Watch carried during that time.

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Why Are We Poor?
Reprinted Column By Antonio C. Abaya
Written Dec. 14, 2004
For the Manila Standard,


The title is that of a talk delivered by Filipino novelist F. Sionil Jose before a gathering at the University of the Philippines in Diliman on Nov. 23 2004, which someone forwarded to me for my comments.
 Sionil Jose says that “we are poor because we have lost our ethical moorings, this in spite of those massive religious rallies of El Shaddai, those neo-gothic churches of the Iglesia ni Kristo sprouting all over the country, in spite of nearly 400 years of Catholic evangelization….”

“We are poor because we are not moral. Can this immorality as evidenced by widespread corruption be quantified? Yes, about P20 billion a year is lost, according to NGO estimates.

“We are poor because we have no sense of history, and therefore, no sense of nation. The nationalism that was preached to my generation  by Claro M. Recto and Lorenzo Tanada was phony………

“We are poor because our elite from way back had no sense of nation – they collaborated with whoever ruled – the Spaniards, the Japanese, the Americans and, in recent times, Marcos. Our elite imbibed the values of the colonizer…..”

Here I disagree with Sionil Jose. To understand an economic phenomenon like poverty, one must look for economic causes, not moral or political or ideological ones. To put it simply and bluntly, we are poor because our economy did not and does not generate enough jobs for those who need and want to work. Why our economy did not and does not can best be explained by six economic reasons:

One. In the mid-1950s, our minimum wage law came into effect. When American firms started to move their manufacturing activities to East Asia in the 1960s, they put up most of their factories in Taiwan and Hong Kong, not in the Philippines, even though most Filipino workers could understand some English (most Chinese then could not), and even though Filipino managers were familiar with American business practices (while most Chinese then were not).

The compelling reason for choosing Taiwan and Hong Kong over the Philippines was:  wages then were lower there than here, and, more important, there was no minimum wage law there. So even though the Philippines enjoyed the second highest standard of living in Asia next to Japan’s up to the late 1960s, we began to lose that lead to Taiwan and Hong Kong in the 1970s. (See “How the Philippines Got Left Behind, Part I,” Nov. 13, 2001.)

Two. In the 1970s, South Korea, Taiwan, Hong Kong and Singapore deliberately geared their economies to the export of manufactured goods. In the 1980s, Malaysia, Thailand and Indonesia  followed their lead. The growth of export industries created jobs, jobs, jobs, which in turn stimulated the growth of manufacturing industries for the domestic markets, which created more jobs, jobs, jobs. This pushed Singapore, South Korea, Malaysia, Thailand and Indonesia (and Taiwan and Hong Kong even more) ahead of us in economic development in the 1980s.

The Philippines did not seriously pursue an export-oriented strategy until the 1990s, under President Ramos, but by that time the global marketplace had become over-crowded, especially with the entry of the People’s Republic of China.

In the 1970s, President Marcos had tried to join the export race, but this was opposed by communist high priests Renato Constantino Sr., Edberto Villegas, Walden Bello and Horacio Morales and their favorite sacristan Conrado de Quiroz, and was deliberately sabotaged by KMU communist labor militants through strikes after strikes against export-oriented manufacturing companies.

In 1965, when East Asia was exporting only commodities, the resource-rich Philippines’ total exports amounted to $769 million, while resource-poor South Korea and Taiwan exported only $175 million and $446 million worth, respectively.

In 2001, after 30 years of manufacturing-for-export, South Korea’s and Taiwan’s exports reached $159 billion and $122 billion, respectively, while the late-coming Philippines’ totaled only $37 billion. There is always a penalty for being late and last. (See “Losing the Export Battles,” April 19, 2002; and “How the Philippines Got Left Behind, Part II,”  March 15, 2002.)

So in those 36 years since 1965, South Korea’s and Taiwan’s exports grew 908-fold and 276-fold, respectively, while ours grew only 48-fold. I leave it to others to calculate how many million jobs we lost by default for not having pursued more vigorously a manufacture-for-export strategy in the 70s and 80s, as our successful neighbors did.

Three. Having been left behind by the export bus, we also missed the tourism bus. In 1991, the Philippines and Indonesia drew in the same number of foreign tourists: one million. In 2004, or 13 years later, the Philippines is still struggling to attract 2.5 million, while Indonesia is expected to draw in six million, despite the Bali bombing in October 2002. This year, Hong Kong, Singapore, Thailand and Malaysia are expected to attract 10-12 million tourists each. Again, I leave it to others to calculate how many million jobs we have lost by default for being such an unattractive place to visit. (See “Wow, Philippines!” July 08, 2004.)

Several reasons account for our poor image, the most prominent being political instability due to coup attempts by Gringo Honasan, EDSA 1 and EDSA 2 and EDSA 3, high-profile kidnappings by the Abu Sayyaf, terrorism by Muslim secessionists, endless insurgency by the NPA and acrimonious streets protests by communist front organizations. Take your pick.

Four. Having failed to develop a wide manufacturing base during the export boom of the 70s and 80s, the Philippines under President Ramos foolishly embraced free trade and globalization, even ahead of, and more enthusiastically than, much more developed Taiwan and South Korea. We naively opened our economy to the products of more aggressive countries, thus forcing the closure of many domestic producers and the loss of jobs by countless Filipino workers. No wonder an average of 3,500 Filipinos leave these shores everyday for jobs abroad that they cannot find here. (See “Protectionism Wins Over Free Trade,” March 06, 2002, and succeeding articles.)

Five. Similarly committed to free trade and globalization, President Arroyo has a pronounced bias against manufacturing, preferring to concentrate instead on agriculture, telecommunications and tourism (kuno). She does not buy the rule-of-thumb that I tried to sell to her: that a hectare of agricultural land, planted to rice or corn, cannot sustain even one family for one year; while that hectare of land, if converted to a manufacturing zone, can sustain hundreds of families. I thought my logic was unassailable. (See “GMA – the best there is but….,” October 03, 2001, and succeeding articles.) 

Instead, President Arroyo goes for gimmicks like giving away P6 billion worth of free food every month to the 20 poorest families in every barangay nationwide, and selling railroad right-of-way to the squatters who occupy it. These gimmicks make as much economic sense as over-printing money and scattering it from airplanes.

Six. Even as the economy failed to generate sufficient jobs in the last 36 years for the reasons outlined above, the Roman Catholic Church continues to actively oppose any and all artificial methods of birth control, stubbornly oblivious to the negative connection between a weak economy and a galloping population growth rate. 

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