What can be done about the Philippines...?

[Ben Franklin]

The Philippines has rampant inflation, and it seems to me it's foreign worker program is the major cause: with huge cash remittances and low GNP, there are too little goods, and too much capital (and not evenly distributed, also).

Here is the Asian Development Bank's Country Economic Review (Year 2003) (http://www.asiandevbank.org/Documents/CERs/PHI/2003/CER_PHI_2003.pdf#search='Philippines%20GNP%20revenue%20foreign%20workers')

Do you have ideas how to increase Philippines' GNP and/or curtail inflation...?

[Ryokan]

The Philippines has rampant inflation, and it seems to me it's foreign worker program is the major cause: with huge cash remittances and low GNP, there are too little goods, and too much capital (and not evenly distributed, also).

Here is the Asian Development Bank's Country Economic Review (Year 2003) (http://www.asiandevbank.org/Documents/CERs/PHI/2003/CER_PHI_2003.pdf#search='Philippines%20GNP%20revenue%20foreign%20workers')

Do you have ideas how to increase Philippines' GNP and/or curtail inflation...?
They need to curb corruption and spending. If they want to improve performance, they need to quit electing demagogues with sticky palms, like whats her name, and cut programs they can't afford.

[Ben Franklin]

They need to curb corruption and spending. If they want to improve performance, they need to quit electing demagogues with sticky palms, like whats her name, and cut programs they can't afford.

I agree that corruption is rampant and that it will be impossible to reform their economy properly without curtailing that also, so let me ask again - Given the above conditions are eliminated, how to increase production...? AFAICS, the cycle of foreign remittances outstripping (?) national goods causes the inflation spiral. What would you do to increase output and/or balance remittances...?

[Ryokan]

I agree that corruption is rampant and that it will be impossible to reform their economy properly without curtailing that also, so let me ask again - Given the above conditions are eliminated, how to increase production...? AFAICS, the cycle of foreign remittances outstripping (?) national goods causes the inflation spiral. What would you do to increase output and/or balance remittances...?
Naw, government overspending is causing those problems. All that debt is inflationary.

[Ben Franklin]

Naw, government overspending is causing those problems. All that debt is inflationary.

Seems like government spending and cronyism/corruption are not the cause:

Poverty, Corruption: The Ties That Bind (http://www.atimes.com/atimes/Southeast_Asia/FJ05Ae01.html)

The main reason may be the absence of a real agrarian reform - an absolute precondition for the economic miracle in Taiwan and South Korea. Land reform created an egalitarian distribution of income, ignited domestic demand, and the whole thing drove an industrialization drive in the 1950s and '60s. Meanwhile, in the Philippines, few were paying attention: after all, the country was growing at rates from 6-10% a year, fueled by its own brand of import-substitution industrialization. But in the late 1960s, the turbo-jeepney came to a halt, because of a structural problem still not solved in 2004: the Philippines was and remains a small market, chiefly because of its tremendous income inequality. With no land reform and anemic exports, the dictatorship of Ferdinand Marcos came up with what might have been a great coup: exporting the country's labor force. Economists in Manila say this was supposed to be a temporary measure. It turned out to be the ultimate lifeline to the Philippine economy - with remittances even helping to prevent the peso from spiraling into total disaster after the 1997 Asian financial crisis.

The Anti-Development State: The Political Economy of Permanent Crisis in the Philippines, a recent joint publication by the University of the Philippines and the non-governmental organization (NGO) Focus on the Global South, written by respected activist Walden Bello and co-authored by Herbert Docena, Marissa de Guzman and Marylou Malig, spells out a devastating case on all the reasons for a crisis that's been going on for four decades. It's unlikely to find readers in Malacanang, the presidential palace. Absence of meaningful land reform certainly is one of the reasons for the crisis. But another, almost as compelling, has been the absence of Japanese capital. "In the period 1985-93, some $51 billion worth of Japanese investment swirled though the Asia-Pacific in one of the most rapid and massive outflows of foreign capital toward the developing world in recent history," the publication states. Thailand, Malaysia and Indonesia could not but grow at dizzying rates - while the Philippines was almost totally bypassed. According to Japanese figures, from 1987-91 Thailand benefited from $24 billion in Japanese, Hong Kong and Taiwanese investments. The Philippines, on the other hand, got only $1.6 billion.

The authors speculate: were the Japanese put off by Philippine corruption? Not really, because South Korea was as corrupt, and Indonesia under Suharto infinitely more corrupt. The answer, once again, refers to the anemic size of the Philippine market. "Japanese investors are strategic investors - that is, they invest if there is the prospect of a growing market ... In the late 1980s, the Philippines was simply not attractive since development, expansion of the market, reducing poverty to create more purchasing power were all being sacrificed to the national priority of repaying the foreign debt - a goal forced on the country by the IMF [International Monetary Fund] and the World Bank acting on behalf of the country's foreign lenders." So the Philippines under president Cory Aquino was basically servicing the huge debt incurred by the Marcos dictatorship. The country's physical, technical and educational infrastructure was left to rot - as it is still. Aquino sank the country further into debt - to pay for the past pile of debt. When Japanese executives examined this situation, they identified nothing else than a strategically depressed market.