The Philippines: A Swordsman in A Gunfight

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Period

Imports

Exports

Balance of Trade

1941

135.6

110.5

25.1

1946

295.9

64.2

231.7

1947

511.1

263.4

247.7

1948

584.9

309.6

275.3

1949

585.9

247.9

338.0

1950

341.9

331.0

10.9

1951

489.0

427.4

61.6

1952

421.4

345.7

75.7

1953

452.4

398.3

54.1

1954

478.7

400.5

78.2

1955

547.7

400.6

147.1

1956

506.2

453.2

53.0

1957

613.2

431.1

182.1

1958

558.7

492.8

65.9

1959

523.6

529.5

5.9

1960

603.0

560.4

42.6

1961

611.3

499.5

111.8

1962

586.7

556.0

30.7

1963

618.2

727.1

108.9

1964

780.3

742.0

38.3

1965

807.6

768.5

39.1

1966

852.8

828.2

24.6

1967

1062.2

821.5

240.7

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[pic 4]

Leveling the ‘Playing Field’

Those who bring a knife to a swordfight may have a chance to win. Those who bring a sword to a gunfight may either be an idiot or someone who can’t even afford to buy a gun. In a similar context, those who trade mostly raw agricultural products for stuff like gadgets, laundry detergents, electronic devices, cars, chocolates, etc. (you get the point) would most likely lose the trade game.

Restating the Labor Theory of Value, the economic value of a good or service is determined by the total amount of socially necessary labor required to produce it, rather than by the use or pleasure its owner gets from it (Ricardo). This implies that the Philippines must process their agricultural goods into something of a higher value. For example, instead of exporting bananas, why not turn them into banana chips, then package and seal them. The ‘processing’ part will not only improve the quality of exports, but will also provide jobs to the people who would make these.

What the Oldies Did

In 1962 the government devalued the peso and abolished import controls and exchange licensing. The peso fell by half to P3.90 to the dollar. Traditional exports of agricultural and mineral products increased; however, the growth rate of manufacturing declined even further.

Significant tariffs had been put in place in the late 1950s, but they visibly provided insufficient protection. Pressure from industrialists, combined with renewed balance of payments problems, resulted in the imposition of exchange controls in 1968. Manufacturing recovered slightly, growing an average of 6.1 percent per year in the second half of the decade. Conversely, during this decade, the sector was no longer the engine of development than it had been in the early 1950s. Overall real GNP growth was ordinary, averaging somewhat fewer than 5 percent in the second half of decade;