After the relinquishment of US sovereignty over the Philippines in July 1946, the Philippines was one of the most promising economies in Asia. In 1950, its living standards were still twice as high as in Taiwan or South Korea. However, as industrialization took off in Japan and spread to tiger economies in East and Southeast Asia, the Philippines fell behind. Today the Philippine living standards are about 15% relative to Taiwan and 20% in comparison to South Korea.
In the postwar era, the US retained military bases in the Philippines, as well as commercial privileges regarding Philippine imports and natural resources. As economic growth and development began to intensify in the mid-1960s, Ferdinand Marcos won the election. During his first term, industrialization increased, infrastructure was created and schools were launched. Meanwhile, Marcos steered increasing funding to the military, while sending more than 10,000 Filipino soldiers to Vietnam to support the US.
In his second term, Marcos began to create a personality cult, amid increasing economic and political turmoil. When he declared Martial Law in 1972, Washington looked the other way. Thanks to heavy borrowing, the economy grew. But by the 1980s, foreign debt servicing and mismanagement of key industries caused a major downturn and the Philippines became known as the “sick man of Asia”.
The 2010 election win of President Aquino was buttressed by the legacy of his father, an opposition leader allegedly assassinated by Marcos, and his mother, the first post-Marcos president. During his rule, Aquino began his struggle against corruption and good governance, but growth did not filter down. Every third or fourth Filipino continues to live below the poverty rate, while drugs and crime thrive in slums.
While Aquino failed to achieve inclusive growth, he did get US forces back to the Philippines.
By Dan Steinbock @ The World Financial Review