New Directions in Domestic Policy and Foreign Relations

The Philippines: New Directions in Domestic Policy and Foreign Relations
CIAO DATE: 6/99
The Philippines
New Directions in Domestic Policy and Foreign Relations
David G. Timberman (ed.)
Asia Society 1998
Bibliographic Data
To the memory of Paul Cunnion
Map Preface
By Nicholas Platt
Introduction: The Philippines New Normalcy

By David G. Timberman
Sustaining Economic and Political Reform: The Challenges Ahead

By Paul D. Hutchcroft
Philippine Economic Growth: Can It Last?

By Emmanuel S. de Dios
The War Against Poverty: A Status Report

By Solita Collas-Monsod
Decentralization, Democracy, and Development

By Steven Rood
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New Directions and Priorities in Philippine Foreign Relations

By Jose T. Almonte
The Filipino American Community: New Roles and Challenges

By Mona Lisa Yuchengco and Rene P. Ciria-Cruz
Suggestions for Further Reading

This volume aims to provide a timely, comprehensive, and balanced assessment of the Philippines progress to date, the challenges it faces, and its prospects. Four of the chapters describe the major political and economic reforms that have occurred during the 1990s under both the Aquino and Ramos administrations and assess the prospects for their continuation. Additional chapters offer informed perspectives on the Philippines changing foreign relations and on the evolving roes of the Filipino American community.
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AUTHOR: Timberman, David G. (ed.) TITLE: The Philippines: New Directions in Domestic Policy and Foreign Relations SUBJECT: 1. PhilippinesPolitics and government1986. 2. PhilippinesEconomic
policy. 3. PhilippinesEconomic conditions1986. 4. PhilippinesForeign relations1973. 5. Filipino Americans

PUBLISHED: New York: Asia Society, 1998. ISBN 0-87848-525-2 (Asia Society, USA) ON-LINE ED.: Columbia International Affairs Online, Transcribed, proofread, and
marked-up in HTML, June 1999.
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The Philippines: Map
The Philippines: New Directions in Domestic Policy and Foreign Relations, by David G. Timberman (ed.)
Map
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The Philippines: Preface
Preface
by Nicholas Platt
Publication of this volume marks the completion of Focus on the Philippines, a public education initiative designed to provide the American public with a deeper understanding of the Philippines today. Sponsored by the Asia Society and the Asian Institute of Management in cooperation with the Philippine American Chamber of Commerce, the project has fostered balanced and thoughtful views on the Philippines and the changing nature of U.S.-Philippine relations among policymakers, business people, journalists, scholars, and the American public. The project was premised on the notion that the United States and the Philippines will continue to enjoy a unique and special relationship despite the fact that both are forging closer relations with other neighbors in Asia and the Pacific. U.S.-Philippine relations rest on a firm foundation of shared history, strong cultural and economic ties, and a commitment to democratic principles. Once defined in terms of security, the bilateral relationship has both widened and deepened in the postU.S. bases era. Within an environment of political stability, economic and cultural ties have flourished. Of particular importance to the continued vibrancy of U.S.-Philippine relations is the role of the estimated two million Americans of Filipino descent (Filipino Americans are the second- largest Asian American group after Chinese Americans). Furthermore, there are currently over 100,000 U.S. citizens in the Philippines. At the time Focus on the Philippines was originally conceived by the Asia Society, American interest in the Philippines was at a low point, due to prolonged stagnation of the Philippine economy and perceptions of the Philippines waning strategic relevance to the United States. Because of this, the Asia Society sought to refocus American attention on developments in the Philippines and on their significance to the United States. Philippine government and private sector representatives joined American specialists on the Philippines in addressing policymakers in Washington, D.C., and American public audiences in cities across the United States, from Norfolk, Virginia to San Francisco, California. The project and this publication are the products of many peoples efforts. In particular, I thank Edilberto de Jesus of Far Eastern University and the Asian Institute of Management and Washington SyCip, Chairman of the SGV Group. I am also grateful for the hard work of the many Asia Society staff members involved with the project since its inception: Pamela Joyce, Kate Simpson, Angela Zalamea, Andrew Thornley, and Wendy Hsieh. Finally, I would like to thank David Timberman, Karen Fein, Rayne Madison, and the contributors to this volume. The Philippines: New Directions in Domestic Politics and Foreign Relations is dedicated to the memory of my long-time friend and colleague Paul Cunnion, Executive Director of the Philippine American Chamber of Commerce. Pauls support and enthusiasm for the project were constant and inspiring. During his lifetime he made a substantial contribution to the betterment of U.S.-Philippine relations. Nicholas Platt
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The Philippines: Preface
President Asia Society
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The Philippines: Introduction
Introduction: The Philippines' New Normalcy

by David G. Timberman
The late 1990s is an exciting time for both the Philippines and the study of Philippine society and politics. It is an exciting time for Filipinos because it appears the country has finally escaped the self-inflicted economic and political crises that traumatized it for the better part of a decade, from the early 1980s to the early 1990s. This is a very positive development as the Philippines begins its second century of nationhood. And it is exciting for those who study the Philippines because, with the dust of that tumultuous decade finally settling, it is now possible to get a clearer view of both the changes that have occurred (and are occurring) in the Philippines and the aspects of Philippine society and politics that are more enduring. In retrospect, the 1992 elections marked the end of the Philippines decade of crisis--in part because of the generally credible way they were conducted and in part because of the outcome. The elections were highly competitive (there were seven candidates for president), and with the closure of the huge U.S. naval base at Subic Bay in 1992, they were the first elections in which the issues of American influence on Philippine politics and Philippine-U.S. relations were not major factors. The elections were not free of controversy, cheating, and violence. But the independence and integrity of the Commission on Elections, combined with credible monitoring of the voting and counting by nonpartisan citizens groups and sophisticated public opinion polling, ensured that the close outcome in the presidential contest was considered legitimate by the vast majority of Filipinos. The outcome, of course, was that General Fidel Ramos, Corazon Aquinos trusted secretary of defense and her anointed successor, was elected president with only 24 percent of the vote--just four percentage points more than the second-place finisher, Miriam Defensor-Santiago. Ramos moved quickly and effectively to restore political stability and to promote economic recovery and reform. His government took a number of much-needed initiatives, including addressing the severe shortage in power generation, opening the telecommunications industry and other protected sectors to domestic and foreign competition, seeking negotiated settlements to the armed conflicts that had plagued the country through the Marcos and Aquino years, expanding and deepening the economic reforms begun during the Aquino era, and assiduously cultivating foreign investment. In pursuing these and other initiatives, President Ramos has wisely used compromise and inducements more often than confrontation and penalties. His administration has successfully cultivated the support of significant portions of the political and business elite at the same time that it has sought to work with the countrys vital and increasingly sophisticated nongovernmental organizations (NGOs). In pursing its agenda, the Ramos administration has both contributed to and benefited from the resolution of a number of fundamental issues that had divided Philippine society in the past. For example, there no longer is any serious argument over the basic form of government: the use of force to overturn the existing system (by either the military or the communists) has been roundly rejected, and few Filipinos would dispute the desirability of representative democracy--although the most appropriate institutional
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arrangement is still being debated. Furthermore, there is no longer a fundamental crisis of governance: leadership succession occurred smoothly in 1992; President Ramos has restored a degree of confidence in the national government; the relationship between NGOs and the government has become less contentious and more productive; and on the local level, the Local Government Code has given local governments much greater authority and resources. With the achievement of several years of respectable economic growth, there appears to be a growing consensus in support of essentially market-driven and internationally oriented economic policies--although here too, there are and will continue to be disputes over specific policies and priorities. And finally, as Filipinos look at their place in the world, a natural shift is occurring in the orientation of government officials and the business community toward Asia and away from the United States. However, it is less clear that public attitudes, still influenced by American media and relatives residing in the United States, are shifting as quickly. As a result, the Philippines appears to have entered a period of political and economic normalcy it has not enjoyed since the 1960s. It is important to note, however, that this normalcy is a new normalcy, for there has been significant change in the Philippines. The sources of this change are many. To begin with, there is inexorable generational change, both in terms of the political elite and across society more broadly. As of 1995, almost half of all Filipinos were under the age of twenty (and two-thirds of the total population was under the age of thirty), which means they have little or no recollection of the Marcos era. Elite and mass attitudes have been altered in a variety of ways (though some would say not enough) by the countrys tumultuous recent history. Significant socioeconomic change is being driven by globalization, improving living standards, urbanization, higher levels of education and the spread of mass communications. Politically, the devolution mandated by the 1991 Local Government Code has resulted in an important shift in the locus of power. Finally, fundamental change has occurred in the international context with the end of U.S. military presence in the Philippines, the rise of China as a regional power, the demonstration effect (both positive and negative) of the Philippines economically dynamic neighbors in East Asia, and the growing pressures and opportunities created by the forces of globalization. Entering this period of normalcy does not suggest the end of history for the Philippines--far from it. There will continue to be significant change, and plenty of bumps--such as the current economic turmoil in Southeast Asia--along the way. But at least for now this change is no longer crisis-driven. Nor is it driven by the dictates and needs of an authoritarian ruler. Nor is it heavily influenced by the United States or the Philippines ties to the United States. As a result, it is becoming possible for analysts of the Philippines to begin to assess what is truly intrinsic to the Philippines as the country approaches its second century of nationhood. This might seem like a mundane exercise--on the face of it economic crises, coup attempts, and colorful, personality-driven politics might seem more exciting. But a lively debate is occurring over a number of intriguing and highly significant questions. For one, what is the most appropriate paradigm to understand and analyze Philippine political behavior (on both the local and national levels) at the end of the twentieth century? The dominant model (first formulated by Carl Lande in his classic study, Leaders, Factions and Parties: The Structure of Philippine Politics), which emphasizes highly personalistic patron-client bonds, was developed in the 1960s. Are contemporary Philippine politics still driven by personalism, clientelism, patronage, and pork barrel? In what ways and to what extent are traditional political relationships and behavior changing? What is replacing them? Interest-group or issue-driven politics? Or politics driven by political machines, money, and the media?
On a more institutional level, how representative, responsive, and effective is Philippine democracy more than ten years after its restoration by Corazon Aquino? Is there meaningful democracy in the Philippines? Or is it, as some critics claim, still essentially elitist or formalistic? Is the Philippine state, historically weak, any more able to fend off the predations of powerful families and narrow special interests and implement policies and programs that are in the broader national interest? Are the Congress and the judiciary becoming any less penetrated by special interests? How influential and effective is the Philippines oft-lauded civil society? How far-reaching and significant are the economic reforms begun under Aquino and vigorously pursued by Ramos? How committed is the political and economic elite to continuing the economic reform process? Has a constituency for reform developed that is sufficiently broad-based and influential enough to ensure the continuation of the reform program? With the foundations for respectable economic growth apparently in place, who will benefit from this growth? Will the primary beneficiaries be the old economic and political elite? Is a new economic elite being created? What is the impact on the urban middle and lower classes? On the rural poor? What is the Philippines model for development? Is adequate and effective attention being paid to rural development and the environment? Can the Philippines avoid the developmental mistakes made by other tiger economies such as Thailand and Indonesia? Finally, with the cold war and the presence of U.S. military bases a thing of the past, how are Philippine perceptions of the world and its place in it changing? As Southeast Asias most robust democracy, how well will the Philippines fit into the Association of Southeast Asian Nations (ASEAN), the nine-country regional grouping that includes a number of nations ruled by authoritarian governments? How will the Philippines respond to its vulnerability to diplomatic, economic, and military pressure exerted by its larger Asian neighbors, particularly China? To offset its weaknesses and vulnerabilities, will Manila once again look to the United States as the guarantor of its security? The contributors to this volume address many of these issues. Taken together, the chapters in this volume, which were written in 1997, suggest that while there has been considerable progress, significant challenges remain. Paul Hutchcroft warns that the admirable economic reforms pursued under the Ramos administration have not been matched by the strengthening of political institutions and by the advent of a new form of politics. Drawing on an expanding body of research on local government since the implementation of the 1991 Local Government Code, Steve Rood offers a more optimistic assessment of the prospects for democracy and development on the local level. Emmanuel de Dios, writing at the outset of the Asian currency crisis, concludes that the boom-bust pattern of economic growth in the Philippines appears to have ended, but he cautions that achieving second-generation economic reforms will not be easy and is in no way assured. Likewise, while Solita Collas-Monsod gladly acknowledges that there has been significant progress in the war on poverty, she warns that many important battles remain to be fought before victory can be declared. Her warning is all the more pertinent given the slower economic growth expected in the wake of the regional financial crisis. Jose Almontes description of the geostrategic environment--with its heavy emphasis on regional economic relations and Chinas emergence and its more limited discussion of Philippine-U.S. relations--is a striking example of the dramatic reorientation of Philippine foreign relations over the last five years. This brief synopsis suggests a general consensus among the contributors that significant economic and political progress has been made in the Philippines since the early 1990s. They share the view that the
Ramos administration deserves considerable credit for restoring political stability, building on the foundations for economic reform laid during the last years of the Aquino government, implementing the Local Government Code, and reorienting Philippine foreign relations. However, they also would agree, I think, that political reform has lagged behind economic reform, that the next generation of economic reforms will present new and more difficult challenges, and that insufficient attention has been paid to rural poverty and agriculture. And with regard to the Philippines foreign relations, several of the contributors have underscored the increasing importance of regional and global relations, particularly economic relations. This volume also includes a chapter on the Filipino American community, an increasingly important force in domestic U.S. politics and in relations between the United States and the Philippines. The authors of this chapter, Mona Lisa Yuchengco and Rene Ciria-Cruz, describe the relative newness (and youthfulness) of the Filipino American community, its divisions, its concerns, and its increasing activism. In doing so, they make the larger point that the community is only now coming into its own in terms of playing a major role in American society and in U.S.-Philippine relations. The potential of the community is considerable, but achieving it will require leadership, resources, and a long-term commitment. This volume seeks to provide a timely and comprehensive look at key aspects of the Philippines. However, space and other constraints do not allow us to adequately address every significant topic. Most noticeably absent is a discussion of the important issues of environmental protection and natural resource use. The Philippines has severe environmental problems ranging from rapid deforestation, to erosion and siltation, to severe air pollution in urban areas. It also faces serious challenges with regard to the sustainable use of natural resources such as fresh water, forests, and fisheries. Environmental and natural resource management issues obviously have a major impact on the prospects for sustainable economic growth and development; but they also play a role in local and national politics, and increasingly in the Philippines international relations. A second issue deserving attention is the role of the Philippines vibrant and complex civil society. Although this volume contains numerous references to NGOs and other civil society groups, it does not include an in-depth look at the full range of organizations and groups that make up civil society, including grass roots peoples organizations, NGOs and NGO coalitions, professional associations, labor unions, the media, and the Catholic Church. These groups play an important role in shaping national economic and social policies, in enforcing a degree of transparency and accountability in government, in grass roots development, and in encouraging citizen participation in public affairs. Although the capabilities, scope, and impact of Philippine NGOs is sometimes overstated, they are no doubt a critical dimension of democracy in the Philippines--all the more in contrast to the marginal role of such traditional groupings as political parties. Despite the end of crisis and the advent of the Philippines new normalcy, the nations future is far from certain. The Philippines remains vulnerable to the vicissitudes of the international economy, to the actions of larger regional powers like the United States, China, and Japan, and, of course, to the behavior and choices of its own leaders and citizens. With regard to the last of these, the countrys future will in no small part be determined by Filipino responses to the following questions. What, if any, changes will be made to existing political institutions, and will these changes be made in a way that most Filipinos consider to be legitimate? Recently there have been controversial attempts made
to overturn constitutionally mandated term limits. There also has been a recurring debate over the merits of shifting from a presidential to a parliamentary system. In the event that these or other changes are made, will the process by which they are made be principled as well as legal, so that it does not damage constitutionalism in the Philippines? In addition to possible institutional changes, what changes will occur in other aspects of Philippine politics? Will the future see the development of meaningful political parties? Are traditional electoral politics on the way to being replaced by politics driven by big business, celebrity politicians, and the media? Will there be meaningful reform of the institutions of government? Will a serious effort be made to improve the ability of the state to perform essential functions including ensuring security, levying and collecting taxes, monitoring and enforcing regulations, and impartially administering justice? And with the 1998 elections in prospect, will the credibility and capabilities of the Commission on Elections be restored to the high levels of both it had at the time of the 1992 elections? How will policymakers and the private sector respond to the economic and social challenges posed by the regional economic slowdown? Will the consensus in favor of economic reform and liberalization be sustained? Will there be more and more effective government and private sector attention to rural development, poverty alleviation, and environmental protection? Will the benefits of economic growth be distributed throughout the archipelago? Will this finally break the decades-long cycle of violence in the Philippines, fueled by poverty and injustice? Will there be lasting peace in Mindanao? Finally, as the Philippines shifts its focus to the Asia-Pacific region, and to ASEAN in particular, will the nation, with its blend of Asian and Western influences, offer a new model for democracy and development to the rest of Asia? In sum, major challenges face the Philippines. Although the country appears to be out of the woods, it now faces the exciting but daunting task of choosing in which direction it will head. I would like to close with a personal expression of gratitude. As a staff member of the Asia Society in the mid-1980s, I played a small role in the production of another volume on the Philippines, edited by John Bresnan and entitled Crisis in the Philippines: The Marcos Era and Beyond. More than a decade later, I am very pleased both to continue to have an association with the Asia Society and to be able to edit a successor volume on the Philippines with a considerably more optimistic title and message. This would not have been possible without the support and cooperation of a number of people in the Philippines and the United States. Washington SyCip, Edilberto de Jesus, Nicholas Platt, and the late Paul Cunnion, to whom this book is dedicated, all made a major commitment of time and energy to the Focus on the Philippines project, of which this volume is a part. My thanks also go to all of the contributors to this volume for their diligence and patience. And finally, I want to thank my friends and occasional colleagues at the Asia Society--Marshall Bouton, Kevin Quigley, Kate Simpson, Karen Fein, Andrew Thornley, and Connie Custodio--for their assistance and forbearance.

The Philippines: Sustaining Economic and Political Reform

by Paul D. Hutchcroft Introduction
The 1990s are proving to be an important crossroads for the Philippines, as the country not only begins to confront a greatly transformed external environment but also seeks to reverse more than a decade of disappointing economic performance. On the international front, the departure of U.S. military bases from the country in late 1992 (only a few months after Fidel Ramos assumed the presidency) presents potentially daunting challenges both to the position of the Philippines in the world and to the position of the traditional political elite within the Philippines. After almost a century of a "special relationship" with the United States, the Philippine state can no longer rely on U.S. support to guard against external threats, ensure the integrity of its national territory, and guarantee its rescue from recurring balance-of-payments difficulties. The ruling elite, moreover, cannot rely on external support to continue to finance its long-standing dominance over Philippine politics and society. In sum, the deal cut at the turn of the century, binding the interests of the United States to those of the major families of the Philippines, has come undone at century's end. On the domestic front, the greatest challenge has been to bring renewed and sustained growth to an economy long in the doldrums. Throughout the 1980s--commonly seen as a "lost decade" for the Philippine economy--annual growth rates averaged only 0.9 percent; between 1980 and 1992 real per capita income actually declined by 7.2 percent. In 1992 Ramos began his presidency with fresh perceptions of the country's place in the world and an ambitious agenda to address the challenges of a new era. The initial years of his term brought major reform initiatives and accomplishments--most notably in the economic realm--and renewed optimism about the possibilities for change. In the late 1990s, however, it has become increasingly clear that the hardest work is yet to come. When he steps down from office in 1998, Ramos will likely be judged by his skill in navigating the country's politics through this critical crossroad and whether he has been successful in charting a course for the economy, domestic politics, and foreign policy that his successors will find worthy of emulation. Analysis of each of these realms suggests that while inducement for change is strong, obstacles to it remain formidable.
Reforming a Laggard Economy

Reform of the political economy was a top priority of the incoming Ramos administration, whose efforts were aided by a widespread sense that new approaches were needed to reverse the country's poor economic performance. The worldwide trend toward liberalization and privatization greatly influenced
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the choice of new strategies, particularly since such policies seemed to be working magic on the country's more economically successful neighbors. In concrete terms, the Philippines found itself faced with decisions about how it might participate in a series of associations that demanded greater commitment to economic openness--notably the Asia-Pacific Economic Cooperation (APEC) forum, the General Agreement on Tariffs and Trade (GATT), and the ASEAN Free Trade Agreement (AFTA). In each case, the national leadership was eager to jump on the bandwagon and able to claim the support of important sectors ready to try something new. The departure of the U.S. bases, moreover, seems to have had a strong impact on national perceptions, leaving the country feeling both more exposed and more aware of its surroundings. With the American security umbrella no longer providing an extensive overhang, there was suddenly a greater tendency to look around the neighborhood. In the process, Filipino observers commonly perceived their house--once widely admired--to be in disrepair and were often surprised by the marked improvements in their neighbors' abodes. A number of important initiatives of economic reform are traceable to the latter years of Corazon Aquino's presidency, but it has been during the Ramos administration that new perceptions of the Philippines' place in the world combined with new leadership to produce major goals for the wholesale transformation of the political economy. From the start, President Ramos expressed a clear sense of his country's weakness as a competitor in the international and regional economies. At his inauguration, the president decried an economic system that "rewards people who do not produce at the expense of those who do [and] enables persons with political influence to extract wealth without effort from the economy." The political dominance of oligarchic groups, he explained later, is "the reason why the Philippines has lagged so far behind the East Asian Tigers." Indeed, the Philippine political economy has long favored the interests of major families at the expense of national developmental objectives. Although the roots of their socioeconomic power can be traced to the development of landed elites in the nineteenth century, it was in the American colonial period that major families emerged as a national oligarchy, able to dominate the country's political and administrative apparatus and shape it to their own ends. Even as new entrants have continually expanded the ranks of this oligarchy, and familial economic interests have diversified considerably throughout the postwar years (beyond primarily agriculture to include commerce, manufacturing, services, and finance), the business success and failure of family conglomerates has depended to a large extent on gaining favorable access to political power. When dominated by the elite, mainstream politics becomes a particularistic scramble for the spoils in which ideological differences and coherent interest-based political groupings rarely play a major role. In combating these patterns of privilege, the Ramos reformers declared their determination to level the playing field and promote a process of development beneficial to the whole nation. Perhaps the boldest initiative of the Ramos administration has been its attacks on the so-called cartels and monopolies of major oligarchic family firms that have long had a stranglehold over key segments of the national economy. The first target, a moribund and inefficient telecommunications industry, has been transformed by new competition and now serves as the model for the reform of other sectors. Such attacks on cartels and monopolies are part of a larger program of economic liberalization and infrastructural development being undertaken by the Ramos administration under the banner of Philippines 2000--a rallying cry for the country to join the ranks of the newly industrializing countries
(NICs) by the end of the century. Trade liberalization, long a priority of local technocrats, the International Monetary Fund, and the World Bank, is given ongoing support by the country's participation in the World Trade Organization, APEC, and AFTA. Foreign exchange and foreign investment have also been liberalized, and major state firms have been at least partially privatized. Moreover, in 1994 the rival stock exchanges were at last forced to unite in the midst of extraordinary growth in the long-dormant Philippine bourse. Ramos has also been credited with ending the crippling power shortages that deprived Manila and other areas of electricity in 1992 and 1993 and evidenced the woeful neglect of the country's infrastructure in the previous decade. In 1994 and 1995 the economy achieved annual growth rates of 5.1 percent and 5.7 percent--modest in comparison to many of the country's Southeast Asian neighbors but a tremendous improvement over the rock-bottom growth experienced late in the administration of Ramos's predecessor, Corazon Aquino. By 1995, the midpoint of his term, Ramos's most commonly cited achievements were in the economic realm: the end of the power crisis, the dismantling of the telephone monopoly, and renewed rates of growth. Gross national product (GNP) growth for 1996 reached 6.8 percent, and many in the business community expressed high hopes that economic expansion would continue through the end of the decade. Government and private economists emphasize that current growth patterns, unlike those of earlier years, are driven not by external debt and aid but by domestic and foreign investment. Furthermore, while a large share of this new economic activity is taking place in Subic Bay Special Economic Zone and other areas near Manila, it is also extending far beyond the capital and creating regional centers of growth, including Cebu and General Santos City in the South. Many fresh faces have appeared on the business scene, and Filipino Chinese conglomerates--many of which enjoy strong links to neighboring economies--have achieved heightened prominence. In addition, new business associations (most notably that of an innovative group of exporters) provide hope that the diversified conglomerates of the major families--nurtured by favorable access to the government--may at last be challenged by entrepreneurial elements whose emergence has been far less dependent on special privileges. The decline of American patronage has been an important impetus for the Philippines to give new attention to its neighbors and to regional groupings, especially ASEAN, AFTA, APEC, and a new growth area linking Mindanao with Indonesia's Sulawesi and Malaysia's Sabah. Closer investment and trade ties have strengthened the country's links with the rest of the region, promoting greater consciousness of the economic success of other countries and heightening fears of the Philippines' falling further behind in the mid-1990s. The country's hosting of the APEC summit in late 1996, at the Subic free port, provided an opportunity to show off its economic gains. Such occasions both expose the Philippines to new ways to promote economic goals and introduce its neighbors to distinctive Filipino viewpoints on such issues as human rights, due process, and democracy. In broader perspective, Ramos's Philippines 2000 represents the first major strategic vision of Philippine political elites since the inauguration of Ferdinand Marcos's martial law regime in the early 1970s. Although the eclectic team of advisors supporting Ramos's program expresses a common commitment to a mutually supportive relationship between democracy and development, the team's more specific reform objectives reveal a sometimes peculiar combination of advocacy of a "strong state" (to combat oligarchic dominance and emulate the developmental patterns of Northeast Asian newly industrializing countries) and the more conventional "minimalist state" prescriptions of U.S.-trained technocrats and multilateral institutions (to curb state regulation and promote market solutions). The latter, free market perspective has been most important in defining the specifics of economic policy; the political strategies necessary
for the implementation of new approaches, however, seem to have been crafted primarily by those who argue for a "strong state" that is able to ensure that decisions are made for the entire nation and not for the few. Overall, analysts note a new consensus in favor of liberalization, market discipline, and integration into the world economy. 1
The Limits of Economic Liberalization

The higher growth evident since 1994, however, should not obscure enduring political and institutional obstacles to sustained economic growth and development. Unfortunately, some in the Ramos administration seemed to have grown complacent by mid-1995, pointing--with justifiable pride--to all the basic elements of reform that had already been put in place. Many foreign and local observers were confident that the country had now resolved its economic woes. Much of this confidence was nurtured by neoliberal sorcerers, who claimed that the "magic of the marketplace" would now pop out of the liberalization hat. More recently, however, relative success has at times been overshadowed. The reform measures do indeed provide major advantages to an economy long stifled by an emphasis on privilege for a few, but it has become increasingly apparent that liberalization will not in and of itself guarantee sustained economic growth. At one level, economic liberalization remains limited in scope: It is still not clear that the Ramos administration, despite its commitment to reform, has the political strength to break all key cartels and monopolies and thus succeed in leveling the economic playing field. There has indeed been success in promoting greater competition in telecommunications: The former monopoly, the Philippine Long Distance Telephone Company, is now providing better service and making more money than ever (while many of its new competitors complain that it has often been uncooperative in facilitating interconnections with them). Impressive increases in competition have also occurred in other sectors, most obviously airlines and shipping. Thanks to measures liberalizing foreign exchange and foreign investment, many of the new competitive pressures have come from a major influx of international investment that, until recently, tended to bypass the Philippines for other locales. Alongside such successes, however, there have also been initiatives largely stifled by those who were supposed to be reformed. Frustrated by long experience with economic stagnation, many in the business community (as well as the labor movement) initially indicated a receptiveness to new strategies. The major push for change, however, has generally come not from a business sector anxious to alter often unproductive modes of operation, but rather from a committed core of reformers within the Ramos administration. Exercising effective and persistent leadership at a propitious crossroad in the country's history, they have indeed begun to effect change. But they have often encountered major resistance from segments of the business community that, while expressing support for liberalization in general, have sometimes opposed key elements of specific liberalization measures. At times, careful political strategies have resulted in major victories for the reformers; at other points, resistance has prevailed. A prime example of this resistance is in the banking sector, the most heavily fortified bastion of privilege and profits. New foreign banks have been allowed into the system, but clear limits have been placed on the degree of new competition that will be permitted: The greatest impact will be on upper segments of the market, which were already quite competitive, and there is little promise that banks will begin to service the needs of small- and medium-scale enterprises and ordinary depositors. Bankers voice
rhetorical support for liberalization while congratulating themselves for helping to craft legislation that did not require "too many unnecessary concessions"; developmental objectives, meanwhile, continue to be defeated by the interests of a few. 2 At an even more basic level, there would be clear limits to any program of economic liberalization--even if it were broader and more comprehensive in scope. For one thing, it is unfortunately questionable whether Philippine state institutions of the late 1990s are able to provide the necessary political foundations required even by a minimalist role of the state in economic transformation. Advocates of free market approaches tend to agree that governments have an important role in helping to create a level playing field on which entrepreneurial activity can flourish. But the Philippine government has often had difficulty providing such basic foundations--whether it be supplying electricity and other vital infrastructure, protecting communities from rapacious loggers, arbitrating business disputes, or providing even-handed regulation of the financial system. The Philippine government has not only been unable to emulate the strong developmental guidance provided by the skillful and powerful governments of the East Asian NICs; more fundamentally, it has also failed to provide even basic legal and administrative underpinnings necessary for free market capitalism. Proponents of economic liberalization commonly assert that it curbs overly intrusive governments and lays firmer foundations for private sector initiative. In the Philippine context, however, big government and shortage of private sector initiative, per se, have never been the major ills plaguing the political economy. First, the problem in the Philippines is not the quantity, but the quality, of government intervention. The Philippine government has a small share in the country's GNP relative to other countries in the region. Moreover, the World Bank has repeatedly expressed its concern about the country's low tax effort, which lags far behind that of its more economically successful neighbors. Second, there has never been any shortage of private sector initiative in the Philippines, where access to the political machinery--whether headed by a democratic or an authoritarian regime--has long been the major avenue to success in business, and the quest for "rent-seeking" opportunities brings a stampede of favored elites and would-be favored elites to the gates of the presidential palace. Merely cutting back the role of government through a conventional program of liberalization, then, will not in and of itself ensure either an improvement in the quality of government services or a reduction in the power of the oligarchy that has long plundered that government for particularistic gain. At least one key Ramos aide has warned against the dangers of complacency and emphasized that the toughest work is yet to come. Presidential Security Adviser Jose Almonte, the administration's most vocal critic of cartels and monopolies and the oligarchic privilege that nurtures them, explained in a speech to the Philippine Economic Society in early 1996 that achievements to date represent the "easy" reforms. As "hard" reforms requiring greater administrative capacity are being attempted, he observed, "the weaknesses of the Philippine state are starting to show." It will be necessary, Almonte asserts, to reduce oligarchic influence over the state and promote better governmental provision of basic developmental tasks: "The paradox of market reforms is that they require capable states. Unless the Philippine state becomes stronger and more efficient, it will not be able to deal with our long-standing problems." The current program of liberalization is best viewed as a first step in shaking up the old system; there must also be a long-term concerted effort to provide stronger foundations for sustained economic growth. In an optimistic scenario, one might hope that by reducing the sphere of rent-seeking opportunities, liberalization will disrupt old patterns of private sector plunder, nurture new patterns of entrepreneurial
behavior less reliant on special privileges, and--through the growth of new elements of the business class--create a stronger constituency for those in government intent on creating stronger political foundations for economic growth. Unfortunately, it is equally possible that the entire program will be undermined by the absence of solid foundations.
Overcoming Obstacles to Developmental Success

Since the mid-1990s, the Philippines has succeeded in surmounting many important hurdles. Economic growth has resumed under an administration committed to liberalizing an economy long held back by unproductive patterns of entrepreneurship. But many troubling obstacles still lie ahead, requiring greater attention to underlying institutional and political constraints. Business leaders commonly see insufficient government attention to such problems as poor infrastructure and crime as among the greatest obstacles to sustained economic growth. In 1995, for example, one warned that unless the government provides greater infrastructural support, "we will run into serious problems and growth will level off." 3 Build-operate-transfer arrangements with private firms have often provided a clever means of circumventing an inefficient bureaucracy, but delays on the $760 million North Luzon Expressway project have shown that even privatized public-works projects can become bogged down in controversy over alleged improprieties. Although the Ramos administration has devoted major attention to remedying deficiencies, infrastructure remains heavily strained not only by fiscal problems and corruption but also by natural disasters, environmental degradation, and rapid population growth. Administrative initiatives are often dwarfed by the magnitude of the problems involved. Any government would be challenged by the massive quantities of volcanic mud flowing off the slopes of Mt. Pinatubo onto the plains of Central Luzon. As illicit dissipation of resources and interagency battles continue to sabotage an effective response, however, future rainy seasons threaten to bury not only more farmland but also the bustling city of San Fernando, Pampanga. Rice shortages and concomitant inflationary pressures in late 1995 refocused attention on infrastructural deficiencies and low productivity in the agricultural sector, which accounts for about one-quarter of national income and one-half of total employment. The shortages resulted, most proximately, from the government's failure to import additional stocks despite clear indications of a future shortfall (reportedly to ensure that it would not be an issue in the May 1995 elections). Needless to say, regimes unable to guarantee ready supplies of the staple crop tend to find it difficult to build broad support for larger programs of reform. Because the country's commitment to liberalization has not been matched by as strong a commitment to export promotion, a kind of reverse mercantilism has resulted. The mercantilists of Northeast Asia restricted imports while promoting exports; in the Philippines, on the other hand, the ports have been opened up to a stream of foreign goods without any concomitant effort to promote higher-value-added exports. Impressive growth in total exports since 1993 has generally been accompanied by even more rapid growth in imported inputs: While annual export growth averaged 21 percent in the years 1993 to 1995, imported inputs expanded by an average of 22.6 percent. 4 Not surprisingly, the trade deficit was a substantial $11.2 billion in 1996; the remittances of overseas workers and other foreign inflows,
however, ensured that the current account deficit was kept in check. There is also a huge and largely unaddressed need to provide diplomatic support to the some four million Filipinos who work overseas, whose remittances brought nearly $11 billion into the country between 1992 and 1995. The plight of overseas workers received national attention with the March 1995 decision of the Singaporean government to hang Flor Contemplacion, a Filipina who had been convicted of the murder of a Singaporean child and another Filipina. Among Filipinos, Singapore was widely perceived to have framed an innocent worker, and the strong sense of national outrage was intensified by anger over the Philippine government's failure to provide proper legal and diplomatic support to Ms. Contemplacion. This and subsequent episodes of perceived but unaverted injustice have served to highlight the incongruity of a country that depends on the export of labor yet is often too weak to provide proper assistance to its overseas workers. The greatest crisis of confidence in governmental capacity comes in the area of "law and order"--which is ironic given that President Ramos headed up the Philippine Constabulary under Marcos and the entire national defense establishment under Aquino. Highly publicized kidnappings of foreign businesspersons sapped investor enthusiasm in the Aquino years, and the number of reported kidnappings increased from 39 in 1991 to 199 in 1995. Common targets are Chinese Filipino businesspersons and their families, many of whom choose not to inform the authorities because of widespread reports that kidnap gangs are closely connected with so-called law enforcement officials. A September 1995 statement of the Philippine Chamber of Commerce and Industry warned that persistence of "the twin problems of kidnappings and bank robberies" undermines investor confidence and reinforces "the perception that the government is helpless in alleviating the situation." Solutions to the problem continue to be attempted, but the business community and the larger public are increasingly impatient for results in breaking a kidnap-for-ransom "industry" that is actually estimated to have collective profits rivaling that of a major automobile company. If "hoodlums in uniform" have provoked widespread cynicism toward the law enforcement system, "hoodlums in robes" (to borrow the terms of Vice President Joseph Estrada) have had the same impact on a judicial system widely disdained for its frequent dispensing of decisions to the highest bidders. Archbishop Jaime Cardinal Sin, for example, has denounced the "judicial Judases" found throughout the system and observed that the study and practice of law in the Philippines are "as different as heaven and hell." Corruption aside, uncertainties and delays generated by the court system are often a source of business frustration; court rulings related to foreign investment have done little to ease long-standing concerns of international investors. Perhaps the greatest complications, however, are found in the extraordinary quantity of litigation related in one way or another to the plunder of the Marcos years. More generally, sustained economic growth depends on improving the quality of the bureaucracy--described by Ramos as the "weak link" in national developmental efforts. Thus far, the most successful economic reform efforts have been those that merely remove restrictions on competition; far more complicated are initiatives requiring sustained administrative capacity. It is one thing, for example, to liberalize agricultural imports or remove restrictions on agricultural exports, but quite another to provide the roads, irrigation facilities, extension services, and other infrastructure necessary for farmers to improve their productivity and meet the challenges of international competition. Similarly, it is far easier to open up the economy to foreign investment and imports than to develop sustained programs of export promotion which could assist local entrepreneurs anxious to tap new opportunities in world markets.
Recurring administrative scandals highlight the enormous need to develop a bureaucracy that can support, rather than obstruct, the country's developmental needs. Reducing the overall scope of bureaucratic activity, Ramos has argued, is the first step toward enabling the state to begin to perform more effectively the basic tasks required of it. On several occasions he has asked Congress to approve a major reorganization of the bureaucracy, but this is only one of many legislative priorities. In any case, reforming a system overflowing with congressional appointees is a herculean challenge, and efforts to provide salaries sufficient to attract better civil servants face formidable fiscal constraints. Although it is heartening that national leaders recognize the need to strengthen the civil service over the long term, change in the short term is likely to be piecemeal at best. In any process of institution building, a logical place to begin would be the enhancement of administrative capacity at the agencies responsible for such vital tasks as revenue collection, bank supervision, and securities market regulation--where the Philippine state has long been unable to ensure that resources and regulatory responsibilities are used for public gain. Thus, no matter how sound the policy agenda promulgated at the national level, there is little hope of coherently sustaining it in the absence of strong political and institutional foundations.
Emergent Stability or Recurring Conflict?

A major factor supporting renewed economic growth has been a significant increase in political stability; overall, the national political scene is calmer than it has been at any point since before the tumult of the 1980s. The 1992 presidential and congressional elections were widely perceived as an important sign that democratic institutions were consolidating themselves in the post-Marcos era, and the May 1995 congressional elections involved former coup plotters choosing "electoral struggle" as a new means of achieving political power and goals. Most notably, former colonel Gregorio Honasan, whose renegade military band threatened the Aquino administration with several unsuccessful coup attempts in the late 1980s, is now a member of the Philippine Senate. The decline in intramilitary dissension was formalized in October 1995, when the Rebolusyonaryong Alyansang Makabansa (RAM) signed a peace agreement in which it promised to return its weapons in exchange for amnesty and reintegration into the armed forces. Further political stability has emerged from the dramatic weakening of the once-powerful Communist Party of the Philippines (CPP), whose bitter internal differences split it and its military arm, the New People's Army (NPA), into openly feuding camps by late 1992. The party first encountered major problems adjusting to new modes of struggle after the fall of the Marcos dictatorship in 1986, and accommodationist policies of the Ramos administration--the legalization of the Communist Party, amnesty to "rebel returnees," and extensive negotiations with the communist-backed National Democratic Front--seem to have been successful both in encouraging ongoing defections and exacerbating intraparty struggles over strategy. Philippine military drives have further contributed to the NPA's marginalization, although communist rebels remain a presence in some outlying provinces. Today, breakaway urban guerrillas continue occasional assassination drives in Manila, and leftist groups remain capable of mounting occasional protest actions against price and tax increases brought on by economic reform programs. Thus, although the militant left has but a fraction of the influence it enjoyed in the mid-1980s, it would be a mistake to presume the permanent demise of radical solutions to national political woes as long as the social and economic problems that inspired past insurgency remain largely
unresolved. In 1996, the government achieved a major breakthrough in negotiations with Muslim secessionist forces on the southern island of Mindanao. Talks with the Moro National Liberation Front (MNLF) initially were reinstated following a 1992 cease-fire agreement, but they were frequently bogged down by fundamental disagreements over how the promises of autonomy first made by Marcos in 1976 were to be implemented. The MNLF argued that an autonomous region should be granted outright, whereas the government insisted on the need for a plebiscite. Amid threats of renewed hostilities, the two parties reached a historic accord in June 1996: In lieu of an immediate plebiscite, both sides agreed to the creation of a temporary body--the Southern Philippines Council for Peace and Development (SPCPD)--to be headed by MNLF chairman Nur Misuari and nourished with ample funds from Manila (as well as, it is hoped, sympathetic Islamic countries). The range of the SPCPD extends much farther than that of the Autonomous Region of Muslim Mindanao (ARMM) created in 1989, but the ultimate boundaries of the autonomous entity are to be decided in a plebiscite in 1999. In effect, Misuari seems to have abandoned secessionist aims in exchange for patronage resources that will enable him to build up a stronger political base. This base is formidable: He was not only promised leadership of the SPCPD but was also elected ARMM governor (on the Ramos ticket) in September 1996. If Ramos has succeeded in making peace with the MNLF, however, he has at the same time alienated many Christian Mindanaoans. Opposition is far from unanimous--many Mindanao Christian politicians support the president--but there is no question that the agreement will face major resistance from those who resent the stature and resources given Misuari and perceive (incorrectly) that his council will dominate existing governmental units. Ramos, for his part, has mounted a determined campaign to garner support for the agreement and has made its successful implementation one of the top priorities for the remainder of his term. Even if peace is achieved with the MNLF and Christian resistance is quelled, ongoing elements of the Muslim secessionist movement have the potential to pose an increasingly powerful challenge to the central government in Manila. The MNLF's official departure from the battlefield was accompanied by the simultaneous strengthening of other forces, not only breakaway groups from the MNLF but also the Moro Islamic Liberation Front (or MILF, which split from the MNLF in 1978) and the Abu Sayyaf Group (reportedly led by veterans of the Afghan wars). The precise links among these various groups remain the source of considerable speculation, but their military capacity was clearly demonstrated in the April 1995 ransacking of a town in western Mindanao. Officials blame Abu Sayyaf for the attack, as well as for a host of other kidnappings and bombings in Mindanao. The strongest secessionist group, however, is the MILF, whose standing army--about 8,000 fighters by the numbers of Philippine officials, but possibly several times larger according to other analysts--and solid base in west-central Mindanao threaten Manila's control over a significant chunk of the South. 5 Thus, although political stability has certainly been enhanced on many fronts, possibilities for ongoing conflicts nonetheless endure.
Ramos and Congress: New Measures, Old Methods

During the Ramos administration, relations between the executive and the legislative branches reached new--albeit often unstable--levels of cooperation. For the first half of his term, Ramos often achieved striking success in building wide bases of legislative and popular support. Despite winning just under one-quarter of the votes in 1992, he used his considerable skills in old-style political maneuvering to forge a multiparty Rainbow Coalition of support in the House of Representatives. His own political party, the LakasNational Union of Christian Democrats (Lakas-NUCD) won only 41 of 206 seats in the 1992 elections. But through wholesale switching of parties, it claimed 112 seats by mid-1993; eventually the Rainbow Coalition came to comprise nearly three-quarters of the House. Cordial relations between the House and the Palace are nurtured by considerable congressional input into the appointment of cabinet officers (many originating in the House itself), as well as by programs that provide members of Congress at least $500,000 each per year (and, for many, several times more) in discretionary funds to be applied to their pet projects. In exchange, Ramos has enjoyed solid House support for important measures of his economic reform program. The dominance of Lakas-NUCD and its Rainbow Coalition was handily confirmed in the 1995 elections. Unfortunately for Ramos, relations with the Senate have not proceeded so smoothly. Traditionally, the Senate has been a more independent body than the House; because its twenty-four members are elected nationally, many see themselves as serious contenders in future presidential elections. Despite the fact that senators obtain far more discretionary funds than their counterparts in the House, the relatively greater power of each senator makes it far more difficult for the Palace to obtain their compliance. In the 1992 elections, the opposition Laban ng Demokratikong Pilipino (LDP) won a strong majority of the Senate's twenty-four seats and soon found itself accused of "obstructing" the administration's measures of economic reform. Ramos managed to engineer a solution in late 1994, when his Lakas-NUCD forged a coalition with the LDP (described by Ramos as not "a temporary union of inexperienced virgins," but denounced by one Manila newspaper as "a get-together of aging tarts and incompetent harlots"). The coalition emerged victorious in the 1995 elections: Of the twelve seats being contested, the Lakas-NUCD-LDP coalition won nine. Ramos's bloc could now boast twenty-one of twenty-four seats in the Senate, of which fourteen were LDP. This tenuous coalition of weakly institutionalized political parties fell apart within months, however, when Senate President Eduardo Angara was deposed in an August 1995 "coup" seemingly initiated by discontented senators and supported by the Palace. Although its motivation for the coup was probably the Ramos camp's eagerness to cut down a potential rival in the 1998 elections, the result was highly counterproductive. The Senate--and thus the entire Ramos legislative package--screeched to a halt; for months, the only bill to become a law concerned the iodization of salt. Angara, who had formerly given considerable support to reform legislation, established his own opposition bloc in the Senate. The House coalition faced fewer tensions, but the cost of regaining even a modicum of reform momentum has been considerable. House members were given some $1 million each in discretionary funds in early 1996--reportedly to assist the passage of tax measures, oil deregulation, and other legislation. Ramos has continued to deliver ambitious legislative agendas to Congress; however, the price of delivering success becomes higher as the 1998 elections approach. Such transactions began to come under increasing public scrutiny after a major newspaper revealed that the total cost of the two major pork barrel programs had soared to consume nearly $1 billion of the annual budget--and that many of the legislators allegedly receive hefty kickbacks from the projects they sponsor. 6 Sustaining economic reform--not only in the latter Ramos years but into subsequent administrations as
well--ultimately depends on reform of a political process still dominated by traditional politicians (disparagingly referred to as trapos, or dishrags). As Joel Rocamora observes, the administration's "continuing vulnerability to the requirements of trapo politics has made it difficult to clinch a thoroughgoing reform image." A full decade after the restoration of elite democracy, the Philippine party structure continues to be even more weak and volatile than it was in the premartial law era. In the absence of effective political parties organized around some basic programmatic agenda, the passage of legislation requires enormous expenditure of effort and resources on individual legislators. The overall cost--both in terms of public funds squandered and cabinets compromised by corrupt or inept politicos--often becomes apparent long after the short-term victory has been won. 7
Decentralizing Government and Politics

The Ramos administration's reform programs are being pursued while the very shape of the nation's governing structure is being recast from top to bottom in a process as consequential on the political front as liberalization initiatives are on the economic front. In the measures of devolution mandated by the 1991 Local Government Code, the importance of the national bureaucracy is downgraded, while local mayors and governors are provided with greater autonomy and responsibility for carrying out many basic governmental functions in such areas as health, social services, agricultural extension, and public works. Local government units are now much richer (cities and provinces are given 40 percent of internal revenue allotments, compared to only 11 percent before 1992), and they enjoy much more extensive power to raise their own revenues and even negotiate their own loans. Although many voice optimism over the possibilities for greater local control of the decision-making process, others express concern that the devolution of power to local communities has the potential merely to heighten the power of local overlords and disrupt efforts to build greater administrative capacity and consensus at the national level. Despite campaigns against them by Manila authorities, private armies continue to flourish throughout the provinces. The ultimate results of the devolution experiment are likely to vary considerably according to local political and economic conditions. The city and provincial governments of the rapidly growing island province of Cebu offer considerable hope for the success of local devolution: Officials are utilizing their new powers to strengthen their revenue base (by floating bonds, establishing joint property ventures with the private sector, tapping foreign assistance, and proposing major increases in what have long been paltry proceeds from property tax) and initiate long-needed infrastructural improvements. In large part through the mediation of the one clearly dominant political family, it has been relatively easy for Cebu to forge high levels of cooperation with the business community, and nongovernmental organizations (NGOs) have enjoyed good access to local leaders at certain points. In other areas of the country, however, local devolution is likely to have far more mixed results. For it to succeed it is necessary not only to build the strong revenue base required to support local development, but also to ensure that the assumption of greater responsibility actually provides benefits to the entire local community. The Local Government Code seeks to institutionalize the participation of NGOs and so-called people's organizations (POs). As is true of political reform more generally, local devolution must empower those sectors of civil society that have long been effectively disenfranchised by the formidable political, economic, and social power of the Philippine oligarchy. In fact, development-oriented and popular
organizations have in many cases succeeded in empowering communities at the local level, and their national counterparts have often had a significant impact on policy decisions in Manila (as advocates of the environment, consumer protection, agrarian reform, gender equality, minority rights, and so forth). Quite often, NGOs and POs have been able to forge effective ties with established elements of civil society, including the church, academe, media, and labor. But the Local Government Code's laudable goal of institutionalizing grass roots participation has often failed. 8 Despite the profusion of NGOs and POs over the past fifteen years, they still have a long way to go before they can be considered to have significant and lasting influence on the conduct of local government and politics. Despite their successes on particular fronts and in particular localities, the cumulative impact of these nontraditional actors is decidedly weak in comparison to the formidable networks of power enjoyed by the traditional structures that they are confronting. Some umbrella political formations are seeking to build stronger links from the national to the local level, but there is as yet no reformist political party able to articulate comprehensively and effectively the demands of those long marginalized by the political system. This is not to underestimate the popular empowerment that has taken place, nor to minimize the considerable changes that have occurred in the character of Philippine politics. New faces have emerged in recent elections, leading some to see a challenge to the dominance of the trapos. Because traditional ties between local patrons and their clients are undermined to the extent that clients have independent access to new outside resources, the infusion of overseas remittances into local communities becomes a significant force in reshaping long-standing political ties. In some localities, a strong NGO presence seems to be associated with voting patterns that challenge established families. At the national level, anger over electoral fraud keeps alive political reform movements whose roots can be traced to the 1950s. Economic growth puts resources in new hands, and with the middle class emerging as an independent political force one can expect to see important opportunities for emancipation from the political and economic dominance of local oligarchs. Urbanization also promotes a shift from patronage-based politics to political appeals based on name recognition and media exposure; increasingly, voters approach the ballot box more as individuals than as elements of a locally organized bailiwick. In addition, a determined new group of investigative journalists has published major exposs that challenge the powerful and even force resignations of blatantly corrupt officials. In the midst of such changes, however, much remains the same. First, members of well-established political clans continue to enjoy clear domination of such bodies as the House of Representatives, and elections are still tainted by the power of "gold, guns, and goons." The Commission on Elections does not consistently inspire confidence in the electoral process, and in any case the enormous expense of running for election serves as an effective barrier to the entrance of reformist forces into the political arena. Second, many so-called new faces often retain strong connections to old centers of power. Third, as part of the new prominence of media appeals, many of the new faces consist of basketball players and movie stars, some of whom actually manage to continue their careers even as they hold public office. Finally, as noted above, there has been little effective institutionalization of the political parties. As in earlier eras, personalities and familial power generally continue to crowd out clearly defined constituencies and careful debate of real issues.
In the Shadow of the 1998 Elections: Issues and Choices

Since late 1996, political dynamics have to a large extent been shaped by the upcoming 1998 presidential and congressional elections. Central to this has been concern over presidential succession, both among those who have feared that the constitution would be altered to allow Ramos to extend his single six-year term and among those who wish Ramos could somehow extend his term in order to continue his program of reform. But the president repeatedly has promised to step down on schedule, and efforts to change the constitution have faltered. As a result, attention has shifted to the question of whom he will anoint as the Lakas candidate. LDP politicians (led by Angara) have formally broken their bond with Lakas in order to intensify preparations for 1998, although many of the party's members were loathe to deprive themselves of the patronage and other benefits that the coalition provided. Because Vice President Joseph Estrada is widely treated as the front-runner for the presidency, there is considerable speculation about his future alliances and choice of running mate. Legislative races are set to produce considerable turnover, since a large number of representatives and senators face term limits and are unable to run for reelection. One important new institutional arrangement will be a party-list system, mandated by the 1987 constitution, that requires fifty members (roughly one-fifth of the body) to be chosen from parties that were not dominant in the 1995 elections. With anticipation of 1998 as a backdrop, the Ramos administration continues to confront major issues--while keeping a close eye on its troubling performance ratings (which plunged from +32 percent in September 1992 to -19 percent in January 1996 before improving somewhat by midyear). A number of factors at home and abroad have contributed to this decline in popularity, some probably unavoidable but others reflecting at least a temporary malfunction in the political dexterity displayed in earlier years. Corruption scandals involving Ramos appointees marred the administration's public image, and reports of Palace infighting contributed to perceptions of a lack of coherence and focus. Public concern over authoritarian impulses has also had a negative impact on the popularity of the administration. Fears of such impulses are nurtured by the central role Ramos played in the Marcos regime, as well as by the frequent appointment of retired military officers to important government posts. Memories of martial law remain a very emotive element of Philippine politics, and members and supporters of the Ramos administration resurrected past fears when they pushed a variety of proposals to revise the constitution from a presidential to a parliamentary system of government. Because Marcos employed the same strategy to prolong his tenure as chief executive in the early 1970s, prevailing political discourse in the Philippines often associates a shift to a parliamentary form of government with the advent of authoritarianism; indeed, many have accused Ramos and his congressional allies of planning charter revision as a means of circumventing term limits and extending their tenure in office. Such fears were exacerbated by the specifics of the administration's draft proposal, which contained no provisions for a question hour or a vote of no confidence. Public opinion polls reveal continuing opposition to a shift in the form of government, and even those who support other versions of parliamentarism (in hopes that it will nurture more issue-oriented parties and give greater voice to those long marginalized by the elite-dominated electoral system) forcefully denounced the plan. Success in combating crime would be a major achievement for Ramos, who acknowledges that crime is eroding political stability and consequent economic gains. But the public (particularly in Manila) often perceives itself to be under siege by an uncontrollable scourge and has grown cynical of repeated attempts to restore a greater degree of law and order. Further threats to the well-being of the citizenry
come from a regulatory apparatus that often fails to enforce basic measures of public safety. The ease with which fire and building codes can be violated (for a fee) was exposed in the wake of a March 1996 fire at a Quezon City nightclub that took the lives of more than 150 youths; similar stories emerge in the wake of ongoing maritime disasters involving the many "floating coffins" that ply interisland routes. Thousands of Leytenos drowned in 1991 when flash floods poured down from denuded slopes where logging had long been essentially unregulated, and two decades of government failure to confront those who discharge sludge from a copper mine in Marinduque has led to the massive poisoning of seabeds, rivers, and entire communities. Citizens outraged by such carnage demand a regulatory structure able to ensure their safety, but piecemeal and ad hoc responses are too rarely followed up with sustained attention to the long-term goal of strengthening the regulatory apparatus. The government must also find politically and administratively feasible means of increasing its low rates of revenue collection. Expanding the value-added tax was supposed to have the advantage of relatively straightforward administration, but even this tax was plagued with confusion about its implementation. The most important measure, the comprehensive tax reform bill, seeks to raise over P13 billion (largely from changes in excise and income tax structures). New revenues are essential; budget surpluses in 1994 and 1995 were made possible only by huge intakes from privatization and cuts in infrastructural spending. As one economist explains, "None of these trends can, or ought, to be sustained." 9 Ramos has called the bill the cornerstone of economic reform efforts, but thus far legislators have shown more fondness for approving new exemptions than for creating new revenue sources. Laying that cornerstone will require a huge expenditure of political capital, and in the process it is quite likely to be carved into unrecognizable shapes. The formidably influential magnate Lucio Tan found many allies in Congress in his quest to ensure that revenue policies remain favorable to his beer and cigarette companies; he even managed to convince the Supreme Court, in June 1996, to support him in a $1 billion tax evasion case pressed by the Ramos administration. 10 Congress faces enormous pressures from businesses seeking to keep taxes low, and the broader public may reasonably question the fairness of a tax system that has long shown itself incapable of significant exactions from property owners and other holders of large assets. Furthermore, even if a more productive revenue structure is promulgated, the far more fundamental question of whether the administrative structures of revenue collection will be able to implement it effectively will remain. Finally, despite Ramos's strong rhetorical commitment to reducing poverty, those at the bottom of society have yet to find much reason to cheer his economic program. Meager public investment in agriculture has contributed to abysmal growth rates and enduring rural poverty. The deeply flawed agrarian reform program so facilitates loopholes and landlord evasion that it does little to promote redistributive reform and the development of a broad base of prosperity. Moreover, the glacial pace of its implementation discourages investment by both generating uncertainty and providing incentives for conversion of lands to nonagricultural uses. The administration's social reform agenda is meant to address the need for equitable growth, but analysts suggest that it has yet to yield many concrete benefits for the "basic sectors" (farmers, fisherfolk, urban poor, indigenous communities, and disabled) that it is supposed to serve. 11 As the country's population continues to grow over the next generation (to perhaps 121 million by 2030, according to one estimate), demands for government services are sure to expand enormously in scope and complexity. Any lapses in implementation of population control programs will make it all the more difficult for future generations
to construct an economy and a polity capable of ensuring a high quality of life for all.
Confronting the Crossroads

Building and reinforcing the institutional and political foundations needed to sustain reform is a difficult and protracted process. It can only succeed with a combination of effective leadership from the top and the emergence of new forces from below that are able to challenge the long-standing oligarchic dominance of the economy. Ramos has begun to supply more effective leadership, but there is little evidence of the emergence of a strong social coalition able to sustain reform measures into subsequent administrations. The creation of a broad pro-reform coalition would certainly be enhanced by ensuring that the benefits of economic expansion are felt by a larger element of the population. This task is made all the more urgent and difficult, however, by the historical absence of any thorough program of land redistribution; unlike South Korea and Taiwan at similar stages of their industrialization process, the Philippines exhibits a particularly immense gulf in levels of wealth and income between the elite and the millions of Filipino workers, urban poor, and peasants. One can certainly hope that the presence of democratic institutions might promote the eventual creation of a broad social coalition able to sustain measures of economic reform into future administrations. Yet, although democratic institutions appear to be firmly establishing themselves, many sectors of Philippine society remain marginal to the overall democratic process--and decidedly undemocratic forces hold sway in many localities. International observers applaud the Ramos administration's explicit efforts to show that democracy and economic growth can go hand in hand, but Philippine-style democracy is handicapped, not only by the continuing dominance of strong oligarchic forces but also by the weak institutionalization of both its party system and its bureaucracy. Thoroughgoing political reform and the careful nurturing of institutions that promote long-range developmental goals will likely be required for Philippine democracy to deliver economic success. Moreover, it is important not to forget--as do some politicians and business leaders when occasionally tempted to resort to anti-democratic measures--that Philippine-style authoritarianism proved highly inimical to the country's developmental efforts. Recent Philippine experience shows that there are no shortcuts on the road to development and democracy. 12 Liberalization is certainly an important first step to promoting greater international competitiveness, but without strong political and institutional foundations it will not be a sufficient response to the country's long-standing economic woes. Devolution holds out similar hope on the political front, but local governments must still prove themselves more capable than the national government in fulfilling the tasks they have assumed. Both measures are useful in shaking things up; the next--and more awesome--task is to put things together in a way that will promote greater prosperity and freedom for all classes of Filipinos. The Ramos administration has begun to address the new realities facing the Philippines in the 1990s; with so much yet to be done, however, this is not a time for either complacency or blind faith in simple solutions.
Endnotes
Note 1: Joel Rocamora, Breaking Through (Metro Manila: Anvil Publishing, Inc., 1994), pp. 173, 19293; Alex Magno, "The Market Consensus," Far Eastern Economic Review, August 10, 1995, p. 31. Back. Note 2: Rafael B. Buenaventura, President, Bankers Association of the Philippines, "At the Forefront of Change," Fookien Times Philippines Yearbook 1994, p. 180. Back. Note 3: Guillermo Luz, Executive Director, Makati Business Club, commenting on a July 1995 survey of major corporate executives. Philippine Daily Inquirer, August 28, 1995. Back. Note 4: Extrapolated from data presented in Jude Esguorra, "A Report on the Economy at the Homestretch," IPD Political Brief, July 1996. On the dominance of low-value- added exports, see also Raul Fabella et al., "1995: A Tale of Two Semesters," Philippine Export Confederation Policy Paper, February 1996, pp. 1114. Back. Note 5: Western intelligence sources estimate 40,000 soldiers; the MILF itself claims to be 120,000 strong. See Rigoberto Tiglao, Far Eastern Economic Review, March 28, 1996, pp. 2629. Back. Note 6: See Philippine Daily Inquirer, July 26 and 27, 1996. Additional details came forth in subsequent weeks and are analyzed by Amando Doronila in the August 4 and August 18 Inquirer. Back. Note 7: Joel Rocamora, "The Political Requirements of Economic Reform," Issues and Letters, Vol. 4 (October 1995), pp. 14; "Is the Ramos Government Unravelling?" Politik, Vol. 2 (February 1996), pp. 4850; "Unnatural Disasters," Politik, Vol. 2 (May 1996), pp. 4648. Back. Note 8: See Emil P. Bolongaita, Jr., "Rethinking Participatory Governance: The Non-Institutionalization of Local Development Councils in the Philippines," Policy Research Paper No. 2 (Makati: Asian Institute of Management Policy Forum, 1996). Back. Note 9: Clarence G. Pascual, "The Proposed Tax Reform Package," Issues and Letters, Vol. 5 (April 1996), p. 1. Back. Note 10: See A. Lin Neumann, "Who Loves Lucio?" Asia Inc., August 1996, pp. 2126, and Rigoberto Tiglao, "Tan Triumphant," Far Eastern Economic Review, September 26, 1996, pp. 6066. Back. Note 11: Edmund Martinez, "Fidel Ramos Unfinished Business," Politik, Vol. 2 (February 1996), pp. 3940. Back. Note 12: To paraphrase the title of Goran Hydens No Shortcuts to Progress: African Development Management in Perspective (Berkeley and Los Angeles: University of California Press, 1983). Back.
The Philippines: Philippine Economic Growth: Can It Last?

by Emmanuel S. de Dios ** Introduction
Philippine officials proclaim that in the year 2000 the Philippines will be Asias next newly industrialized country. But the real message underlying the hyperboleof the administrations shibboleth, Philippines 2000, is that the Philippines has turned the corner, that economic growth--and hopefully development--can be sustained.Several trends support this. In the brief period since 1993, a significant differenceis apparent in the countrys economic performance. Over the period 1993--95, grossdomestic product (GDP) grew at an average of almost 4 percent annually, with a trendto acceleration: GDP growth was 5.4 percent in 1996 and 5.2 percent in 1997. Thisperformance is certainly a large improvement over output growth of less than onepercent annually in the immediately preceding three years, 1990--92. At that time,the economy was reeling from the effects of a recession caused by a budget crisisand crippling power shortages. From a long-term perspective, however, recent improvements are far from dramatic.In 1995, Filipinos earned on average only as much as they did in 1984 (Figure 2.1),and it will not be until the late 1990s that Filipinos ultimately regain the averageincomes they received a decade and a half ago. Indeed per capita income in 1995 wasonly 9 percent higher than that of the worst years of the 1980s, an improvement ofless than one percent growth annually over an entire decade. This is not the first time the country has appeared headed for a permanent recovery.In the period 1987--89 the economy also seemed to be growing out of recession (theworst in postwar history); GDP growth averaged 5.8 percent, more rapid growth infact than in the recovery of the mid-1990s. Yet the earlier recovery sputtered--inpart because of the December 1989 coup attempt--and gave way to a full-blown recessionby 1991. Indeed, economic growth in the Philippines over the past three decades has been dominatedby a boom-bust cycle, according to local economists. Significant interruptionsin economic growth occurred in 1958--60, 1970, 1974, 1983--85, and 1990--92. Thepast decades record is shown in Figure 2.1 in which two recessions are evident:in 1984--85 and in 1991--92. In the typical pattern, a few years of moderate economic growth are followed by shortagesof foreign exchange, making it necessary to cut back on government spending and contractmoney supply, thus halting the growth episode. A period of partial adjustment follows,and the growth cycle resumes once the foreign exchange constraint is eased, withthe government typically feeling freer to resort to deficit spending. As a result,the growth episodes have closely followed a periodization according to major balanceof payments crises. Although different factors may immediately precipitate thesecrises, they are ultimately traceable to the economys failure to earn enough foreignexchange to pay for the imports
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(both productive inputs and final goods) associatedwith rising output and incomes. The most recent episode of the boom-bust cycle was the recession of 1991--92. Underthe Aquino government in 1987--89, economic growth had begun to recover , led initiallyby deficit financing for rural public works and reviving consumption, then graduallyby investment. GDP growth in this period was as high as 5.8 percent. The attemptedcoup detat in late 1989 again shook investor confidence, so that growth fell to3 percent in 1990. Apart from political uncertainty, however, fundamental economicproblems continued to hound recovery. This boom-bust pattern is often cited by those who contend that the present recoveryis soon bound to end, the same way others did. This has led to a vigorous debateover the soundness and sustainability of the Philippines economic growth. Are thingsfundamentally different, or are they fundamentally the same? Put another way, what--ifany--are the reasons to believe that the current growth trajectory will differ fromthose past? This question has been sharpened by the most recent turmoil which causedsharp depreciations and large drops in almost all Southeast Asian currencies andstock markets beginning in July 1997. Perhaps prematurely, the sustainability ofgrowth in the entire region is being placed in doubt, and this only complicates themore limited task of assessing the extent, depth, and prospects of recent Philippineeconomic performance. The difficulty stems only partly from the gap between governmentaspiration and economic reality. Certain analytical problems present obstacles aswell: How much credence should one lend to different sets of information, both ofwhich are true? Is the recent past a more accurate guide to the future than the moredistant past? Nor are econometric models of any use; they are after all based onlyon past data whose very validity for future trends is at issue.
Table 2.1: Philippine GDP Growth Rates, 1984-97 (percent) Period 1984-86 1987-89 1990-92 1993-97 Average Annual GDP Growth Rates -3.73 5.75 0.93 4.4
Source of basic data: Philippine Statistical Yearbook
This chapter will argue that, in many ways, the current recovery is better placedto succeed than previous ones. First, stable macroeconomic conditions have been restored.Second, some major economic reforms, which in the past have met with social resistance,are now firmly established. The final ingredient is the restoration of investor confidence.The succeeding sections discuss each of these aspects in turn.
Solving the Fiscal Crisis

The main problem confronting the Aquino government was a fiscal crisis, wherein thegovernment faced the following macroeconomic dilemma: Maintenance of a decent levelof social and economic services in the face of low tax collections and a large debt-servicebill meant enlarging the public deficit to be
financed; but it was feared that monetizingthe deficits would lead to inflation (and more important, it was disallowed underthe International Monetary Funds stabilization program). As a result, the Aquino government initially resorted to domestic borrowing usingshort-term instruments. This, however, began to bloat the internal debt andin turn threatened recovery, since it tended to raise interest rates. More immediately,it also raised the governments debt service on past debt and worsened the deficitin nominal terms. The government was then caught up in a vicious circle of borrowingmore in order to repay past loans. Debt service was taking up some 30--40 percentof the budget. In 1990, the Aquino government addressed the fiscal crisis by drastically cuttingback on public spending and quickly raising resources through indirect taxes. TheGulf war in 1991 raised oil prices and bloated the trade deficit, while its threatcreated an aura of national crisis that made calls for austerity more palatable.The government used this opportunity to push harsh crisis measures, including anengineered depreciation, contractionary monetary policy, and renewed fiscal austerity.A 10 percent levy across the board on virtually all imports was imposed, as wellas a peso-per-liter tax on all petroleum imports. Mandatory cuts in spending werealso ordered for all government agencies. By 1992, the budget surplus before debt service had reached 5.2 percent of GNP. Becauseof the tight-money policy, however, interest rates rose and output fell, finallyending the growth episode. In time, the recession would ultimately moderate bothinterest rates and inflation, as well as exert pressure on the balance of payments.As interest rates fell, the recession also relieved the governments nominal deficitproblem as debt service on accumulated borrowings fell. In a way, therefore, the1991--92 recession did solve the immediate fiscal problem, but only at the cost offalling output and employment. The recession was further prolonged by a shortage of power-generating capacity, lastinguntil early 1993, which was due to the governments failure to anticipate an increasedneed for power and put new plants on stream. The recession of 1991--92 and the cripplingpower crisis would do much to obscure most of the Aquino governments earlier achievementsin the public mind and leave bitter impressions of its years in power. One lessonthe recession taught policy makers, however, was the importance of holding the publicsector deficit in check if the domestic debt treadmill was not to be cranked up again. Often overlooked are the significant tax reforms put in place by the Aquino government.In 1986 the value-added tax (VAT) was introduced and the reform of the individualand corporate income tax systems began. These succeeded moderately in raising revenuewithout calling forth any public protest. Taxes rose as a percentage of GDP fromless than 10 percent to 14 percent between 1984 and 1989, before the 1991--92 recessionand the imposition of large indirect taxes. Nonetheless, these efforts were insufficientto overcome the fiscal crisis, chiefly owing to the large portions of the budgetpreempted by debt service, the significant loopholes (chiefly in the form of generousdeductions allowed under the corporate income tax and the partial coverage of theVAT), and finally the poor collection efforts of the government bureaucracy. After the 1991--92 recession, in one of its most significant accomplishments, thenew Ramos administration managed to maintain a consistent budget surplus. This wasdone through a combination of means: first, by keeping the growth of government expendituresin line with the overall growth of the economy, a measure not without its costs,as will be seen below; second, by a reliance on build-operate-transfer schemes toimplement significant infrastructure; and third, by an active resort to raising nontaxrevenues, primarily in the form of proceeds from privatization. The result was aslowing down of the growth of the internal debt and a reduction of internal debtservice.
The realignments of the tax system under the Aquino government probably renderedtax revenues more buoyant, so that as economic growth resumed, tax collections improvedmore than proportionately. The tax effort (ratio of tax revenues to GDP) now standsat some 16 percent. This would be an accomplishment, except that the needs for governmentspending--especially on infrastructure--are much greater. Further attempts at a comprehensivereform of the tax system, especially under the Ramos administration, have been meetingstronger resistance from certain parts of the corporate sector. To provide essentialinfrastructure without bloating the budget deficit, the government since 1992 hasrelied on private sector initiative and financing in the implementation of some largeinfrastructure projects. Another element in resolving the fiscal crisis was the aggressive resort to nontaxrevenues through the sale of public assets. On the one hand, this was an obviousrecourse: The government had accumulated a large number of unprofitable (often overvalued)assets owing to guarantees it had extended in the past. Their maintenance was a drainon public resources, hence it was an easy decision to be rid of them. The Aquinogovernment had begun in this manner; between 1986 and 1989, nontax revenues representedmore than 20 percent of total revenues. Since 1992, however, the idea that not only losing enterprises, but even profitableones could be sold off became accepted within government. This realization was partlydue to the exigencies of raising revenues through nontax means. Obviously, the proceedsfrom one-time privatization will moderate substantially as the supply of vendiblegovernment assets gradually runs out. Nontax revenues accounted for more than 23percent of total revenues in 1994; this fell to less than 10 percent in 1995. The last element in the return to macroeconomic stability was the rehabilitationof the central bank in 1993. Before then, the central bank could not function effectively,owing to a negative net worth caused by bad loans extended during the Marcos regime.As a result, the national government had to perform quasi-monetary functions, issuingT-bills in excess of its own needs for budget financing, bloating the budget in theprocess with higher payments on internal debt. Under a 1993 law, the government reestablisheda new central bank and took over the bad-loans portfolio of the old one. This constituteda large step in allowing independent monetary policy to be conducted and in disentanglingmonetary from fiscal policy. The effects of having gained control over the deficit were palpable, namely, lowernominal interest rates and a moderation of inflation. As the governments need fornew borrowings was reduced, the pressure on interest rates was also lessened, whichin turn also reduced the debt service on old debt. Falling deficits also temperedpeoples expectations of future inflation, and as a result actual inflation has declinedsignificantly. The close relationship between this development and the fall in thegovernments budget deficits as a share of GDP is striking (Figure 2.2). Inflation has also been moderated by the pesos continuing stability, although thishas been a mixed blessing, as the subsequent sudden depreciation in July 1997 showed.The peso had actually appreciated nominally since 1991, and the exchange rate hadhovered since then at an almost constant P26 to $1. After the successful restructuringof the countrys foreign debt, inflows were sustained by an incipient export boom,overseas workers earnings and other factor income, as well as large inflows of foreigncapital, which have resulted in positive payments balances notwithstanding an increasingcurrent account deficit. The central banks net international reserves as a resultincreased dramatically from the negative balances of the 1980s to more than $11 billionby late 1996 (Table 2.2). By the middle of the 1990s, the country had restored bothfiscal and monetary control, while the perennial problem of external
balance thathad been immediately due to the foreign-debt hangover had been addressed--at leastin the short term.
Table 2.2: Exchange Rates and International Reserves, 1990-96 Year 1990 1991 1992 1993 1994 1995 1996 Exchange Rate (pesos/$) 24.31 27.48 25.51 27.11 26.42 25.71 26.2 Net International Reserves* ($million) 66 2170 3661 3495 7121 7762 11467
Source: Bangko Sentral ng Pilipinas, Selected Philippine Economic Indicators. * End-of-period balances; figure for 1996 isas of end-September.
The recent speculative attacks on the peso and other currencies of the region haveunsettled the previous situation that was increasingly overly founded on continuingforeign portfolio inflows. In July 1997, the central bank attempted briefly to defendthe peso against speculation by selling more than $4.5 billion worth of foreign exchangein one week. This explicit defense of the currency was soon abandoned, however, asreserves thinned out. The peso then depreciated sharply from P26 to P30 to a dollarover a period of days. The central bank next resorted to raising interest rates andcontrolling liquidity. This worked only briefly, and by the end of 1997 the pesohad depreciated more than 50 percent against the dollar. In what could be a hopefulsign, however, inflation continued to be at single-digit levels, with business beingworried more about the recessionary consequences of the central banks high-interestcure, which was worse than the depreciation itself. Indeed, notwithstanding itssuddenness, the depreciation represented a badly needed correction of the one macroeconomicvariable that had slowly strayed out of line. Its consequences properly handled,the depreciation could represent a shot in the arm for the flagging manufacturing(and especially export) sector over the next few years.
Structural Reforms
Determining the character and sustainability of economic growth requires an examinationof regimes of trade and investment, since they affect the relative profitabilityof various industries and, in this manner, guide the flow of new investments. Therepeated occurrence of the boom-bust syndrome in the past was due in large part toan industrial portfolio that consisted largely of uncompetitive or inefficient industries.Adjustment in those circumstances simply meant depressing the import demand ofsuch industries through a contraction of output all around, i.e., a recession, enoughto temporarily restore the external-payments balance. The so-called recovery phase,however, would subsequently revive the same
set of uncompetitive industries, puttingthe economy on course for another crash. There are indications, however, that this pattern is in the process of being broken.Aside from the restoration of macroeconomic stability, the most recent growth episodeis distinguished from previous boom-bust cycles by its occurrence in a context ofsignificant structural reform. Changes have been most far-reaching in the trade regime;the momentum for lowering the level and narrowing the spread of tariff protectionhas been maintained therein. The overall climate for investment, meanwhile, has alsoundergone dramatic changes, with formerly regulated, restricted, or monopolized industriesbeing opened to competition from new entrants. These industries have included powergeneration, telecommunications, interisland shipping, passenger and commercialair transport, banking, urban water and sewerage services, and oil trading and refining.The chances for a repetition of the boom-bust cycle are lessened by new investmentsentering industries and firms that are competitive and earn enough exports. Trade Reforms The system of protection has long been a bone of contention and has often been depictedas the epitome of the struggle between political and economic forces in the Philippineeconomy. It is in this area, however, that both the Aquino and Ramos governmentsmay be said to have accomplished the largest changes, in a long but steady processof removing the protectionist bias of the trading regime. After the fall of the dictatorship, the Aquino governments import-liberalizationprogram of 1986 removed a large number of quotas and other nontariff measures, convertingthese into tariffs. One of the last acts of the Aquino administration was to putin place a large-scale tariff reform to narrow the spread and lower the average levelsof tariffs over the years 1992--96. The Ramos administration followed through on this commitment by remaining firm inthe implementation of the reforms initiated under Aquino. The momentum was maintainedby the promulgation of another phase of unilateral tariff reductions beginning in1996 and ending in 2001, further narrowing the levels and spread of tariffs. Theneed to adjust tariffs in the context of the countrys participation in the ASEANFree Trade Area (AFTA) partly justified this. Upon its accession to the World TradeOrganization (WTO), the Philippines bound its industrial tariffs to those set underthe Aquino administration and committed to converting remaining agricultural quotas--exceptfor rice--into tariffs. (Japan and South Korea were the only other countries besidesthe Philippines that sought and were given exemptions from the require- ment of theGeneral Agreement on Tariffs and Trade [GATT] to convert agricultural quotas intotariffs.) Finally, as a member of the Asia-Pacific Economic Cooperation (APEC) forum,the Philippines supported the Bogor Declarations objective of attaining free tradein the region by 2020 and submitted a unilateral (albeit nonbinding) action planthat would attain a low uniform tariff by 2005. This succession of initiatives has resulted in a more or less consistent increasein the countrys openness to trade. The average level of protection for importableshas fallen from 47 percent in 1983 to 32 percent by 1995. For agricultural imports,tariffs decreased from 63 percent to 28 percent between 1983 and 1995, while formanufactured imports, average protection fell from 45 percent to 33 percent. Thereduction in tariff rates for agricultural imports has been especially large in relativeterms. The long history of failure in trade reforms--and their apparent success in recenttimes--is interesting on its own terms as well as instructive for assessing the likelihoodof success of subsequent similar
initiatives. Previous attempts at trade reformsin the Philippines have suffered historically from a weak internal constituency--anunderstandable state of affairs, since the gains to be reaped by industries, firms,and workers appear amorphous and far in the future as compared with the reality ofcurrently established interests. Most proponents of liberalization in the past camefrom multilateral agencies, the technocracy, and to a limited extent academe. Thiscircumstance did not greatly help advocacy in a country that viewed external influencewith suspicion and concrete interests as weightier than theoretical arguments. Anarticulate business advocacy (as opposed to academic and bureaucratic advocacy) forexports emerged only in the 1990s with the emergence of the Confederation of PhilippineExporters (Philexport). Even in this case, however, the interests represented weresmaller and less influential than established ones. Organized labor has also viewedliberalization with suspicion, not merely due to ideology, but for the pragmaticreason that the bulk of unionized labor is concentrated at the moment in industriesthat are inward-looking or declining, i.e., the very ones threatened by liberalization. It is helpful to distinguish at least two phases in the reform of the trade regime.In the early stages of trade reform in the mid-1980s, success was due primarily tothe extraordinary credibility of the post-Marcos government and its ability to findan internal justification for these reforms. The Aquino administration removed agreat number of quantitative restrictions, using for the most part the rationaleof simply reversing patently unsuccessful intervention measures by the discreditedMarcos regime. The depth and duration of the 1984--85 recession assisted the reformprocess by severely weakening import-substituting interests. Political resistanceto such changes from the business sector was fortunately weakened by the fact thatmany interests affected were of political personae non gratae. The tariff reforms of 1990--94 represent a second phase in the social justificationfor the trade reform program. The need to keep up with international commitmentsdetermined the pace of liberalization in the second phase. The countrys participationin AFTA, its accession to the WTO, and participation in the APEC forum may be seenas key events which cemented the social and governmental commitment to a liberaltrade and investment regime. In the case of AFTA, the Philippine government was caught up in a program of liberalizationwithin the region where--for both economic and political reasons--it could not affordto be an outsider. The formation of AFTA in 1990 was initially thrust on ASEAN leadersby the lack of progress in the GATT Uruguay Round, the formation of the North AmericanFree Trade Agreement, and the impending completion of the European single market.ASEAN leaders agreed in 1990 to reduce trade barriers among member countries by theyear 2005, later accelerated to 2003. The Philippines did not push this process inASEAN, since it considered itself to be in a weaker economic position than its neighbors.Furthermore, in order to keep pace with its neighbors it would need to reconfigureits trade regime. A significant element in facilitating social acceptance of AFTA-relatedchanges was that the country was not under visible pressure from developed countries(particularly the United States since the withdrawal of U.S. military bases in 1991)or multilateral institutions to undertake tariff reforms--ASEAN was primarily anaffair among developing countries. Once the premise of joining AFTA had been accepted, further trade liberalizationwas inevitable. The Philippines could not risk having substantially higher tariffson imports from the rest of the world than those it imposed on imports from ASEAN;otherwise trade and investment flows might be deflected to other ASEAN members withlower tariffs. To illustrate, suppose trade was free between Malaysia and the Philippinesbecause of AFTA, but that the Philippines maintained higher tariffs on non-ASEANimports. Then there would be a large incentive for foreign suppliers to penetratethe Philippine market through
Malaysia, or for Philippine trade to be biased undulytoward sourcing from Malaysia over the rest of the world. Practical exigency dictated,therefore, that tariffs on imports from third countries should also come down bythe time the free trade area was completed in 2003. This logic provided a strongexternal justification for the proposal floated by the Ramos governments economicplanners to reduce tariffs to a low uniform level (5 percent) by 2005, a standingproposal that has met with surprisingly little criticism, except for some argumentover the exact level of the low uniform tariff. The muted social reaction to the countrys participation in AFTA contrasts with thelouder controversy generated by the countrys joining the WTO and APEC, both perceivedas entailing liberalization under terms imposed by developed countries. The controversyover the WTO and APEC was surprising, since for the most part the Philippines offersunder the Uruguay Round merely reiterated tariff reforms that the government hadalready determined to undertake unilaterally. In the same manner, the countrys offersto APEC (wherein submissions are voluntary and nonbinding to begin with) merely elaboratedexisting plans to implement a low uniform tariff by 2005. Opposition was muted bythe realization that the countrys submissions were similar to the offers of otherdeveloping countries. This description of the process of liberalizing trade illustrates the combinationof internal and external factors that succeeded in nudging reforms along in the Philippines.An important factor was the rationale provided by an internal critique of previousfailed policies, up to and including the dirigisme and control of the dictatorship.Another factor was the benchmark provided by the actions of the countrys economicallysuccessful neighbors. Even today, the Philippines defines its goals in terms of abroad emulation of the tiger economies of East and Southeast Asia. A final factor,however, in cementing reforms was the momentum of liberalization contained in multilateralorganizations of which the country was a member. Privatization and Deregulation The same factors may be traced in the second set of structural reforms the governmenthas undertaken, namely the deregulation of important sectors of the economy and theprivatization of a number of important government corporations. This process alsobegan as a turning away from the politically discredited policies of the Marcos regime,which had supported both private and parastatal monopolies in the economy and hadextended large guarantees on foreign loans taken out on behalf of entities favoredby the Marcos government. The financial distress of these corporations after thedebt crisis and their bailout resulted in their ultimate takeover by the government. Thus the first phase of privatization was easy in that it tread on no major constituenciestied to the retention of these corporations in the public sector. Indeed, the processwas hastened for significant pre-Marcos interests (e.g., the Lopezes, Ayalas, andSorianos) restored by the 1986 revolution that stood to benefit from a restorationof their assets. Even former Marcos associates eventually reacquired their assets,in a unique version of political reconciliation. Second, the assets involved in privatizationwere egregious acquisitions, which even by former rules were not considered legitimateareas of government activity. The subsequent disposal of these assets involved nomajor ideological change and required only the overcoming of political resistanceamong bureaucrats who had become attached to continuing government stewardship oversuch assets. In the meantime, the stage had been set for the second, still on-going, phase ofprivatization, involving the disposal of other assets that had traditionally beenowned or controlled by government for some plausible public purposes. The initialmoves in this direction included the privatization through public listing of
thePhilippine National Bank, heretofore the countrys largest commercial bank, and Petron,the government-owned oil company. From a bureaucratic and financial angle, as previouslymentioned, the rationale for privatization was found in the need to raise revenuesand bridge the fiscal gap. It was to the governments credit nonetheless that itsaw the opportunity to expand the agenda to restructure the economy. Two significant measures affecting foreign investments enhanced the success of thegovernments privatization efforts. In 1991, the last year of the Aquino administration,Congress passed an unprecedentedly liberal foreign investments law removing minimumnationality requirements in virtually all sectors of the economy. In particular,the foreign investments law adopted a negative-list approach, specifying only thosesectors where full foreign ownership was not allowed, implicitly allowing 100 percentforeign ownership everywhere else. Second, the newly elected Ramos government inApril 1992 lifted a large number of foreign exchange restrictions in the entry andrepatriation of foreign funds. These two moves played a large role in stimulatinginflows of both direct and portfolio foreign investments in the country. The effectwas to increase the number of actors in the privatization efforts and to encouragealliances between foreign investors and large domestic interests. The first testing ground for true or structural privatization was the power sector.To solve the crippling power shortages that had become the principal obstacle togrowth, the Ramos administration in 1992 and 1993 aggressively opened up the power-generationsector--hitherto monopolized by the state-owned National Power Corporation--to bothforeign and domestic investors wishing to build and operate new power plants. Thiscreated a large response, especially among foreign investors and subsequently amongthe large domestic conglomerates as well. The build-operate-transfer contracts werein all likelihood too generous to the contractors and expensive for the government,since they guaranteed not only against sovereign but also commercial risks throughguaranteed sales to the government. On the other hand, this measure did solve theimmediate problem of eliminating power outages and gave both the government and thepublic a positive experience with private sector entry into utilities. Moreover,the entry of serious foreign investors in the energy sector broke the ice and helpedrefocus the attention of foreign direct investors on the countrys gradually improvingconditions. The deregulation of telecommunications came soon after in 1993 (following a famousspeech by Lee Kuan Yew, who carped at the state of Philippine telecommunications)with new entrants allowed in international gateway, cellular, and finally domestictelephone services. This momentum was sustained with the deregulation of interislandshipping (1993), domestic passenger and cargo airlines (1993), and banking (1994)following in quick succession. The privatization deals that have caught the most attention (and attracted controversy)have been large sales of idle government real property (the sale of the Fort Bonifacioproperty in Makati, stockyards in Alabang, and reclaimed property on Manila Bay areexamples). These deals have turned out to be the most lucrative for the government.Their impact on economic structure is less complex, although they have managed tostimulate domestic and foreign investor interest and allowed the government to bridgeits fiscal deficits. In 1997, the government undertook another major structural privatization by biddingout the concessions to operate the heavily indebted water supply and sewerage systemsin the Metro Manila area. The full deregulation of the oil industry was also slatedwithin the year, as was the privatization of some power-generation assets of thepower company.
The hope underlying privatization and deregulation has been that these should providenew stimuli for both domestic and foreign investors, especially as compared withinvestment by government-owned or controlled corporations, which are typically indebtedand strapped for cash. The principle involved is clear: encouraging new entrantsand competition should induce new investments, either by the new entrants, the incumbents,or both. This has worked most clearly in telephone services, where the previouslydominant firm, Philippine Long Distance Telephone (PLDT) was compelled to undertakea massive expansion and upgrading program with the entry of new competition.
What Could Go Wrong?

Philippine industrial structure has changed inexorably as a result of the reforms.But the effects of such changes on aggregate indicators of economic performance,though encouraging, are still modest at best. The reasons for this are discussedbelow. Low Savings and Investment Reflecting the importance of foreign investment, foreign savings (i.e., foreign investmentsplus foreign loans) have constituted an increasing part of total investment, risingfrom 18 percent in 1991 to 34 percent by 1995. But this improvement in foreign investmenthas been offset by a fall in domestic savings, which have dropped to only 15 percentof GDP in 1995, versus 21 percent in 1988. This performance is far below dragonsavings rates of 30 percent of GDP or more in other rapidly growing countries ofthe region. Looking only at foreign investments, a distinct increase in both direct and portfolioinvestments may be dated from 1993 following the 1992 liberalization of the capitalaccount and a spate of initial public offerings on the stock market from privatizedgovernment firms and hitherto closely held family corporations. Table 2.3 shows analmost simultaneous rise in both portfolio and direct foreign investments in 1993,more than double that of 1992 net inflows. By 1995, net foreign investment inflowshad risen to $3.7 billion, buoyed up further by portfolio investments. The increasein the more significant direct foreign investments has been slower but steady.
Table 2.3: Direct and Portfolio Investments by Foreigners 1990-95 ($ million) 1990 1991 1992 Direct investments Inflows Outflows Net inflows Portfolio investments Inflows Outflows Net inflows 550 -22 528 152 -204 -52 556 -27 529 227 -102 125 776 -101 675 566 -411 155 1993 1238 -374 864 2257 -1360 897 1994 1591 -302 1289 2979 -2078 901 1995 1524 -399 1125 4740 -2110 2630
Total net inflows
476
654
830
1761
2190
3755
Source: Bangko Sentral ng Pilipinas, Selected Philippine Economic indicators.
For all that, total investment as a proportion of GDP has increased only from 20percent to 23 percent between 1991 and 1995 (Figure 2.3). This figure is inferiorto the pre-recession level of 24 percent, and some distance away from tiger-economystandards of 30 percent or more of GDP being invested. Ultimately this deficiencyhas been reflected in the relatively modest growth rates the economy has managedto achieve. If investment constituted as much as 30 percent of GDP in the Philippines(as it does in many other Southeast Asian countries), then the GDP growth rate ofthe country would have been around 7 percent or more per annum, rather than the mid-1990srate of only 5 percent. The conundrum--and the fundamental problem for growth--continues to be the low rateof domestic savings. It is unlikely for foreign loans and direct investments to exceed10 percent of GDP, so if domestic savings continue to remain below 20 percent, theinvestment needed to sustain GDP growth of 7 percent will not be forthcoming. Asthe economy first started to climb out of recession, the problem of low savings wasthought to be due simply to low average incomes. As Figure 2.3 shows, home savingrose only moderately since 1993 and is still below levels of 1988--89, which aresimilar years of recovery. (Financial liberalization has failed similarly in bringingabout improvements.) What is more likely, new measures will have to be found to solvethe domestic savings problem. Institutions such as pension funds and housing schemesthat tap small household savings have played a large role in the high savings ratesin some countries of the region. By contrast, similar institutions in the Philippinessuch as the government and private pension funds have remained small and peripheralto the accumulation process. International Competitiveness and the Current Account A principal source of income growth is not even directly related to homegrown employmentbut to earnings overseas. Earnings from contract workers abroad and from propertyabroad made up 28 percent of all foreign exchange earnings in 1995, up from only13 percent five years earlier. The true size of property income from abroad, reflectedas foreign exchange account withdrawals in the statistics, has been questionedfor some time now; at least some of these are properly treated as investments, whilesome exports may actually have been booked twice. In either case, GNP would be overstated. Partly reflecting the large gap between domestic savings and investment has beena worsening of the trade balance (the difference between exports and imports of goods;see Table 2.4), which now stands at almost 12 percent of GNP. Nonetheless, the currentaccount deficit has declined owing to the large inflows of factor earningsfrom overseas, as earlier mentioned.
Table 2.4: Tradeand Current Account Deficits, 1990-96 ($ billion) 1990 1991 1992 1993 1994 1995 1996 Trade deficit Exports of goods Imports of goods Current account deficit 4.02 8.19 12.21 2.57 3.21 4.7 8.84 9.82 12.05 14.52 0.87 0.86 6.22 11.38 17.6 3.02 7.85 8.94 11.35 13.48 17.45 20.54 21.33 26.39 31.89 2.95 3.3 3.91
As a percent of GNP Trade deficit Current account deficit
9.1 5.8
7 1.9
8.7 1.6
11.2 5.5
11.9 4.5
11.7 4.4
13.2 4.5
Source: Bangko Sentral ng Pilipinas, Selected Philippine Economic indicators.
Notwithstanding the respectable growth of exports in current dollars, it is surprisingthat the countrys orientation to exports (of goods alone) in recent years has actuallydeclined, while the share of imports has increased. Goods exports made up 23 percentof GDP in 1990, and this figure had fallen to 18 percent by 1995. Importsas a proportion of GDP, on the other hand, rose from 28 percent to 35 percent overthe same period. In one view, the worsening trade performance is merely due to the necessarily heavyimports the country must undertake in the course of industrialization and its catch-upon infrastructure, admittedly an importand capital-intensive proposition. Thiscannot be the whole picture, however, since not only is it true that imports aregrowing rapidly; there are also signs that some of the countrys exports are losingcompetitiveness. Indeed, except for electronics--where direct foreign investmentshave fortunately facilitated some deepening and diversification within the sector--agood number of the countrys other export products are stagnant or in decline, withtheir export share or actual earnings actually shrinking. This is true for agriculture-basedcommodities (coconut oil, sugar, fruits, and vegetables), processed foods, furniture,and others. In 1996, garments, long a staple export good, experienced a fall in exportearnings, as the government admitted that the country was being edged out by othersuppliers with lower labor costs such as Vietnam, China, and Bangladesh, and thatsome U.S. demand had been lost as a result of NAFTA. Indeed, electronics now accountfor 70 percent of all goods exports. Two factors bear on the question of current competitiveness, neither of which canbe easily addressed: the exchange rate and productivity. By early 1997, the pesohad strengthened to the point that the profitability of most domestic exports (bothmanufactured and traditional) was threatened. The authorities also appeared to havebeen lulled by the continuing growth of foreign investment--led exports, neglectingthe fact that the productivity margins for the latter are much higher than for domesticexports. The politically correct opinion about solving the trade deficit has now become thatof raising productivity in the export sector. This is already happening as directforeign investments bring in superior technology. But more intensive support in termsof technology, infrastructure, and credit is required to raise productivity amongsmall and medium enterprises enough to compensate for the penalty of a strong currency.Between the time foreign capital inflows ultimately weaken and the time a vigorousset of new export industries arises, the economy will be treading a narrow line.It would be in the economys best interests indeed if such a period never occurred. Agriculture and Wages The concentration of investor interest (and especially foreign investor interest)in utilities, finance, real estate development, construction, and manufacturing hasmeant the relegation of agriculture--particularly small-holding agriculture--to secondaryimportance. A complicating factor has been the uncertainty of ownership caused bythe agrarian reform program, which does not yet have a clear policy regarding landsof 50 hectares or less. In the face of more profitable competing uses for land, thenatural slant of incentives is toward real estate and a reduction of land devotedto agricultural production. The
governments inadequate capacity to support agriculturalproduction through irrigation and other infrastructure facilities, R&D, and extensiondoes not help. The pesos continuing strength in real terms further erodes the competitivenessof domestic agricultural production. For mainly these reasons, the domestic farming sector has remained skeptical andcautious about the effects of globalization and has adopted a highly defensive andprotectionist posture. In the debate over the countrys joining the WTO, the governmentconceded that it would improve its support of agriculture as a condition for farmerssupport for WTO accession. Among others, the country managed to exclude rice fromthe general WTO obligation to replace import quotas with tariffs. The more worrisome consequence of this instinctively phobic agricultural postureis the possibility that the sector may unwittingly inflict damage on itself, andon the rest of the economy indirectly. The quotas on agricultural imports, removedas called for by the countrys WTO commitments, were replaced by import tariffs higherthan the equivalent protection provided by the quotas on these goods. Although 50percent tariffs on staples such as corn, rice, sugar, and others are still belowthe maximum WTO rates the country promised not to exceed, the levels are high enoughto risk domestic producers outpricing themselves. For example, high tariffs and hencehigher prices on corn feed will lead not to a shift from imported to domestic corn,but to a shift away from imported corn toward imported soybeans. The fate of agriculture in and beyond Philippines 2000 remains unclear. One of thecountrys clear disadvantages in its export drive is its loss of competitivenessin labor-intensive products, because wages have become high in dollar terms, relativeto what other countries offer, even before full employment has been reached. Giventhe official reluctance to use the exchange rate as a tool to regain competitiveness,the remaining lever is to provide cheaper food to reduce pressure to raise nominalindustrial wages by, for example, importing cheap food from abroad. The current inefficiencyof agriculture and the high cost of food relative to prices from abroad representsa severe drag on industrialization. But importing food would definitely cause severedislocations among those employed in traditional agriculture. Alternatively, thegovernment could improve productivity in agriculture sufficiently to raise food cheaplyat home. This approach, however, requires a large amount of public funds and an appreciablylong period to realize, if at all. Neither case represents an attractive option forthe government. Fiscal Management The fiscal picture in the Philippines has without doubt improved considerably, amain element of the restoration of macroeconomic stability. Nonetheless, permanentmeasures are needed to ensure regular sources of income to sustain--not to mentionimprove--government programs. The inability to mobilize public resources means thegovernment cannot reliably provide social and economic services without worryingabout their effects on macroeconomic stability. The question, however, is whether enough revenues can be generated to support thehuge catch-up in public spending required for the Philippines to become regionallycompetitive. Suppose, quite arbitrarily, that central government spending must beraised from the current level of 18 percent to a modest 20--23 percent for this catch-upto take place over the next five years. At the same time, one may anticipate thatthe proceeds from privatization would fall. The extreme case, with only tax revenuesavailable (about 15 percent of GDP), would leave a central government deficit ofsome 5--8 percent of GDP. Running such a deficit, which is large relative to recentperformance, would weaken the governments credibility and would probably be takenas a sign of a loss of macroeconomic control. To opt for maintaining the
deficitin those circumstances would require severe cuts in spending and giving up the catch-upin infrastructure and social spending altogether. Clearly, a greater tax effort is needed, a point that has not been lost on the Ramosgovernment. Over the past two years, the government expended a good deal of politicalcapital in pushing two tax initiatives, the expansion of the coverage of the value-addedtax to remove exemptions and a comprehensive tax reform aimed at closing the loopholesin the indirect tax system and simplifying the income tax system. In both cases,however, the results have been mixed at best. After a great deal of debate (reachingthe Supreme Court), the VAT coverage was indeed expanded, but intensive lobbyingensured that the odd exemptions remained (e.g., publishing, mass media, and cooperatives),defeating the original purpose of simplifying administration. The expanded coveragealso allowed large businesses to claim deductions on purchases from small supplierspreviously not covered by VAT. The net effect on revenues, therefore, has been ambiguousat best. The governments other great stab at improving tax efforts fared somewhat better.The comprehensive tax reform program is intended to plug certain tax loopholes thathad caused large revenue losses. For example, some producers had been able to evadespecific taxes on tobacco and alcoholic products by setting up their own distributionnetworks and deliberately underpricing sales from the factory to these retail networks.In corporate income taxation, on the other hand, unlimited deductions for business-relatedexpenses considerably reduced taxable incomes. At the same time, the governmentstax planners hoped to rally some middle-class support for the entire package by includingmore generous deductions for individual income-tax payers to offset the income-bracketcreep caused by inflation. The entire process threatened to unravel when Congress seemed interested only inthe more popular tax-losing parts of the package, while the proposed changes in tobaccoand alcohol excise taxes became hostage to a narrow debate over whether the applicabletax should be specific or remain ad valorem. Ultimately, after lengthy negotiations,public relations blitzes, and executive intervention, a so-called compromise wasforged with Congress, which the government felt would likely yield higher revenuein the short run but had sufficient ambiguity to give business interests leeway tomaneuver in the future. This compromise is a nightmare for anyone seeking uniformityof treatment and flexibility. Beer and cigarettes are classified according to severalprice-quality categories for purposes of determining the level of specific taxes.To overcome the inflexibility of specific tax collections in the face of inflation,the price categories and the level of taxes are to be reviewed and revised by Congressperiodically. The system virtually invites future lobbying. Nonetheless, for all its twists and turns, the tax-reform episode did end in a compromisethat accomplished (if imperfectly) part of the reform agenda. This is at least ahopeful indication that with sufficient statesmanship and practical power politics,democratic institutions could lead to (perhaps small) steps even in difficult reformareas. The main constraint to achieving a more significant reform in taxes will be the growingresistance to taxes in general, both among the middle classes and the poor who feelthey pay a disproportionate share of revenues, as well as the business sector whodemand more liberal tax treatment citing globalization. For example, the desire toattract and keep investments is putting pressure on the government to reduce corporatetaxes and preventing the withdrawal of tax breaks for investors. Moreover, tradetaxes, which currently make up some 30 percent of all taxes, are scheduled to bereduced drastically. Reflecting the Philippines commitment to a liberal trade policyand its international commitments, tariffs for most
nonagricultural goods are dueto be reduced to a low uniform level by the year 2003. (The current scenario callsfor a uniform 5 percent tariff.) The commitment to implement a low-tariff regimewill put additional pressure on the government to find alternative sources of revenue. The Challenge of Second-Generation Reform The variable fortunes of the tax package illustrate the difficulties likely to befaced in succeeding reform initiatives. Several factors can explain the uphill climb,which can be seen most vividly by comparing the proposed tax reforms with the successfultrade reforms. A first difference is found in the fact that the locus of the initiativehad shifted from the executive to the legislature. Compared to tariff reforms, whichcould be implemented by executive orders, tax reforms involved Congress and alloweda larger number of agents and interests (especially business interests) free playin influencing the decision. This lengthened the process and risked distortion ifnot defeat of the reform goals. The second difference is a waning sense of crisis. The congressional conviction thatraising additional revenues is an urgent task is weaker than the arguments againstnot joining the WTO or for the need to open power generation to foreigners and theprivate sector in order to resolve the energy crisis. It has certainly been no helpthat the Ramos administration has periodically portrayed its budget surpluses aspermanent and the fiscal crisis as solved. Third, while trade reforms involved the removal of bureaucratic prerogatives in certainareas, tax reform and others similar to it define and strengthen such privileges.The intellectual and social justification for any reforms relying on bureaucraticdiscretion will obviously be weakened if many parts of the bureaucracy are perceivedas being inept and corruptible. Indeed, the success of second-generation reformswill depend less on sweeping policy changes and more on steadfast and reliable implementationof rules and regulations. Aside from the implementation of tax laws, new areas suchas the regulation (including price- and rate-setting) of privatized utilities willrequire a highly competent and impartial bureaucracy. Fourth, unlike trade reforms, second-generation reforms typically are not drivenby externally determined targets or conditionalities. Furthermore, the specific policiesadopted in fulfillment of their objectives can have vastly differing outcomes forsocial distribution. The overall objective of raising revenues, for instance, maybe attained equally well through an increase in indirect taxes or through stricterenforcement of existing tax laws. But each has a different consequence on incomedistribution: the former would hit the poor the hardest, whereas the latter woulhit mostly the affluent. In this instance, the only external pressure is for thegovernment to raise revenues; how this is done is left to political leaders and policymakers. The formulation of these policies involves primarily a domestic struggleover redistribution whose features and final outcome may be shaped by either negotiationor the raw exercise of political power. By contrast, there is much less leeway forsocial renegotiation when implementing the countrys international commitments toAFTA and the WTO.
Sustaining Reforms: Is There a Reform Constituency?

By any standard, in terms of economic reforms the Philippines has traveled a remarkabledistance over the past five years. A question that intrigues both Filipino and foreignobservers, however, is how such large changes over a short period were possible inthe first place and, related to this, whether in fact the
momentum of such reformscan be sustained. In a political form such apprehensions have carried over to thequestion of whether a successor to President Ramos can be found to carry on the reformagenda. The underlying issue, however, is whether there is a constituency in Philippinesociety that wants further reforms and is influential enough to see to the electionof a government that will implement them. The answer to this question depends onwhether the entire reform episode up to now has been a fluke peculiar to the Ramospresidency, or whether the process reflects lasting changes in the balance of interestsin Philippine society. Many observers of Philippine policy making see the lack of a reform momentum, especiallyin regard to removing protectionism, dismantling monopolies, and resolving the agrarianquestion. For example, some have used the dominance of landed clans and local elitesto explain past opposition to agrarian reform. The involvement of landed familiesand their diversification into import-substituting industrialization in the past,combined with their dominant position in local and national politics, has explainedthe lasting influence of protectionism (both agricultural and industrial). Underthe resulting conditions of small protected markets and the availability of monopolyprivileges, rent-seeking (the exertion of efforts to obtain favored economic positions)has served as an important means of accumulating wealth; but by drawing on otherwiseproductive resources, it has diminished the potential for development. Formal institutionshave provided no checks to such vested interests. In particular, the bureaucracyhas been a weak institution relative to the influence of dominant industrial andcommercial interests bent on preserving monopoly privileges. The immobility in the social structure and the consequent policy stasis that maybe derived from such analyses have certainly helped to explain some of the countrysbackwardness relative to faster-growing countries in the region. For example, suchfactors may reveal why export interests have been weaker and entrepreneurship lessdefined in the Philippines than, say, Thailand. The derived result appears to bethat no significant (or lasting?) economic reforms are conceivable without a countervailingsocial coalition to overcome the resistance of vested interests. Such interpretations--termedclosed or rounded-off models--have also discomfited a number of people by makingthe necessity of revolutionary change more plausible. The problem for such closed readings of the Philippine situation, however, is explaininghow the rapid pace of economic (though not yet social) reforms in the 1990s can haveoccurred without the occurrence of large social conflicts or realignments. Thereare two options: one casts doubt on the profundity or permanence of the changes thathave taken place, since the winning coalition to support them is absent or weak.The other--admittedly less theoretically elegant--admits the possibility that vestedinterests are fluid and can be redefined by changing external circumstances, as wellas simply by learning. Without claiming to be exhaustive, this paper takes the latter view, namely, thatrecent structural changes in the Philippines do stand some chance of being sustained,since they have come to correspond with a changed perception of national interestand purpose, especially among the elite. These changes were occasioned by a deepsense of national crisis, a reconstructed strategy for emulating the success of thenewly industrializing economies, and no less important, some real opportunities toaccommodate incumbent interests in a liberalizing environment. A Sense of Crisis A crucial ingredient that started the process of liberalization and has periodicallysustained it has been the element of crisis. The shock of the deep recession of 1984--85was an unmistakable signal for the
wholesale abandonment of the dirigismeof the Marcos regime and a cause to experiment with its opposite, namely liberaltrade and investment policies. It also helped that the import-substituting industriespromoted by the previous regime were substantially weakened by the crisis itself.The realization that the country had fallen behind in a rapidly growing region heightenedthis sense of crisis. The oft-repeated hyperbole describing the Philippines as thesick man of Asia and the equally exaggerated idea that, with some effort, it couldbecome a newly industrialized country (NIC) by 2000 illustrate the lengths of nationalself-persuasion involved. The same sense of national crisis has time and again assisted the system in overcomingthe typical malaise of most democracies, namely the costly (often lengthy and occasionallyinconclusive) process of making decisions and its susceptibility to lobbying. Thisis compounded in the case of the Philippines by the dominance of particularisticinterests in government, especially in the legislature, which have adversely affectedthe content of economic decision making in the past. External threats often lead to the kind of solidarity or consensus needed to takemajor economic decisions (South Korea and Taiwan, both of which faced external threats,easily come to mind). In the same manner, deep crises have time and again resultedin the grant of sweeping powers to the president to address an urgent situation.The resolution of the power crisis is one example. Congress at that time grantedPresident Ramos special powers to augment energy supply expeditiously, powers thatallowed the executive to enter into negotiated contracts and to shortcut some stipulatedprocesses of environmental impact assessment. The Ramos administration utilized thisopportunity to open up the power-supply industry to build-operate-transfer schemes.As seen above, that move not only addressed the immediate problem of the power shortage,but also rehabilitated the country as a major field for foreign investments in general. Emulating the Newly Industrialized Countries A second factor facilitating change was the example of the newly industrialized countriesin successfully pursuing a high-growth path based on strong manufacturing exports.In the Philippines, however, the NICs experience was interpreted as consisting primarilyof an agenda for liberalization, that is, a reduction of state intervention and participationin the economy in general, and in particular an abandonment of selective industrialpromotion of industries through either tariff protection or fiscal or credit incentives.This has led some writers to worry about the discrepancies between the Philippinesown strategies and the highly interventionist approaches of such NICs as South Korea.The apprehension concerns whether the Philippines has not in fact gone overboardin its liberalization strategy, using the NICs as a benchmark. The concern is fairenough. But in fact, there is no single NIC experience: neoliberal and interventionistapproaches are two ends of a spectrum. Comparisons seeking to show similarities or discrepancies between the Philippinesand the NICs strategies (whether by the government or its critics) are quite besidethe point. Industrialization strategies are unlikely to be directly transplantableacross social and political systems; heavy economic intervention may possibly functiondifferently between the fragmented elite democracy prevailing in the Philippinesand the authoritarian governments in some other Asian countries. More important iswhether the current strategy, however determined, is appropriate to the current socialcontext. Properly administered, a policy of discriminating among sectors (say, aggressivelypromoting industries determined to have the greatest technological promise) may conceivablybe superior to one of uniform tariff protection. On the other hand, if (as the literaturesuggests is true in the Philippines) lobbying is
rampant, the bureaucracy is weakrelative to the business sector, and mistaken democratic decisions are difficultto overturn, the same policy may carry possibilities for large mistakes and waste.Indeed the same argument can be carried over to questions of administered pricing,government-owned monopolies, and heavy regulation, all of which could be justifiedin a perfect world. Thus the neoliberal strategy now pursued by the country mightbe justified not because it yields the best results of all possible strategies whenproperly applied in a perfect world, but because it is less liable to huge abuseor costly failure than any other strategy under existing conditions. Opposition and Policy Instability Recent economic growth distinguishes itself from past episodes by drawing in largersectors of the population both in terms of social strata (e.g., the middle classes)and geographically (e.g., the development of regional centers other than the metropolitanManila area). As a result, the recent growth episode has built a constituency formeasures that will sustain that growth. It is also noteworthy that structural reformshave been put in place with relatively limited adjustments and dislocations. Theunemployment rate has remained fairly stable at less than 10 percent. A number ofsocial indicators, including poverty incidence, have continued to improve; thereis a good chance of achieving the goal of reducing poverty incidence (which stoodat 35 percent in 1994) to 30 percent or less by 1998. These characteristics augurwell for the sustainability of liberalizing policies. Nonetheless, this is far from saying there has been or will be no opposition to reforms.There is, owing to extremely uneven distribution of the gains from the liberalizationprogram. The first source of opposition is from those sectors of the economy thatare being left behind. Wealth has been concentrated in the services sector, especiallyfinance, real estate, retail and wholesale trade, telecommunications, and construction.By contrast, new private investment and technological change have been much slowerin small-holding agriculture and in small- and medium-scale manufacturing enterprises,with continued low incomes and productivity. The resistance of the farm sector tothe countrys accession to the WTO was already discussed. In addition, economic reforms threaten implicit social safety nets in specific areas.Recent examples are the reassertion of private or public property rights (motivatedby high real estate prices) on hitherto idle lands where squatter occupation wastolerated and the reduction of redundant employment in privatized government corporations.Because the grievances and interests involved are disparate and sectional, but moreimportantly because the ideological and organizational split in the Left leaves noworkable ideology to unite them, the resulting protests have delayed but not preventedthe governments liberalization. Both to enhance the credibility of its actions andas part of its social policy, therefore, the government needs to respond by puttingin measures that ease the transition for marginalized sectors and draw them intothe mainstream of development. Accommodating Established Interests Internally, the congruence of interests between foreign investors and domestic landedand financial interests has consolidated social receptivity to liberalization. Therecession of 1984--85 led to the collapse of most industry. Fortuitously, it willbe recalled, the subsequent recovery took place after an agenda for tariff reformshad been set. The incentives would gradually be changed so that industries wouldno longer be as heavily oriented to the protected domestic market. The vocal socialadvocacy of the exporter interests also contributed significantly to changing thesocial climate for policy making, shifting it in favor of outwardness.
Nonetheless, it has not been the domestic export sector but foreign investment, bothdirect and indirect, that has constituted the dynamic element that is proving crucialin consolidating social support for a globalization strategy. It is foreign investmentthat has generated the competitive exports (especially in electronics), providedaccess to capital and new technology in various projects, and provided the new buyersfor initial stock offerings and privatizations. The benefits derived from the entry of direct and portfolio investment have managedto coopt most elite economic interests and reshape them. The more modern urbanbusiness classes represented by the financial circles in Makati have a large stakein the continuing openness of the economy, especially to foreign investors. The dependenceof land values on foreign demand is an obvious link. Higher demand for real estate,as a consequence of both industrial relocation and rising incomes, has brought aboutrising land prices, especially in the metropolis and adjoining rural areas, includingthe provinces in the path of Metro Manilas expansion: Cavite, Laguna, Batangas,Rizal, and Quezon, known as the CALABARZON region. Similar booms in real propertyare also being experienced (or at least expected) in other areas. Outside Manila, several other urban centers have sought to emulate Manilas and theCALABARZONs example of presenting alternative sites for relocating firms. This hasbeen helped along by the decentralization and devolution process, the emergence ofa sharper breed of local executives, and the governments promotion (uneven at times)of other urban centers such as Cebu in the Visayas, the former U.S. bases Subic andClark in Central Luzon, and Davao, General Santos, and Zamboanga in Mindanao. Animportant point is that land and property prices in these areas are tied up withdemand for land as industrial sites. This development is significant if, as the canonicalanalysis of Philippine political economy suggests, a good amount of the social basisof wealth and political influence is based on landed property. From a political-economyviewpoint, the gain is clear: Traditional local elites are looking for a stake inthe globalization process and giving up their orientation to a purely local economy. The spate of new strategic alliances between large domestic conglomerates and transnationalfirms also ties up a large part of the domestic economy with foreign investor interest.This has occurred largely in the deregulated utilities, including telecommunications,shipping, infrastructure, and power. It has allowed other established local groupsto diversify into different businesses, often in strategic alliances or joint ventureswith foreign firms. The bidding for concessions to operate the metropolitan waterand sewerage system was won by firms associated with traditional names in Filipinobig business, namely the Lopezes and the Ayalas. It can be argued, therefore, thatthe liberalization strategy, through deregulation, privatization, and the increaseddemand for land, has become smoothed, since it has permitted a retention of someof the value of the already wealthy. A further element that has made for policy stability has been the greater prominenceaccorded the Filipino Chinese business community, whose upper echelons (locally knownas the taipans) have recently attained a social recognition (though not yet politicalprominence) that has never been accorded the Chinese in Philippine history. The internationalconnections of Filipino Chinese businesses to other large ethnic Chinese businessinterests in the region have allowed them to mobilize funds readily and attract largeinvestments from related interests in Taiwan, Malaysia, Indonesia, Singapore, anhong Kong. In a significant development, Filipino Chinese interests with strong foreignconnections have won over the traditional oligarchy in several huge public bidsfor privatized government assets (notably urban real estate deals). Nonetheless, the distribution of the benefits of the economic boom has been far fromeven. Mainly the
larger, more established conglomerates have benefited most readilyfrom the process. By contrast, there appears to be much less correspondence betweenagriculture-based interests and foreign investments. The structures of protectionand exchange-rate policy have shifted incentives away from agricultural productionin favor of services, utilities, real estate, and to a lesser extent, manufacturing. However, the struggle among private interests seeking to dispute the gains from liberalizationby attempting to change the rules threatens policy stability. The most prominentexample was the Supreme Court decision in 1997 overturning the results of a biddingprocess for the privatization of the historic Manila Hotel. A Malaysian-led consortiumhad earlier won the bid. The losing Filipino consortium argued, however, that thehotel was part of the national patrimony and could therefore not be awarded toforeigners, an argument that the high court sustained. Other large public-privatedeals, including the port-services concession for Subic Bay Free Port and the privatizationof reclaimed portions of Manila Bay, have also been the subject of legal or proceduraldisputes, with some reaching the courts or the level of congressional inquiries.In these cases, losing bidders have sought to change the arena of competition byhaving recourse to political solutions, using the courts, congressional influence,or the media. In hindsight, the use of political means to resolve economic disputes is merely acarryover of previous rent-seeking behavior. It is true, of course, that the liberalizationprocess itself would remove the means for rent-seeking by narrowing the scope forgovernment intervention. Nonetheless some processes in a liberalizing agenda, especiallyderegulation and privatization, yield substantial rents as well, and no great technologicalshift is required on the part of dominant groups--including those well-representedin government--to use customary rent-seeking methods to win such battles. Presidential Succession Notwithstanding the more or less conscious desire to avoid the negative experienceof the Marcos dictatorship, the 1987 Constitution still left a good deal of leewayfor presidential prerogative (e.g., line-item vetoes, discretion over budgetary releases,legislation through executive orders, appointing power over the bureaucracy and themilitary, and so on). The role of a strong presidency has been crucial in the currentreform episode. As already seen, these prerogatives have thus far served the reformprocess well by helping to overcome resistance by disparate local interests throughthe combined use of a dominant position and patronage. In other words, the dominantpresidency has served to check possible abuses by local interests. In the pre-electionyear 1997, however, this pattern was in danger of being broken, as circles closeto President Ramos engineered attempts to extend his term beyond the six years setby the constitution, on the ostensible basis that none of the likely winners in apresidential election could carry through the balance of economic reforms with thesame zeal and competence. First, mass petitions, then calls for turning a beholdenCongress into a constituent assembly were attempted to set turning the wheels ofconstitutional revision. Rather than reassure investors of policy-continuity, however,these all-too-transparent attempts only managed to increase uncertainty and raisefears that future policy would be severely biased to favor exclusive groups, as happenedunder the Marcos regime. Because of this, the modern business sector joined withthe Catholic Church and other social groups to vociferously oppose any charter change. What the vocal and negative public reaction to charter changes really illustratesis the social value placed on maintaining the arduously attained modus vivendi amongcompeting interests, an accommodation that has been cemented by the recent and prospectivemoderate economic gains. Conforming with the established ground rules for succession--imperfectthough they may be--is obviously regarded as more
important than securing business-friendlypolicies, since the cost of violating the social consensus would be worse--palpableunrest. In initiating moves to extend its stay, the Ramos government seriously overestimatedthe value of its own contribution to the economic climate, as well as miscalculatedthe modern business sectors fear of a less than ideal electoral outcome. Indeed,to the extent the reforms it presided over prove lasting and the business sectorfeels able to fend for itself and strike an independent deal with the rest of society,the Ramos administration becomes an increasingly superfluous guardian.
Conclusion
Economic reforms in the Philippines found a starting point in the crisis that prevailedsince the economic collapse of a decade ago and successive tests thereafter. Theeconomic collapse weakened hitherto protected interests, while the governments cash-strappedposition reduced the scope for redistributing largesse. As a result, the perceivedscope of rent-seeking also declined, permitting the two successive post-Marcos governmentsto introduce large-scale changes--mostly in the direction of liberalizationsimplyas part of undoing politically discredited economic approaches, and subsequentlyas part of a national goal of catching up with the industrializing economies of theregion, summarized, if vaguely, in Philippines 2000. The countrys involvement ininternational economic arrangements, as well as the approval its policy measureshave found among foreign investors, have also positively reinforced the governmentsresolve to see through the entire liberalization program. Improving economic indicators due to the moderate economic growth over the past fouryears may have weakened the sense of urgency and crisis that initially provided theatmosphere for consensus. The unequal distribution of benefits has also led to somedissatisfaction over the way the spoils from liberalization are being divided. Legitimate dissatisfaction understandably comes from socially marginalized sectors,whose immediate poverty and association with declining or less dynamic sectors preventsthem from participating meaningfully in any restructuring of the economy. Dissatisfactionis also found among elements of traditional elites whose bases of wealth and localpower have been bypassed by a process that, left to itself, tends inherently to concentratewealth geographically and socially. In addition to these, however, the entire modernbusiness community, the Church, the political opposition, and other mainstream sectorswith no particular reason to oppose the direction of economic changes found commoncause in opposing attempts to change the constitutionally ordained process of transition. A real danger exists that such dissatisfaction could lead to implosive tendencies,in which rent-seeking battles, combined with social protests, reverse the policydirection or sufficiently poison the investment climate. Until recently, however,the continuation of even moderate growth has held such tendencies in check, withthe public mechanisms to redistribute resources functioning reasonably satisfactorily(this includes the pork-barrel mechanisms that have kept Congress pliant). Thereis, obviously, no guarantee that the delicate balance between economic growth andsocial consensus will not be tilted too far in either direction. There is also noguarantee that the quality of the governments bureaucracy and other institutionsof governance will be sufficient to implement second-generation reforms, includingchanges in the tax system and the effective regulation of private monopolies. Thereis, finally, no guarantee that the favorable global economic forces that have sustainedmoderate growth in the Philippines thus far--especially inflows of foreign investment--willlast long enough to permit the economy to restructure
itself. Strictly speaking,the Philippines will by no measure be any tiger economy by 2000 or perhaps even 2005.What it will have achieved is a recovery of incomes from a decade ago, though perhapson a more stable economic and social basis. The experience of the Philippines thusfar shows that further steps along the road of economic and social reform will betedious and difficult--but not impossible.
Table 2.5: GrowthRates of Output, Investment, and Trade (percent) Year 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 GDP 3.62 1.87 -7.32 -7.31 3.42 4.31 6.75 6.21 3.04 -0.58 0.34 2.12 4.42 4.85 GNP 2.84 1.51 -8.83 -7.02 4.15 4.62 7.71 5.61 4.02 0.46 1.55 2.12 5.28 5.73 Investments 8.4 6.4 -36.99 -31.85 10.06 19.69 14.69 20.45 15.83 -17.29 7.83 7.87 8.65 3.52 Exports -10.69 3.45 4.54 -16.07 16.91 6.83 14.53 8.87 1.86 6.27 4.28 6.22 19.84 13.77 Imports 2.45 -3.06 -17.48 -14.2 10.24 28.63 19.62 15.18 10.04 -1.12 8.69 11.5 14.5 15.61
Source of basic data: Asia DevelopmentBank, Key Indicators of Developing Asian and Pacific Countries (Hong Kong:Oxford Univ. Press, 1996).
Table 2.6: Investment,Saving, and Trade as Shares of GDP (percent) Year 1984 1985 1986 1987 1988 1989 1990 1991 Investment 19.51 14.35 15.27 17.52 18.82 21.35 24 19.96 Domestic Saving 22.92 18.81 19.07 20.98 21.22 20.08 18.57 16.43 Exports 26.52 24.02 27.15 27.8 29.83 30.58 30.23 32.31 Imports 23.65 21.89 23.34 28.78 32.24 34.97 37.35 37.14 Trade -2.87 -2.12 -3.81 0.97 2.41 4.39 7.12 4.83
1992 1993 1994 1995
21.46 22.67 23.58 23.29
15.01 13.01 14.61 15.29
33.58 34.93 40.09 43.5
40.24 43.93 48.18 53.12
6.65 9 8.09 9.62
Table 2.7: National Government Spending and Revenue Taxes (% Year of GDP) 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 9.55 1071 10.75 12.58 11.3 13.23 14.08 14.6 15.44 15.61 16.07 16.27 Expenditure (% of GDP) 13.08 15.28 18.8 22.77 20.95 18.73 23.74 23.49 24.28 21.28 22.07 20.19 Deficit (% of GDP) 2.24 3.22 5.82 7.86 7 2.5 7.16 6.04 6.52 3.72 2.26 2.3 Nontax Revenue (% of total revenue) 13.45 12.58 20.67 18.5 23.36 22.68 17.76 19.48 15.03 12.48 23.64 9.96
Endnotes
*:Editor's Note: This chapter was written before the outset of the regionalcurrency crisis and was updated in late 1997, before the impact of the crisis onthe Philippines could be ascertained. Back. **:I am grateful to Raul Fabella, Paul Hutchcroft,Joseph Lim, Felipe Medalla, and Amado mendoza for stimulating ideas and conversations. Remaining errors of fact or opinion, however, are my sole responsibility. Back.

The Philippines: The War Against Poverty

by Solita Collas-Monsod Introduction
The ultimate objective of any nation is to improve the well-being of its people. This may be articulated as poverty alleviation, or satisfying minimum basic needs, or human development, or simply development. But whatever it is called, the central preoccupation is the same: to lift people up from poverty and deprivation in its many dimensions, expand their choices, and increase the opportunities available to them as well as their capabilities to respond. In short, to empower, or in a much broader sense to liberate, the people. Fittingly, the restoration of democracy in the Philippines following the 1986 people power revolution brought with it greater and more focused efforts on the part of the Aquino government to promote people-centered development. Prior to 1986, development plans addressed the needs of so-called low-income groups and the need for a higher standard of living, but the Marcos government made no official attempt to measure poverty. Independent researchers had estimated poverty lines for the Philippines since 1971, but it was only during the administration of President Aquino sixteen years later that official estimates of poverty were first made based on an official poverty line. Certain factors are responsible for the lapse in record keeping during the Marcos administration. One was the widely held assumption that economic growth and human development are directly related--the so-called trickle-down effect. It is now generally accepted that while economic growth is a necessary condition for development, it is not sufficient. An illustration from Philippine experience: between 1965 and 1971, real per capita GDP grew by 2 percent a year, but poverty indices showed, if anything, an increase rather than a decrease in poverty incidence. 1 Another now debunked theory that enjoyed great currency was that income inequality, or relative poverty, was a sine qua non for economic growth, because investment was the engine of growth, and only the rich could save and invest. Today the opposite view holds sway: not only is there no contradiction between growth and equity, but growth may not be sustainable without it. A third possible reason for not keeping official poverty estimates was of a less intellectual and more political nature. The Marcos dictatorship probably operated on the principle that what the people didnt know wouldnt hurt the government. With discarded theories and a discarded dictatorship and people power fresh in everyones mind, the Medium-Term Philippine Development Plan (MTPDP) for 198792 attempted to correct the situation. For the first time in Philippine planning history, income-based poverty reduction was included as a specific plan target, together with other equity indicators. Its successor, the 199398 plan, also gives pride of place to human resource development, devoting the first chapter to a discussion of the challenges
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faced in that area. The first target listed in this plan is the reduction of poverty incidence to 30 percent of Filipino families by 1998, from the official 1991 estimate of 40 percent. The Ramos administrations increased focus on poverty reduction, equity, and human development is reflected in many ways. A major issue of Fidel Ramoss campaign platform was people empowerment. It is a theme that he has adverted to throughout his presidency: We in the public sector and the basic sectors declare our common commitment that our people should be at the center of development and that the real measure of growth must be the well-being of ordinary Filipinos. His administration has been marked by multisectoral consultations called summits aimed at galvanizing the different sectors of society toward what he fondly calls Philippines 2000, a mission to improve the quality of life of the ordinary Filipino by fully industrializing the country. Aside from an Economic Summit in 1993, there was a Social Reform Summit in 1994, a Housing Summit in early 1995, an Employment Summit in late 1995, a National Anti-Poverty Summit in early 1996 (also a Peace and Order Summit in-between), and in mid-1997, a National Development Summit. President Ramos has also created a Social Reform Council, a Presidential Council on Countryside Development, and a Presidential Commission to Fight Poverty. At the same time, his administration has wholeheartedly endorsed the platform for action adopted by the UN Social Summit in Copenhagen. Whether the finely articulated human development goals set out at the beginning of President Ramoss term have been met and can be sustained are questions that are addressed in this chapter.
A Profile of Philippine Poverty

Poverty Incidence As of 1994 4.5 million families or 27.3 million Filipinos, comprising 35.5 percent of total families and 40.6 percent of total population, were officially considered poor. That is, their annual per capita incomes fell below the poverty threshold or poverty line, the critical amount of income necessary to satisfy nutritional requirements (2,000 calories) and other basic needs. That poverty line was placed at P8,885 per person per year, equivalent at the prevailing exchange rates to about $340 per person per year, or less than a dollar per person per day. These aggregate figures for the country conceal a great deal of spatial and sectoral disparities. As Table 3.1 shows, the 1994 poverty incidence of families among regions ranged from a low of 8 percent in the National Capital Region (Metro Manila) to a high of 60 percent in the Autonomous Region of Muslim Mindanao (ARMM). The variations among the provinces are even larger: 11.6 percent (in Cavite) to 79.5 percent (in Romblon). Among the geographic sectors, rural poverty incidence at 47 percent was almost twice the urban rate (24 percent), although again there were tremendous disparities among specific locales.
Table 3.1: Poverty Profile Among Regions, 1994 Contribution to Poverty Incidence (%) Contribution to National Poverty (%) Poverty Threshold (annual per capita income in
Pop. (%)
Philippines NCR Metro Manila I. Ilocos II. Cagayan Valley III. Central Luzon IV. Southern Tagalog V. Bicol VI. Western Visayas VII. Central Visayas VIII. Eastern Visayas IX. Western Mindanao X. Northern Mindanao XI. Southern Mindanao XII. Central Mindanao CAR ARMM
100 13.8 5.5 3.9 10.4 13 7 9 7.2 5.2 4 5.9 7.2 3.2 1.9 2.7
Families 35.5 8 47.9 35.5 25.2 29.7 55.1 43 32.7 37.9 44.7 49.2 40.3 54.7 51 60
Pop. 40.6 10.5 53.6 42.1 29.2 34.9 60.8 49.9 37.5 44.8 50.6 54.1 45.6 58.7 56.4 65.3
Families 100 3.1 7.5 4.1 7.1 11.3 10.7 10.8 6.9 5.8 5 8 7.9 4.8 2.7 4.4
Pop. 100 3.6 7.3 4 7.5 11.2 10.5 11 6.6 5.7 5 7.8 8.1 4.7 2.7 4.3
pesos) 8885 11230 10022 8316 9757 9537 8319 8197 6425 6444 7074 7938 8201 8971 10853 8889
Source: National Statistics Office, Family Income and Expenditures Survey (Manila, 1994).
Although the Southern Tagalog region contributes the most to Philippine poverty (with 515,000 of the countrys 4.5 million poor families), at 29.7 percent it has the third-lowest poverty incidence among the regions, with only Metro Manila and Central Luzon having a lower poverty incidence. On the other hand, ARMM, with the highest poverty incidence among the regions in the country, is the fourth-smallest contributor to poverty, following the Cordillera Autonomous Region, Metro Manila, and Cagayan Valley. The same observation applies to provinces. Of the twenty provinces with the highest poverty incidence, only four (Masbate, Zamboanga del Norte, Bukidnon, and Cotabato) are among the twenty provinces contributing the most to total poverty (see Tables 3.2a and 3.2b). The distinction between contribution to poverty and poverty incidence becomes relevant in any poverty-targeting exercise. Given scarce
resources, the regions or provinces targeted will be different depending on whether the government gives priority to areas with the highest percentage of poor families or areas with the highest number of poor families. Poverty incidence is highest in families whose head is engaged in agriculture, followed by mining and construction. The incidence of poverty among manufacturing workers is only about one-third of that in agriculture. Workers in the financial sector have the lowest poverty incidence. Poverty incidence is highest among families with a self-employed household head and lowest among families headed by wage and salaried workers. Within the latter category, government workers enjoy the lowest poverty incidence.
table 3.2a: Twenty Poorest Provinces by Poverty Incidence and Contribution to Total Poverty, 1994* Poverty Incidence 1. Romblon 2. MASBATE 3. Ifugao 4. Abra 5. Kalinga Apagao 6. Agusan del Sur 7. Mt. Province 8. ZAMBOANGA del NORTE 9. Davao Oriental 10. Sulu 11. Capiz 12. Camiguin 13. Quirino 14. Bukidnon 15. Tawi-Tawi 16. Surigao del Norte 17. Sultan Kudarat 18. Palawan 19. COTABATO 79.5 77.7 72.1 71 70.3 67.6 67.1 62.3 62.1 60.1 59.8 59.5 59.4 58.8 57.5 56.4 54.9 54.5 54.5 Contribution to Total Poverty (percent) 0.76 2.49 0.42 0.58 0.71 1.01 0.35 1.92 1.12 1.06 1.57 0.15 0.33 2.04 0.59 1.16 1 1.25 1.77 1.48 21.76
20. Sorsogon 54.4 Contribution of 20 Poorest to Total Poverty

* preliminary estimates Source: National Statistical Coordination Board (Manila).
Table 3.2b: Twenty Poorest Provinces by Contribution to Total Poverty and Poverty Incidence, 1994 Contribution to Total Poverty Poverty Incident (percent) 4.58 44.9 4.06 51.3 3.67 32.9 3.37 46.5 3.08 48.3 2.88 50.5 2.83 42 2.49 2.49 2.25 2.15 2.07 2.04 1.96 1.92 1.88 1.81 1.77 1.75 2.83 51.88 77.7 38.5 36.5 32.7 35.6 58.8 47.1 62.3 45.3 40.6 54.5 35 42
1. Negros Occidental 2. Pangasinan 3. Cebu 4. Iloilo 5. Quezon 6. Camarines Sur 7. Leyte 8. MASBATE 9. Zamboanga del Sur 10. Batangas 11. Davao del Sur 12. Nueva Ecija 13. Bukidnon 14. Albay 15. ZAMBOANGA del NORTE 16. Misamis Oriental 17. Negros Oriental 18. COTABATO 19. Isabela 20. Davao Contribution of 20 Poorest to Total Poverty
Source: National Statistical Coordination Board (Manila).
The Face of Poverty A composite picture of a typical poor Filipino household shows a family with the following characteristics: q Its size is larger than average. As previously stated, although 35.5 percent of Filipino families were poor in 1994, they constituted 40.6 percent of the total population. A 1992 survey of families ranking among the poorest 30 percent of all families showed their average size to be greater than ten for urban families and greater than eight for rural families.
A male heads the household. Poverty incidence among female-headed households is less than male-headed households. The head of household is younger than fifty. This is true for more than two-thirds of all poor households. The head of household has little or no schooling. For 72 percent of all poor households, the highest educational attainment is a primary school education. The family is more economically active than the rest of the population, with substantially higher labor participation rates, especially among the youngest and oldest age groups, but with less access to the formal labor market. Two-thirds of the men and roughly three-fourths of the women are either self-employed or unpaid family workers. It lives in a rural area (two-thirds of all poor households), and its members are engaged simultaneously in as many as four or more income-earning activities. Yet they are largely underemployed. If living in an urban area, the family derives income mainly from agriculture, construction, and transport. Notably, the percentage of poor households engaged in urban agriculture is larger than in those engaged in any other occupation. More urban poor families are engaged in agriculture than in construction and transport combined.
Three things stand out from these points, which may run counter to popular perceptions. The first is that the poor are neither lazy nor shiftless nor jobless. Many of the poor are employed simultaneously in different occupations. They cannot afford to be unemployed. So the problem of poverty is not so much the lack of jobs as the lack of jobs that provide sufficient wages or income. The second is that people in the agricultural sector bear the heaviest share of the poverty burden--poverty in the Philippines is largely an agricultural phenomenon (see Table 3.3). This fact is not limited to rural areas: the biggest contribution to poverty in urban areas is the same as that in rural areas: dependence on subsistence-level agriculture. Basically, this is a matter of definition. Areas become classified as urban when population density achieves a certain level, even if activities in the area remain largely agricultural in nature. The most recent empirical investigation into the determinants of agricultural poverty shows that low levels of human capital, inaccessibility of land, lack of infrastructure, and unfavorable policy environments are the main correlates of rural poverty. 2
Table 3.3: Poverty by Economic Sector, 1985 and 1994 (percent) Sector Agriculture Mining Manufacturing Utilities Construction Trade Percent of Sector Impoverished 1985 1994 50.3 38.7 29 22.2 23 10 8.5 4.3 27.7 21.3 17.8 10.5 Contribution to National Poverty 1985 1994 75.8 77.7 0.6 0.5 5.5 3.3 0.1 0.1 4.7 6.5 4.6 3.9
Transport Finance Service
16.8 5.3 13.1
12.2 3 6.8
3.3 0.3 5.1
4 0.2 3.8
agriculture = agriculture, fishery, and forestry mining = mining and quarrying utility = electricity, gas, and water trade = wholesale and retail trade transport = transportation, storage, and communication finance = finance, insurance, real estate, and business services = community, social, and personal services Source: A.M. Balisacan, "Poverty and Economic Inequity in the Philippines" (Paper prepared for Asian Development Bank, Manila, 1997).
Third, while the headcount poverty data using national poverty lines seem to indicate that poverty is much greater in the Philippines than in the other countries of the Association of Southeast Asian Nations (ASEAN), that would be an unfair conclusion because the standards are not the same. The Philippines income poverty lines seem to be based on higher food and caloric standards than some of its neighbors poverty lines. Using the World Banks $1 a day benchmark based on purchasing power parity (a method of comparing production and income levels of different nations by looking at what it actually costs to buy similar goods in various countries to determine the real purchasing power of local currencies), the difference in poverty per capita narrows, and Philippine poverty incidence is closer to countries like Indonesia and China. Other Indicators of Deprivation Income-based measures of poverty assume a persons or familys deprivation stems mainly from an inability to earn or obtain sufficient private income. There is undoubtedly a connection: the poorest 30 percent of Filipino families (in income) also show a very low educational achievement, and only one-fifth of them are high school graduates, compared to a national average that is double that. But the connection between deprivation and earning ability is certainly not on a one-to-one basis, nor is it always in the same direction. And this is amply illustrated in the Human Development Index (HDI) and the Minimum Basic Needs (MBN) Index, which are more comprehensive socioeconomic measures. The HDI is a composite of three basic indicators of deprivation and development: health, proxied by life expectancy; knowledge, represented by functional literacy; and standard of living, measured by real per capita income. The closer the HDI is to 0, the greater the level of human deprivation; the closer it is to 1, the higher the level of human development. Cavite had the highest HDI (0.840), closely followed by Rizal, Batanes, Laguna, and Bulacan. The provinces with the lowest HDI were Sulu (0.372), Tawi-Tawi (0.384), Ifugao (0.409), Basilan (0.427), and Lanao Sur (0.445). The absence of a one-to-one correspondence between incomes and quality of life highlights the need to include the other dimensions of poverty to income measures. For example, Zamboanga del Sur and Tawi-Tawi have practically the same per capita income, but their HDIs differ markedly, with the former having a much higher HDI (0.543) than the latter (0.384). Ilocos Surs real per capita income is higher than that of La Union by more than P1,300, but their human development levels are very similar (0.657 vs. 0.650). And finally, Romblon, which has the lowest real per capita income and the highest poverty incidence among the provinces (with 79.5 percent of its families below the poverty line), has an HDI
higher than that of twelve other provinces, six of which are not even among the poorest twenty provinces (in terms of poverty incidence). The life expectancy and functional literacy data, which are essentially health and education indicators, help to clarify the situation. Average life expectancy in the Philippines is estimated (in 1994) to be 66.9 years, but again this hides large variations among the provinces. Cebu has the highest average life expectancy at 71.8 years, whereas life expectancy in Tawi-Tawi is only 52.8 years. The disparities in functional literacy are even larger: with a national average of 83.8 percent, the provincial rates ranged between 92.8 percent (in Cavite) and 52.7 percent (in Tawi-Tawi). The Minimum Basic Needs Index uses the same methodology as the HDI, but whereas the HDI has three components, the MBN Index has eight: number of families below the official poverty line; incidence of official poverty in the province; infant mortality rates; malnutrition rates; cohort survival rates; adult illiteracy rates; proportion of households without access to safe water; and proportion of households without access to sanitary toilets. The 1997 United Nations Development Programmes Human Development Report, which introduces a multidimensional Human Poverty Index similar to the MBN Index, indicates that the Philippines is in fact better off than Indonesia under this measurement of poverty and about on par with China. Philippine averages for the MBN indicators hide large variations among the provinces. Infant mortality, for example, ranges from a high of 126 per 100,000 live births in Sulu and Tawi-Tawi to a low of 31 in Zambales. Five percent of children in Batanes are malnourished, compared to 31 percent in Camarines Sur. Ninety percent of households in Sulu have no sanitary toilets, whereas in Batanes all households have access to sanitary toilets. In the education sector, cohort survival rates are high at 96 percent in Antique, whereas only a little over a third of those entering elementary school in Sulu and Maguindanao finish the fourth grade. As with the HDI, the MBN Index does not correspond on a one-to-one basis with income poverty. Provinces such as Sorsogon, Camiguin, Antique, Quirino, Bohol, Oriental Mindoro, and Marinduque, which in 1991 were among the twenty poorest provinces by way of poverty incidence, were all in the top half of the provinces ranked according to fulfillment of minimum basic needs. Income Distribution: Relative Poverty So far, the discussion has centered on absolute poverty, in its many dimensions. Before proceeding to the next section, a look at income distribution in the Philippines is in order. The Gini coefficient, which measures the inequality of income distribution, was 0.4507 in 1994 (a Gini of zero shows perfectly equal income distribution and of one shows perfect inequality) for the Philippines. The 1994 data show that the bottom 40 percent of families in the country accounted for only 13.7 percent of total family income, and the top 10 percent of families accounted for 35.5 percent (see Table 3.7). The income of the highest decile was almost nineteen times the income of the families in the lowest decile. Income in the Philippines is more equally distributed than in Thailand and Malaysia, and less equally distributed than in Singapore and Indonesia. But in the same way that absolute poverty varies among regions, relative poverty also does. The regions with the lowest Gini coefficients (and therefore the more equal income distributions) were the ARMM (0.3125), followed by Central Luzon, the Ilocos Region, Western Mindanao, and Metro Manila. The region with the highest Gini concentration ratio was the Central Visayas, followed by Central Mindanao
and Eastern Visayas (see Table 3.4).
Table 3.4: Gini Concentra
The Philippines: Decentralization, Democracy, and Development

by Steven Rood Introduction
The administration of President Fidel Ramos has proclaimed on numerous occasions its dedication to a list of "Ds": deregulation, decentralization, democracy, and development. This chapter looks at the last three. The traditional view of local politics and government in the Philippines is not flattering: elected officials are personalistic faction leaders (or worse, bosses or warlords) interested in parlaying their personal wealth and power rather than promoting good governance. Thus, it could be argued that decentralization by shifting power away from a reforming center to powerful irresponsible local politicians, will harm democracy and development. On the other hand, it could also be argued that decentralization in the political sphere is the equivalent of deregulation and privatization in the economic sphere. By lifting the burden placed on local communities by the central government in Manila, decentralization allows local energy to be channeled into development rather than devoted to maneuvering through a thicket of government rules and regulations. This chapter examines the striking decentralization in the Philippines since 1992 and assesses whether it is helping democracy and development. It begins with a brief review of traditional politics and governance on the local level, as a prelude to a description of legal and socioeconomic changes at the local level. These changes are then assessed in light of the desire to deepen democracy and further socioeconomic development in the Philippines.
Traditional Local Politics and Governance

Politics Local politics in the Philippines has been variously described as rooted in patron-client relations, bossism, or warlordism. Personal relations dominate all these descriptions, and indeed, many mayors and governors have been elected on the basis of family name and networks rather than the strength of their parties or platforms. Political leaders at the local as well as national level traditionally have been drawn from families possessing the considerable wealth necessary to engage in politics. Often political office has been seen as a vehicle for protecting or enhancing familial economic interests in plantation agriculture, logging or other extractive operations, or transportation and shipping. At a minimum, political office has been a mechanism for recouping the expenses involved in attaining that office. During the late 1980s, I asked a campaign manager in the Visayas what was the most expensive part of the campaign. I was trying to gauge the distribution of campaign funds among advertising expenses,
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transportation expenses, and personnel expenses. But he responded, "When the voters tell us their problems." The voters wanted their problems solved immediately, so the campaign vehicle would carry a supply of water pumps, TV antennas, medicines, and the like. Writing just before the passage of the new Local Government Code (the Code) in 1991, David Timberman described electoral politics on the local level in the following way: Local elections, then, have traditionally tended to be contests between the members of the wealthiest and most influential families, or their proxies. Local campaigns have emphasized local issues and personal relationships. They secured votes by using a combination of family ties, utang na loob [debts of gratitude], loyalty, and promises of jobs, payments, or other material benefits. If necessary, they would also use threats and intimidation. 1 The character of local politics had consequences for Philippine politics as a whole. National political parties were built from competing alliances of local leaders. Local leaders (and even national figures) would switch parties depending on what party had captured the presidency and who was nominated for which post. Benigno (Ninoy) Aquino was a Nacionalista governor of Tarlac but switched to the Liberal Party when Diosdado Macapagal was elected president of the Philippines. When Ferdinand Marcos won the next presidential election as a Nacionalista, Governor Aquino refused to switch back but understood when the majority of Tarlacs municipal mayors did. As Mary Racelis Hollnsteiner points out in her classic, The Dynamics of Power in a Philippine Municipality, even at the local level alliance systems among elites were unstable. 2 Control over votes, access to resources from the national level, and personal rivalries led to shifting alliances which mirrored the shifts in national parties. Some leaders had a monopoly of power in their locality, but more common were persistent rivalries at the local level which led to the use of various mechanisms to retain local office. In some instances the use of violence has dominated localities, shading into what has been called a "sophisticated form of brigandage." 3 Particular locations and warlords have been infamous in this fashion, including the Duranos of Cebu and Ali Dimaporo of Lanao. The use of violence in politics at both local and national levels seemed to be increasing in the late 1960s, which led to the coinage of the phrase "guns, goons, and gold" to describe the three key ingredients for electoral success. Warlordism and violence provided Ferdinand Marcos with justification for the imposition of martial law in 1972 and the subsequent disenfranchisement of elected local officials. Between 1972 and 1986 local politics became either a matter of access to largesse from Malacanang Palace (where Marcos had established a monopoly over government resources) or a struggle to survive in those few places where oppositionists had won in the 1980 local elections. However, as the machinery of Marcoss political machine, the Kilusan Bagong Lipunan (KBL), or New Society Movement, began to crumble in the post-1983 era, localism once again grew strong. In the 1984 elections to the National Assembly for example, Pangasinan governor Aguedo Agbayani, a KBL stalwart, essentially ignored the national KBL machinery when he had his son, Victor, run successfully against the official KBL candidate for a seat in the assembly. In 1986, the new Aquino administration replaced Marcos-era local officials with appointed officers-in-charge, many from prominent political families that had led or joined the ranks of the anti-Marcos opposition. Some of these officers-in-charge won in the subsequent 1988 local elections, but
a large number of the replaced Marcos-era officials were returned to office, proving the durability of their access to power and the limits on the national governments ability to determine the outcome of local politics. Governance Whether local politicians were characterized as warlords, based on the use of violence, or as patrons, based on the material benefits and favors distributed by elected officials, the portrait did not depict good governance. In fact, rather than promoting comprehensive or sustainable development, local officials often provided scattered, particularistic benefits. These included small public works projects such as paving sections of roads or constructing basketball courts, barangay 4 halls, and footbridges; providing government jobs, preferential access to government funds, or special exemptions from (or nonenforcement of) government regulations; and favoritism in the resolution of disputes over land, resources, or commercial transactions. Even social services tended to be discretely distributed. Medicines were labeled with officials names before being handed out. Patients brought their doctors or pharmacy receipts to politicians for reimbursement. And, most famously, family expenses for christenings, education, weddings, and funerals were solicited. KBL, it was said, stood for Kasal, Binyag, Libing--wedding, baptism, funeral. The focus on specific benefits eclipsed planning for more general economic development. Development projects were frequently selected on particularistic or personal grounds, leading to faulty implementation. This type of planning, combined with widespread corruption, resulted in many incomplete projects or in shoddy construction and maintenance. However, the lack of effective development planning was not entirely the result of a politics based on material exchange. Even those politicians interested in more broad-based and effective socioeconomic development and the planning technocrats who supported them (or tried to change the minds of more traditional politicians) were largely helpless in the face of a centralized system of planning, budgeting, and expenditure. National officials and government agencies decided on major development projects with little or no attention to local government views. 5 Agency priorities were decided in their Manila offices (or dictated by members of Congress), and implementation was undertaken by locally based national government field personnel, who were not accountable to local governments. Local governments were extremely limited in their ability to raise revenues locally, and national government funds were unpredictable and often dispensed based on personalistic and political considerations. Post-1972 efforts to rationalize the system by having regional development councils bring together local governments and national government agencies, with technically qualified secretariats formed by the National Economic and Development Authority (NEDA), failed. The root reason for this failure was that direction for agency activities continued to come from Manila, even after the change of government from Marcos to Aquino in 1986. Again, I quote Timbermans summary of local governance shortly before the passage of the 1991 Local Government Code: The signs of excessive government centralization are widespread. Teachers, policemen, and firemen are employees of the national government. All but the very smallest public works projects are planned and funded by national departments. The provincial or regional heads of these departments are responsible to officials in Metro Manila rather than to the governors of the provinces in which they operate. Provincial and local governments have
very limited opportunities to raise revenues by taxation. 6 In this atmosphere, local development plans amounted to wish lists compiled at the local level for presentation to national government officials in the executive or legislative branches. Hence, while problems in decentralized development were related to traditional politics, even writers focusing on "bossism" admit that eliminating the phenomenon would not be sufficient to ensure development. "The constant struggle for government largesse, moreover, compromises the uses of planning to promote economic growth, because even the best economic plans cannot be implemented." 7 The Impact of the 1991 Local Government Code The passage of the 1991 Local Government Code is one of the most remarkable changes that has taken place in the Philippines since the restoration of democracy in 1986. It issued in a revolution in governance, devolving substantial power, responsibility, and resources from the national government to the local governments. To appreciate the significance of the Code, it is first necessary to understand the magnitude and complexity of the system of local government it altered. The Philippines is the fourteenth most populous nation in the world, with about 70 million people. This makes it one of the ten largest democracies in the world. The Philippines is a unitary state under its constitution, but in terms of geography, history, culture, and language it is anything but. The archipelago consists of more than 7,100 islands (of which about 1,000 are inhabited) stretching over 1,100 miles. These islands vary greatly in size, resource base, language, and culture. Provincial and regional affinities have been historically as strong or stronger than national identity. Today this somewhat fractured nation is divided into 77 provinces, 1 autonomous region, some 1,500 municipalities, and 68 cities--some of which are under provincial jurisdiction ("component cities") and others politically and administratively independent. Philippine public administration specialists clamored for years for decentralization, and successive governments paid it lip service. Yet in some ways the passage of the Code is puzzling, since the members of Congress responsible for its passage are often rivals of local government officials, and national government agency personnel have to this day vocal reservations about devolving powers and responsibilities to local politicians. A team of writers from the National Economic and Development Authority appropriately termed the Code a "Saturday morning surprise." 8 Why were these powers taken from the national government and given to local communities? One general explanation has to do with the tide of democracy that followed the change of government in 1986. The 1987 Constitution called for autonomy for local governments, but so had the Marcos-era 1973 constitution. What impelled the actual implementation of the constitutional mandate was a reaction to the fourteen-year authoritarian interlude. Anti-Marcos sentiment fueled a determination to dismantle the mechanisms of central control instituted by the deposed president. It was argued that bringing real authority and responsibility closer to constituents was inherently more democratic. This argument coincided with the interests of local politicians eager to increase their freedom to act. A nationally prominent governor, Luis Villafuerte from Camarines Sur, was a prime mover in forming the League of Leagues, an alliance of the League of Governors and the League of Mayors, which actively lobbied for the passage of the Code. In both houses of the legislature leaders had particular reasons for pushing for more power for local governments. Senator Aquilino Pimentel sponsored the bill out of his
experience as the mayor of Cagayan de Oro City in Mindanao. House Speaker Ramon Mitra appeared to believe that by shepherding the Code through the House of Representatives he would gain the support of local politicians in his bid to succeed President Aquino in 1992. In the end, though, the explanation rests on the considerable leadership exercised by national politicians, led by President Aquino. She consistently put the resources of her administration (both political and bureaucratic) behind the effort to institute meaningful decentralization as a bulwark against the reimposition of authoritarianism. As a result, the bill was signed into law by President Aquino on October 10, 1991, and went into effect on January 1, 1992. Though the Code legally took effect on January 1, in practical terms implementation was on hold until after the May 1992 elections for all local government offices, Congress, and the presidency. Implementation of the Code has coincided with the tenure in office of President Ramos. Highlights of the Code The Local Government Code transferred significant financial resources, responsibilities, and personnel from the national government to local governments. The Code also contained a number of features designed to increase the level of citizen input into local government decision making. For local government to work well, local communities would need to become more involved in the process of governing. The amount of money in the national governments Internal Revenue Allotment to local governments went from some P10 billion (about $375 million) in 1991, the last year before the implementation of the Code, to over P70 billion (about $2.7 billion) in 1997. Even taking into account the 66 percent rise in consumer prices over this period, this represents more than a fourfold increase in real terms. Thus, from 4 percent of the national budget allocated as transfers to local governments in 1991, the figure climbed to more than 14 percent by 1997. In addition, the Code granted to local governments more power to generate their own financial resources. Local governments have more freedom in the use of property taxes and in the levying of business taxes. They are able to obtain credit by taking out loans or floating municipal bonds (although the latter remains rare). Build-operate-transfer schemes enable local governments to access private sources of funds for projects the community needs. Clearly, local governments have much more money to spend. The money goes partly to fund the new responsibilities devolved from the national government. Basic health care, from barangay health centers to provincial hospitals, was transferred to local governments. Delivery of social services was similarly devolved. Agricultural extension work was transferred to municipalities and cities. And some environmental-management responsibilities were passed down (although this is still subject to control by the national governments Department of Environment and Natural Resources). The shift of responsibilities entailed transferring some 70,000 national government employees from the Department of Health, Department of Social Work and Development, Department of Agriculture, and Department of Environment and Natural Resources. These employees had to be integrated into local organizational structures, which required that they learn how to perform their functions under elected leaders and alongside local and provincial level officials. Local governments retained their existing structure, which consisted of a governor or mayor, a vice governor or vice mayor, a provincial or local council (sanggunian) with eight directly elected members,
and indirectly elected representatives of the youth sector and barangay captains. The Local Government Code did modify the separation of powers somewhat by having the vice mayor or vice governor chair the councils. he Code also instituted a number of local special bodies to encourage citizen participation. Local Development Councils were created and given responsibility for formulating local development plans for ratification by the local elected councils. The Code requires that at least one-fourth of the council members, all of whom are appointed, be representatives of nongovernmental organizations (NGOs). There are also Local Health Boards, Local School Boards, Pre-Qualification, Bids, and Awards Committees--each with its respective nongovernmental representation. NGOs apply to the local sanggunians for accreditation, and then the accredited organizations choose among themselves their representation to various local special bodies. Implementation of Decentralization Under the Code The Local Government Code was implemented abruptly, taking effect less than three months after it was signed. Many observers were skeptical about the ability of both sides--the national government agencies and the local governments--to handle the complex process of devolving functions. Also unclear were the attitude and behavior of the nongovernmental community, which had been nurtured in opposition to government during the Marcos years. To this day, more than five years after the formal implementation of the Code, debate continues about the success with which the Code has been implemented and its impact on local governance. What follows is a brief review of the Codes implementation, based on an extraordinary series of empirical studies called Rapid Field Appraisals, which have been conducted periodically since the implementation of the Code in 1992. 9 The technique was designed to provide timely information for decision makers during the actual devolution process and to monitor nationwide progress toward decentralized democracy. Each appraisal takes about six weeks to complete. Locally based consultants prepare regional reports based on roughly ten days of fieldwork. A two-day seminar is then held in Manila to collate and analyze their observations, followed by a public presentation to decision makers and influential individuals in the decentralization process. Finally, a synopsis is written to integrate the findings for the Philippines as a whole, and this synopsis is widely disseminated. When, after the 1992 elections, attention turned to matters of local governance, the dominant attitude among local officials was "wait and see." Confronted with implementation of the Code, local government officials and other members of local communities were uncertain about what to expect. Local government officials did not believe, for instance, that the national government would give the Internal Revenue Allotment set by the Code. They would not have been surprised if the national government reneged on that promise, since fine words about decentralization had often in the past been followed by contrary actions. January 1993 marked the true beginning of the devolution process. The first Internal Revenue Allotment was distributed and national government personnel from the Departments of Health, Agriculture, Social Work and Development, and Environment and Natural Resources began to be devolved. A variety of operational problems and constraints arose, including uncertainties about actual budgets due to late notification of the size of the Internal Revenue allocations (which generally counted for 70 percent of local budgets), questions regarding which personnel would be transferred to which local government, and
the like. By mid-1993, concern with the problems of devolution was strikingly reduced. The process of devolving personnel and functions from the national government to local government had more or less taken place. At this point local government attention turned to structural, organizational, and procedural changes necessary for effective decentralization. Local organizational structures needed to be changed to accommodate new personnel and functions and to fulfill mandates of the Code, including those pertaining to the design and passage of budgets. By 1994, with most of the Codes organizational and procedural problems worked out, local communities and local governments were becoming increasingly enthusiastic about the opportunities created by the Code. There were no more questions about devolving national personnel to the local level or about the Internal Revenue Allotment. It is hard to overemphasize the importance of the fact that the Internal Revenue Allotment had become predictable and automatically released. This made rational planning at the local level possible in a way that had never been the case before. Thus, local governments were asserting local priorities in the delivery of basic services, finding new ways to deliver these services, and forging partnerships with the private sector. A continuing acceleration of innovation and action at the local level took place in 1995, while national government action on Code matters seemed to have stalled. In order to verify complaints about lethargy at the national level, the Fifth Rapid Field Appraisal included a consultant investigating national government agencies. Both that consultant and regional consultants looked for national decentralization plans being implemented but found none. A particular exception was the Department of Health. Local Health Boards were noted in June 1994 to have problems. By June 1995 they were working very well and this was largely due to corrective action by the Department of Health. Local governments appeared to be taking their autonomy seriously with respect to local governance and service delivery. Financially, the bulk of resources continued to come from the Internal Revenue Allotment, but local governments were attempting innovative local revenue-raising measures and were availing of credit from government financial institutions. Increased resources were being devoted to delivery of basic services, but demoralization of devolved workers continued to be a problem in some areas. In 1995 Congress passed a bill returning health services to the national government, but this bill was vetoed by President Ramos. A good deal of the political impetus for this bill came from health workers discontented with their lot as employees of local governments. The dissatisfaction of health workers (which is shared to a lesser degree by agricultural workers) does not stem from a feeling that local governments cannot deliver the requisite service. Rather, discontent is with their professional prospects, especially when comparing themselves with colleagues retained by the national government agency. The Rapid Field Appraisal completed in May 1996 affords a snapshot of where the decentralization process has gone. There are a number of model local governments, such as those that consistently win awards for innovation and service. For example, Naga City in the Bicol region has a system of emergency services for the citizenry, a city-employee productivity-improvement program, and an empowerment bill which includes the nongovernmental community in all aspects of governmental decision making. Puerto Princesa City in Palawan is incredibly clean and green, has an active environmental watch program, and a system of satellite hospitals serving remote barangays. The province of Bulacan has initiated a cultural development program and an integrated social services
delivery program. By 1996 even poorer local governments could be cited for undertaking innovative and effective development programs. Pagadian City in Mindanao has systematically completed a farm-to-market road network, allowing access for the first time to rural barangays. The municipality of Tuguegarao in Cagayan Province built a twenty-bed hospital by combining municipal funds with private donations. The municipality of Daraga, in Albay, has embarked on a systematic program of agricultural development by importing breed stock for cattle and fowl and establishing tree nurseries to develop forests and fruits. The second finding is a conspicuous deepening of decentralized operations and programs. Local governments are trying to take charge of local operations, and local NGOs are taking more initiatives. The province of Nueva Vizcaya has established a separate procurement office to facilitate delivery of medicines and other supplies. In Zamboanga del Norte the nongovernment and government sectors have joined to establish the Kaugmaran (Development) Foundation to help the provincial government promote sustainable development with citizen participation. Representatives of the Catholic Church and other NGOs helped the municipality of Tulunan in the province of Cotabato become a peace zone in an area of intense conflict. The third finding is a shift in management emphasis for local governance. Instead of traditional handouts in response to specific needs and requests, local governance has become more project- and program-oriented. Occasionally NGOs are taking the lead, and at other times the local government itself is. San Miguel, Bohol supports an infirmary and its ability to deal with diseases by a system of fees for service. New Lucena, Iloilo tapped a number of sources, government and private, to establish a Comprehensive Cooperative Development Program, which led to the creation of a Federation of (23) Cooperatives. In Malita, Davao del Sur a cooperative spearheaded the formation of multisectoral Municipal Advisory Teams on Environment which obtained funding from several adjoining municipalities to launch an integrated program of environmental rehabilitation. Finally, there is growing advocacy for better performance, at two levels. Local governments are evolving into a lobbying force to influence the national government. Pressure is being exerted on national government agencies to take local governments into account. And the League of Provinces, League of Cities, and League of Municipalities are not going to allow the Code to be significantly weakened during the ongoing discussion of amendments (pursuant to the provisions mandating congressional review of the Code after five years). These Leagues have hammered out a common position on many aspects of the Code (such as the sharing formula for the Internal Revenue Allotment or proposed amendments to the Code). At the local level, governments are finding that the general citizenry is no longer accepting poor performance. In participatory planning sessions at the barangay, municipal, and provincial level citizens are included in the discussion of progress indicators and accomplishments. In Capiz, municipalities have opened up their operations to systematic evaluation by local citizens. Greater transparency means that citizens are more aware of local government performance, and can compare their locality to neighboring communities. There has long been speculation about whether issueoriented voting might emerge. Now that local governments have more powers, local citizens seem poised to hold local officials accountable for performance. Other Key Developments at the Local Level
We can see from the above that considerable changes have transpired under the 1991 Local Government Code. But the implementation of the changes mandated by the Code has not taken place in a vacuum. Broad social and economic changes have been occurring on the local level, so that by the late 1990s a favorable climate exists for decentralized democracy in the Philippines. Economic and Social Change As early as the 1970s scholars noted that economic change had eroded traditional local patron-client relationships. This process had begun in the economically most advanced provinces such as Central Luzon and in certain cities. The loosened grip of the traditional patron made it possible for President Marcos to bypass local intermediaries in his successful reelection bid in 1969, and the weakened power of local bosses contributed to the ease with which he imposed martial law in 1972. Long-run socioeconomic change has continued in the twenty-five years since that time. Agrarian reform, slow though it may be, has eroded the power of the landlord class. Urbanization has increased economic differentiation, increasing the share of the vote that is up for grabs in any particular election, rather than being under the control of political leaders. Much greater media penetration has allowed direct appeals to the citizenry and enabled new faces to challenge old political families. A sometimes overlooked phenomenon is the rapid growth of the middle class. Even before the economic growth of the Ramos years, there had been a 55 percent increase in per capita real income between 1961 and 1991. This figure is much lower than neighboring countries in Southeast Asia, but looking at averages vastly understates the increase in the pool of the highest income group. This increase is by no means confined to the Metro Manila area, as is often asserted. In Northern Luzon, which includes many of the poorest provinces of the Philippines, the number of families in the highest-income category (P10,000 per year in 1961, the equivalent of P233,000 in 1991) was conservatively estimated to have gone up by a factor of seven in these thirty years. A larger middle class increases the demand for new politics, such as that offered by Senators Miriam Defensor-Santiago and Raul Roco on the national scene, and such local politicians as Governor Roberto Pagdanganan of Bulacan or Mayor Jesse Robredo of Naga City. The middle class is also a source of new politicians, as more persons can afford to become candidates. This increased supply is reflected in the large number of candidates for each elected post. It is not unusual to have four or five serious candidates for important positions. The overseas diaspora of Filipinos has an important impact on the local economy and society. Remittances from abroad, which now total about $6 billion a year, both free families from their dependency on local economic and political elites and provide the resources for political activities by new entrants into politics. Given the role of social networks in labor recruitment, it is not unusual to see localities with very significant inflows of resources. For example, woven into the sad story of the decline of a traditional pottery craft in the island of Maripipi in the Visayas is the fact that 30 percent of the islands families have regular remittances from Overseas Contract Workers. 10 Other social factors, such as education and the spread of global awareness, also wreak subtle changes. Criticisms of the longevity of so-called elite families and political dynasties miss an interesting generational shift that seems to be ongoing among the political elite. There is no doubt that many of todays politicians indeed belong to long-standing political families. Yet the sons and daughters are often quite different from the fathers. Lanao del Norte governor Abdullah Dimaporo is an American-educated
sophisticate quite at home with technocratic modes of governance. He has his father Alis mastery of Maranao culture and politics, but he balances that with an orientation toward development that goes well beyond the short-term thinking of the elder Dimaporo. Whereas some scholars think of this phenomenon as a cyclical one, accompanying the rise and decline of political families, I believe it is part of a long-term trend toward more development-oriented government officials. 11 The fame of Ali Dimaporo as a warlord draws attention to the contrast between traditional and more modern politics and governance, but there are many similar, less famous examples. Governor Rene Relampagos and Vice-Governor Edgar Chatto of Bohol are in their thirties, the younger generation of political families, but they embrace organizational development for the provincial machinery, publicprivate sector partnerships in investment planning, and public opinion polling to sound out their constituents on such hot-button issues as water diversion for the city of Cebu. Or there are examples like the terribly traditional municipal mayor in the interior of Capiz Province whose approach to getting a water system was to have a local beauty queen kiss a visiting senator. The mayors son, however, is a provincial board member conversant in issues of sustainable development, environmental impact, and long-range planning. Civil Society One of the most striking aspects of Philippine politics is the proliferation of organizations in the nongovernmental sector. Organizations of farmers, cooperatives, professional associations, civic clubs, religious groups--all are readily observable both at local and national levels attempting to influence national policy. During the latter years of the Marcos era, civil society organizations often provided absent government services and served as refuges for opponents of the government who could not find places in the Marcos-controlled system. After the opening of "democratic space" in 1986 there was a veritable explosion of nongovernmental organizations performing many different functions. Today some 48 percent of Filipinos belong to at least one organization (the comparable figure for the United States is 71 percent and for Spain just 19 percent). 12 Just before the passage of the Local Government Code, an observer wrote: "To a greater extent than anywhere else in the region, so-called nongovernmental organizations have taken over from the government the work of improving the lot of the poor majority, through political, cultural and economic programs. The irony of their success is that even the government seems happy to see NGOs assume part of its functions." 13 This explosion has been reinforced by two entities: the Catholic Church and the media. It is well-known that the church formed a counterpoint to government during the Marcos years and was instrumental in the February 1986 ouster of President Marcos. 14 There was a close relationship between the Catholic Church and President Aquino, but the relationship has been cooler with President Ramos, who is a Protestant. Still, religious organizations of many types form networks which contribute significantly to a vibrant civil society. The lively Philippine press is almost as well-known. Although it is often criticized as being inaccurate and irresponsible, collectively it provides an invaluable channel for conveying information, independent analysis, and a diversity of views to the citizenry. Given this background, it is not surprising that active participation by the nongovernmental community was written into the Local Government Code. Aside from venues for participation such as the Local Special Bodies, local governments were empowered and encouraged to tap NGOs in the delivery of services and the performance of other functions. Given the link between the strength of civil society and
the functioning of democracy, the fact that the Philippines has a civil society that is quite strong by developing-country standards offers reasons for optimism for both democracy and development. Implications for Democracy and Development Clearly the 1991 Local Government Code has significantly decentralized government operations in the Philippines. The traditional view of local politics and governance would lead to suspicions that giving more power to local officials might be counterproductive. Traditional politicians might be disinclined to use their powers to encourage democratic decision making and participatory development and would merely perpetuate their hold on local power. Traditional political families like the Ecleos of Dinagat Island, Surigao del Norte have certainly not disappeared, and the next generation of these families continues to win elections. In 1995 twin brothers, Allan Ecleo I and Allan Ecleo II, became the mayors of adjoining municipalities while still in their twenties. 15 On the other hand, social and economic changes seem to have loosened the hold of traditional local elites. The progress of civil society lends an optimistic perspective on Philippine politics. What are the implications of such factors for democracy and development? Democracy 16 In trying to characterize some 1,600 local government units, any set of data is almost inevitably partial and there are bound to be exceptions to any conclusions drawn from it. However, the cumulative effect of several different sources of empirical data strongly suggests that devolution is contributing to democracy in the Philippines, as seen in three indicators of democracy on the local level: public opinion, electoral outcomes, and popular participation in the process of governance between elections. Public Opinion and Elections Survey data on how citizens view their local governments shows respondents in nationwide surveys more satisfied with provincial, city, and municipal governments than they are with the national government. Significantly, citizens feel more able to influence these lower levels of government. For instance, in 1996 Bohol citizens rated the condition of roads as the most serious problem needing local government attention, an opinion that will come as no surprise to anybody who has visited that province, and they felt that the new administration of Relampagos and Chatto was responding to their concerns on this score. In the last two local elections (1992 and 1995), winners typically won with less than half of the vote. This is because votes are split among so many candidates, which is part of the trend noted above toward more candidates for each office (a trend caused in turn by a larger pool of middle-class citizens). The result is that in 1995 less than one-third of the governors reached their constitutionally prescribed maximum of three terms, and fully two-fifths were elected to their first term. (Members of Congress, also elected by districts but less accountable locally, had exactly the opposite profile in 1995. Only one-fourth were elected for their first term, whereas two-fifths were on their third and last term. The latter figure is one of the main reasons for the discussion in Congress about changing the 1987 Constitution to remove term limits.) With respect to disadvantaged sectors, such as women and indigenous peoples, the picture is somewhat mixed. At lower levels of government women are better represented, but rarely do they form more than one-fourth of elected officials. Indigenous peoples are well represented in areas where they form a majority of residents, such as the Cordillera region in Northern Luzon. But in areas swamped by
in-migrants, such as many places in Mindanao, the representation of indigenous peoples is low. The Local Government Code provided for sectoral representation (e.g., farmers, laborers, women, and youth) in the sanggunians, but this representation has been postponed by an Act of Congress (the postponement was supported by the regularly elected local officials). The two autonomous regions for cultural minorities mentioned in the 1987 Constitution--in Muslim Mindanao and in the Cordillera--form special cases. They are intended to be political units, not the purely administrative regions that exist in the rest of the Philippines. In the Cordillera, the autonomous region has not yet been instituted--the first version was voted down in a 1990 plebiscite. In the meantime, local governments in the Cordillera operate just like those throughout the Philippines. Since in-migration into the central Cordillera has been limited (with a few exceptions), indigenous peoples dominate local governments in their traditional areas. The Autonomous Region for Muslim Mindanao (ARMM) was instituted in 1989, covering four provinces. An ARMM Local Government Code has been passed, which ensures that the powers of the region are not devolved to local governments. Thus, characterizations about provinces and municipalities developed for the rest of the Philippines tend not to apply in ARMM. In 1996 the Ramos administration signed a peace agreement with the main Muslim rebel movement, the Moro National Liberation Front (MNLF), and supported MNLF Chairman Nur Misuari for the elected post of governor of the ARMM. This was the first step in a renewed effort to make the ARMM work to the advantage of Muslims in Mindanao and to make joining the autonomous region attractive to other areas in Mindanao and surrounding areas. A Southern Philippines Council for Peace and Development (SPCPD) was set up, government funds increased, foreign donors encouraged to concentrate on the area, and the like. The plan is to hold another plebiscite to determine which other areas will join the ARMM once benefits have been demonstrated. Popular Participation in Governance What about the extent of participatory democracy between elections? It might be that citizens are shut out of the day-to-day working of local government. Has this been the case? The Code envisioned that citizen participation between elections would be channeled through NGOs. The nongovernmental community participated actively in the implementation of the Code. Beginning in 1992 a National Coordinating Council on Local Governance was formed by national NGO networks. Its aim was to inform the nongovernmental community about the Code and to participate in the accreditation process. After five years, what can we say about nongovernment participation in local governance? Scholars have tried to answer this question by reviewing a growing number of case studies of nongovernment participation in local governance. One review concluded that "a dynamic change in GO-NGO [government organizationnongovernmental organization] interaction is brewing as indicated in the medium to high degree of peoples involvement in the decision-making process." 17 Similarly, research commissioned by the Caucus of Development NGOs (CODE-NGO) in 1996 concluded that "increasingly, NGOs/POs [nongovernmental organizations/peoples organizations] or their projects have become regular fixtures in the halls of local administration and public affairs" and that power sharing has become "intermediate, in some cases intermediate to high." 18 The involvement of the nongovernmental sector increases the participation of women in governance. A
count of contact persons listed by NGOs accredited to local governments reveals that some 30 to 35 percent are women, a level far above that for elected officials. Further, the status of women in NGOs improves even more at the leadership level--over 45 percent of the delegates to the First NGO Congress in 1991 were female. These studies are reinforced by the conclusions of the Rapid Field Appraisals, which have always been concerned in part with citizen participation in decentralized governance. The nationwide appraisals found that in the early stages of implementation there had been minimal interference in the accreditation of NGOs and in the selection of representatives to local special bodies. As time went on, local governments fulfilled the letter of the Code with respect to local special bodies, but doubts arose as to whether this was leading to genuine democracy. Local Development Councils, for cities and provinces in particular, tend to be large and unwieldy. They are difficult to convene and hard to manage for meaningful results. Reflecting this problem, a 1996 study of municipalities and cities within seven provinces addressed three indicators of citizen participation in local governance: active NGO representation in local special bodies; citizen participation in the preparation of investment plans; and citizen participation in the preparation of environmental plans. Based on these three indicators, the study found that 57 percent of the local government units covered had evidence of effective citizen participation. Room for improvement remains, but it certainly seems that the climate is favorable for participation. In sum, these assessments indicate that the Local Government Code has increased democracy at the local level. Even when the specific mandates of the Code fall short, the Code itself is influential in producing a mind-set that encourages participation. When individual citizens and NGOs think about interacting with government, they are more likely than before to think of local government because of the channels laid out in the Code. From the viewpoint of local government officials, the Codes explicit inclusion of nongovernmental entities in the process of governance increases the legitimacy of political action by those entities. Socioeconomic Development The socioeconomic development process in the Philippines has speeded up during the Ramos administration. But has decentralization helped or hampered the process of development? Decentralization, it can be argued, is a logical concomitant of the Ramos governments deregulation thrust. Just as efficiency can be served by reducing the role of government in the national economy, regional and grassroots development can be encouraged by reducing the role of the national government in local government affairs. If decentralized governance is effective, local talent can be encouraged to stay in the provinces. Just as expanded economic opportunities at home draw Filipinos back from abroad, localities can attract and keep skilled local residents if development springs up outside of Metro Manila. Private investment and government initiatives combined with a higher quality of life outside of Metro Manila can alter a hitherto overcentralized development pattern. In response to the Code, the promotion of economic activity is a growing concern of local governments. Major cities such as Davao and Cebu have investment-promotion centers which attract enterprises away from the primary city of Manila. The provincial government of Bohol also is engaged in systematic investment promotion. The concentration is on eco-tourism with a secondary emphasis on agro-industrialization, as prioritized in a bottom up planning process by communities throughout the island. Municipalities in Palawan have canvassed which of their development needs can be met by
private investments and have provided potential investors with the information needed for project development. A small but growing number of local governments are also beginning to avail themselves of other forms of nontraditional financing. Bonds have been floated to finance a housing project in Victorias, Negros Occidental. Nueva Ecija took out a loan to acquire construction equipment and demonstrated that the province could construct roads considerably more cheaply than the Department of Public Works and Highways. Bohol is building a new provincial center, which will be paid for by commercial establishments occupying the first floor. Another concern is the provision of social services to balance and encourage economic growth. Because of the Code, local governments have more money to spend--from the Internal Revenue Allotment, local taxes, or credit sources. The Rapid Field Appraisals have found that local governments now spend more on social and economic services than did national government agencies before the passage of the Local Government Code. However, we know little about the effect of this increased expenditure. The most systematic data we have is with respect to spending on health. At the macro level, it appears that indicators of health care have not deteriorated. Respondents to surveys have repeatedly said that health services have improved since 1992, although they are often not aware that the responsibility has been devolved from the Department of Health to local governments. What we do know is that local governments are taking their responsibilities seriously. In Camarines Sur, Governor Villafuerte has launched a number of agricultural initiatives, with the assistance of consultants hired out of provincial funds. In Cotabato, Governor Rosario Diaz (herself a physician) has undertaken a province-to-barangay evaluation and revamp of health-care delivery. She has involved the citizenry in every step and is finding outside money to match provincial funds in improving health care. Local communities are now taking action to preserve the environment. As noted in Rapid Field Appraisals, locally based natural resource councils have become quite common in response to local concerns about the environment and natural resource use. More generally, some local planning efforts are now technically sophisticated. In Palawan municipal level investment planning workshops are followed up both by feasibility studies of individual projects and concerted efforts to influence the provincial plan. In 1996 the Palawan NGO Network was tapped to facilitate these workshops, and with the province jointly planned the Provincial Development Council meeting, which devised the provincial development plan. In Nueva Vizcaya the challenge of bottom-up planning is being addressed by sequential barangay planning workshops followed by municipal workshops which then culminate in the provincial meeting. Unfortunately, as noted in some Rapid Field Appraisals, some agencies of the national government still do not seem to fully embrace participatory, bottom-up development. Planning by the National Economic and Development Authority is still largely top-down, based on decisions taken at the national and regional levels. National agencies like the Department of Agriculture still formulate their own priorities instead of responding to those from below. Still, while we do not yet have truly systematic data, the socioeconomic benefits from decentralization based on anecdotal evidence appear quite strong. Observers of the Philippines who travel outside of the Metro Manila area are likely to find enormous developmental energy being released in the countryside.
Conclusion
The foregoing points tend to demonstrate that decentralization under the 1991 Local Government Code has advanced both democracy and development in the Philippines. The premise behind the optimistic view of decentralization is that accountability upward, to national government agencies, stifled local initiative and was often ineffective. Thus, it is better to institute local autonomy with accountability downward, to the local community. This is not wishful thinking about local politics and governments, since many problems and challenges remain. Successful local government requires that the process of selecting local officials can be trusted by the citizenry. The process must be protected by the impartiality and effectiveness of the national governments Commission on Elections. It also requires a vital civil society--including an energetic media--to participate in the decision-making process and enforce accountability. While we can be confident that the overall trend is toward democratic and effective local government, traditional politicians continue to govern parts of the country through the use of patronage and coercion. Moreover, in some areas of the country even well-intentioned local officials cut from a new cloth will not be able to deliver development. Some areas are just too poor to have surplus resources to invest. And in some areas local governments are mired in bureaucratic inertia, combining local government employees who never before had any responsibilities with new employees devolved from national government agencies who do not know how to work in a local environment. Unfortunately, such unevenness is part and parcel of decentralized governance. Once the illusion of uniform results enforced by the national government throughout the archipelago is discarded, we must expect that different places will have different outcomes. The best examples of local government must be highlighted, and the process of spreading such innovations must be encouraged and supported. Finally, even the best local governments run into problems needing higher coordination. A good example is the conversion of land from agricultural to other uses. Conversion might seem good for any locality, since the economic value of nonagricultural land is higher. However, if every locality undertakes conversion, too much agricultural land will be lost and food production will suffer. Furthermore, land conversion tends to affect different parts of each community differently. Landowners might obtain the highest economic return for their land, but landless agricultural workers might lose access to livelihood opportunities. Land-use planning requires localities to integrate their plans. Another concern is that dispersed minorities such as indigenous peoples might not find a voice in localities that are dominated by major ethnic groups. They will need an advocate based outside the locality to help them preserve their culture and way of life. In sum, the national government continues to play an important role in local affairs, especially as devolution generates greater differentiation. It must maintain its commitment to macroeconomic policies that promote sustainable and equitable economic growth. It also must build a judicial system that enforces the law fairly and promptly and must ensure that elections are honest and fair. It should trust and support--or at least not impede--the efforts of local communities to achieve their own visions of democratic development. And it should provide local officials with training, models of successful programs, and a degree of coordination. Only with these kinds of support will the full potential of the Local Government Code be realized and the prospects for Philippine democracy and development be enhanced.
Endnotes
Note 1: David G. Timberman, A Changeless Land: Continuity and Change in Philippine Politics (Armonk, N.Y.: M.E. Sharpe, 1991), p. 38. Back. Note 2: Mary Racelis Hollnsteiner, The Dynamics of Power in a Philippine Municipality (Quezon City: University of the Philippines, 1963). Back. Note 3: John Sidel, Coercion, Capital, and the Post-Colonial State: Bossism in the Postwar Philippines (Ph.D. Dissertation, Cornell University, 1995), p. 509. Back. Note 4: The barangay is the smallest political unit of Philippine government and exists within all municipalities and cities. Often translated as "village," it typically has from 70 to 300 families. Back. Note 5: For further discussion of these points, see the ARD/GOLD Occasional Papers, "Issues on Local Government Finance," Nos. 96-03 ("Local Investment Planning") and 96-04 ("Budgeting") (Makati: Governance and Local Democracy Project, 1996). Back. Note 6: Timberman, p. 227. Back. Note 7: Joel Rocamora, "Introduction," in Boss: Five Case Studies of Local Politics in the Philippines, ed. Jose F. Lacaba (Manila: Philippine Center for Investigative Journalism and Institute of Popular Democracy, 1995), p. xiii. Back. Note 8: Teresa S. Abesamis and Lourdes J. Angelo, "Program Context: Power to the People--Again," in Technical Cooperation for the Management of Change: The Case of the Local Development Assistance Program and Its Strategic Contributions to Meaningful Decentralization in the Philippines, ed. Teresa S. Abesamis (Pasig: National Economic and Development Authority, 1995), pp. 8990. Back. Note 9: Rapid Field Appraisals have been funded by the United States Agency for International Development. The first four (199294) were carried out by Associates in Rural Development, Inc. (ARD, Inc.) under the Local Development Assistance Program; the fifth (1995) by the Evelio B. Javier Foundation; and the sixth (1996) by ARD, Inc. under the Governance and Local Democracy Project. Synopses of the first four appraisals appear in Technical Cooperation for the Management of Change: The Case of the Local Development Assistance Program (LDAP) and Its Strategic Contributions to Meaningful Decentralization in the Philippines, ed. Teresa S. Abesamis (Pasay: National Economic and Development Authority, 1995). Others are available from ARD, Inc. in Makati Back. Note 10: Cynthia Neri Zayas, "Reversing the Demise of a Pottery Tradition" (Paper presented at the Third European Conference on Philippine Studies, Aix-en-Provence, April 2729, 1997). Back. Note 11: See, e.g., Alfred W. McCoy, "An Anarchy of Families: The Historiography of State and Family in the Philippines," in An Anarchy of Families: State and Family in the Philippines, ed. Alfred W. McCoy (Madison, Wisc.: Center for Southeast Asian Studies, University of Wisconsin, 1994). Back.
Note 12: For a survey of activities in which NGOs engage, see Organizing for Democracy: NGOs, Civil Society, and the Philippine State, ed. G. Sidney Silliman and Lela G. Noble (Honolulu: University of Hawaii Press, 1998). Back. Note 13: D. Goertzen, "Agents for Change: NGOs Take the Lead in Development Process," Far Eastern Economic Review (August 8, 1991), p. 20. Back. Note 14: Robert L. Youngblood, Marcos Against the Church (Ithaca, N.Y.: Cornell University Press, 1990). Back. Note 15: Lacaba, pp. 3063. Back. Note 16: A more academic version of this assessment is found in Steven Rood, "Democratic Decentralization in the Philippines" (Paper presented at the Annual Meeting of the Association of Asian Studies, Chicago, March 1316, 1997). Back. Note 17: Luce Agnes Simeon-Bulosan (Masters Thesis, University of the Philippines, 1995). Back. Note 18: Alberto C. Agra, "Literature Review of Selected Case Studies and Documents on Popular Participation in Local Governance and Administration" (typescript report for CODE-NGO, Makati, April 1996). Back.
The Philippines: New Directions and Priorities in Philippine Foreign Relations

by Jose T. Almonte Introduction
At Philippine independence in 1946, President Manuel A. Roxas set the country's "safest course" in the "glistening wake of America." Now those who command the Philippine ship of state must plot for it a new orientation. The country's opening to the global economy, the dismantling of U.S. air and naval bases on Luzon Island, and the uncertainties raised by the power configurations emerging in the Asia-Pacific region--all these have made necessary a broadening of Philippine contacts and friendships in the world. This new foreign policy is based essentially on the country's membership in the Association of Southeast Asian Nations (ASEAN). Today's Philippines is more open than in the past to its Asian affinities; it is eager to take part in the communal life of the new East Asia. This chapter begins with discussions of the changing security environment in the Asia-Pacific region and the potential regional flash points of greatest concern to the Philippines. It then explores future trends in Philippine foreign relations and the prospects for a Pax Pacifica--for lasting peace across the Asia Pacific imposed not by a hegemonic power but attained by the unforced cooperation of all the states in the region.
The Changing Security Environment in the Asia-Pacific Region

The Primacy of Economic Security The Philippines' national security is founded ultimately on the nation's economic strength, political unity, and social cohesion. Like many other countries--including the United States--the Philippines has redefined its security increasingly in economic terms. A common faith in policies oriented to trade is speeding up the postcold war realignment. A shift toward outward-looking, market-oriented, private-sector-led growth among both the region's developing and newly industrializing economies is linking them more closely each year. The political impact of the market system has been most dramatic on East Asia's Leninist systems. But the market is in fact homogenizing all of the East Asian states--so thoroughly that "anti-communist" ASEAN has effortlessly incorporated "communist" Vietnam. Growth rates should remain high, although no longer as spectacular as they have been. Poverty is easing: living standards in the region, measured by average individual incomes, increased
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fourfold over the last generation, and prospects seem good for their continued steady rise. Both the United States and the European Union now trade with East Asia more than they do with each other. Open export markets made East Asia grow. Now freer world trade is promised by the Uruguay Round Agreements and an economic "rule of law" by the World Trade Organization. ASEAN's own economic grouping, the ASEAN Free Trade Area (AFTA), has decided to speed up the dismantling of national tariff barriers from fifteen years to ten. This means virtual free trade within Southeast Asia by the turn of the century. Intra-ASEAN trade is growing very fast (by 43.8 percent in 1994). It now makes up a fifth of all the trade of member countries. Meanwhile, APEC has agreed that its developed members should open their markets completely by 2010 and its developing members ten years later. In his effort to link up the country with the regional economy, President Ramos has conducted a vigorous personal diplomacy. Since mid-1992 he has visited all the major East Asian states--as well as Australia and New Zealand, the United States, and much of Western Europe. Ties with Latin America and Africa he has strengthened through Philippine membership in the Nonaligned Movement. He has also visited Saudi Arabia and other key countries in the Organization of the Islamic Conference. At the United Nations, Philippine contingents took part in peacekeeping efforts in Cambodia (1994) and in Haiti (199495). A fifty-man humanitarian relief force has been in Iraq since the Gulf war. The Challenges of Political and Social Change The region also faces a variety of challenges rooted in the rapid pace of socioeconomic and political change. In Cambodia, the unlikely coalition government organized under the Paris agreements of 1991 proved too weak to put down ideological and personalist factions and to allocate a realistic sharing of power. The strongman Hun Sen finally broke the stalemate by bloodily seizing power in Phnom Penh and expelling his royalist partner, Prince Norodom Ranariddh--in the process forcing ASEAN to delay Cambodia's entry into the regional association. In Myanmar the ruling generals are maneuvering to preserve a political role for themselves after the unavoidable restoration of representative processes. In Vietnam the controversy over economic and political strategy between communist conservatives and reformists is still unresolved. It is in ASEAN's collective interest to encourage the reformists seeking to open up the economy and to incorporate Vietnam completely into its regional institutions. Rapid economic change in East Asia is producing its usual by-products in society--the break-up of custom; the disintegration of tribes, clans, and families; alienation and political terrorism; crime and violence; prostitution and the use of narcotic drugs. Their relative deprivation sharpens the anguish of social groups that development is leaving behind. Communications systems which governments can control less and less fuel the drive of the new middle classes, in Francis Fukuyama's words, for "nonmaterial goals like recognition of their status and political participation." 1 All of these give East Asia an underlying instability that could surface once the region's economic growth falters. The failure of secular culture to satisfy desires deeper than consumerism stimulates fundamentalism--Christian as well as Islamic. The deconsecration of human life has led to a widespread feeling of loss--an anxiety that the younger churches, with their personalist approach to religion, have been able to satisfy better than the institutional churches. Fortunately, the traditional syncretism of Southeast Asian culture mitigates the power of religious fanaticism in the region. Communist insurgents, who once operated all over Southeast Asia, have now disappeared except in the Philippines, and even there they are in terminal decline. Not that Marxism's collapse has invalidated its
Leninist component, whose teachings on how to run a revolutionary conspiracy remain useful to any clandestine organization. Another irritant in East Asian relationships concerns illegal migrants and undocumented workers. The Philippine government is particularly interested in the cross-border movement of workers, a sizable number of whom are its citizens. Many of these migrant workers are virtually without civil rights in their host countries, and the Philippines wants ground rules laid, ideally on a regional basis, to ease their problems somewhat. Many current and prospective regional problems can be dealt with only cooperatively. This is true of piracy, the narcotic drug trade, and organized crime. As for the increasing threat to the regional environment, forest fires in Indonesia cast a haze over Singapore and Kuala Lumpur for weeks during the 1997 dry season. Remedies will be difficult to impose, because they are susceptible to the "free-rider" option. East Asia's Evolving Balance of Power Robert Scalapino has noted that if East Asia is economically vigorous, it is also politically fragile. 2 Since the 1970s the American military presence--and China's--had balanced that of the Soviet Union. That power balance created the precarious stability which enabled many economies to flourish. Now that arrangement has collapsed--and a new balance of power has yet to firm up. As Russian influence recedes, China is becoming increasingly assertive. Thus the U.S. presence is as crucial as ever. But now it assures the East Asian states not so much against identifiable enemies as against uncertainties. And these include aggressive nationalism, territorial conflict, and clashing regional ambitions. The postcold war balance of power in East Asia is still evolving because the relationships of the major actors are still evolving. There is as yet no status quo to which every power subscribes. And only now is East Asia beginning to develop a regionwide security organization, in the embryonic ASEAN Regional Forum. The probable outcome is a five-power balance among the United States, Russia, China, Japan, and a greater ASEAN. In at least two of these great powers--Russia and China--the military will continue to have a key--perhaps even decisive--role, with all that implies for regional instability. For five powers to learn to live with each other will be more difficult than for two powers to do so (as during the cold war). But learn they must. In the nuclear age, war is no longer a reasonable recourse for the great powers. As the new world order becomes established, the Philippines expects relations among the regional states to be driven primarily by pragmatism and compromise. It sees these neighborly virtues as being helped along by the recession of authoritarianism, by the spread of democratic systems and, most of all, by the increasing linkages of the regional economy. China and the United States are most likely to determine the shape and form of the East Asian power balance. The relationship between the two is the classical example of the dominant state and a rapidly rising subordinate state. In the past, such a clash of interests would have been resolved by a hegemonic war. Now there is no alternative to engaging China. As Germany was integrated into Western Europe, so must China be integrated into East Asia if the region is to have stability that lasts. In the immediate future, only the United States and Japan will be strong enough to influence China's political evolution. How these three powers arrange their security relationships will dictate the security
framework of the smaller East Asian states in the new century. Thus the U.S.-Japan relationship is the key relationship in East Asia--the relationship in which all bystanders have a vested interest. Just now the Philippines worries that the endless disputes between the two over bilateral trade may spill over into their strategic relationship, particularly now that "standing up to the Americans" has become so attractive to Japanese politicians. And bystanders worry just as much about the growing pessimism among ordinary Japanese about the effectiveness of their representative system. Russia--for good or ill--will continue to count in the Asian balance of power. It is worrying that President Boris Yeltsin does not seem strong enough to stand up to his conservative nationalists on issues like the Kurile Islands dispute with Japan. Political instability in Moscow will reflect on the security concerns of the East Asian countries. Anxiety had been raised throughout Southeast Asia by the dismantling of the U.S. bases in the Philippines in 1992. The fear that potentially aggressive regional powers may be drawn into the power vacuum is undoubtedly real. But the United States will stay on in East Asia, and in its own interest. Shifts in its demography and overseas trade have made the U.S. a true Pacific power. It cannot tolerate East Asia's being dominated by a single power any more than it could a Western Europe in the same predicament. China's Intentions The biggest factor in East Asia's future is the rise of China. Since 1979 its economy has doubled roughly every seven-and-a-half years. In fact the World Bank projects China to become the world's biggest economy by 2020. The appearance of a great new power has always disturbed the balance of the world system. But a forcible rearrangement of the hierarchy of powers is not inevitable this time around. Unlike Japan in the 1930s, China is entering an increasingly open world economy. On market reform there seems no turning back for China. Market reform has developed a constituency--within the party, among technocrats, even in the military, and among the middle class of entrepreneurs, managers, and professionals. Already Beijing allows the media and local congresses greater leeway to air popular grievances. More recently, it has begun to allow village communities to choose local leaders freely. But individual dissidence is still dealt with harshly--undoubtedly to prevent student and democratization movements from starting again. How China evolves will depend primarily on the interplay of internal forces. The Communist Party faces the modern-day "rulers' dilemma." To preserve its power, it must deliver growth to its national constituency. This requires it to liberalize the economy. But liberalization and deregulation have unavoidable political consequences. They create a civil society that works to loosen central government control. For some time now, East Asians have discerned opposing strains in Beijing's basic policy goals. One is to modernize China's economy so that the Communist Party can deliver growth to its people and reinforce its legitimacy, and so that China can attain international respect in keeping with its size, population, and culture. The Economist reckons that China's GNP must continue growing at its average of 10 percent per annum if the economy is to create the ten million jobs or so each year that China needs to keep pace with population growth and stave off social unrest. If China is to grow at this breakneck pace, it needs foreign investment, foreign technology, foreign markets, and regional stability over the next twenty to twenty-five years. Conflicting with this conservative need is China's other driving force--its proud
people's collective memory of 150 years of weakness and humiliation at the hands of the great powers and their need to "right the wrongs of history." And since China has unsettled border disputes with ten of its neighbors and claims two million square kilometers of territory outside its present-day borders (it has in fact fought four local conflicts with neighbors over the last generation) East Asians cannot be blamed for their renewed anxieties about their huge and potentially very powerful neighbor. Engaging China How should its neighbors deal with China? Containment may have been justified for an ideological power like Stalin's USSR. But it would be unwise to approach today's China with such a preconceived notion when this huge and complex nation is in the middle of such epochal transition. China's neighbors need to discourage (as far as they can) China's lingering idea of itself as the "Middle Kingdom," while encouraging those trends that make the Chinese economy increasingly interdependent with those of its neighbors. In a word, other Asian nations must induce China to develop a stake in the Asia-Pacific status quo. ASEAN's economic ties particularly with China's southern coastal provinces may be expected to grow even more. At the moment, China's economy complements those of Singapore, Malaysia and Thailand, but competes with those of Indonesia, the Philippines and Vietnam in labor-intensive industries. Southeast Asia's ethnic Chinese communities will have a big role in linking China and ASEAN in ties of mutual benefit. This is why the ASEAN states--which are of necessity acutely sensitive to China's feelings--refuse to commit themselves prematurely to a proposal for "prepositioning" U.S. military supplies, in advance of any potential need, in their territories. But Beijing's continued encroachments on the South China Sea will surely accelerate security cooperation among the Southeast Asian states and between them and the United States. Japan Japan is seeking a political role in East Asia--and the world--that reflects its economic and financial power. Japan too is in transition, from rule by bureaucrats to rule by politicians. The Philippines is confident this political role will be exercised on the side of peace, which Japan needs more than any other great power because of its worldwide trade and investments and its extreme vulnerability to nuclear conflict. The Philippines supports Japan's bid for a permanent seat in the Security Council, which should enhance its political integration into the world community. The Philippines has no apprehensions about Japan's taking a more active role in regional security cooperation. Like other Southeast Asian countries, the Philippines wishes Japan's security ties with the United States to continue, as the linchpin of East Asian stability. President Ramos has said he wishes the alliance put on an even keel, to raise Japan from a strategic client into a full partner of the United States and to shift the focus of the alliance from the passive defense of Japan to the promotion of East Asian security. That Washington and Tokyo should read Beijing's motivations accurately is crucial for all the East Asian countries. Foreign pressures apparently tend to shore up hardliners in the Communist Party leadership and in the administrative bureaucracy. For instance, what Chinese intellectuals see as Washington's heavy-handed way of negotiating trade disputes is said to have caused even relative liberals among them (those who sided with the student-protesters at Tiananmen Square in 1989) to rally around the Beijing
establishment. The Idea of "America" East Asian anxieties about U.S. staying power in the region stem from perceptions of a new age of isolationism beginning in the United States. But isolationism has always been less of an option for their country than Americans themselves have believed possible. It is even less of an option now that U.S. prosperity increasingly depends on overseas trade. While it is true that U.S. security commitments remain the principal source of its influence in the region, America's unique sense of mission is also integral to its appeal to many East Asians. For the United States, national interest has always had a moral component. Over the past forty-five years, a spacious sense of self-interest impelled the United States to help shape East Asian development--in fact, to make it possible. That role began with land reform in Japan, Taiwan, and South Korea undertaken under U.S. guidance and continued with the U.S. military umbrella that, in President Bill Clinton's words, enabled the Southeast Asian "dominoes" to become "dynamos." Thus there is a reservoir of goodwill that the United States can draw on in its dealings with East Asia. The Philippines appreciates that the United States is looking for a new sense of fairness in its trade with East Asia and has no problem at all with the proposition, because a strong U.S. economy is as good for East Asia as it is for the United States. Potential Flash Points From the perspective of the Philippines, East Asia's most urgent problems are those involving the Korean peninsula, the Spratly Islands, and Taiwan. The Nuclear Problem in Northeast Asia North Korea, the last Stalinist regime, still seems geared single-mindedly for war. It apparently devotes 20 to 25 percent of its GNP to military spending, risking even economic decline and severe food shortages. East Asians may reasonably expect China and Vietnam to evolve from "hard" to "soft" authoritarianism. But in North Korea the liability of a sharp break between the old and the new order is very real--most likely through a military coup. Now that the urgent issue of nuclear proliferation has been set aside by the agreement reached between the United States and North Korea in late October 1995, East Asia's best hope is that confidence-building mechanisms set up by the six powers engaged in the region can begin to work toward the only stable resolution of Northeast Asian instability--reunification of the two Koreas. Reunification will bring about many interim problems. Organizing the integration of the North alone will take much money, a great deal of time, and plenty of mutual goodwill. But, by bringing together the North's natural resources with the South's technology, reunification will eventually make Korea a formidable regional power. It will then have a population of more than seventy-two million and an industrial economy and a military to match (among whose assets would be the North's nuclear know-how). Given Korea's still-festering colonial grievances against Japan, this combination will have repercussions in Tokyo if no overall settlement is reached among the Northeast Asian powers. Taiwan and the Spratly Islands Beijing's behavior vis--vis Taiwan and the Spratly Islands is fueling the regional anxieties raised by
China's resurgence. The Taiwan issue could crucially disrupt East Asian stability. Political liberalization has opened the door for advocates of independence to enter Taiwanese politics. The conservative Kuomintang, which agrees that Taiwan is an integral part of China, has been losing ground to the pro-independence Democratic Progressive Party, which has mobilized the island's young, professional middle class, and to the new generation of Kuomintang leaders like President Lee Teng-hui. The cross-strait crisis generated in March 1996 by China's effort to influence the course of Taiwan's first free presidential elections ended without mishap. China's intimidation of Taiwanese electors ironically produced a landslide for Lee, their first Taiwan-born leader. But the situation in East Asia will not be easily restored to what it was. China's brusque attempt to intimidate Taiwan has shattered East Asia's comfortable assumption that its efforts to draw China into its web of economic interdependence would moderate Beijing's political behavior. More recently, China has encroached on Mischief Reef, which is only some 135 nautical miles from the Philippine main island of Palawan. China's claim to the Spratlys chain of islets, reefs, and cays in the South China Sea--which it disputes with Brunei, Malaysia, the Philippines, Taiwan, and Vietnam--seems to hinge on two things: the oil resources the area is believed to contain and China's new military strategy of "forward defense." China's need for new oil fields has become more and more urgent--it became a net importer in 1994--and this resource the Spratly Islands are believed to contain in large quantities. For instance, a Russian research institute estimates the Spratlys region to contain the equivalent of one billion tons of crude oil, worth about $126 billion at current prices. But military necessity seems an even stronger motive. People's Liberation Army (PLA) strategists have given up the Maoist guerrilla strategy of luring an adversary deep inside China in favor of building up their capability to fight a hightech naval conflict in the China Sea and in the Western Pacific. And regional security analysts believe the PLA is using China's claim to the Spratlys to justify its general modernization plan, whose long-term goal is to develop a full-open ocean fleet--a blue-water navy--which China has lacked since the early fifteenth century. Anxieties over China's intentions may have spurred several Southeast Asian governments to build up and modernize their arms inventories. Even the Philippines has reluctantly begun to modernize its coastal defenses, using money it could ill-afford to divert from its effort to build up its infrastructure devastated by decades of neglect. But the bargain-basement prices offered by Western suppliers, ironically led by the cold war protagonists, seem a greater impetus than perceptions of outside threats. Even so, the Ramos government sees the need for greater transparency in the defense programs of the Southeast Asian governments, and it has proposed intensifying exchanges of intelligence, defense white papers, and other military programs. The Philippines and the Spratlys Dispute The Chinese encroachment on Mischief Reef the Philippines regards as the concern of all the powers interested in the stability of the South China Sea and its strategic sealanes. The Philippine government sees no substitute for consultations that produce a consensus among the six littoral states claiming portions of the Spratly Islands. Indonesia--which hosts informal talks among the claimants--has suggested they share the natural resources in the Spratlys. President Ramos has proposed demilitarizing the South China Sea and placing each disputed island under the stewardship of the claimantcountry
closest to it. The claimant states can then undertake multilateral ventures in oil exploration, marine research, fishing enterprises, joint policing, environmental protection, and so forth, perhaps under a joint development authority. Chinese leaders have several times reassured the Philippines that China poses no threat to the growth and stability of the Asia-Pacific. But the Philippines is still not completely at ease in its bilateral relationship with China. It cannot reconcile Beijing's avowals of neighborliness and friendship with its continued presence on Mischief Reef. Future Trends in Philippine Foreign Relations Philippine foreign relations in the future can be expected to hew even more closely to the ASEAN consensus. Regionalism may not have sublimated sharp differences in leadership style among ASEAN's personages. But ASEAN's increasing cohesion prevents serious conflicts caused by irredentist claims, rebellions, and other intrigues from breaking out among its constituent states. Policy differences within ASEAN are discreetly resolved out of public sight--in the meetings of senior ministers and in the informal summit of heads of government held at every year end. ASEAN solidarity in the ASEAN Regional Forum, the Nonaligned Movement and APEC, and in its dealings with the European Union and in the United Nations is exemplary. Toward One Southeast Asia Outside pressures have historically shaped the forms and set the pace of ASEAN cooperation. Now Southeast Asia has no alternative to eventual unity, if only because separately its ten countries cannot stand up to the intense competition of the emerging global economy, and the power politics that might yet replace the relatively simple power configuration of the cold war era. Intensified regional cooperation is necessary to provide a combined counterweight to intrusive external powers. Take trade as an example. Like any other aspect of foreign relations, it becomes equitable only when either side can enforce reciprocity--when each can demand roughly equal access to the other's markets and productive capacities. Separately, the Southeast Asian countries cannot hope to be strong enough to enforce reciprocity against the European Union, North America, Japan, or even China. Even a unified Southeast Asia may not assure the region complete control of its own fortunes. But as Jusuf Wanandi has pointed out, 3 only unification gives it a fighting chance to resist external pressures and play a role in influencing the development of the region. Unification will give Southeast Asia's nearly 500 million people the cultural variety, the talent pool, and the economic weight they need to become a major player in the future world. In the beginning, economic cooperation was merely the least controversial topic on which to hang the concept of ASEAN. Now it has become one of the association's main purposes--alongside political and security cooperation. The ASEAN Free Trade Area goes further than any previous economic agreement among the ASEAN states. It abolishes nontariff barriers and binds members to accord almost free-trade treatment to each other within ten years (to end in 2003) and over almost the entire range of traded products. Already AFTA has stimulated intra-ASEAN trade, which by 1995 had multiplied by almost 50 percent over trade in 1993, the first year of its implementation. ASEAN's intermediate goal of incorporating all of Southeast Asia should be completed before the turn of the century, now that Vietnam, the linchpin of Indochina, has joined. The Fifth ASEAN Summit in
Bangkok in December 1995 convened the heads of government of all ten Southeast Asian countries for the first time. (It produced an agreement on a nuclear-free zone in Southeast Asia.) Of course unification will raise its own problems. An enlarged ASEAN will certainly find it more challenging to achieve consensus. It must then also ensure that commerce between its rich and poor halves in no way resembles the colonialism the Western powers once imposed on the region. Laos and Myanmar were accepted into ASEAN during the celebrations of its thirtieth anniversary in July 1997. But full membership for Cambodia cannot wait for too long, because instability in the heart of Indochina is liable to draw in not only the traditional rivals, Thailand and Vietnam, but also the external powers with strategic interests there. Myanmar's membership has drawn much criticism from ASEAN's Western dialogue partners, in the United States and the European Union--whose own interests focus on human-rights issues in Yangon and the failure of the ruling State Peace and Development Council to negotiate live-and-let-live arrangements with its civilian opposition led by the gallant Aung San Suu Kyi. In this case, too, strategic reasons compel ASEAN to take Myanmar under its wing--to prevent the country from becoming a pawn in big-power rivalries. For fear of offending national sensibilities, ASEAN leaders tend to downplay variations in standards of civil liberties among member states. But the ASEAN collective sense will want to see in Myanmar a minimum adherence to the rule of law and a measure of respect for human rights. A united Southeast Asia can become a stabilizing influence in East Asia. Already the Asia-Pacific community has accepted ASEAN's leadership in the ASEAN Regional Forum and in APEC. Both groupings have adopted ASEAN's negotiating principles of consultation and consensus as standard operating procedures. They emphasize building political trust before coming to grips with specific disputes. In working incrementally, informally--keeping in mind that the process of reaching an agreement is important in itself--both APEC and the ASEAN Regional Forum gain a unique flexibility. Once the APEC leaders develop the habit of economic cooperation, they will begin to discuss shared political and security concerns. Another recourse Southeast Asia's security specialists are beginning to consider is a concert of middle powers--organized outside the orbit of any of the great powers--as a moderating influence in the region. Over the medium term, the ten Southeast Asian states plus Australia and New Zealand can deploy a combined economic and political strength comparable to any of the individual great powers. Regional security analysts regard the security agreement between Indonesia and Australia signed in December 1995 as a step in this direction. The Special Philippine-U.S. Relationship Since the 1900s the U.S. presence had insulated the Philippine state from disturbances to its social stability and shielded it against any sense of an outside threat. Successive generations of Filipino politicians manipulated the colonial relationship to their advantage, using Washington to prop up a corrupt and inefficient political and economic system. Now the free ride is over. From Washington's point of view, the Philippines may have been reduced from a strategic ally to just another poor client in need of American benevolence. But both sides should welcome the evolution of the relationship to one governed by straightforward economic and strategic considerations. Relations with the United States will remain a major aspect of Philippine foreign policy: the former colonial power remains the country's top trading partner. But the Philippines now has the chance to
design a foreign policy that looks beyond special relations. It can influence the course of this relationship if it develops a strong and outward-looking economy. U.S. resources will then come into the country no longer as handouts but as revenues from trade and tourism, and as direct investments, joint-venture capital, and commercial loans. And the Philippines should welcome even the winding-down of U.S. aid, because it forces the country to face up to structural reforms needed in the economy. The bases for this new beginning are sound. The historical association of the two countries has resulted not only in a shared belief in liberal democracy but in a large--and growing--Filipino American community. By 1990 Filipinos had become the United States' most numerous ethnic Asians. The Filipino American community is potentially important as a source of investment and a lobby for Filipino interests in Washington, D.C. It also ensures that for many Filipino families Philippine relations with the United States will remain special whatever turn the official relationship may take. And while it may be fashionable to belittle the representative system the Americans transplanted to the Philippines, ordinary Filipinos do put their faith in it. Walden Bello, a left-wing scholar inquiring into why the communist rebellion has become marginalized, found one reason to be "the continuing vitality of the tradition of formal democratic electoral politics as a source of political legitimacy--not only among the middle class but also the peasantry and workers." 4 If the new relationship is to prosper, Filipinos will of course have to soothe U.S. anxieties about the Philippines. These include commercial piracy and violation of intellectual property rights, and the country's increasing role in trans-shipping narcotics to the American market. And security cooperation must mean more than the passive kind of dependence on the U.S. that the Philippines developed in the postcolonial period. Toward a Pacific Peace Economic growth in East Asia is proceeding at such a pace that regional output is projected to exceed that of both North America and the European Union by the year 2020. But an explosion of cross-border violence in any region of East Asia will burst the stability that allows the region's economy to grow. Thus the countries of the region must first and foremost preserve the peace among them. The key to peace in the region in the new century is the peaceful accommodation of the ambitions of the rising powers--China, Japan, a resurgent Russia, a unified Korea, an increasingly self-confident Indonesia--for influence in regional affairs. Because China's potential is so great and its historical grievances so strong, East Asians may be sure it will never be content to remain a regional power. And since U.S. strategy in the Asia-Pacific envisions continued U.S. preeminence, one can easily foretell a difficult long-term relationship between the two countries most likely to contest world hegemony in the twenty-first century. Finding this key will thus be difficult. Fortunately the Asia-Pacific countries have the leisure to do so. None of the major powers faces an immediate threat to its security, while rivalry among them has lost its ideological edge. And U.S. military superiority seems assured for at least the next 15 to 20 years, since the United States keeps at the cutting edge of the technological revolution in weaponry and in battlefield communications and command systems. This should allow time for Chinese living standards to rise and for liberalizing influences in Chinese politics to induce a new generation of Chinese leaders to seek the satisfaction of their country's aspirations within the regional community. At the very least, the economic and political costs of resorting to force in any bilateral dispute should be progressively higher as regional
integration deepens. End of the Age of Hegemony How can long-term stability be assured on the rim of the great ocean its discoverers named so felicitously? It is true that, in the past, stability--even a flowering of civilization--had resulted from the hegemony of a great power: the Roman Empire in the ancient world, the British Empire during the nineteenth century, and the American Republic after World War II. But the age of hegemony has passed. Today no state, however big and powerful, can act unilaterally. In a world more interconnected than it ever was, big nations and small are virtually equal in the restraints the world community places on their behavior. It is time the region's thinkers began conceptualizing a Pax Pacifica. The market too has shown its liberative political effects--its ability to transfer power painlessly from the state to civil society. It is in East Asia's collective interest to promote the deepening of market reform in all its countries. And this effort should include the encouragement by East Asian governments of the entrepreneurial activities of the region's overseas Chinese communities. Regional leaders must also strengthen nascent multilateral institutions for practical security cooperation such as the ASEAN Regional Forum and the APEC Leaders' Summit. APEC's immediate objective is comprehensive trade liberalization among its 18 Pacific Rim states. According to an Australian analysis, this by itself will raise the aggregate real income for APEC economies by at least $303 billion yearly. Even more important, APEC's every broadening act of liberalization should speed up worldwide free trade. As chairman of the APEC Leaders' Summit in 1996, the Philippines has taken up the burden of leading the collective effort to sustain APEC's forward movement. President Ramos has also challenged the APEC leaders to deepen and broaden their vision of an Asia-Pacific community. No Clash of Civilizations The assumed opposition between Western and Asian values is more of a political than a cultural issue. I see no "clash of civilizations" of the kind imagined by Samuel Huntington impending in East Asia (although Singapore's senior minister Lee Kuan Yew suggests there may be racialist undertones in America's attitude toward a resurgent China). Cultural differences between East Asia and the West are not the critical determinants of politics, economics, or manners. As societies get more complex, they must increasingly be ruled by compromise and majority rule if society is to become both free and orderly. And to the extent that countries--East or West--accept these consensual methods, their political cultures will converge. As political cultures converge, the differences between countries will arise largely from the civic values that specific cultures prize, and also from the deliberate efforts that East Asia's modernizers are making, to avoid the "mistakes" the early modernizers in the West made; for example, in failing to restrain the egotism of individualistic capitalism, and in allowing both the deterioration of family ties and the extreme secularism of society and of human life. China must be incorporated peacefully into this Pax Pacifica. Zbigniew Brzezinski memorably said that, apart from military reach, economic impact, and political muscle, a superpower must have a message of worldwide relevance derived from an inner moral code of its own, defining a "shared standard of conduct as an example to others." The Asia-Pacific as a community must impress on China that military reach, economic impact, and political muscle by themselves can no longer command respect. Respect must be
earned--and China can deserve the region's respect only if it has a message that transforms power into a leadership that commands moral legitimacy. How China behaves in Hong Kong, in the South China Sea, on Taiwan, and in Korea will define for the Philippines its message to the region and the world. In the past, states moved effortlessly from economic strength to military power and then to imperialism. But today no state need aspire to hegemony, because it can attain its goals of wealth and prestige through peaceful commerce and integration in the community of nations. The long-term objective should be to replace security arrangements based on the military balance with mutual security based on economic cooperation--on mutually beneficial trade and investment. A Pax Pacifica must be founded on the stability imposed not by any hegemonic power but on the peace of virtual equals: the product of security cooperation that comes from reasoning together.
Endnotes
Note 1: Francis Fukuyama, "The End of History," National Interest, Vol. 16, Summer 1989. Back. Note 2: Robert A. Scalapino, "Political and Social Change in East Asia" (Paper prepared for the Asia Pacific Center for Security Studies, Honolulu, Hawaii, September 1995). Back. Note 3: Conversation with Jusuf Wanandi. Back. Note 4: Walden Bello, "The Crisis of the Philippine Progressive Movement," Kasarinlan [Independence], A Philippine Quarterly on Third World Studies, Vol. 8, no. 1 (Third Quarter 1992), p.146. Back.
The Philippines: The Filipino American Community

by Mona Lisa Yuchengco and Rene P. Ciria-Cruz Introduction
Visiting Philippine government officials never fail to exhort the Filipino American community to play an active role in shaping U.S.-Philippine relations. They appeal to the expatriates to act as a collective lobby for Philippine economic and political interests, often citing Israel's vibrant community of support in the United States as a model. The officials are not mistaken in detecting considerable potential in the nearly two-million-strong Filipino community, the Philippines' largest expatriate group. Filipino Americans, on the whole, are economically stable and becoming more active in the political and civic affairs of their adopted country. However, expectations of an immediate political boon to the Philippines must be tempered by an objective appraisal of the challenges to overcome for the community to attain the political capability to influence U.S. public policy. Perhaps the visible protests and sustained lobbying from the 1970s to the mid-1980s by the U.S.-based opposition to Ferdinand Marcos have given rise to much optimism. However, that burst of political activity was a unique phenomenon that can only be used to illustrate the potential. The U.S.-based opposition movement, after all, was directly initiated by highly motivated exiled dissidents representing the entire breadth of the ideological spectrum. Moreover, Marcos's authoritarian rule created an unprecedented division in the community as well as a general air of controversy that quickly evaporated on his demise. Without such a singular polarizing factor, Filipino Americans have naturally gravitated back to quotidian concerns and are generally impervious to appeals to greater political activity. "Factionalism," "regionalism," and "lack of collective spirit" are attitudinal and behavioral factors often cited as hindrances to the community's political progress. While these usual suspects do play a negative role in the community's internal dynamics, the uniqueness, if not the impact, of some of them (like "regionalism") is actually overblown. Stressing their significance has as much weight as discovering the obvious. There are far more powerful objective factors that act as restraints to fuller participation in civil society. Ultimately, the emergence of undeniable Filipino American political clout rests on the maturation of the community's sense of entitlement and self-organization, in a process of overcoming cultural and social inhibitors inherent in the immigrant experience.
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Exclusion's Historical Impact: Protracted Assimilation The great demand for workers by the Hawaii sugar industry and large-scale food-crop producers on the mainland created the first wave of Filipino immigration, which meant thousands of able-bodied Filipino men (most of whom were bachelors) came to the United States starting in 1906. A 1930 California Department of Industrial Relations (DIR) study counted 31,092 Filipinos admitted to the state alone between 1920 and 1929. There were nearly 50,000 Filipino workers according to the 1940 Census. The Filipinos, however, were brought here for their labor and were not allowed to integrate into the economic, social, and political fabric. Like the U.S. bracero programs, or overseas contract employment in the Middle East, assimilation was not part of the contract. Filipinos could not bring wives, marry into other races, own property, or vote--they were not allowed to become Americans. Official and popular racism prevented the mass of itinerant bachelor farm workers from starting families and producing new generations of U.S.-born Filipinos. According to the 1930 California DIR study, the ratio of unmarried Filipino males to females was 23 to 1; there were only 217 females, of whom only 93 were married, among 31,092 Filipinos in 1929. The virtual absence of families precluded the establishment of deeply rooted and enduring communities whose economic, political, and cultural power could grow over time. The social potential stifled by exclusion could be gauged by the dramatic impact of a policy change that created a small second wave of immigration at the conclusion of World War II. Some 4,000 of the younger second-wave immigrants were allowed access to U.S. citizenship after serving in the military during the war (under the Immigration Act of July 2, 1946). Most of these veterans brought back war brides from the Philippines. The face of the Filipino minority quickly changed, with stable, family-based communities--bolstered by a U.S.-born-baby boom--sprouting up all over the West Coast. After years of exclusion, Filipinos Americanized with a vengeance. This was, however, a limited window of opportunity. Immigration restrictions would not be relaxed again until 1965. In 1965, U.S. immigration laws were relaxed to encourage the entry of professionals and skilled workers, and an unending chain of family reunifications commenced. Largely as a result of this third wave of Filipino immigration, the Filipino American population has grown rapidly over the last thirty years and today totals 1.7 to 2.2 million people. The largest concentrations of Filipinos are in California, Hawaii, Illinois, New York, New Jersey, Washington, Virginia, Texas, Florida, and Maryland. The Census Bureau expects Filipino Americans to spill over the two-million mark by the year 2000 and to be over four million by 2030. Of the 1.4 million Filipinos officially counted by the 1990 U.S. Census, 71 percent are Philippine-born immigrants who came after the easing of restrictions in the 1960s. Thus, despite a presence in the United States dating back to the second decade of this century and the existence of at least three generations, the Filipino American population is still primarily an immigrant community--and a fairly young one at that. The demands of assimilation are the Filipino Americans' biggest challenges. With the arrival of more than 40,000 new immigrants each year, the community's immigrant character is constantly reinforced and reproduced, with much help from jet travel and telecommunications. The relatively young roots of the predominantly immigrant community hint at a very particular social dynamic that encourages political detachment. A protracted period of national ambivalence inhibits immigrants from comfortably laying claim to their adopted country. This inhibition is reinforced by the depoliticizing pull of the day-to-day
demands of establishing a new life in a different social and cultural environment. In addition, the largely Eurocentric mainstream culture's resistance to ethnic diversity throws up barriers to smoother assimilation. Racism, which tends to deflate the linguistic and cultural "advantages" the nonwhite Filipinos derive from their American colonial legacy, also frustrates the "complete" or unconditional assimilation of U.S.-born, second-generation Filipino Americans. It is a frustration generally not shared by U.S.-born descendants of Caucasian immigrants. Had the first wave of immigrants been given full rights to assimilate, the political profile of the Filipino community would look quite different today. Several generations of U.S.-born Filipinos, extensive economic assets, and an accumulation of political experience would have provided a more developed and entrenched foundation, or staging point, for the succeeding third wave of immigration. Filipino American political presence today would perhaps be broadly comparable to that of the Mexican American community. Instead, the third wave came on a small community with foundling institutions and an aging sector of first-wave pioneers. The chronological length of a community's presence, therefore, is a deceiving indicator of political growth when applied to Filipino Americans. The consequences of the previous official policy of exclusion have negated the potential advantages of a community that has been in this country for a relatively long period of time. Filipino Americans' tendency to blame their community for "achieving so little for so long" should be taken with a dose of skepticism, because effectively the community is only three decades old. Building Community Pride and Unity There are no antidotes to the negative political effects of a protracted process of assimilation, only strategies to mitigate them. Strengthening ethnic pride is one of these strategies. Filipino immigrants generally bring with them a low "national self-esteem"--lingering colonial mentality, self-blame, submissiveness, and passivity--shaped by centuries of colonization and the Philippines' bruising struggle with underdevelopment. It was not so long ago that a "Philippines-U.S. statehood movement" drew a lot of supporters and generated much publicity. In addition, a survey of Filipino children conducted several years ago by Ma. Luisa Doronila, of the University of the Philippines, revealed that the majority preferred to be "reborn" as Americans. At the same time, Filipinos in the United States are hungry for recognition as Filipinos, a manifestation of collective frustration over the community's relative invisibility in the mainstream. To illustrate, a study conducted by California State University, Hayward found that a majority of Filipinos surveyed admitted they "favor(ed) companies/brands which have shown interest in and appreciation for the Filipino consumer." The second and third highest percentages indicated they were more likely to buy products or services that advertised in Filipino media. 1 It is important, therefore, that community advocates maximize opportunities and means to build pride in Filipino culture and heritage. Criticisms of poorly organized community events notwithstanding, events like Philippine Independence Day fiestas, award ceremonies for achievers and role models, and so forth, if done well, are effective in raising collective self-esteem. There are favorable trends that can boost such initiatives. Philippine-born immigrants tend to nurse a growing appreciation for "things Filipino"--a function of nostalgia, homesickness, or middle age--and are extremely receptive to cultural information
they once took for granted. U.S.-born Filipinos inevitably respond to the racial dynamics in American society by searching for their "roots" or ethnic identity. This social reflex is encouraged today by a growing demand for the celebration of cultural diversity. The Filipino American media can greatly assist in bolstering pride by highlighting important historical events, projecting role models, and showcasing the best of Filipino culture and traditions. Unlike many of the other Asian American communities, the generally English-proficient Filipino immigrants do not have to rely on community media to translate news and information from the mainstream. Imada Wong Communications Group's Asian Pacific American Media Guide, 1996 counted two Filipino American radio shows, five television programs, four magazines, and twenty-three newspapers. Filipino American media mainly fill the demand for community news and for homeland news and entertainment. As such, they already function as active connectors to the homeland, channels that Philippine institutions and interests can use for access to the Filipino American community and market. Mainstream American media and political circles use (though not frequently enough) Filipino American media as references and "sources." (Indeed, mainstream media that are serious about providing comprehensive coverage would do well to consistently monitor the community's periodicals and block-time television and radio shows.) In other words, Filipino American media indirectly project the collective profile to the mainstream. Shoddy publications and productions, however, undermine credibility and impart a distorted image of the community's tastes and values. It is important, therefore, for community media to help the cause of collective empowerment by upgrading their standards and improving their quality. Increased professionalism is also the prerequisite for serving as effective interpreters of U.S. affairs for Philippine interests. Similarly, professionalism will enable Filipino American media to act as credible analysts of Philippine socioeconomic and political trends for American observers. "Lack of unity" is often raised in criticism of the proliferation of sometimes competing and redundant community organizations. Indeed, there are legions of community, professional, business, and hometown organizations--Filipino American Political Association, National Filipino American Council, Filipino Civil Rights Advocates, Association of Philippine Physicians in America, Philippine Nurses Association, Philippine-American Chamber of Commerce, Inc., University of the Philippines Alumni Association in America, Bicolandia Association, and the Congress of Visayan Organizations, to name only some. It is better to accept this proliferation as a natural state, rather than continually wish for a pie-in-the-sky single federation of Filipino associations. Regional associations, professional groups, religious circles, and so forth will always be around and should be expected to promote their own agendas. What is more important is for organizations and leaders to develop the ability to band together in coalitions on important issues. The community's record in this regard cannot be dismissed. In the past 30 years, single-issue campaigns and coalitions with limited lifetimes have emerged in many parts of the country, dealing with a variety of issues, from local cases of police brutality to issues that drew national attention, for example, the Narciso/Perez case involving the wrongful prosecution of two Filipino nurses for murder, the threat of deportation faced by Filipino nurses who failed their licensure exams (both in the 1970s), and (more recently) the denial of benefits for Filipino World War II veterans. Repeated experiences in cooperative action are building blocks for political unity and maturity. Economic Progress Through Immigration Despite the political disadvantages of being a relatively young, largely immigrant community in a
racially conscious society, Filipino Americans do not occupy the lowest rungs of the economic ladder. Filipinos rank fourth in per capita income ($13,616 or 9 percent lower than white per capita income) among ten Asian groups. They have the second-highest median family income at $46,698 in the United States (the median family income for the United States is only $35,225). Filipinos have the highest rate of labor participation, at 75.4 percent, among all Asian groups. As a result, the poverty level of Filipinos is the lowest in the nation at only 6.4 percent. Because of Filipinos' relative proficiency in English and familiarity with American popular culture, even recent immigrants can integrate into the mainstream job market in a relatively short period of time. Fifty years ago, half the total number of Filipinos in the labor force held physically strenuous jobs in agriculture, forestry, and the fishing industry. Today only 1.6 percent of Filipinos in the labor force can be found in those sectors. Up to 64 percent of the 751,000 Filipinos in the labor force hold white collar jobs: 27 percent are in the professions and 37 percent are in technical, sales, or administrative support positions. Filipinos on the whole do not depend on independent entrepreneurship for livelihood. The median education level has also risen, from 9.7 years in 1960 to 13 years in 1990. Up to 39 percent of Filipinos over 25 have bachelor's degrees or higher. Before "growth of political muscle" can be deduced from this impressive shift in occupational status and relatively high level of educational attainment, it must be underscored that these gains did not result from the accumulation of power by earlier immigrants. Much of the evident progress in the Filipino community has been brought about by the immigration of professionals and skilled workers after 1965. Up to 85 percent of Filipinos who came between 1965 and 1977 were professionals, for example, part of what former Philippine foreign affairs secretary Raul Manglapus sardonically described as "Philippine foreign aid to the United States." Filipino Americans have not tended to congregate in self-- contained economic enclaves, like Chinatowns, which also serve as permanent cultural points of reference for the mainstream public. The enclave is a survival mechanism for many other Asian minorities which cannot integrate easily into the mainstream labor force due to more formidable language or cultural barriers. It is a social necessity that has become a political virtue as it underscores the numerical strength of a community and the concentration of economic means--factors that count considerably in the political arena. Most Filipino concentrations are residential, based on accessible real estate and rental prices in bedroom communities or neighborhoods. There has been much talk in the community of replicating the enclave, but capital-intensive, artificial "Manilatown" projects are rare, and success is quite uncertain. Filipino Americans' aggregate purchasing power has been estimated at $13 billion a year, 2 and remittances from the United States account for 70 percent of remittances to the Philippines. Filipinos in 1987 owned 40,412 enterprises with gross revenues of $1.9 billion, ranking fifth in business holdings after the Chinese, Koreans, Japanese, and Indians. However, the Filipino community does not project economic power and, as a result, tends not to be a magnet for politicians. Filipino Americans' economic power will probably remain understated owing to their high level of integration into the workforce as wage earners or skilled professionals. But there is a case to be made for strengthening the independent entrepreneurial sectors. There is spontaneous reliance in the community on Filipino-oriented services or products. Filipino chambers of commerce and similar groups can conduct standing "buy Filipino" campaigns to firm up this market and bolster internal support even for Filipino enterprises (car dealerships, real estate firms, and so forth) that cater to the mainstream market.
Experience in actively supporting community-based enterprises, combined with the previously cited preference for "companies/brands which have shown interest in and appreciation for the Filipino consumer," should eventually provide the basis for future acts of negative consumership, e.g., boycotts of companies or brands that commit acts that are discriminatory or damaging to Filipino American interests. The Visibility Problem The concentration of occupational skills, educational achievement, a relatively comfortable economic status, and a historical presence in the United States only highlight the empowerment puzzle: Why are Filipino Americans, the second-largest Asian minority, still an invisible community? A rupture in historical continuity between the first pioneering wave of immigrants and the present, largely third-wave community provides part of the answer. Official U.S. exclusionary policies earlier in the century stunted the all-sided development of the first-wave community. The lack of a substantial foundation has undermined the advantages that should have come with the combination of a long-standing Filipino presence in the United States and the community's rapid numerical growth today. Another drawback that contributes to the Filipino minority's "invisibility" is the fact that the Philippines is dwarfed by more ancient Asian cultures. The Philippines is a very young nation, originally a collection of archipelagic settlements administratively consolidated by Spanish colonialism. The republic that emerged in the revolution against Spain will be only a hundred years old in 1998, and the dominant mestizo culture shaped by "400 years in the convent" was easily diluted by "50 years in Hollywood" under American colonization. The more "exotic" and ancient cultures of China, Japan, Korea, and Vietnam have tended to be more intriguing to American public taste. For example, a cursory inspection of index information will reveal that coverage of Japan by both the San Francisco Chronicle and the Examiner from 1919 to 1934 greatly exceeded coverage of Philippine affairs--at a time when the Philippines was a direct colony of the United States and the San Francisco Bay Area had a growing settlement of Filipino immigrant farm workers. A 1990 study (by researcher Augusto Espiritu) of Filipino source materials at the University of California in Los Angeles found that only an average 2.7 works a year were published on Filipino Americans between 1920 and 1990. Whether by design or plain neglect, the academy, media, and popular entertainment have served the American public very few enduring memories of historical ties with the Philippines. For a country that served as the United States' first experiment in imperialism--at the cost of some 4,000 American and several hundred thousand Filipino lives during the American conquest and subjugation of the Philippines between 1898 and 1906--the Philippines hardly figures in the American imagination. Filipino American writers, scholars, artists, journalists, and performers will be crucial in correcting cultural marginalization by projecting the Filipino image and experience. Successful Filipino American writers, artists, and entertainers will serve as highly visible representatives and, for the general public, as "cultural reference points." In this light, Philippine and Filipino American studies programs, community theater groups, writers workshops, and so forth deserve collective support. The Philippines itself will play a major role in ending Filipino American invisibility. The United States is living proof that what a young nation lacks in cultural stature can be more than compensated for by economic power. What further deflates the Philippines' international standing is its economic underdevelopment. Filipino Americans have a real stake in the Philippines' ambition to be a newly
industrialized country, besides seeing the cycle of poverty end in their homeland. As long as the U.S. media project mainly images of poverty and backwardness in the Philippines, the collective prestige of Filipino Americans will be undermined. Filipino Americans, therefore, must include on their agenda programs to assist Philippine economic development, by way of direct investments, technical and educational assistance, and ultimately, lobbying the appropriate U.S. institutions. Issues Facing Filipino Americans The more assimilated sectors must take the lead in confronting political issues that affect the community. The backlash against immigrants that has developed in the U.S. in recent years hurts Filipino Americans in a number of concrete ways. In addition to the expected rise in local instances of hate crimes and workplace "English-only" language discrimination, new federal and state policies will have a negative impact on Filipinos across the country. While it is not yet clear how many will be directly affected by the new welfare reform law's exclusion of legal immigrants from public assistance such as Aid for Families with Dependent Children, Medicaid, and food stamps, federal statistics show that exclusion from Supplemental Security Income will hit 26,485 aged or disabled legal Filipino immigrants in California alone. Filipinos must wrestle with more restrictions in the new Illegal Immigration Reform and Immigrant Responsibility Act. The reforms give immigration authorities greater, more arbitrary powers to exclude even legal immigrants from entering the United States. Up to 500,000 Filipinos are waiting to rejoin their families here, but the new act, along with provisions in the new welfare law, weakens the ability of immigrants and U.S. citizens to petition for family members. For Filipino Americans with limited incomes, particularly recently naturalized elderly veterans of World War II, petitioning and sponsoring family members is virtually impossible. The veterans themselves are also still campaigning to get the full benefits given to all former members of the U.S. military, which is another issue confronting the community in a political climate heavy with the rhetoric of budget downsizing. California's antiaffirmative action mood is expected to spread to other states and spawn Proposition 209 clones. The blow against minorities in education, hiring, and government contracts will be felt by Filipinos too. Community leaders and advocates must be alert to issues that will affect the future of the U.S.-born, such as affirmative action, education issues, youth violence, drug abuse, and so forth. Community advocates must also grasp the significance not only of a generation gap, but also of a cultural divide between immigrants and the American-born. Many immigrants tend to resent the Americanization of U.S.-born Filipinos, their apparent lack of concern for the homeland, their seeming disrespect for elders and traditional Filipino values, and their businesslike, if not brash, attitude toward community concerns. U.S.-born Filipinos, on the other hand, tend to be disdainful of the immigrants' rowdy political culture, their attachment to homeland affairs (even its popular culture), their apparent lack of American savvy, and even their thickly accented English. U.S.-born Filipinos tend to be alienated from initiatives dominated by immigrants. Two culturally divided camps can emerge within an older ethnic minority, where the schism between immigrants and American-born painfully reveals itself in conflicting positions on issues facing the community. (For example, Mexican immigrants' active participation in their homeland's election campaigns has been bitterly criticized by some American-born leaders as disempowering because it purportedly reinforces the "foreign" image of the Mexican American community.) For now, immigrants and U.S.-born alike still respond to "Filipino identity" and take pride in the achievements of all Filipinos.
This communitarian spirit, however, will be challenged, if not undermined, by the community's continuing numerical growth, social stratification and generational differentiation. A conscious effort to build internal coalitions between immigrants and U.S.-born Filipinos around political issues and civic needs could prevent or offset the negative impact of a spontaneous cultural schism. To ease the pressures of assimilation, more stable and active immigrants must orient many of their activities toward assisting recent arrivals. Advocacy for publicly or privately funded programs that facilitate adjustment, acculturation, job searches, and so forth, is a practical means of pursuing this goal. Filipinos for Affirmative Action in Oakland, California and Search to Involve Filipino Americans in Los Angeles are just two of the community groups committed to such programs. The aforementioned issues, while worrisome, provide opportunities for involving the community in collective political action. They are openings for building coalitions among community groups, between the assimilated and the new arrivals, and between the foreign-born and the U.S.-born Filipinos. The issues also provide the basis for coalescing with other negatively affected ethnic minorities and sectors. Broader contacts and experiences with other communities and with mainstream institutions will help break isolation and minimize parochialism in the Filipino community. Filipino American activists have inevitably sought greater strength by interacting with the broader "Asian American community." (Although the "Asian American community" is not a culturally homogeneous entity, it does stand for a community of interests on the basis of which Americans of various Asian origins can initiate joint, mainly political, action.) It is a positive impulse that contributes to the overall political maturation of Filipinos. Bolstering the Community's Political Presence It takes a while for first-generation immigrants to unconditionally embrace the United States as their country. It takes a longer stay to significantly erode the immigrant syndrome typified by guest mentality and compliant behavior. For example, when young activists in the 1970s began launching nationwide campaigns against the discrimination of foreign medical graduates and nurses, they had to overcome the usual recent-immigrant admonition, "Don't bite the hand that feeds you," in reference to U.S. authorities. With assimilation comes the erosion of debilitating immigrant syndromes among the foreign-born and a greater understanding that claiming one's place, self-organization, and advocating for group interests are as American as apple pie. It is an understanding that comes more naturally to the U.S.-born as they grow inside a veritable hothouse of ethnic survivalism. According to the Census Information Center, there are 491,646 Filipinos who are naturalized U.S. citizens. When this figure is added to the 505,988 U.S.-born Filipino Americans, it means that as much as 60 percent of the community are citizens, many of whom can already vote. (The Immigration and Naturalization Service acknowledges that Filipinos are ahead of other ethnic groups in naturalization.) However, there are no reliable studies on Filipino voter registration and turnout. There is a going assumption that most Filipinos are registered Democrats, but this is usually countered by arguments that Filipinos are conservatives at heart, that immigrant aspirations tend to buy into the values of dominant establishment groups, and therefore Filipinos could easily be attracted to the Republican Party. More Filipino Americans are seeking appointments to political office or participating in local elections. These are both valuable sources of experience, support networks, alliances, and accumulated political savvy. Politically active Filipinos must devote time and effort to studying the trends in the community's political behavior in order to take appropriate measures for influencing it. Any serious political
empowerment agenda must include definitive studies of Filipino American electoral behavior. Indeed strategizing for empowerment must be based on objective studies of the community's history, present realities, and prospects. This underscores the importance of developing academic research, Filipino studies courses, and Filipino scholars as an indispensable sector of the Filipino American intelligentsia. Still, the availability of expendable funds earmarked for lobbying or political contributions will remain limited, and very few Filipino Americans, for example, will be able to afford the prohibitive costs of high-powered fund-raising dinners. Filipino Americans, therefore, must find ways to compensate for modest political kitties. Although the decisive role money plays in U.S. politics will remain unchanged, marginalization resulting from lack of it can be alleviated by the active, high-profile presence of Filipino American experts and organizers in political and social advocacies, the media, trade unions, and political parties and their campaigns. Since "politics is addition," building coalitions with other minorities and bridges to mainstream institutions is crucial in offsetting the community's modest size and financial means and lack of political experience. In fact, successful politicians like Governor Benjamin Cayetano of Hawaii, Councilor Mike Guingona of Daly City, California, Mayors Henry Manayan and Pete Fajardo of Milpitas and Carson City, California, respectively, won their offices by not relying solely on the Filipino American electorate. The current climate is quite favorable for coalitions that are not purely based on electoral campaigns but can eventually be translated into electoral capital. Among the lessons that many Chinese American leaders are learning from the campaign-donations scandal is how vulnerable their community is to stigmatization despite--or because of--their ability to raise substantial amounts of campaign funds. Many Asian political advocates are warning their communities not to rely solely on huge campaign donations to gain political access and presence, and to begin investing more energy in grassroots efforts to change policies and legislation. The Filipino American Community and the Philippines If Filipino American's ability to advocate on behalf of Philippine national interests is intimately bound up with their collective political maturation, the Philippine government must provide concrete means of placing those interests on the community's agenda. Rhetorical appeals to patriotism will not suffice. Political advocacy on behalf of the Philippines by Filipino Americans is best guaranteed by the establishment of real economic stakes in the homeland. Development plans must include the utilization of the Filipino American community as a strategic reserve, not just as an immediate source of tourism, dollar remittances, and trade revenues. Philippine authorities must also reinforce their appeals to Filipino American investments with attractive incentives and streamlined visa, permit, and licensing processes. Concrete programs with long-range orientations must be put in place. For example, the current "Lakbay-Aral" summer exchange/tour program for U.S.-born, second-generation Filipino American youth has excellent potential for developing deep and lasting ties with future community leaders. Filipino-community-based "trade missions" must be encouraged and designed not just for immediate economic results, but also for immediate and long-range impact on the local, state, and national levels of U.S. political leadership. In the same spirit, mobilizing active Filipino American involvement in initiating and sustaining official sister-cities relationships must be given high priority. The expected granting of voting rights to Filipino citizens overseas should increase the participation and stakes in Philippine political affairs of Filipino nationals residing in the United States. Ultimately,
however, the readiness of Filipino Americans to advocate for the national interests of the Philippines will increase in proportion to the eradication of official corruption, entrenched bureaucratic inefficiency, and gaping social divisions in their homeland. Pride in the seriousness, unassailability, and effectiveness of their homeland's political leadership is one of the best antidotes to skepticism and apathy. The all-too-brief moment of elation after the 1986 "people power" revolution provided a glimpse into the greater potential of the Filipino American civic spirit, when "helping the homeland" went hand-in-hand with agitation for "political empowerment" in the United States.
Conclusion: Looking to the Future

Whether the entry of new Filipino immigrants continues at its current high rate, or, as predicted, the restriction of immigration as a whole becomes inevitable, the emergence of greater Filipino American political power ultimately depends on the growth of the assimilated sector of the community and on the coming of age of the U.S.-born. First-generation foreign-born immigrants are an aging sector, their median age being 38.7 years. In contrast to this, 35 percent of the community is made up of U.S.-born Filipino Americans with a median age of 14.1 years. With the United States as their principal reference point, U.S.-born Filipinos tend to more naturally identify with this country's political affairs. They have a natural sense of entitlement and do not have the same ambivalence about their claim on the United States that tends to politically inhibit recent immigrants. Community advocates--and those who wish to guarantee a place for Philippine national interests on the Filipino American agenda--must pay careful attention to the strengthening of Filipino American identity, the development of communitarian spirit, and the accumulation of political experiences among the American-born. Ultimately, the U.S.-born Filipino Americans will bear the primary responsibility for attaining greater political power and boosting the community's visibility and cultural impact on American society. The Filipino American community's political presence will become more pronounced when this generation of U.S.-born Filipinos comes into its own to add complexity and firmer moorings to the relatively young community.
Endnotes
Note 1: A Study of Filipino American Consumer Behavior: Media Habits, Ownership and Consumption Patterns, Values, Attitudes and Lifestyles, researched by Christina Marie Macabenta (Hayward, Calif.: California State University, 1995), p. 117. Back. Note 2: A Study of Filipino American Consumer Behavior, p. 21. Back.
The Philippines: Suggestions for Further Reading
Suggestions for Further Reading

Introduction: The Philippines' New Normalcy
Broad, Robin with John Cavanagh. Plundering Paradise: The Struggle for the Environment in the Philippines (Berkeley: University of California, 1993). Laude, Carl. Leaders, Factions and Parties: The Structure of Philippine Politics (New Haven: Yale University Southeast Asian Studies Program, 1965). Silliman, G. Sidney and Lela G. Noble, eds. Organizing for Democracy: NGOs, Civil Society and the Philippine State (Honolulu: University of Hawaii Press, 1998). Steinberg, David J. The Philippines: A Singular and a Plural Place. 3rd ed. (Boulder, Colo.: Westview Press, 1994). Thompson, Mark R. The Anti-Marcos Struggle: Personalistic Rule and Democratic Transition in the Philippines (New Haven: Yale University Press, 1995). Vitug, Marites Danguilan. Power from the Forest: The Politics of Logging (Manila: Philippine Center for Investigative Journalism, 1993).

Berlow, Alan. Dead Season: A Story of Murder and Revenge on the Philippine Island of Negros (New York: Pantheon, 1996). Putzel, James. A Captive Land: The Politics of Agrarian Reform in the Philippines (Manila: Ateneo de Manila Press, 1992). Thompson, W. Scott and Wilfrido V. Villacorta, eds. The Philippine Road to NIChood (Manila: De La Salle University, 1996). Timberman, David G. A Changeless Land: Continuity and Change in Philippine Politics (Armonk, N.Y.: M.E. Sharpe, 1991).

Campos, Jose Edgardo and Hilton L. Root, The Key to the Asian Miracle: Making Shared Growth Credible (Washington, D.C.: The Brookings Institution, 1996).
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de Dios, Emmanuel, et al. Poverty, Growth, and the Fiscal Crisis (Makati: Philippine Institute for Development and the International Development Research Center, 1993). Fabella, R. and H. Sakai, eds. Toward Sustained Growth (Tokyo: Institute of Developing Economies, 1995). Hutchcroft, Paul. "Oligarchs and Cronies in the Philippine State: The Politics of Patrimonial Plunder," World Politics, Vol. 43, no. 3 (1991), pp. 41450. Temario C. Rivera. Landlords and Capitalists: Class, Family, and State in Philippine Manufacturing (Quezon City: University of the Philippines Press, 1996).

Balisacan, A.M. Poverty, Urbanization and Development Policy: A Philippine Perspective (Honolulu: University of Hawaii Press, 1995). de Dios, E. A National Strategy to Fight Poverty. Prepared for the Presidential Commission to Fight Poverty (Manila, 1995). Intal, P.S., and Bantilan, M.C.S., eds., Understanding Poverty and Inequity in the Philippines (Metro Manila: National Economic and Development Authority). National Economic and Development Authority. Medium-Term Philippine Development Plan, 199398 (Manila, 1995). ____________. Updated Medium-Term Philippine Development Plan, 199398 (Manila, 1997). World Bank. Philippines: A Strategy to Fight Poverty (Washington, D.C., 1995).

Kerkvliet, Benedict J. and Resil B. Mojares, eds. From Marcos to Aquino: Local Perspectives on Political Transition in the Philippines (Honolulu: University of Hawaii Press, 1992). Lacaba, Jose F., ed. Boss: Five Case Studies of Local Politics in the Philippines (Manila: Philippine Center for Investigative Journalism and Institute of Popular Democracy, 1995). McCoy, Alfred W., ed. An Anarchy of Families: State and Family in the Philippines (Monograph Series, 10) (Madison: University of Wisconsin Center for Southeast Asian Studies, 1994). Innovations (Official Publication of the Local Government Academy, Department of Interior and Local Government, Pasig City).

Cullather, Nick. Illusions of Influence (Palo Alto, Calif.: Stanford University Press, 1994). Karnow, Stanley. In Our Image: America's Empire in the Philippines (New York: Random House, 1989). McCoy, Alfred W. and Edilberto C. de Jesus. Philippine Social History: Global Trade and Local Transformations (Sydney: Allen & Unwin, 1982).

Alegado, Dean. "How the Exodus Began: The Third Wave, 1965." Katipunan (December 1987). Bulosan, Carlos. America Is in the Heart: A Personal History (Seattle: University of Washington Press, 1973). Filipino American Political AssociationMetropolitan Washington, D.C. and Philippine Heritage Foundation. "The Filipino Population of the United States: A Special Profile" (1990). Lott, Juanita Tamayo. "Migration of a Mentality: The Filipino Community," Asian Americans: Social and Psychological Perspectives, Vol. 2 (Palo Alto, Calif: Science and Behavior Books, 1980).

New Directions in Domestic Policy and Foreign Relations

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The Philippines: New Directions in Domestic Policy and Foreign Relations

CIAO DATE: 6/99

To the memory of Paul Cunnion

Introduction: The Philippines New Normalcy

Sustaining Economic and Political Reform: The Challenges Ahead

Philippine Economic Growth: Can It Last?

The War Against Poverty: A Status Report

Decentralization, Democracy, and Development

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The Philippines: New Directions in Domestic Policy and Foreign Relations

New Directions and Priorities in Philippine Foreign Relations

The Filipino American Community: New Roles and Challenges

Suggestions for Further Reading

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The Philippines: New Directions in Domestic Policy and Foreign Relations

policy. 3. PhilippinesEconomic conditions1986. 4. PhilippinesForeign relations1973. 5. Filipino Americans

marked-up in HTML, June 1999.

The Philippines: New Directions in Domestic Policy and Foreign Relations

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The Philippines: Map

The Philippines: New Directions in Domestic Policy and Foreign Relations

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The Philippines: Preface

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The Philippines: Preface

President Asia Society

The Philippines: New Directions in Domestic Policy and Foreign Relations

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The Philippines: Introduction

Introduction: The Philippines' New Normalcy

The Philippines: Introduction

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The Philippines: Introduction

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The Philippines: Introduction

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The Philippines: Introduction

The Philippines: New Directions in Domestic Policy and Foreign Relations

The Philippines: Introduction

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The Philippines: Sustaining Economic and Political Reform

Sustaining Economic and Political Reform: The Challenges Ahead

Reforming a Laggard Economy

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The Philippines: Sustaining Economic and Political Reform

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The Philippines: Sustaining Economic and Political Reform

The Philippines: Sustaining Economic and Political Reform

The Limits of Economic Liberalization

The Philippines: Sustaining Economic and Political Reform

The Philippines: Sustaining Economic and Political Reform

Overcoming Obstacles to Developmental Success

The Philippines: Sustaining Economic and Political Reform

The Philippines: Sustaining Economic and Political Reform

Emergent Stability or Recurring Conflict?

The Philippines: Sustaining Economic and Political Reform

Ramos and Congress: New Measures, Old Methods

The Philippines: Sustaining Economic and Political Reform

The Philippines: Sustaining Economic and Political Reform

Decentralizing Government and Politics

The Philippines: Sustaining Economic and Political Reform

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The Philippines: Sustaining Economic and Political Reform

In the Shadow of the 1998 Elections: Issues and Choices