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By Juan T. Gatbonton, Editorial Consultant
Though culturally hospitable, we Filipinos
apparently like our economy closed. Protectionist tendencies run
below our surface show of welcome for strangers and foreigners.
These tendencies are reflected in our
most-favored-nation tariffs, which are significantly higher than
those of our neighbors; as well as in successive Constitutions that
reserve natural resources and key industries for nationals. And they
complicate the work of opening the economy to foreign
investment—which we must do, if we are to begin easing joblessness
and poverty.
Most international studies find that relatively
well-off city people—particularly younger men, political
conservatives and non-Catholics—tend to favor open trade. (So do
the jobless and the self-employed.) Generally opposed to open trade
are women, older people, Catholics, political radicals, public
officials, union members and rural populations.
Contrary to general trend
Two analysts of the National Economic
Development Authority (NEDA) think tank, Philippine Institute for
Development Studies (PIDS), using data from the 2003 International
Social Survey Program, correlated individual responses to a question
about limiting foreign imports. They found the replies from the
Philippines going against the norm.
Unusual for elites in the new countries, it is
well-off urban Filipino men who tend to be opposed to open trade.
And it’s Filipino women who’re more likely to support open trade
policies; so do rural Filipinos in general.
The higher his economic class, the more
protectionist the Filipino male tends to be. The PIDS scholars
suggest this is because, as the owners of businesses, they have been
the prime beneficiaries of protectionist policies. Managers of
national businesses and high professionals are also protectionist.
So are public officials, since the regulated economy enhances their
influence, as well as facilitates rent-seeking.
Filipino women are more agreeable to open trade.
The PIDS analysts suggest this may result from greater job
opportunities in export industries (such as call centers and
electronics assembly) that globalization is opening up to them. As
the managers of family finances, they may also appreciate the lower
costs and greater variety imported goods offer.
An inward-looking nationalism
There may be deeper reasons. Protectionist
sentiment may be only one expression of our inward-looking
nationalism. In our country—as in Latin America—nationalism has
been shaped by the overpowering presence of the United States.
Resentment of the Americans—coupled with a recognition of our
utter dependence on them—had produced self-doubt and turned
nationalism inward, toward cultural authenticity and economic
preferences for nationals.
To “Filipinize” the economy, policymakers
have risked even economic setbacks. Anti-Chinese economic measures
starting in the 1930s (which included retail trade nationalization
in 1955) apparently put many Filipinos out of work. But “[i]t is
useless to amass wealth which is not ours to dispose of,” reasoned
the industrialist Salvador Araneta.
Historically, a self-seeking elite has used the
rhetoric of nationalism (“Filipino First!”) to justify monopoly
profits for its import-substituting industries under a regime of
controls that penalized agriculture, kept down workers’ wages, and
condemned the entire economy to near-stagnation.
In our country, protectionism has been what John
Stuart Mill said it would be: “An organized pillage of the many by
the few.” Until now, it chokes the flow of foreign capital,
technology and managerial skills into the economy.
Financing gap
The arithmetic tells us why foreign investment
is so crucial to the poor country. If we Filipinos are to begin
reducing our poverty, we must grow continuously—at least over
these next 10 to 12 years—by a minimum 7 percent. And if we are to
grow by 7 percent, we need to invest at least 30 percent of our
gross domestic product (GDP), as our neighbors do. But we save on
the average only 19 percent of GDP—the lowest rate among
comparative Asean economies.
In 2000, that financing gap was equivalent to
about $8.4 billion. Usually, countries could bridge this gap by
public and private borrowing—but, in our case, the gap was too
great—since foreign direct investment (FDI) in that year was only
$1.3 billion. In 2005, we attracted barely 1 percent of the net FDI
that entered emerging Asia.
Influence of stereotypes
Until now, the stereotypes of an era long gone
influence our intellectual approach to foreign investment and
economic liberalization; to opening our economy to the
opportunities—and risks—of globalization.
Our economy still is heavily regulated and
inward-looking (that is why we’re forced to export people instead
of products); at every level of government, public authority is used
for private benefit.
We must speed up market opening and reduce the
costs of doing business, if our country is to catch the new wave of
growth building up in East Asia.
To blame all our ills on outside forces—on the
CIA, on multinational industry, on the international lending
institutions, rather than on the defects of our own political and
social structures—is to yield to impotence.
We must redefine our nationalism to make it
responsive to the new ideologies and technologies reshaping the
world. The best reply to the impositions of the International
Monetary Fund and the World Bank—against which our intellectuals
rail endlessly—is for us to strengthen our economy that it need
not submit to them.
Notes & Comment appears fortnightly.
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