What went wrong? No national industrialization!

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Giovanni Tapang, Ph.D.

Giovanni Tapang, Ph.D.

President Aquino wondered aloud on why the country is facing the very high unemployment rate reported by the Social Weather Station earlier this week. In their estimation, around 12.1 million Filipinos are unemployed right now which is 27.5 percent of Filipinos of working age. This is six percent higher than the previous quarter’s 21.7 percent despite the recently reported 7.2 percent growth of the economy.

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The unemployment rate should not have surprised the president. The phenomenon of unemployment amidst supposed growth has been the hallmark of recent governments even before Aquino. This jobless growth is a result of the government mainly focusing on the growth of the services sector while manufacturing and agriculture remain slow.

According to the think tank IBON, services would have a relatively weak job creation potential, productivity and earnings when compared to manufacturing and a modernized agriculture sector. Government instead allows foreign investors and their agents to dictate and control domestic patterns of production and consumption resulting in a heavy push for services such as business process outsourcing and the like.

Basic services such as electricity, water and transportation are being sold left and right to private firms. These basic utilities which are vital and strategic to industrialization is being held hostage by profit. One example is how power generation firms threaten blackouts in the recent Meralco case in the Supreme Court if they are not allowed to get the more than 4.15 peso rate increase.

Agriculture’s contribution to the country’s GDP has shrunk to only around 12 percent compared to 41 percent right after World War II. Manufacturing as a subset of industry has been relatively flat since the 1950s at around 30 percent. Services on the other hand has increased from slightly below 40 percent in the 1940s to around 56 percent last year. The 27.5 percent joblessness is a direct effect of this long-term de-industrialization and shrinking manufacturing in the country.

Building national industries is the solution. We need to have an industrial policy geared towards building local industries in order to modernize agriculture and reverse agrarian backwardness. Without increasing manufacturing capacity, we will always face perennial joblessness.

We need to expand production of raw materials for the needs of downstream industries and local processing in the country. In order to do this, we need foundation industries such as basic metals, chemicals, pharmaceuticals, petrochemicals, machinery, precision instruments and capital goods. Aside from these heavy industries, we should also build light industries in order to address daily and consumer needs such as processing of grains, cereals, beverages and dairy products, aquaculture and fisheries, textile, garments and mass housing.

We should limit the export of primary commodities such as raw minerals and agricultural products in order to have materials for the industries we need. Manufacturing should be made as much as possible reliant on locally produced capital equipment, intermediate parts and raw materials. This can be done by re-tooling the present manufacturing enterprises away from exports as well as building local capacity to make our own capital goods.

Whatever surplus in agriculture, mineral extraction and industrial goods above the current needs of the people and the targets of the economy can be traded in exchange for capital goods and important products which the country cannot yet make. The objective is to be able to build local capacity in industrial production of capital and consumer goods. As the PDAF, DAP and presidential pork issues have shown, money in government is being used for personal and political gain rather than being used as industrial investments.

Building national industries is the key to the establishment of a modern and diversified industrial economy that will satisfy our basic industrial and consumer needs, secure jobs and livelihood for our people as well as ensure rapid and sustained economic growth for the country. We will not only achieve economic independence by mobilizing primarily our own domestic capital geared towards satisfying our own domestic market needs.

As President Aquino’s spokespersons have noted, the idea of national industrialization is not new. But it is definitely not passe. What went wrong is President Aquino’s continued implementation of privatization and liberalization. His government’s refusal to build and strengthen Filipino industries and instead depend on foreign capital is the answer to his question of why the country seems to never generate enough jobs.

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9 Comments

  1. What went wrong?

    The hypocrites were…
    (1) too busy pushing their own personal agendas.
    (2) too busy thinking of ways to steal what they can.
    (3) too busy looking making excuses to cover their tracks and failures.
    (4) too busy believing their own propaganda.
    (5) too busy listening to the wrong “experts” who are full of “godly intentions” but have very little common sense and have been perennially in denial.
    (6) too busy with internal affairs while the world was about to take advantage on us.
    (7) too busy chasing equality which will never be achieved on earth when they should have been focused on freedom.
    (8) too busy with selective justice a.k.a. social justice when we know justice is blind and non-selective.
    (9) too busy mixing religion with politics that they could no longer differentiate fantasy from reality.
    (10) too busy with redistributing land when more of the what they already transferred have been abandoned or sold by the beneficiaries for lack of government support and lack of entrepreneurship. 55 is the average of our farmers; 59 for rice farmers.
    (11) just too busy with something that actually was worth nothing….!

  2. Yes Sir, industrialization is the key for our masses and OFW’s and stop this contractual labor. Industrial means nothing if the workers are good for 5 month only and discarded like a plastic after use.

  3. A government that relies on OFW remittances, call centre revenues, and tourism as way out has very little or no chance of success. Of course, that has always been the mindset among PHL’s leaders.

  4. Matthew Parkes on

    National industrialisation has never worked. Ever. We need a free market in the Philippines instead of reducing the economy to a series of monopolies and cartels controlled by the same oligarchs who own the corrupt politicians.

    And Aquino has never embraced liberalisation.

  5. We need FDI. But the constitution, as it is written now, precludes entities from even considering investing tin the Phl. Not to mention the (non) ease in doing business and the the arbritrariness of the gov’t. Phl will always be underdeveloped with a high level of unemployment.

  6. Industrialization is the route that advanced economies went through from the start of the 20th Century. It brought them progress and prosperity side by side with dignity and respect among neighbors. Not so in our case. Farming is still using carabaos and lands still owned by parasitic landlords or controlled by foreign agri-business. Our national products are not the manufactured goods but labor export – exporting our rich human resources and the sacrifices that is intertwined with it, i.e. brain drain and its dehumanizing social costs. More so, our OFWs are raped, killed, detained and exploited in this modern slave market as Phil. govt. does not require recipient govts. to respect and safeguard their rights for fear of losing the market. Industrialization is the key, But in this age of humanity showing the failure of monopoly capitalism, it must serve our domestic need first before export; growth for the people and not for a few; rights of workers are respected, treated as partners and not slaves of profits and greed; environment is protected; and, production planned and properly managed. There is so much to be done and we have to act now and act in unison with every stakeholders in this backward society!

  7. Government should not be the be all and end all. Let the private firm do what it needs to do and let the government get out of the way. History always tell that, if the government tries to go in business, it will be doom to fail. Look at the communist countries.

  8. This long term national industrialization solution is not the dream of Pres. Aquino administration but the Bangsamoro Peace Accord for the MILF as dictated by most western states (those countries pushing for Bangsamoro Autonomy may then negotiate freely to MILF for oil and other natural resources extraction concession) for his legacy while continuing to achieve high GDP growth (another dream he attained already but benefited those big private companies only, the oligarchs). This is the reality now and is the trend until he finish his term. If another Aquino party mate wins again in 2016 election, this trend most likely will be carried again because their philosophy maybe is, it is very easy to govern when we let all the private investors take care of the management of all the basic industrial utilities of the country to the detriment of the consuming public and make the OFW’s do the earning of dollars for us.

  9. Felix Servidad on

    The experts says, the 7percent growth of economy in Korea and in Japan produced 7 millions of jobs, why is that in the Philippines cannot produce a million jobs, while the government boasts of 7.2 percent growth of the economy, the government should focus also in manufacturing to create more jobs and lessen the unemployment and crime.
    If the power rates continue to rise, the foreign investors will not come to waste their time and money. Meralco wants our money to invest in Singapore and keep on asking more money.