James is currently in the Philippines researching extractive institutions with Pablo Querubín. This is the first in a series of joint blogs by the three of us about the Philippines through the lenses of Why Nations Fail.
Over the past 50 years one of the most extraordinary economic developments has been the rise of East Asia. This started with Japan after World War II, to be followed by the ‘Asian Tigers’ Singapore, South Korea and Taiwan, and after that Malaysia. Even Indonesia was doing well for a while, and in fact, it managed to squeeze into the World Bank’s much cited 1992 report on the East Asian Miracle.
But all East Asian economies have not been miraculous. Take North Korea for example. One of the most puzzling economic failures has been that of the Philippines since independence from the US in 1946, which also started with very similar levels of income per-capita to South Korea or Taiwan in the 1950s.
Those prone to the fallacy that particular countries leave particular immutable institutional legacies in their colonies might have thought that the Philippines had all the institutions to succeed. The US had built a democratic legislature and congress, they built schools and educated judges, and they implanted English as a national language that some social scientists have linked to economic success.
What with this and important linkages to the US market, for example a sugar quota which moved from Cuba to the Philippines after the Cuban Revolution, the country looked like it ought to have been set for success.
Yet the Philippines was not in the World Bank’s report
Digging deeper, we will see that this is not a surprise. Though the Philippines is in East Asia, its history is very different from other East Asian countries. Reflecting on Philippine colonial history, Stanley Karnow in his book In Our Image: America’s Empire in the Philippines characterized it as being “300 years in the convent, 50 years in Hollywood.”
By this he meant to convey the impression that the Philippines had languished under colonialism, hidden in the convent and entertained by Hollywood, while the world had dramatically changed.
It was first colonized by the Spanish in 1565, though the great mariner Ferdinand Magellan had visited the islands in 1521 where he has been killed on the island of Lapu-Lapu (Mactan) near the modern city of Cebu. The key economic institutions that the Spanish used to control and exploit the indigenous peoples of the Americas, like the encomienda, were also used in the Philippines but there were important differences. For one, there were few Spanish settlers and the governance of the islands was left to the Church. Moreover, large parts of the archipelago, particularly the southern island of Mindanao, were never controlled by the Spanish until the 19th century and maintained de facto independence.
We met Mindanao in Why Nations Fail where we showed how the expansion of the Dutch East Indies Company had reversed development among the sultanates of this island. Though in the 17th century the Spanish ruled in Manila or Cebu, the Sultan of Maguindanao was still independent. (Such enduring independence was not unknown in colonial South America. Soon after the early conquest of Chile, the Spanish lost control of the south of the country to the warlike Araucanian and Mapuche Indians who were not conquered until the second half of the 19th century.)
Spanish colonialism was cast off in 1898, only to be replaced by US colonialism that lasted until 1946. Like many post-colonial experiences with democracy, that in the Philippines collapsed in 1972 with President Ferdinand Marcos’ declaration of martial law. His viciously kleptocratic regime was finally forced from office by a popular revolt in 1986. Now all that most people recall of this regime is the 3,000 shoes of Marcos’ wife Imelda (800 of which are now on show at the Marikina Shoe Museum in Manila).
On the surface this seems very different from the trajectories of other East Asian countries and the obvious explanation is the different colonial history. The Philippines is just a Latin American country stuck in East Asia, with Evita replaced by Imelda. Right?
In the next few posts we will dig deeper into the roots of poverty in the Philippines and discuss some of the explanations that have been produced to account for it.
But first it is worth noting that the fact that the Philippines was on a par in terms of income per-capita with South Korea or Taiwan in the 1950s says little about what the long-run economic prospects of the societies were. Many other countries with radically different underlying growth prospects, such as Ghana, had similar income levels. All were emerging from long periods of colonialism: South Korea and Taiwan from that of Japan, the Philippines from that of Spain, and the US and Ghana from that of Britain. In nearly every non-settler colony, colonialism had the effect at best of trapping the country in amber. There was no chance of institutional change or structural transformation. Little chance of indigenous innovation or adaptation to a changing world. At independence, living standards often bore little relation to the long-run prospects for economic growth.
But what then were these differences that led to such poor economic growth in the Philippines? And how come they got stuck with Marcos rather than President Park or Chiang Kai-Shek?