By Rene Ofreneo – December 13, 2018
Neoliberal economists, who worship in the altar of free trade, love to make theoretical constructs on the basis of assumptions under an imagined world of perfect competition.
But it is an imperfect world with imperfect markets. It is a world lorded over by the likes of Donald Trump, with his “America First” ideology, and Xi Jinping, who presides over a state-led capitalist transformation of China.
Hence, markets get roiled from time to time because there are market players who do not play based on perfect competition rules and the assumption that everyone does so. The so-called level playing field in an uneven and unequal economic order is never fair to the small players and to those who do not get any information on the state of the economy, such as the unlettered farmers, coastal fisherfolks, indigenous peoples, ambulant vendors, camote miners, etc.
The World Trade Organization has a preambular principle: special and differential treatment. The SDT precept recognizes that not all countries are equal and at the same level of development. And yet, the WTO rule makers, coming mainly from the developed countries, try to impose uniform trade liberalization rules for all while keeping the system of expensive subsidies to their own farmers and domestic producers. This is like having equal rules apply to both the heavyweight and lightweight boxers, such as no head-butting, with extra protection or safety net given to the former! This is one of the reasons why the WTO’s Doha Development Round, launched in 2000 for the purpose of further liberalizing global markets, has failed to take off in two decades of WTO-led trade talks.
Meanwhile, in the Philippines, the neoliberal economists have been making countless economic forecasts based on the imagined growth and job outcomes from the triad of neoliberal programs of trade/investment liberalization, privatization and economic deregulations, collectively called as “structural adjustment programs” or SAP. This is fine if such forecasts are treated as mere academic exercises to promote wider and deeper debates on the economic policy directions that the country must take. The problem arises when the authors of these forecasts market these forecasts as the sole basis of economic policy-making and the crafting of corresponding economic development strategies.
And yet, no one comes out to own the mistakes when these forecasts fail, when these economic development strategies do not deliver the expected outcomes based on these forecasts. Examples abound, but the most spectacular and saddest is the forecast made in relation to the proposed Philippine membership in the WTO.
In the 1994 Senate debate on Philippine membership in the WTO, the neo-liberal advocates drowned the opposition by coming up with the following official forecasts: membership and adoption of the WTO liberalization rules (e.g., lowering of industrial tariffs, tarrification of agriculture, etc.) meant creation of 500,000 new jobs annually and realization of P3.2 billion net export surplus annually, both in the agricultural sector. And yet, since 1995, the Philippines has become instead a bigger and bigger agriculture-importing country. Agriculture has shrunk and now accounts for less than 10 percent of the GDP. In short, there has been a de-agricultural development.
In the case of industry, the forecast was 500,000 new jobs being created annually, rising to 700,000-800,000 a year. This never materialized. Instead, we have witnessed a general stagnation of the country’s industrial sector under the program of export-oriented industrialization (EOI), a program that the neoliberals have been pushing since the 1980s, reinforced by the IMF-World Bank’s SAP loans in the 1980s and Philippine liberalization commitments to the WTO in the 1990s. In short, the country experienced deindustrialization.
After four decades, the EOI-SAP program has only managed to create around a million or so jobs in the four export processing zones, two special economic zones and two scores of private industrial parks. The garments industry, which generated a million jobs in the 1980s, has disappeared with the removal of the quotas under the WTO’s Agreement on Clothing and Textiles. In the four decades of EOI-SAP, the Philippines was also bypassed by our Asian neighbors—first, by the Asian NICs (South Korea, Taiwan, Singapore and Hong Kong); then by Malaysia and Thailand; and, later, by China. All these countries have an Industrial Policy that is starkly different from what the Philippine neoliberal economists have been advocating since the 1970s.
But somehow the Philippines is growing and is even seen as a growth leader in Asia today. As everybody knows, this is because of two economic phenomena: 1) the huge volume of remittances ($30-B +) by the 11 million overseas Filipino workers who have failed to find quality jobs under the EOI-SAP program of the neoliberals, and 2) the surprising growth of the call center-BPO sector, which generated a million jobs. But the development of these two legs of the economy can hardly be linked to the floundering EOI-SAP program. And how long we can rely on these two legs is a question that policy-makers must address, sooner because of the mounting uncertainties in overseas migration and global service outsourcing.
This is why efforts to infuse dynamism in our stagnant industrial sector is very much welcome. According to DTI Assistant Secretary Rafaelita M. Aldaba, this is precisely what the DTI team is doing through its “Manufacturing Resurgence” program. Former Sen. Joey Lina, the anchor of ABS-CBN program Sagot Ko Yan, released a sigh of relief—“Hallelujah”.
Then Joey raised a truly strategic economic question: Are we targeting the domestic market as a platform to promote industrialization? After all, we have a 110 million population. Just imagine how many factory jobs and agro-industrial livelihoods can be generated if at least 50 percent of all the goods sold in the malls of the Sys, Gokongweis, Ayalas, Gaisanos, Villars and so on are all made in the Philippines, not imported. To this, Asec Aldaba answered that the domestic market is, in fact, at the center of the DTI industrial strategizing or restrategizing. Joey released another sigh of Hallelujah.
Further, Asec Aldaba added that they recognize the mistake of the past EOI program. Wow, another hallelujah.
But is this economic revisionism accepted by those who crafted the Neda’s PDP, which retains the old SAP-EOI macroeconomic framework? Is this economic revisionism accepted by those who made the imagined sustained growth trajectory for the country up to 2040, as if growth and poverty reduction are simply a question of growth-growth-growth through a build-build-build/tax-tax-tax program? Is this economic revisionism different from the proposed scaling up of Philippine participation in the global value chains of the MNCs, whose facilities are hosted by the EPZs under the old SAP-EOI program?
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