Introduction
The history of the Philippines is deeply etched with the imprints of successive colonial empires. Notably, the period of American colonialism, spanning from 1898 to 1946, stands as a pivotal chapter. Following the 1898 Treaty of Paris, the Philippines transitioned from Spanish rule to American authority in the aftermath of the Spanish-American War. This era of American colonialism wielded substantial influence over the Philippines, ushering in both positive and adverse transformations. Noteworthy achievements included the constructive introduction of public education and enhancements to physical infrastructure such as roads and bridges. Yet, this period was not devoid of challenges, with the Philippine-American War (1899–1902) serving as a stark testament to the Filipinos’ struggle for independence. Despite the establishment of the Philippine Commonwealth in 1935, complete independence for the nation only materialized in 1946, following the conclusion of World War II.
Post-independence, the Philippines grappled with a landscape characterized by political unrest, social reforms, and economic hardships. Prior to President Ferdinand Marcos declaring martial law in 1972, the nation confronted economic obstacles, including issues related to land reform, income inequality, and an over-reliance on agriculture. The agrarian sector faced challenges stemming from outdated agricultural practices and inadequate infrastructure, exacerbating social instability through concentrated land ownership among a select elite. Additionally, the Philippines’ economy, reliant on a limited range of essential exports like sugar and coconut, proved vulnerable to external disruptions. Political instability and corruption, further hindered economic development, with the decade preceding Marcos marked by transitions and instability, setting the stage for the implementation of martial law in 1972. Despite these challenges, efforts during this period aimed at overcoming obstacles and achieving sustainable growth, reflecting the resilience of the Philippines.
Rise of Ferdinand Marcos and His Early Economic Policies (1965-1972)
After distinguishing himself in World War II, Ferdinand Marcos rose to prominence in Philippine politics, assuming the presidency in 1965. His tenure marked the inception of a transformative era characterized by societal advancements, economic initiatives, and modernization. Marcos, leveraging his leadership acumen, aimed to propel the Philippines towards economic prosperity, pledging to tackle challenges such as poverty and unemployment through a comprehensive expansion strategy. This strategy encompassed infrastructure development, land reforms, and industry initiatives, with the maxim “Build, Build, Build” epitomizing the administration’s commitment to construction endeavors. Despite the visionary approach, challenges arose, particularly in the areas of land distribution, where Marcos’ land reform policies faced significant hurdles, leading to persistent issues of social injustice and inequality.
In the initial years of Marcos’ presidency, signs of economic progress were evident, with improved infrastructure, enhanced communication, and accessibility for commerce. Industrialization initiatives further contributed to the perception of advancement, although this early success came at a cost. Marcos heavily relied on borrowed funds to finance expansive projects, leading to a surge in external debt that shadowed future financial challenges. As the 1970s unfolded, the Philippines entered a period of political and economic instability, casting doubts on the sustainability of Marcos’ economic vision.
Martial Law and the Descent into Economic Turmoil (1972-1981)
In 1972, Ferdinand Marcos proclaimed martial law on the pretext that it was essential to quell insurrection and reinstate order. Marcos was able to reign by decree, thus circumventing established democratic norms, by this proclamation. The implementation of martial law in the Philippines significantly influenced numerous facets of society, including economic policies. Marcos strengthened his authority and centralized economic decision-making. As the government exerted greater control over critical institutions, civil liberties declined. The business climate was constricted, and political dissent was repressed.
To maintain political authority and finance ambitious infrastructure initiatives, the Marcos administration augmented government borrowing substantially. Significant growth in foreign debt resulted in debt service consuming a considerable portion of the national budget. During this period, crony capitalism and pervasive corruption emerged. Marcos and his associates, in return for the political support of a select group of corporate executives, granted them access to profitable contracts and privileges. Collaboration between the government and influential businessmen nurtured a culture of corruption that afflicted the nation for decades.
As a result of prioritizing political allegiance over economic efficacy, productive sectors experienced a diversion of resources. Instead of fostering extensive economic expansion, resources were consolidated among a minuscule cohort of associates affiliated with the Marcos regime. The implementation of this approach impeded the growth of sectors that had the potential to contribute to sustainable development and obstructed the establishment of robust competition. The agricultural sector was adversely affected by the inequitable distribution of resources resulting from insufficient emphasis on rural development and land reform. The disregard for these sectors further exacerbated the enduring poverty and inequality within the Philippines.
During the martial law regime, the Philippines’ economic situation declined, notwithstanding initial indications of advancement. The nation was confronted with the adverse repercussions of crony capitalism, excessive reliance on debt, and economic mismanagement. The income gap and the destitution rate both widened. A privileged minority benefited disproportionately from economic development, whereas the majority of Filipinos were confronted with escalating living expenses and limited employment opportunities. As the urban-rural divide increased, social tensions also intensified. In 1981, following the end of martial law, the Philippines was beset by an economic catastrophe. A substantial quantity of foreign debt, an unstable economy, and a population that had endured ten years of totalitarian rule characterized the nation.
Economic Crisis, Debt Default, and the People’s Uprising (1981-1986)
The Philippines was beset by a severe economic crisis in the early 1980s. The unmanageable level of foreign debt emerged as a consequence of the Marcos administration’s extravagant borrowing to finance infrastructure initiatives and preserve political authority. Repayment of the nation’s liabilities was a significant burden, consuming a substantial portion of the national budget. On the contrary, the nation was mired in an economic impasse characterized by hyperinflation, a depreciating currency, and insufficient foreign exchange reserves.
Financial assistance programs were extended by international financial institutions, including the World Bank and the International Monetary Fund (IMF), in response to the economic crisis that gripped the Philippines. The most significant stipulation underlying these bundles was the execution of structural and economic reforms.
The convergence of structural changes mandated by global financial institutions and the economic crisis led to a substantial escalation in both underemployment and unemployment. Due to the failure of businesses and industries, a great number of Filipinos lost their jobs. Mismanagement of the economy during the martial law period, in which funds were squandered on initiatives that failed to foster long-term prosperity, exacerbated the gravity of the crisis. The social unrest was exacerbated by the worsening economic conditions, which also established the foundation for a broad-based retaliation from the populace against the Marcos regime.
The 1986 People Power Revolution exemplified the pinnacle of discontent and resistance from the general populace against the Marcos regime. Large-scale nonviolent demonstrations wherein Filipinos from various sectors of society united in support of a diverse coalition, advocated for the removal of Marcos’ autocratic regime. In February 1986, in response to mounting pressure and the withdrawal of support from the military and other crucial allies, Marcos abandoned the Philippines and commenced exile in Hawaii. A turning point in Philippine history, the People Power Revolution symbolized the success of the collective will of the common people in triumphing over an oppressive government. The Philippines encountered an enormous challenge as the post-Marcos era unfolded: reconstructing a devastated economy and instituting a more inclusive and answerable political structure. The circumstances of this period laid the foundation for the subsequent political and economic affluence of the nation.
Legacy of the Marcos Regime and Lessons Learned
The economy of the Philippines was significantly and persistently impacted by the Marcos regime’s legacy. His presidency was marked by crony capitalism, excessive borrowing, and incompetent management, all of which contributed to a catastrophic debt crisis caused by his economic policies. As a result of placing politically motivated initiatives ahead of sustainable development, poverty and wealth disparities were exacerbated. The economic crisis of the 1980s caused pervasive underemployment and unemployment, which affected vulnerable industries disproportionately. The repercussions of these measures persisted well beyond the tenure of Marcos in office.
After the Marcos dictatorship ended, the economy of the Philippines was confronted with substantial structural obstacles. The country was confronted with challenges such as substantial foreign debt, repercussions of economic mismanagement, and the necessity for structural reforms to promote sustainable development. To facilitate the process of economic reconstruction, it was critical to confront challenges including corruption, inadequate institutions, and a dearth of inclusive policies. While structural reforms imposed by international financial institutions were critical to restoring economic stability, they also demonstrated that the Philippines needed to strengthen and diversify its primary industries, reduce its reliance on debt, and promote inclusive growth.
Following Marcos, the Philippines embarked on a path of reform and recovery. Taking lessons from the past, the country has sought to implement policies that promote equitable growth, sustainable development, and good governance. Policymakers working to build a more resilient and equitable future for the Philippines can learn from the Marcos administration’s mistakes.
International Context
The Philippines became entangled in this geopolitical struggle as a result of the US-Soviet competition, which had global ramifications. As a former colonial power and ally, the United States of America has a strategic interest in the Philippines. During the Cold War, the Philippines’ economy became increasingly reliant on foreign assistance, particularly from the United States. This reliance influenced the country’s political and economic ideologies.
Worldwide economic shocks, such as variations in the price of oil, significantly impacted the Philippine’s economy. The geopolitical upheavals in the Middle East in the 1970s prompted oil crises and increased energy prices, which contributed to inflation and economic troubles in the Philippines. Because it relied on oil imports, the country was vulnerable to external shocks. Likewise, the debt crisis and the early 1980s global economic recession added to the Philippines’ economic burden. The recession exacerbated the challenges caused by the country’s debt load and affected export markets, reducing demand for Philippine exports.
International financial institutions such as the World Bank and the International Monetary Fund (IMF) were critical in responding to the Philippines’ debt issue. They proposed financial aid measures to help the Philippine economy stabilize. These packages, however, came with conditions, such as economic and structural improvements aimed at addressing the root causes of the crisis.
 Conclusion
The People Power Revolution, American colonial control, and Marcos’ government all played key parts in the Philippines’ challenging economic history. Global shocks exacerbated the Marcos regime’s debt dilemma and economic incompetence. Cold War dynamics influenced reliance on foreign help. International organizations intervened and enforced recovery obligations. The People Power Revolution of 1986 marked a shift toward more inclusive governance. Among the lessons to be learned are the importance of responsible borrowing, inclusive development, competent economic management, and strong institutions. These lessons will serve as a road map for the Philippines’ future economic development as an open, accountable, and healthy economy.
