International Business : SPOTLIGHT ON THE PHILIPPINES : The Philippine Economy

Although still recovering from the political instability of the 1980s and hurt more recently by natural disasters and the closing of U.S. military bases, the country has seen investment and growth increase slowly. The primary limit on the economy is a lack of adequate electricity. After infrastructure improvements, sustained growth is more likely in the next few years. Strong natural and human resources give the nation a head start.

Resources: Coal and hydroelectricity have reduced the nation’s dependence on imported oil from 95% of energy supply in 1979 to 60% in 1990. Fishing, which accounts for 5% of exports, has boomed with sales of shrimp to Japan. Extensive cutting has depleted forests, but mining remains important, with gold, silver, copper, nickel, iron, lead and chromium in rich deposits. The Philippines is the world’s eighth-largest gold producer.

Power: The shortage of power-generating capacity is estimated to have cost the economy about $1.3 billion in lost output in 1993. It also has secondary effects on employment and consumer spending. Because of the long brownouts in the Manila area, many firms have reduced work hours and unemployment has reached 25%. But new power plants are starting to come on line.

Exports: The Philippines is the world’s leading exporter of coconut products, but their relative importance has declined and now they make up about 10% of exports. Increasingly important now are electronics (19% of exports in 1990) and textiles (16%). Bananas and handicrafts have also become growth industries. Overall, agriculture provides about a third of export revenue and employs about 40% of the labor force.

Potential: An English-speaking labor force, extensive natural resources and a large domestic market put the Philippines in a strong position as it faces competition from China, Vietnam and Indonesia. Top priority now is to address structural defects that have held the nation back, such as insufficient revenue, large corporate monopolies and unequal distribution of wealth.

Working Abroad: Despite the international recession, the number of Filipinos working abroad, especially in Asia and the Middle East, has steadily increased. Without the $2.2 billion in remittances from these workers in 1992, the GNP would not have grown.

Sources: Bank of America, Europa Publications, CIA and ABC-Clio