State of Economic Development in the Philippines

Do you want to know the state of in the Philippines?

We all know that we are a part of Economic Development.

Our traditional economic activities are part of economic development and as such development is not just an increase in national income, but a successive stage of economic growth.

How do we know that a country is economically developed?

At a macro level, we have some indicators of economic development like Gross National Product and GDP.

According to Philippine National Statistical Coordination Board the Philippines Gross National Product increased to 2218895 PHP Million in the first quarter of 2015 from 2214850 PHP Million in the fourth quarter of 2014.

Historically,

the Gross National Product in Philippines averaged 1450438.30 PHP Million from 1998 until 2015, reaching an all time high of 2218895 PHP Million in the first quarter of 2015 and a record low of 944320 PHP Million in the second quarter of 1998.

Read the full report here.

From the classical economic theory of development based on Rostow’s stages of growth, I saw that the Philippines is not yet ready to take-off. Visit this site for detailed explanation of Rostow’s stages of growth.

Although that in recent years there is a positive growth rate in some sectors, but systems of production has not yet replaced the traditional methods and norms.

To take off to happen, traditional society must be replaced with modern technology production of goods. While based on the Harrod and Domar theory, a savings of 15% to 20% are important factors for a country to develop faster. Of course, assuming that capital accumulation is high or else Philippines must seek help from foreign aid .

I tried to search the web for some quick facts about the current status of the Philippine economy and this is what I found.

Based on some data gathered Gross National Savings (% of GDP) as of 2014 is 22.303% (Economic Indicators), a little bit closer to 23.27% of the IMF data (IMF World Economic Outlook, 2014).

Source: IMF Data
Source: IMF Data

View it live from this site IMF World Economic Outlook

 

From the website of the IMF, national savings of the Philippines is 22.6% in 2014. While based on “The Changing Wealth of Nations: Measuring in the New Millennium” (2011), World Bank staff estimates based on sources and methods in World Bank’s, adjusted savings: net national savings (% of GNI) in the Philippines were 27.37 as of 2013. Meanwhile, its highest value over the past 36 years was 37.36 in 2010, while its lowest value was 3.66 in 1985.

indexmundi
Source: The Changing Wealth of Nations: Measuring Sustainable Development in the New Millennium” (2011).

 Not bad.

Now what does this data imply?

Of course, this means that our economy is growing piecemeal.

Amazingly, the Philippines were able to lend money to the IMF last 2006. It means that we were able to pay up our loan to them.

Read this report in GMA about the loan to IMF here

So, in this report I surmised that Philippines has enough money.

But although our economy is good at this point and in theory, there is not much tangible effect to most of us, and even the common Filipino doesn’t feel this economic growth.

There are still many poor and disadvantage sectors are hapless in their plight and vulnerable to economic stress. Now, my question is should the government fast track our economic development by investing in technology and infrastructure or strengthen agriculture?

It is undeniable that Philippines is an agricultural country. However, as our technology is relatively increasing every day, some areas in the Philippines remain to be purely agriculture-based.

With regards to industrialization, any country who would like to cope up with the fast changing world economy should be industrialized. Hence, industrialization is really a must for economic development because the history of advanced countries shows.

For development, the share of the industrial sector should rise and that with the agricultural sector decline. This is only possible by having a policy of deliberate industrialization.

Industrialization is the method of manufacturing consumer goods and capital goods in addition to creating social overhead capital to be able to provide services and goods to both individuals and businesses.

As such industrialization plays an essential role in the economic growth of LDCs (Less Developed Country) like the Philippines.

As a result, the key benefits of industrialization will “trickle down” on the other sectors in the economy in the form of the development of agricultural and service sectors leading towards the rise in employment, output and income.

In overpopulated LDCs, there is certainly overcrowding around the land, holdings are subdivided and fragmented, and farmers practice traditional agriculture. This attribute characterizing the traditional society in Rostow’s stage of growth.

What about the current educational system?

Does a college degree contribute to economic development?

Let take a look at South Korea. With minimal natural resources to take advantage of, South Korea surely could become a developed country which has a high-income economy.

It is ranked 15th on earth in terms of nominal GDP. It is now your fifth largest economy in Asia. In the past fifty years, South Korea was an input-driven economy, however, this can be a knowledge-based economy.

For rapid development, LDC’s can’t afford to wait for adjustments to farm practices to happen. There must be something to be done.

While many NGOs are pursuing traditional ways of producing agricultural products and going green to help mitigate , still there is a gap in our economy.

Although,

extreme poverty has declined significantly over the last two decades. In 1990, nearly half of the population in the developing world lived on less than $1.25 a day; that proportion dropped to 14 per cent in 2015 based on MDG report, still many are living below poverty threshold.

Well, economic development is not just development in monetary terms but also in the welfare of the people. Its development of the people and for the people.

References:

http://siteresources.worldbank.org/ENVIRONMENT/Resources/ChangingWealthNations.pdf

http://www.tradingeconomics.com/philippines/indicators

http://www.indexmundi.com/facts/philippines/net-national-savings

http://www.economywatch.com/economic-statistics/economic-indicators/Gross_National_Savings_Percentage_of_GDP/

http://knoema.com/IMFWEO2014Apr/imf-world-economic-outlook-april-2014?tsId=1040350