‘Free market’, export-led development strategy and its impact on rural livelihoods, poverty and inequality: The Philippine experience seen from a Southeast Asian perspective

ABSTRACT

The ‘free market’, export-led development strategy has not delivered its promise of development in agriculture, as far as the Philippines is concerned. The World Bank-and IMF-instigated privatization and deregulation policies with direct consequence to rural livelihoods carried out much earlier and far wider in the Philippines than in some other Southeast Asian countries have coincided, overlapped and interlinked with the GATT/WTO trade/exchange rules. These two broad sets of policy related to agricultural production and exchange, combined, have largely reinforced, not undermined or eroded, pre-existing agrarian structures dominated by domestic and transnational elites. The overall outcome is the opposite of neoliberal reformers' predictions: the transformation of the Philippines from a net agricultural exporting to a net agricultural importing country. This development strategy has failed to address the persistence of poverty and growing inequality in this country. If a poverty-eradicating strategic national development is to be achieved in the Philippines and in some of the latter's regional neighbors, a radical recasting of the pre-existing agrarian structures partly through explicitly pro-poor land policies will be necessary and urgent.

KEYWORDS:

• ASEAN
• WTO
• regionalization
• livelihoods
• agricultural trade

Notes

∗Beans.

∗∗Green and roast; fruit and juice.

∗∗∗Fresh, juice and dried.

^∼Fruit, concentrate and canned.

^∼∗Includes area planted to non-export variety–export variety covers around 50,000 hectares.

∗Estimated as the ratio of the share of a commodity group in a country's exports to that commodity group's share of world exports. Except for 1960 and 1998, years represent a three-year average centered on the year shown.

∗∗Includes fisheries.

∗∗∗Sugar has historically been exported to the US at a premium price. Hence a value greater than unity does not reveal comparative advantage in this case. However, the sharp declining trend may still be interpreted as a rapid deterioration in comparative advantage.

1 The research work for this article was carried out when I was at the Rural Development, Environment and Population Studies Group at the Institute of Social Studies (ISS), The Hague, the Netherlands. This study benefited from the logistical support of ISS.

2 An earlier, significantly different, version of this paper was prepared for and presented at the conference on ‘Regionalismo y Desarrollo en Asia: Modelos, Tendencias y Procesos’ on 4–5 July 2005 in Barcelona, Spain, organized by the Consorci Universitat Internacional Menéndez Pelayo de Barcelona (CUIMPB) and was subsequently published (in Spanish) as a book chapter (see Borras, 2006a). I would like to thank Max Spoor and Jennifer Franco for their helpful comments and suggestions. For this version, I would like to thank the two anonymous reviewers and one of the RIPE editors for their very critical but constructive comments and suggestions that have greatly improved the arguments of this paper.

3 Paul Nicholson of La Via Campesina, in the latter's statement on the occasion of the WTO Hongkong talks (www.viacampesina.org; accessed and downloaded 17 March 2006). For a general background on La Via Campesina, see Desmarais (2002).

4 Focus on the Global South (2006).

5 For critical insights on such measurements and statistics, see Wade (2004).

6 World Bank (2005).

7 As the rural poor struggle to construct their livelihoods, access to and control over different productive resources such as land do not always necessarily mean they intend to create a typical small family; they could aspire to gain access to employment by way of securing land rights, as for example, through a variety of contract arrangements with domestic and transnational buyers. This is for instance the case in many of the land reformed modern plantations in Mindanao as examined by Borras and Franco (2005).

8 For a general background on poverty and inequality between countries in the region and between the region and other regions across continents, see CPRC (2005). For an excellent background political-economic analysis of the region and its relationships with other regions in the world, see Katzenstein (2000).

9 The high growth performance was actually until the early 1980s—just until the eve of the political and economic crisis that begun in 1983.

10 This was the year when the Benigno ‘Ninoy’ Aquino, a principal figure in the political opposition against the Marcos dictatorship, was assassinated. The assassination led to popular anger against the Marcos regime. This event, plus other political factors, such as the 1978 parliamentary elections and subsequent electoral exercises held under the dictatorship including the 1985–1986 presidential election, sustained people's anti-dictatorship mobilization ‘from below’, and factionalism within the military and the landed and corporate elite that eventually led to the ouster of the Marcos dictatorship in February 1986 (Franco, 2001).

11 Even the Moro conflict in the southern Philippines (an area that has been particularly identified for a special sub-regional free trade zone project with Brunei, Indonesia and Malaysia) has significant roots in the highly inequitable agrarian structure and landlessness (Gutierrez and Borras, 2004).

12 In 1970–1980, the Philippine agriculture sector had a growth rate of 4.9 percent, while Indonesia had 2.0, Malaysia 6.5, and Thailand 4.2 percent (David, 2003: 177).

13 These were estimates based on remittances coursed through formal banking institutions. If remittances sent through informal channels were included, the annual total may double.

14 It was US $26 billion in 1986 (Bello et al., 2004: 13).

15 Data on poverty incidence differ, depending on the kind of measurement used. The official government data is rather low, at 28 percent (NEDA, 2005), as opposed to ADB's data of 34 percent (ADB, 2005).

16 But it is important to note that increasing inequality exacerbates the arguably ‘rational’ decision of extremely poor to have large families. Moreover, it is to be pointed out that the Catholic Church's lobby against contraception and population control could have made a significant contribution to this predicament given the fact that it is an extremely influential institution in the Philippines.

17 It must be noted however that the Filipino domestic helpers in Hong Kong, Taiwan and Singapore have, beginning in the 1990s, started to face increasing competition from (cheaper) new entrants coming mainly from Indonesia and some South Asian countries. This and other factors (such as the 1997 Asian fiscal crisis) have contributed to the decrease in number of Filipino workers in these countries, although they have remained the most dominant group in terms of number (Huang et al., 2003).

18 For a village-level study about the impact of overseas remittances on agricultural and rural livelihoods, see Banzon-Bautista (1989).

19 Interestingly, the growth rates of the Philippine agriculture during the 1950s through the 1970s, while modest, have been consistently (relatively) progressive. This was the era of trade protection and state-driven agricultural extension programs that were severely criticized by neoliberal reformers beginning in the 1980s. For a relevant, insightful analysis of the performance of the agriculture sector in Latin America across different policy regimes, refer to Spoor (2002).

20 Vietnam will join in 2006, Laos and Malaysia in 2008, and Cambodia in 2010.

21 Estimates of possible value of new trading linkages were as follows: ASEAN-China = $1.23 trillion, ASEAN-Japan = 113.6 billion (in 2000), and ASEAN-South Korea = $28.9 billion (in 2000) (ASEAN, 2002).

22 For a critical overview on the key agricultural issues hotly discussed during the debate about the Philippine accession to WTO in 1995, refer to Lim (1996).

23 But even during the peak years of Philippine coconut exports, when the Philippines was the ‘coconut king’ of the world, to borrow James Boyce's term, the mass of poor tenants and landless farm workers have been among the poorest sections of the rural poor (Boyce, 1992; de la Rosa, 1994). The gains from the export boom in the past and even at present have remained in the hands of the landed elite and traders. And by 2004, 75 percent of the land redistribution balance under the state agrarian reform program is in coconut lands.

24 It is important to note that the commercial farm sector is also tightly controlled by domestic and transnational elites, and even during the export boom periods the benefits are not equitably distributed to the mass of poor farm workers (Hawes, 1987; Tadem et al., 1984). But these plantations were included in the official scope of land reform, and the current production and trade practices and strategies of landed and corporate elites in this sector vis-à-vis regional and global competition can be better understood from this perspective (Borras and Franco, 2005; de la Rosa, 2005).

25 The case of Vietnam is not elaborated here. For excellent related background studies, see Akram Lodhi (2005) and Kerkvliet (2005).

26 Refer to the critical analyses by Putzel (1992) and Rivera (1994); but see also Angeles (1999). For a relevant discussion on the role of land reform in national and regional development from a cross-regional comparative perspective, refer to Cristóbal Kay's (2002) analysis of the East Asian and Latin American experiences.

27 See Kerkvliet (1977), Lara and Morales (1990), Putzel (1992), Riedinger (1995), and Franco and Borras (2005).

28 The numbers are: 5.9 million hectares of land redistributed to 3 million rural households, as of early 2005. For nuanced accounting of the ‘real’ extent of land redistribution outcomes in the Philippines from 1972 to the present, see Borras (2003, 2006b); Putzel (2002). But beginning in 2001, progress in land reform was put to a halt, with the Macapagal-Arroyo administration proving to be unwilling and unable to proceed with the completion of the land reform program (Franco, 2004; Franco and Borras, 2005).

29 This phenomenon has been widespread in the country, although it tends to concentrate in enclaves identified as export-processing zones. See, for example, Bankoff (1996) and Sidel (1998).

30 This is the combined amount of the money recovered from the Marcoses plus an initial amount recovered from the so-called ‘coconut levy fund’.

31 See, e.g. Bello et al. (2004).

32 For a relevant argument, but focusing on the historical development processes in East Asia and the role of redistributive agrarian restructuring, see Griffin, Khan and Ickowitz (2002).

33 See, for example, the arguments by Wade (1990) and Bello et al. (2004).