A Paradise Lost

“The world has been passing the Philippines by, literally. Back in 1960, the country had the second-highest per capita income in Asia, lagging behind only Japan. But by the following decade, South Korea and Taiwan had surpassed it, and by the 1980s, Malaysia and Thailand had, too. China overtook it in the late 1990s. And now—an event that many Philippine elite thought they would never live to see—Indonesia has sailed past the Philippines….
The Philippines was billed in the 1950s and '60s as Asia's most promising story, alongside Burma and Sri Lanka. Now a somber reminder of how long-term projections often go awry and why economic catch-up is not inevitable, even for a country rich in human capital and natural resources. From Brazil in the 1970s and '80s to Thailand more recently, history is littered with instances of countries that lose their way following a few years of success because of weak institutions and the lack of political will to enact tougher reforms. After growing at an average pace of 6 percent in the 1950s and '60s, the Philippines missed out on the successive waves of -investment-led booms in the region due to constant political instability and failure to liberalize the economy. Investment as a share of GDP is merely 15 percent—the lowest in its post–World War II history. Although the economy has expanded at an average 4 percent annually in the post-Marcos era, it has translated into little progress for a nation with a population growth of more than 2 percent a year…
A free and fair presidential election would be a start. The agenda for a new government is fairly clear-cut. Investment has long been the missing component in the growth equation, so the government needs to begin by creating a better environment for investment. This means stronger contract enforcement, less judicial interference, and breaking up the stranglehold of some oligarchs in key businesses. An important measure of the country's success will be if it manages to slow the pace of emigration. More than 10 million Filipinos have left the country since the early 1980s for better prospects abroad. The country needs some of that talent to return home and add to the economy's underlying productivity.” -Newsweek Jan 22, 2010-