Before Ferdinand Marcos became president in 1965, the Philippines was already the second largest economy in Asia after Japan. The administration of then-president Carlos P. Garcia that spanned from 1957 to 1961 weathered the economic impacts of the Second World War through several economic policies centered on controls system.
These included austerity measures, import substitution industrialization, and a comprehensive nationalist policy that favored Filipinos over foreign investors, thus reducing the exposure of the country to the global economy.
When Diosdado Macapagal took office as president in 1961, he abolished the controls system and reestablished the free market capitalistic system. The system allowed him to launch and promote his Five-Year Socio-Economic Integrated Development Program that included land reforms that abolished tenancy and promoted open market competition.
Marcos essentially inherited an economy that was already stable. Hence, when he took office, he was able to implement economic programs and projects centered on rapid growth and modernization using the favorable credit rating of the country, as well as his consolidation of economic control.
Understanding the Reasons Behind the Economic Policies of Marcos
As mentioned, the economic strategies of Marcos centered on the principle of rapid growth and modernization through loans and economic control. Take note of the following:
• Foreign Loans to Ramp Up Economic Development: Two factors enabled the Marcos administration to borrow loans from foreign investors. The first was the thriving economy that gave the country a favorable credit rating and the second was the growing petrodollar market in which oil-producing countries channeled their excess profits by investing in counties they considered investment haven,
• Establishing and Maintaining Economic Control: Marcos was able to build and maintain an almost absolute control over the Philippine economy using various tactics designed to undermine the influence of traditional Filipino elites and communist threats. These include forming the so-called Marcos technocrats composed of a new breed of economic managers, establishment and expansion of crony capitalism by favoring a select group of industrialists, and the control of communist insurgency and social unrest through the imposition of martial law.
With loans from international lenders such as countries, transnational commercial banks, and multilateral organizations, the Marcos administration was able to launch economic programs and specific projects that resulted in rapid economic growth.
Most of these programs and projects included social welfare and healthcare programs, further agricultural reforms through the Green Revolution, and national infrastructure programs that helped build networks of transportation system, utilities, and telecommunication.
The programs and projects increased public spending, thus increasing the gross domestic product of the country. Furthermore, both programs and projects provided additional employment and supported relevant sectors and industries.
In addition, with firm control over the economic affairs of the Philippines, the programs and projects, and overall economic policies of Marcos were essentially unchallenged. His technocrats gave him advice, while also following his orders.
The cronies maintained dominance over critical industries and sectors, thus sidelining the traditional Filipino elites and anyone that could challenge him. Through martial law and the corresponding dictatorship, Marcos had consolidated all of his powers, thereby giving him a firmer grip over the Philippine economy and politics.
Nevertheless, the success of the aforementioned two-fold economic strategies of Marcos remains debatable. From one end of the spectrum, his administration managed to accomplished feats that remain useful today, most notably the infrastructures.
From the other end, the Philippines experienced economic problems during the Marcos administration and within the actual martial law period. The country also incurred significant amounts of debt, and according to critics, the Marcos family and his cronies pocketed a considerable portion of loaned money.
Philippines also lost the opportunity to become a highly industrialized nation due to the economic problems that emerged under the Marcos administration.