October 23, 2013

Philippines Pattern of Development

According to a structural change model "patterns of development analysis", an empirical work of Harvard economist Hollis B. Chenery and his co-authors, development has a sequential process or pattern. Usually, underdeveloped countries with focus on agriculture sector as the main engine of growth, shifts to manufacturing followed by development of service sector. In the case of the Philippines the sequence was not followed.

What happened in the Philippines was that, while agriculture is still growing, the focus shifted to service sector.

During the past, working on farm was tough. Most of the farmers do not own the land they are tilling; also, the income is small. Without own land and with only little Peso income, who would be motivated to work in agriculture sector?

The farmers continued to work hard on farms while their children were being educated in schools. After less than two decades of studying, their children are ready to find a job in the metropolitan district. No one wants to dig the soil anymore.

Because less benefit is seen in innovating the process of agriculture, the sector was left undeveloped. As result, importation was seen as the solution for under-supply. Instead of developing a technology that would ease and increase the production of agriculture goods, some favored importation; thus, self sustainability was not achieved.

Globalization not only affected the agriculture sector; it also affected the manufacturing sector. Instantly, these gave the country access to foreign goods. However, the entry of foreign products suffocated the local manufacturing businesses that should be incubated.

This is not to say that globalization is not good; if only right policies were implemented to encourage innovation on agriculture and incubation of local manufacturing businesses, things might be different today.

It's not too late, a new cycle can be started - start from agriculture and manufacturing, but this time, right policies must be implemented.

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