San Beda College Alabang

Alabang Hills Village Alabang, Muntinlupa City Integrated Basic Education (High School)
That In All Things, God May Be Glorified

Social Studies IV Handout Philippine Economy Through the Years Name: Section: Date: Teacher:

I.

Economic Periods a. Pre-Spanish Colonial Period b. Spanish Colonial Period c. American Period d. Japanese Period e. Republic Years

II. Pre-Spanish Colonial Period Major Industries Agriculture Livestock Raising Shipbuilding/Boatmaking Fishing Mining Wine-Making y Tuba (coconut wine) y Lambanog (nipa wine) Weaving Minor Industries Jewelry Making Mat and Basket Making Ornament Making from Carabao Horn Tanning of Animal Hide Hunting of Edible Bird s Nests Trading with China, India and Japan Smelting of gold and iron Ceramic Making Exports Imports Glass Porcelain Commercial gold Perfume containers Vases, Needles, Silk Fishing rods Silk umbrellas Rattan baskets Pots, Beads Bracelets

Cotton Onions Pearls Fruits to China

III. Spanish Colonial Period Goods brought in from: Tobacco Cocoa Corn Peanuts Mexico Papaya Potatoes Europe Pineapple Horses Coffee China Horses

Land Ownership During the Spanish Colonial Period Encomienda System y A piece of land was given as a reward to the king s soldiers who helped in conquering territories y Encomenderos collected taxes from those who cultivate the lands within the encomienda Four Classifications of Land Ownership y Lands owned by the Church and religious congregations Dominicans and Augustinians  Large tracts of land  Farmers rented a large portion for cultivation (inquilinos) y Lands owned by Spaniards living in the Philippines y Lands owned by mestizos and rich indios (principalia) y Small-sized lands owned by ordinary indos that they inherited from their ancestors before the Spanish colonization Effects of Land Ownership y Renting of lands led to small-scale production y Exorbitant taxes became heavy burdens on the farmers y Land-grabbing anyone can claim a piece of land considered public lands by cultivating it

System of Taxation Indirect Tax or Rentas Estancadas Levied on the manufacture, purchase or use of products, services or things y Tobacco (via tobacco monopoly system) y Coconut wine y Bandala system natives were forced to sell their produce to the government at a set price  Rice  Sugar  Hemp y Custom taxes in imported merchandise and exports y Taxes on Vices  Cockfighting  Betel nut chewing y Direct Tax Tributo paid to show acceptance of becoming a subject to the king of Spain Polo forced labor  male citizens from 16 60 years old  15 or 40 days a year Falla paid in exchange of exemption from rendering polo

Galleon Trading in the 16th Century y An annual trade between Manila and Acapulco, Mexico which used a galleon (ship) y A government-owned business supervised by royal officials y Galleon had 1,500 divisions y Only those with boleta (ticket) were allowed to engage in the galleon trade Boleta y A ticket entitling a person to ship goods to Mexico y Given to the governor-general, clergy, members of the Royal Audiencia and their friends, widows of Spanish officials y Those with boletas but did not have enough money to trade sold their boletas to traders for a higher fee y Traders who did not have enough capital to buy boletas borrowed money from Spanish friars Obras Pias y An organization which solicited funds from the rich to be used for charitable activities y This is where the money that the friars loaned to the traders came from Sociedad Economica de Amigos del Pais (Economic Society of Friends of the Country) y An organization established during the time of Governor-General Jose Basco y Vargas to assist him in the implementation of his economic reforms y Provided scholarships to Filipinos to study the art of dyeing y Founded an agricultural school y Offered free training on cotton weaving y Provided incentives to farmers to increase rice production y Imported heavy machines y Ceased operations after Governnor Basco s term Real Compania de Filipinas (Royal Company of the Philippines) y Its objective is to develop and promote direct trade between the Philippines and Spain as well as among the different colonies of Spain y Exclusive control of trade between the Philippines and Spain y Philippine goods entering Spain were admitted tax-free y Failed due to mismanagement and non-cooperation of Manila traders y Succeeded in opening Manila to world trade

IV. American Period y Treaty of Paris in 1898 ended the war between Spain and the United States y Control of the Philippines was transferred to the Americans at a price of $20 million y Colonization was for economic reasons: U.S. wanted a colony in Asia as a base for its ultimate goal in partaking in the huge market of China Major Economic Policies Free Trade y A commercial policy which allows the unhampered flow of goods among trading nations y Imports and exports transactions between the U.S. and the Philippines had no trade barriers Implementation of Trade Laws y Payne-Aldrich Act of 1909 allowed importation of American goods into the Philippines without tariffs and quotas  Tariff a tax imposed on imported products  Quota a restriction on the amount of goods which can be imported  Trade Barriers restrictions on free trade y Underwood-Simmons Act of 1913  Tried to achieve the real essence of free trade between the U.S. and the Philippines  Philippine products with 20% foreign raw materials were not allowed to enter the American market  Favoured the U.S. Tydings-McDuffie Law of 1934  Established the commonwealth government in the Philippines  Commonwealth Period was from 1935-1945  Continued free trade between the commonwealth of the Philippines and the U.S.  Sugar, coconut oil and abaca fiber were exported to the U.S. on a limited basis

Effects of Free Trade y Organization of financial institutions extended credit to importers and exporters y Commerce became widespread y Improvement of transportation and communication facilities y Volume and value of Philippine products increased y Colonial mentality was developed y Promoted heavy economic dependency on the United States  A barrier in the development of local industries  Local industries cannot compete with the cheap manufactured goods imported from the U.S. V. The Japanese Occupation Philippine Economy y High inflation y Rationing of prime commodities y Buy-and-sell activities y Black market y Heavy taxation y Resource utilization y Dull economy Shortage of Commodities y When a country is in a state of war (Japan and the United States), many of its resources and the raw materials needed for productive purposes are diverted to war-related activities. Given the limited resources for productive use, the production of consumer goods declined substantially. y Since Japan was at war with the United States, all our trading relations with the U.S. had to stop and consumer goods imported to the United States eventually vanished. y Lack of sufficient local industries

During the Japanese occupation, shortage was reported in the following:  Rice  Coconut oil  Vegetable lard and soap  Cattle and hogs  Clothing To avert the massive inability in the light of limited supplies, the following situation existed:

Japanese Military Administration Imposing of price control and rationing Worsening of problem as system of distribution y y y y The price control and rationing scheme further exacerbated the problem since producers became more unwilling to increase production at controlled low prices. Rationing system paved way for the rise of the black market and profiteering Massive unemployment forced people to resort to buying and selling of scarce products, second hand commodities and even stolen goods The significant drop in foreign trade and stagnation in domestic trade reduced government revenues from customs and sales taxes. So the Central Administrative Organization had to impose forced savings by:  Lowering the salaries of government employees  Increasing contributions to government insurance schemes  Imposing new sales and luxury taxes Central Administrative Organization a coordinating body of all the existing administrative agencies established to execute programs and policies under the command and order of the imperial forces commander-in-chief in the Philippines. To increase government funds, the organization: Re-opened Cockpits Racetracks Jai-alai joints Boxing and wrestling rings Dancing halls Night clubs Imposed 20% tax on public eating and drinking places, and amusement centers Increased taxes on beer and liquor 20% ad valorem tax on imported and exported merchandise

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Although the Japanese were very critical of the American economic policy in our country, their concern for the self-sufficiency and industrialization of our country was meant for the development of their country, Japan. The Philippines being essentially an agricultural country, her industrial production will be limited. She is destined to play the role of a raw material supplier to Japan, like other southern countries which are members of the Co-Prosperity Sphere. (Hartendorp, 1967)

VI. The Republic Years Manuel Roxas (1946-1948) y Condition of the country  End of the World War II  Destruction of economy  Resources have been severely damaged y Rehabilitation of the warn-torn economy y Restoration period y Main problem: sourcing of funds to finance enormous rehabilitation efforts y Americans idea of help: free trading between the Philippines and U.S. should continue y U.S. Rehabilitation Efforts  Bell Trade Act (1946)  War Damage Act  Tydings Rehabilitation Act y Rehabilitation and Finance Corporation (RFC) manage the distribution of loans and give financial assistance

Trade Act y Commercial exchange between the countries y Quotas were imposed on Philippine exports y External value of the peso was pegged to the dollar y Equal rights in the exploitation, in the ownership and management of public utilities y 1935 Constitution amended for the parity rights Parity Rights y Provision granted American investors equal rights as Filipinos to exploit the natural resources of the country and operate public utilities y Included in the Bell Trade Act Elpidio Quirino (1948-1953) y Continued the rehabilitation and reconstruction programs of Manuel Roxas y Insurgence of the Hukbalahap forces led by Luis Taruc Import Substitution y To curb the growing balance of payments deficit y Control of imports in the country y Objectives  Establishment of industrial and manufacturing base Support and protect local manufacturing industries producing substitute products Import Control Law of 1950 y Gave enormous power in regulating the entry of foreign products y Established the Central Bank of the Philippines Ramon Magsaysay (1954-1957) y Well-remembered for its concern with the plight of the landless farmers y Idol of the Masses Land Reform Act of 1955 to resolve growing feud between farmers and landowners NARRA to give land to the landless, improve the quality of the farmers harvests, and extend credit assistance Farmers Cooperative and Marketing Association (FACOMA) cooperative Carlos Garcia (1957-1961) y Most Pro-Filipino Administration y Enacted the Filipino First Policy y Promoted Filipino Culture y Import substitution program y Restriction of imports and foreign exhange Filipino First Policy y Free from foreigners control y Priority to Filipino industries y Filipino Retail Nationalization Trade Act Diosdado Macapagal (1962-1965) y Liberalized the importation of goods y Relaxed foreign exchange controls y Peso devaluation (from $1.00 = P2.00 to $1.00 = P4.00) Decontrol allowed imports to enter into the Philippines with little restrictions Agricultural Land Reform Code of 1965 removed the share tenancy and replaced with the leasehold system to organize the farmers into a

Ferdinand Marcos (1966 1986) y Decontrol and liberalization policy continued y Promoted export industries y Established the Board of Investments(BOI) Martial Law in 1972 y Launched a comprehensive land reform program y Government-controlled corporations increased y Rise of crony capitalism giving favors to friends and relatives y Stagnation of economy y Peso devaluation in 1983 foreign debt rose to $26 B in 1986 Open-Door Policy foreign investors were given the right to: y Invest in industries which are potentially successful y Invest in developing industries and with Filipino partners y Own properties for a period of 30 years provided they have Filipino partners Corazon Aquino (1986-1992) y Restored democratic institutions like free press and the independence of the judiciary y Had seven (7) military coup attempts y Negative growth rate y Privatization y Dismantling of monopolies y Reduced the number of government-owned and controlled corporations through the Asset Privatization Program y Creation of PCGG (Presidential Commission on Good Government) y U.S. bases were dismantled Laws Passed: y Foreign Investments Act of 1990 y Consumer Code y Comprehensive Agrarian Reform Law y Local Government Code Fidel Ramos (1992-1998) y Emphasized people empowerment y Believed in deregulation and privatization y Philippine peso plunged with the currency rate of P27.00 = $1.00 y Philippines 2000 - envisioned the country as a newly-industrialized country (NIC) by 2000 y Build-Operate-Transfer Joseph Estrada (1998-2001) y Pro-poor and pro-market y Erap Para sa Mahirap slogan y Exports increased by 18% y Peso s depreciation rate remained one of the lowest in Asia y Elimination of pork barrel funds for legislators y Successful approval of APEC Summit leaders of grant through President Estrada s request y The Philippines was the only one in Asia with positive growth y Signing of the Visiting Forces Agreement (VFA) y Lingap Para sa Mahirap y O Ilaw Program y Erap Rolling Stores y Angat Pinoy 2004 Gloria Macapagal-Arroyo (2001-2011) y Ginintuang Masaganang Ani was introduced to assist countryside development y Rolling stores were fielded by the National Food Authority (NFA) y Provided low-cost housing for the masses y Education got the biggest budget y Reduction of red-tape by shortening the period of processing papers y Continued infrastructure projects y RORO (Roll-on, Roll-off) y Holiday Economics