In his May 12 column, Juan L. Mercado said: ?The region?s (Asia?s) economic pacesetter in the 1960s, the Philippines trails badly today. In just 20 years, Malaysia and Thailand virtually scrubbed ?absolute penury.? China had a higher poverty incidence than the Philippines. Now Beijing?s poverty incidence is only half that of Manila.?

It was in the 1950s?definitely not in the 1960s?when the Philippines was rated by the World Bank as next only to Japan in Asia?s race for development. The industrial advances made by the Philippines in the 1950s, triggered by the import substitution strategy of development and under the protection of import and exchange controls, were in fact rolled back in the 1960s as a result of decontrol and devaluation prescribed by Washington through the World Bank-International Monetary Fund (WB-IMF).

This was what happened: In the 1950s, the Second Bell Mission to the Philippines recommended the adoption of import and exchange controls to curb the massive hemorrhage of US dollars from the Philippines. But Miguel Cuaderno and Horacio Lava of the Central Bank converted import and exchange controls into an import substitution strategy of development, under which more than 1,500 factories emerged. By 1958, President Carlos Garcia proclaimed a ?Filipino First Policy? and the country was poised to focus on heavy industries?apparently in the pursuit of Claro M. Recto?s call for ?nationalist industrialization??with the launching of the Iligan Integrated Steel Mills and FilOil.

But Diosdado Macapagal, with US support, became president in 1962 and, in exchange for US loans of almost $500 million, torpedoed import and exchange controls. In their place, he instituted decontrol and devaluation or, in short, free trade. Decontrol opened Philippine-made products to the competition of tax-exempt imported goods, while devaluation hiked the peso costs of imported machinery, spare parts and raw materials. Only a few of the import substitution factories survived the massacre; even the survivors were marginalized.

Thus began the WB-IMF control over the commanding heights of the Philippine economy, under which all Philippine presidents (without exception from Macapagal to his daughter, Gloria Macapagal-Arroyo) have been mere overseers (katiwala) of the WB-IMF. Their prime duty has been and still is to enforce WB-IMF debt conditions, not the Constitution of the Republic of the Philippines.

No question about it, during the 1950s the Philippines was ahead of Malaysia and Thailand in Asia?s development race. But today Malaysia and Thailand are newly industrializing economies, while the Philippines is a failed economy, dependent upon foreign countries for the employment of its citizens. China and the Philippines are simply not in the same league. The Philippines is a Third World country; China not only belongs to the First World but it is now the third largest economy in the world, pushing Germany?the largest economy in Europe?to fourth place.

?AMADO GAT INCIONG,
Cubao, Quezon City