Can the Philippines become an upper-middle-income country by 2031?
Looking at the pattern of our development after our independence from American rule, we had one of the highest real per capita GDP levels and growth rates among our neighboring countries in East and Southeast Asia from 1950 to the 1960s. During the period, the real GDP of the Philippines expanded 1.68 times.
Between the 1950s and 1990s, the economies of South Korea, Taiwan, Singapore, and Hong Kong underwent rapid industrialization and high growth rates of more than 7 percent a year. By the early 21st century, these countries had developed into high-income (HI) economies and came to be called “tiger economies.” All along, however, the Philippines experienced an economic downturn in the ’70s and ’80s when the gains we made earlier were lost to corruption, cronyism, and mismanagement.
The good news is that from 1987 when the World Bank started its current economic classification system up until 2023 the Philippines has rebounded and has been assigned a lower-middle-income category with a gross national income per capita of some $3,950. A study by Mathur et al. released this year by Australia’s ANZ Research, pointed out that the Philippines can attain an upper-middle-income (UMI) status after seven years if it accelerates reforms such as allowing more investments, reducing red tape, and eliminating non-tariff barriers. However, even as our neighboring tiger economies keep on enhancing their development, it is still conjectural if we can soon attain and maintain a UMI status unless we consider the political and cultural dimensions of economic development that also factor in the development of the tiger economies.
An article by Yap and Balboa in 2008 pointed out that the constraints on economic development are not purely economic. There is the political dimension where there is an inability to establish a credible, strong, and selfless political leadership; then there is the cultural-religious dimension where long-held social values have adversely affected economic growth in less tangible ways.
Studies done by Kaplan in 2003 and by Gyawali in 2020 have also echoed the above observation that the rise of modern Asian states was marked by strong leadership that was also guided by cultural values particularly contained in the Confucian rulebook.
Indonesia, Malaysia, Thailand, the Philippines, and Vietnam are sometimes referred to as the “tiger cub economies” because, while they have developed more slowly than the four Asian tigers in the decades since the 1950s, they have nonetheless grown generally at a steady rate. But do they have—especially in the case of predominantly Catholic Philippines—the particular neo-Confucian values that are seen among the tiger economies? We will see if the years ahead will bear this out.
The economist Robert Nelson pointed out in 2007 that the Confucian ethic that is analogous to the secular Protestant ethic is largely missing in the Philippines’ predominantly Catholic culture where there was Latin American feudal hacienda mentality, poor leadership, pervasive political oligarchy, and a value system based on harmony instead of mastery over man and nature. A promising way to counter these persistent failings is to embrace the neo-Confucian values that stress the following: frugality and savings that can lead to expanded investments and entrepreneurship; high educational attainment that equips one with wealth-creating skills; and work ethic that stresses creativity, achievement-orientation and seriousness about tasks. To reiterate, we need to protect and enhance our current economic gains by always considering the desirable political and cultural dimensions of development.
Meliton B. Juanico
