The new rules of the game

This material originally appeared as  a chapter in W. Bello and J. Chavez (eds.) State of Fragmentation: The Philippines in Transition. Bangkok: Focus on the Global South.

This entry is the second of a four-part serialization.

Part I
Part III: Back to the land
Part IV: The creative destruction of Filipino capitalists

From the early 1980s to the present, the structure of the Philippine economy, its position astride global circuits of labor, commodities, and capital, and the opportunities for accumulation available to its capitalist classes have been defined by three sets of processes. First among these was neoliberalization. At first glance, the Philippines was perhaps one of the countries where neoliberalism saw an unqualified ideological triumph. It was among the first countries in the world to participate in structural adjustment program in 1980, and has since been the recipient of a total of nine structural adjustment loans from the World Bank and a participant in three IMF programs.[1] The momentum of neoliberal reform has been sustained from within by state economic planning agencies, the academe, and private-sector think tanks.[2] As a consequence, the Philippines has consistently gone above and beyond the prescriptions of the Washington Consensus: it had unilaterally adopted among the lowest average tariff rates in the world, innovated the privatization of economic zones, and embarked on some of the biggest privatizations in the world.

Far from being a completely ideological project, however, neoliberalization in the Philippines has been implemented in a specific, locally-contingent, and highly-uneven manner, and the resultant contours were crucial to the recent successes of domestic capitalists. This is perhaps most evident in the Philippine privatization program. Beyond the crown jewel corporations, such as Philippine Airlines, Petron, National Steel, and Napocor, public land and infrastructure have been the most consistent targets for privatization by successive post-EDSA governments. In Manila, the privatization of military-owned land, such as Fort Bonifacio and Camp Bago Bantay, of national government centers in Quezon City, and of reclaimed land on Manila Bay have in recent years been a defining feature of urban development in the city. Through the Bases Conversion and Development Authority alone, a total of 267 hectares in the city have been privatized in this manner, creating some PhP46.697 billion in revenues.[3]

Two particular features of the privatization program deserve closer scrutiny. Continue reading “The new rules of the game”

Back to the land

This material originally appeared as  a chapter in W. Bello and J. Chavez (eds.) State of Fragmentation: The Philippines in Transition. Bangkok: Focus on the Global South.

This entry is the third of a four-part serialization.

Part I
Part II: The new rules of the game

Part IV: The city and the restoration of class power

All these transformations—the Philippine brand of neoliberalization, the unique vectors through which its economy globalized, and its uneven sectoral and geographical development—converge in urban real estate. Mirroring the trajectory of the economy as a whole, real estate development began the decade in crisis: the sector shrank from 2000 to 2002, hitting a 24.7 percent year-on-year contraction in the first quarter of 2001. But beginning with 2003, residential lot sales, coupled with office and retail space rental and leasing, have sustained record levels of growth: from the second quarter of 2004 until the fourth quarter of 2008, it sustained a double-digit streak, broken only twice by dips into high single-digit growth rates (see Figure 3). In the third quarter of 2006, the sector grew at a record pace of 26.2 percent year-on-year, breaking a record that was previously set in the third quarter of 1982. This record was broken yet again when the sector grew by 27.7 percent in the second quarter of 2010. At the end of its bust period in 2002, the gross value added of real estate development stood at approximately PhP8.8 billion. In 2010, it had grown to PhP22.1 billion.[1] If considered as a separate subsector, real estate was the second-fastest growing sector of the economy over the past decade, outpaced only by mining.

Continue reading “Back to the land”

The city and the restoration of class power

This material originally appeared as  a chapter in W. Bello and J. Chavez (eds.) State of Fragmentation: The Philippines in Transition. Bangkok: Focus on the Global South.

This entry is the last of a four-part serialization.

Part I
Part II: The new rules of the game

Part III: Back to the land

All told, the new Philippine economy saw billions of dollars churned into the land by overseas Filipinos and foreign investors, land that had been newly liberated from the state, agriculture, and domestic manufacturing, and redeveloped into subdivisions, condominiums, office space, and malls. This picture so far provides an account for what the new economy is, and why, how, and where these changes are taking place; what is so far lacking is an account of who benefited from this new economy.

As in any other economy, power in the brave new Philippines lies in the opportunities available for capitalist accumulation. Just like ownership of land under hacienda agriculture or dictatorial largesse under import-substitution industrialization, control over these opportunities will mean control over the creation of wealth.

The new economy saw, on one hand, the possibility of amassing wealth from haciendas or from small factories propped up by the state has been decisively closed off, even as important sunshine industries such as electronics manufacturing and business process outsourcing have daunting technical and financial entry barriers. On the other hand, the torrent of foreign investment and remittances that it has unleashed are creating immense opportunities in sectors which, whether by accident or design, are reserved for Filipinos.

Real estate development is one of these sectors. Over the past two decades, an array of crony capitalists, manufacturing-oriented taipans, and landed elites have converged on urban real estate as a central component of their strategies to diversify from their traditional sources of wealth. Continue reading “The city and the restoration of class power”

Retelling the Philippines’ ‘turnaround story’

Originally published as an Asia Research Brief with the York Centre for Asian Reseach, 3 July 2014. The argument outlined here was first developed in Cardenas, K. (2014) “Urban Property Development and the Creative Destruction of Filipino Capitalism”. In W. Bello and J. Chavez (eds.) State of Fragmentation: The Philippines in Transition. Bangkok: Focus on the Global South, and appears in a condensed form in Cardenas, K. (2014). “Cash-crop condominiums.” Philippine Daily Inquirer, 16 March 2014.

Long the exception to a region of dynamic export-oriented economies, recent years have seen the Philippine economy deliver unusually impressive numbers, receive successive votes of confidence from credit rating agencies, and emerge as an unusually bright spot in an otherwise gloomy global economy. In 2013, its GDP grew at a rate of 7.2 percent, second only in the region to China. Over the course of the Great Recession, it grew at a pace that compared favourably with its middle-income and Southeast Asian peers; its average growth over the same period was also at its fastest in its recent history.

The causes behind this growth have been firmly established: a reinvigorated mining sector, robust remittance inflows from overseas Filipinos and a rapidly-growing services offshoring industry. Its effects, however, remain only partially understood. What is so far apparent is that the growth has failed to address the high levels of unemployment, poverty and inequality that have been persistent features of Philippine underdevelopment. If the new wealth has so far failed to translate into the well-being of Filipinos, then where did it go? Continue reading “Retelling the Philippines’ ‘turnaround story’”