This Sankey diagram depicts data from Ayala Corporation’s 2015 Annual Report: cash flows, both into and out of the company, from and to investing, operating, and financial activities, and total assets. Urban land and infrastructure activities emphasized.
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’”
A version of this piece was first printed by the Philippine Daily Inquirer’s “Talk of the Town” section on 16 March 2014 (p.16). An expanded version of this analysis appears as a chapter in the forthcoming co-authored book, “States of Fragmentation”, to be published by Focus on the Global South.
When we tell the stories of our wealthiest men, we tend to tell the stories that are of no consequence: we repeat their names, which have mostly remained constant for most of recent memory; we futilely recite the numbers of their net worth; we mythologize the secrets to their success.
These stories are of no consequence for the simple fact that we are telling ourselves things that we either already know, or things we don’t need to know. When we dwell on who the ten Filipinos on Forbes’ 2014 list of world billionaires are, we learn nothing of value. Henry Sy’s net worth is a few hundred million dollars lower this year, the Ayalas are mysteriously absent, the majority of the names are Filipino-Chinese. So what?
But once we turn our attention to understanding what the richest Filipinos are, an entirely different story reveals itself. The true significance of the recent fortunes of our Ten Millionth Percent is in how their stories can help make sense of the puzzles of our recent economic successes, such as jobless growth, our inability to address deep and widespread poverty, or whether the near future holds an East Asian-style ‘takeoff’ in the Philippines.
To tell this other story, we need to ask different questions: how are the biggest Filipino capitalists building their fortunes? Why, in the Philippines of the 21st century, is wealth being built in this way? How does this strategy compare to strategies seen in other periods of our economic history,s or in other places? Finally, what does the success of this strategy mean for the prosperity not just of the few, but of the country as a whole? Continue reading “Cash-crop condominiums”