Were it not for Marcos, Filipinos today would have been richer

Were it not for Marcos, Filipinos today would have been richer

Source: Rappler

Millennials earning a monthly income of, say, P30,000 could instead be earning somewhere between P90,000 to P120,000 today

The controversial burial of Ferdinand E. Marcos at the Libingan ng mga Bayani last week sparked a raging debate online about how the late dictator continues to affect Filipinos today.

On the one hand, the pro-Marcos camp has pointed out that Filipinos today benefit from a number of good things that Marcos championed, including the presidential decree on 13th month pay and several big infrastructure projects.

On the other hand, the anti-Marcos camp has rebutted that Filipinos today continue to suffer from the billions worth of debt that Marcos accumulated and plundered, the egregious human rights violations he sanctioned during Martial Law, and his bastardization of our democratic institutions.

We argue in this article that, 3 decades after he was ousted, Marcos continues to have a substantial yet invisible impact on Filipinos today: Were it not for his bad economic policies and mismanagement, the average Filipino today would now be enjoying an annual income 3 to 4 times larger than what he or she currently earns.

Were it not for Marcos, Filipinos today would have been richer 1

We lost two decades of development

In a previous Rappler article, JC Punongbayan and Kevin Mandrilla showed that one way to measure a country’s path to development is by looking at income per person (GDP per capita).

Although imperfect, GDP per capita is widely recognized as a useful proxy for measuring people’s welfare: The larger people’s incomes are, the more goods and services they can purchase and the freer they are in making choices for their own lives.

It bears repeating that, based on this metric, the Philippines lost two decades of development after the debt crisis in the early 1980s. Figure 1 shows that the Marcosian debt crisis put the country on a lower income trajectory. As a result, it took more than two decades for the average Filipino’s income to recover its 1982 level.

Were it not for Marcos, Filipinos today would have been richer 2

Importantly, no such downturn was observed in our ASEAN neighbors. In fact, their incomes grew by 2 to 4 times during the time it took us to just recover. This suggests that the Philippines’ “lost decades of development” were not unavoidable and were borne directly by Marcos’ policies.

What if we did things differently?

Looking back, one might ask: What if we had done things differently? What if the country had stayed on its original income trajectory?

Such “counterfactual” thinking is common in everyday life. By using the right kind of data and statistical models, we can similarly imagine hypothetical scenarios of what the average Filipino’s income would have looked like.

Figure 2 compares the Philippines’ actual income trajectory (orange trend) and certain hypothetical scenarios from 1965 to 2014 (blue, green, and brown trends).

Were it not for Marcos, Filipinos today would have been richer 3

The blue trend answers the following question: If we had replicated or mimicked the growth of our large neighbors – Malaysia, Indonesia, and Thailand – from 1965 onwards, how much more income would the ordinary Filipino have enjoyed today?

The green trend is just a more conservative version of the blue trend. The brown trend is based on our neighbors’ worst-case scenario: What if the average Filipino’s income grew at the same pace as our worst-performing neighbor in each year?

We would have enjoyed higher incomes today

As you can see, the actual income trend we experienced as a nation fared worse than all hypothetical incomes.

The blue and green trends deviated from the orange trend (actual income) as early as the late 1960s. This suggests that even during the early years of Marcos’ first term as president, the Philippines had started to stagnate vis-à-vis its regional neighbors.

Meanwhile, the brown trend deviated around the time of the debt crisis, and since then it even fared better than our actual income trend. In other words, Filipinos’ incomes grew even slower than our neighbors’ worst performers.

Most importantly, Figure 2 shows that we would have enjoyed much higher incomes today had we done things differently since 1965. The blue and green trends show that in 2014 the average Filipino would have enjoyed an income 3 to 4 times larger than what she or he was actually earning.

Think of how different your life would be if you earned 3 to 4 times more than your current income. Millennials earning a monthly income of, say, P30,000 could instead be earning somewhere between P90,000 to P120,000. Generally higher incomes would have improved the living standards of a vast majority of Filipinos and lifted so many families out of poverty.

Put another way, our results show that the average Filipino’s income today is just a fraction of what it would have been. Around the time of the debt crisis, we already lost as much as 50% of our potential income. As a result, the average Filipino’s income in 2014 was just 27% to 36% of its potential.

We would have been one of ASEAN’s richest countries today

Furthermore, because of our deviant economic path during the Marcos era, we lost the opportunity to become one of the most prosperous countries in ASEAN. Figure 3 shows that by 2014 the Philippines would have been more prosperous than Malaysia, Indonesia, and Thailand.

Were it not for Marcos, Filipinos today would have been richer 4

Instead, we found ourselves becoming the region’s laggard, the “sick man of Asia”. One by one our neighbors overtook us, and soon, even Vietnam is poised to overtake us. Today we find ourselves needing to catch up with our neighbors rather than leading them.

Conclusion: Marcos stole our future as well

It’s bad enough that the Marcoses stole so much from the Filipino people already, from billions worth of ill-gotten wealth to last week’s swift and clandestine burial at the Libingan ng mga Bayani.

But the data suggest one more important fact: Ferdinand E. Marcos effectively “stole” the Filipino people’s futures as well by ushering in a full-blown debt crisis and dragging the country to a much lower income trajectory.

Were it not for Marcos’ bad governance, the Philippines would’ve been more prosperous today. Put another way, Filipinos today continue to reel from the impact of Marcos’ regime in terms of the potential incomes we have lost.

How do we move on from this intergenerational treachery? While we can’t turn back time to rectify our mistakes in the distant past, we can still avoid repeating the same mistakes in the future.

To ensure that our futures will not be “stolen” again, we should never again surrender our economic and political freedoms to charismatic strongmen with authoritarian tendencies. We should also make sure that our leaders do not implement short-sighted policies with little regard for the future well-being of Filipinos.

Maintaining a democracy is hard work, and our liberties are more fragile than most people think. That is why we should continue to engage ourselves in the running of our country by remaining vigilant and keeping a critical mind. No less than the future of our country is at stake. – Rappler.com

Technical notes for Figure 2: The data refer to GDP per capita in 2005 international dollars PPP (RGDPNA variable). Counterfactual trends for Philippine GDP per capita were generated using a Kalman-filtered state-space representation of the dynamic factor model (DFM) which extracts the shared co-movement of GDP per capita growth in Malaysia, Thailand, and Indonesia.

Alternative scenario 1 shows the baseline DFM estimates. Similar results were obtained when the counterfactuals were computed using the simple average and median growth rates in our neighbors. Alternative scenario 2 assumes that the Philippines is, on average, less sensitive to the expansion of our neighbors’ GDP per capita.

JC Punongbayan is a PhD student and Teaching Fellow at the UP School of Economics (UPSE). Manuel Leonard Albis is an Assistant Professor at the UP School of Statistics (UPSS) specializing in time series analysis, and also a PhD student at UPSE. Their views do not necessarily reflect the views of their affiliations. Thanks to Kevin Mandrilla for valuable comments and suggestions.

Marcos years marked ‘golden age’ of PH economy? Look at the data

Marcos years marked ‘golden age’ of PH economy? Look at the data

Source: Rappler

The notion of a ‘golden age’ of the Philippine economy under the Marcos regime, especially during its latter years, is a big, fat lie

Thirty years after the first EDSA Revolution, many myths about the Marcos era are being deliberately floated around especially among today’s youth.

Particularly alarming is the mistaken notion that the Marcos era ushered in the “golden age” for Philippine society, including the economy.

We thought we might contribute to the ongoing discussion by looking at the data and allowing them to speak for themselves.

Indeed, for the newer generations with virtually no means of recalling the brutal martial law era and the economic hardships that it brought, perhaps one of the best ways of reliving the Marcos economy is by revisiting the data and opening yourselves to the story these data show.

To do so, we picked the top 5 graphs which, to our mind, best illustrate the ill outcomes of the Marcos era on the economy.

1) We lost two decades of development

Marcos years marked 'golden age' of PH economy? Look at the data 5

Original graphic by Punongbayan & Mandrilla (2016); basic data from PSA

What the graph shows: A continuous increase in GDP per capita (or income per person) is usually understood as an overall improvement in economic welfare. Figure 1 shows that Philippine GDP per capita declined after 1982 and did not reach the same level until 2003, or 21 years later.

What it means: This severe retrogression of Filipinos’ income per person – called “lost decades of development” – testifies to a truly dark era in our economic history. It took the country an entire generation to recover from the bad outcomes of the Marcos regime’s economic policies and management. Even with this data alone, it is difficult to understand why many people cling to the idea that the Marcos regime, taken as a whole, brought about the Philippine economy’s “golden age”.

2) We became the “sick man” of Asia

Marcos years marked 'golden age' of PH economy? Look at the data 6

Original graphic by Punongbayan & Mandrilla (2016); basic data from WDI

What the graph shows: The decline of income per person after 1982 was not seen in our neighboring countries; in fact their incomes went on to soar since then. By the time we recovered our 1982 income levels, their incomes had already grown between two to 4 times.

What it means: The economic setback due to the Marcos regime cemented our title as the “sick man of Asia” for the good part of the past 3 decades, and prevented us from partaking of the so-called “East Asian miracle”. Although we have enjoyed high annual growth rates of 5-7% in recent years, Figure 2 shows that we lost so much ground compared to our neighbors and catching up remains a huge challenge.

3) The regime borrowed too much too quickly

The country’s stock of debts grew exponentially in the late 1970s, and this imprudent debt management burst into a full-blown crisis by 1983.

Marcos years marked 'golden age' of PH economy? Look at the data 7

Original graphic by Punongbayan & Mandrilla (2016); basic data from WDI

What the graph shows: Figure 3 shows the unsustainability of debt during the Marcos regime. From 1977 to 1982 (or in just 5 years) the country’s total external debt grew from $8.2 billion in 1977 to $24.4 billion. As a result, interest payments as a share of national income (in gray) increased eightfold in the same period, a trend closely mirrored by the debt-exports ratio (in orange).

What it means: For the country as a whole, borrowing per se is not a problem; it fact it can even spur growth. Borrowing is problematic only when it becomes unsustainable, or when the debtor fails to meet its obligations.

This is exactly what happened during the Marcos regime, whose many “successes” were built on “debt-driven growth”. While it is true that the regime embarked on an infrastructure spending spree, this was pursued largely to justify its existence and at the exorbitant cost of the ballooning of the country’s external debt. The situation was exacerbated by a confluence of external factors, including the Latin American debt crisis.

The 1983 debt crisis is a painful reminder of the long-run importance of sound and prudent macroeconomic management. Contrary to the Marcosian economic view, borrowing alone cannot induce growth. Instead, it requires deep, structural reforms that transform the economy fundamentally and promote growth through innovation and enterprise.

4) Manufacturing was neglected

The crony capitalism espoused by the Marcos regime disincentivized enterprise and growth in favor of cronies’ interests, leading to the inimical stagnation of the manufacturing sector.

Marcos years marked 'golden age' of PH economy? Look at the data 8

Original graphic by Punongbayan & Mandrilla (2016); basic data from WDI. Note: data spans from 1965 to 2004.

What the graph shows: The graph plots income per person (horizontal) versus the share of manufacturing to total output (vertical). The two variables usually go together, as experienced by our regional neighbors (notably South Korea); that is, income growth is usually accompanied by manufacturing growth. This would become the typical pattern of East Asian success that the Philippines, unfortunately, failed to replicate.

What it means: Although the Marcos era is remembered by many as an age of industrialization, it was characterized by “crony capitalism” where Marcos’ closest allies were awarded industries (e.g., TV and car manufacturing) and ambitious industrial projects (e.g., the Bataan Nuclear Power Plant), many of which ended up being inefficient or bankrupt. Such an economic environment led to the neglect and stagnation of the vital manufacturing sector, which, in turn, slackened the pace of the country’s structural transformation.

5) Work conditions deteriorated rapidly

Finally, the martial law regime resulted in poor work conditions as testified by the sharp rise in underemployment, which at one point afflicted a third of the employed.

Marcos years marked 'golden age' of PH economy? Look at the data 9
Original graphic by Punongbayan & Mandrilla (2016); basic data from PSA. Note: underemployment rate refers to percent employed

What the graph shows: Martial law coincided with a gradual rise in unemployment and more importantly, a precipitous rise in underemployment (from around 10% to 33% of the employed). Some scholars (including Prof Noel de Dios of UP) argue that for a developing country like the Philippines it may be underemployment (or the inadequacy of one’s work) that matters more than unemployment. After all, unemployment tends to be a middle-class phenomenon: most of the poor are employed, and most of the unemployed (e.g., college graduates) are nonpoor.

What it means: Since underemployment contributes to poverty, the severe underemployment brought by the martial law era gives a glimpse of the deterioration of welfare for Filipino households during that time. This dissatisfaction in the labor force (especially among skilled workers) would later give rise to the widespread growth of the OFW phenomenon after 1986.


The notion of a “golden age” of the Philippine economy under the Marcos regime, especially during its latter years, is a big, fat lie especially when pitted against the data during that time. It’s quite amazing (and disturbing) that a single man with absolute power could bring down an entire economy to a lower growth trajectory and set back the march of the country’s economic development by decades.

National Scientist Raul V. Fabella once said, “The annals of underdevelopment are filled with chapters on failures due to wasted opportunities”.

As we go to the polling booths on May 9, let us all heed the lessons of history and data, and choose leaders who will lead us to rapid, inclusive, and sustainable development by not repeating the mistakes of the Marcos regime (or even daring to kindle among the people its false, illusory glory). – Rappler.com

JC Punongbayan is a PhD student at the UP School of Economics. Kevin Mandrilla is an MA student at the UP Asian Center. The views expressed here do not necessarily reflect the views of the authors’ affiliations.