AleraMJ_Assignment1.

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THE DEVELOPMENT THEORIES: HOW THEY SHAPED PLANNING IN THE

COUNTRY

Development is defined as an inclusive process to achieve not only economic progress

but also social development.

Economic development during the post-world war II was dominated by 4 major

approaches: 1) the Linear-stages-growth model 2) theories and patterns of structural change
3) the international-dependence revolution, and 4) the neoclassical, free-market
counterrevolution.

These development theories influenced the economic structure of the country as the
economy improved and declined under different leaderships. Not that the government
welcomed every policy, rules and trends in the domestic and international markets, but rather
used the theories to improve and avoid mistakes and economic failures.

The Linear-stages approach which emphasized the role of savings and investment in
the transformation of underdeveloped countries made use of massive financial and technical
assistance from the US. This Marshall Plan worked for Europe but it failed in
underdeveloped countries, including the Philippines, which was known to be a heavy
borrower, during the Marcos Regime. Even with massive borrowings, the economy did not
rise as expected because more investment does not necessarily mean faster economic growth
because there are complimentary factors that should be possessed by the recipient country
like skilled labor, managerial competence, well-trained and educated workforce and the
ability to plan diverse projects and programs.

The most notable work of Structural-change was introduced by economist Hollis B.

Chenery and his colleagues. It focuses on transformation of traditional agriculture to a more
modern, more developed and diversified manufacturing and service companies, shift in
demands from basic necessities such as food to diverse manufactured goods and services to
address health issues. The Philippines joined this bandwagon with the Green Revolution
Program which started the research of a high-yielding rice variety with the aim of increasing
food production.

The International-dependence Revolution describes the co-existence of rich and poor

countries whether intentionally exploitative or unintentionally neglectful. Underdevelopment
is attributed to the exploitation of poor countries by rich countries, taking advantage of the
lack of useful knowledge and expertise of the poor countries. Superiority and inferiority of
nations existed and so is the co-existence of wealth and poverty, separation between the rich
and poor nations and wealth amidst poverty. The most effective way of to deal with these
diverse social problems is to pick-up speed of economic growth through domestic and
international reforms, and accompanied by a mixture of both public and private economic
activity.
An example of this influence is the enduring resilience of Philippine–American
relationship. The United States took control of the Philippines from the Spaniards and then
shared power with a prominent Filipino elite, introduced suffrage, introduced public
education, and promised national independence. The United States took advantage of this
partnership to lure the Philippines to sign an economic and military treaty that benefited
American businesses and also the military. And when the Philippines terminated the
agreement, the United States reduced its support to the country. Both countries once again
renewed their bond in response to the U.S. “Global War on Terror” especially with the
Chinese military aggression in the West Philippine Sea.

The Neo-classical Counterrevolution has influenced development in the Philippines

the most. In the 1980s, the developing countries called for freer markets, broken-up public
ownership and minimized the government regulation of economic activities. The argument of
this theory as seen from the point of view of the neo-classicists including Lord Peter Bauer,
Deepak Lal, Ian Little, Harry Johnson, Bela Balassa, Jagdish Bhagwati and Anne Krueger
that the reason for the slow growth of the economy is that there is too much intervention by
the government in economic activity. The neoliberals believed that allowing competitive free
markets, privatization of inefficient state-owned enterprises, encouraging free trade and
export, welcoming foreign investors from developed countries and eliminating most of the
government regulations and policies in financial markets. The slow pace of economic growth
in the under-developed countries is due to inefficiencies of the state, corruption and lack of
economic incentives. The neo-classical theory includes the free-market analysis which
signals new investments, new industries and believes that competition is an effective stimulus
of economic development. Public-choice theory concludes that minimal government is the
best government. This stems from the belief that citizens use political influence to ask favour
and special benefits from politicians through bribes resulting to misallocation of resources.
The Market-friendly Approach recognizes the weaknesses of the market and government
plays an important role in its operation.

The influence of the Neo-classical Counterrevolution on the economic and social

development of the Philippines dates back to 1970s to 1980s from when the country was
perceived to be at its lowest, economically, socially and politically brought about by
resources mismanagement and the presence of enterprise monopolies, that urged the people
to join the EDSA People Power Movement that oust President Ferdinand Marcos. It points
out that too much government intervention slows down economic growth brought by the
decrease of freedom and individuality.

Policies in planning in the Philippines has evolved to encourage free market and well
regulated competition in the market. Republic Act 9184 –An Act Providing for the
Modernization, Standardization and Regulation of the Procurement Activities of the
Government and For Other Purposes was approved to encourage fair and just market
environment by providing equal opportunities to eligible and legitimate suppliers. The
government decreased expenditures for social services hence the privatization of enterprises
for Basic Services such as power – communication, transportation and oil, with a promise of
efficient and better delivery of services to the people. The National Power Corporation,
PHilpost Corporation, Manila Water Services, Philippine National Bank and the Philippine
Airlines were among the few privatized companies. Foreign Investors were welcomed to
challenge domestic products like Globe and Smart Telecommunications offering a more
reliable communication technology. Social Services like the KALAHI-CIDSS PROGRAM,
which is patterned to internationally awarded Bottom-Up Budgeting Program are directly
implemented by the citizens, providing them equal access to resources. The Build, Build,
Build Program of President Rodrigo Duterte energized the economy with better connectivity
through infrastructure.
References:

Abinales, P. (July 2017) A History of Philippine-American Relations Subject: Foreign

Relations and Foreign Policy and Political History. Retrieved from:
http://americanhistory.oxfordre.com/abstract/10.1093/acrefore/9780199329175.001.0
001/acrefore-9780199329175-e-404

Goulet,D. (n.d.) Chapter 4. Classic Theories of Development: A Comparative

Analysis Retrieved from:
https://pdfs.semanticscholar.org/cca4/e97516d4c7b39d6033e0e1b4b24635fb7ec4.pdf

Justinene (March 24,2014). The Privatization of Social Services in the Philippines

Retrieved from:
https://pdfs.semanticscholar.org/cca4/e97516d4c7b39d6033e0e1b4b24635fb7ec4.pdf