Basics of Macroeconomics Final Paper

Submitted to:

Professor Jean Lee Patindol

Submitted by:

Abellar, Christian Zen

Cotelo, Isabella

Gemino, Gil

Jara, Heather

Lim, Ron

Sy, Joshua

Vivero, Erica
I. INTRODUCTION

This paper provides an analysis and interpretation of the Philippines’ economic

performance through six different presidential terms from Ferdinand E. Marcos to

Benigno Aquino III based on the findings of the article “Which Philippine President

Caused the Downfall of the Philippine’s Economy?” by Enrique Salvador “Boom” San

Agustin. The paper reviews the presidential terms as measured by three economic

indicators: Philippine peso to US dollar exchange rate, Gross Domestic Product (GDP),

and Debt-to-GDP ratio.

I.a. FERDINAND MARCOS

1. MAJOR POLITICAL EVENTS

 1966 – 1968 - In 1966 more than 100 important smugglers were arrested; in

three years 1966-1968 the arrests totaled 5,000. Military men involved in

smuggling were forced to retire.

 1968 - The Philippines became self-sufficient in rice, the first time in history

since the American period due to the greater production of rice by promoting the

cultivation of IR-8 hybrid rice. The Philippines exported rice worth US$7

million.

Government finances were stabilized by higher revenue collections and loans

from treasury bonds, foreign lending institutions and foreign governments.

Land reform was given an impetus during the first term of President Marcos. 3,739

hectares of lands in Central Luzon were distributed to the farmers.

 2. MAJOR ECONOMIC EVENTS

 1975 to 1985 - President Marcos began the Bagong Lipunan Improvement

of Sites and Services (BLISS) projects in Manila and in the rural areas to

house the country’s poor. A total of 230,000 housing units were built.

 1969 – The San Juanico Bridge was built.

 1967 to 1970 - Luzon major irrigation systems and hydroelectric power

plants were built. These were the Upper Pampanga River Project, Angat

multipurpose power and irrigation project and the Magat River Project.

 1975 - The Philippine Heart Center, Lung Center, and Kidney Center were

established

 1983 - With the commissioning of the Tongonan 1 and Palinpinon 1

geothermal plants the Philippines became the second largest producer of

geothermal power in the world.

I.b. CORAZON AQUINO

1. MAJOR POLITICAL EVENTS

 1987 - The 1987 Constitution was approved and enacted on February 1987

which crippled presidential power to declare martial law, proposed the creation

of autonomous regions in the Cordilleras and Muslim Mindanao, and restored

the presidential form of government and the bicameral Congress.

President Aquino announced a policy of national reconciliation asking for the

cooperation of the Filipinos especially the rebel groups.

PCGR (Presidential Commission on Government Reorganization)

was instituted to terminate streamline bureaucracy. Some government offices were

phased out, displacing a number of government employees.

2. MAJOR ECONOMIC EVENTS

 1987- 1988 – Established the CARL (Comprehensive Agrarian Reform Law) &

CARP (Comprehensive Agrarian Reform Program) that aimed to establish a

more equitable distribution and ownership of land. It meant to distribute lands to

farmers in span of 10 years, but was extended by the 11th Congress due to delays

in land distribution and lack of budget allocation.

I.c. FIDEL V. RAMOS

1. MAJOR POLITICAL EVENTS

 1992 - issued Proclamation no. 10, granting amnesty to 4500 rebels consisting

of former soldiers, communist party members, and Moro National Liberation

Front (MNLF) members.

2. MAJOR ECONOMIC EVENTS

 1992 - Fidel Ramos established Philippines 2000 where several industries

critical to economic development were privatized, such as electricity,

telecommunications, banking, domestic shipping, and the taxation system was

reformed, and external debt was brought to manageable levels by debt

restructuring and fiscal management.

 1993 - The Social Reform Agenda was established. It addressed the

 long-standing problem of poverty: jobs and livelihood, health, education and

skills training, housing, environmental protection, children and the youth, the

elderly and the handicapped, agrarian reform, and access to equal opportunity,

averaging the country’s GNP by 5% every year

 1996 – GNP was growing at a rate of 7.2 percent and GDP at 5.2 percent.

The annual inflation rate had dropped to 5.9 percent from its high of 9.1.

I.d. JOSEPH ESTRADA

1. MAJOR POLITICAL EVENTS

 1998 - On May 29, Joseph Estrada – a popular actor-turned-politician – won

the presidential race with his slogan, “Erap para sa mahirap” (Pobre, A. &

Gonzales, C., 2017).

 2000 - Impeachment proceedings started against President Estrada on

November 12 with allegations of corruption, betrayal of public trust, and

violation of the constitution (BBC, 2018).

 2001 - EDSA People Power II, Suspension of impeachment causes mass

street protests against former president Joseph Estrada who was then facing

plunder charges. Military withdraws support and President Estrada stands

down (BBC, 2018).

 2001 – Moro Islamic Federation Front declares ceasefire, says ready to

hold talks with government (BBC, 2018).

Joseph Estrada is charged with plundering more than $80m from state funds

while in office. Eventually found guilty and jailed for life. Later pardoned
 by Arroyo (BBC, 2018).

2. MAJOR ECONOMIC EVENTS

 1998 - The Philippines was still reeling from the 1997 Asian financial crisis.

The peso (PHP) suffered from sharp depreciations in its value from 1997 to

2000. The peso fell from PHP 26.28 to the US dollar in 1996 to PHP 39.97

in 1997, and PHP 49.95 in 2000 (Batalla, E., 2016).

 2000 - Gross domestic product (GDP) grew by 4.4 per cent in real terms.

After a standstill in 1999, net primary income grew by 31.7 per cent,

leading to a 7.7 per cent growth in GNI in 2000 (Batalla, E., 2016).

 2001- Estrada moved to tighten securities regulations, liberalize the trade of

grains and privatize the electricity industry. His efforts limited foreign

ownership of businesses to 40% (Hays, J., 2015).

The peso, the stock markets and confidence in the Philippines as a place to

invest dropped the same time as Estrada’s dropped approval ratings. Foreign

companies like Philips Electronics and Johnson & Johnson pulled out of the

Philippines. After his ouster in 2001 he left behind a huge budget deficit and

debt payments that were double what the country sent on health, education

and agriculture combined (Hays, J., 2015).

3. MAJOR SOCIAL EVENTS

 2000 - President Estrada declared "all-out-war" against Moro Islamic

Liberation Front MILF (“Philippines History Timeline”, 2017).

  2001 - Mass street protests took place; military withdrew its support of

Estrada (“Philippines History Timeline”, 2017).

1.e. GLORIA MACAPAGAL ARROYO

1. MAJOR POLITICAL EVENTS

 2003 - Government signs another ceasefire with MILF in July (BBC, 2018).

 2004 - Presidential election takes place on May 10; President Arroyo

narrowly defeated Poe, taking 39.5% of the vote to his 36.6%. (Johnson, D.

& Ross, S., 2017).

 2005 - Members of the opposition call for the resignation of President

Gloria Macapagal Arroyo in June, after she admitted to calling an election

official during 2004's presidential race to influence the outcome. (Johnson,

D. & Ross, S., 2017).

Arroyo declared a state of emergency in February after an attempted coup by the

military. Rallies commemorating the 20th anniversary of the ouster of Ferdinand Marcos

were banned (Johnson, D. & Ross, S., 2017).

 2006 - On June 26, Opponents of President Arroyo filed a new

impeachment complaint, alleging corruption and human rights abuses

(Johnson, D. & Ross, S., 2017).

 2007 - The government had reached a deal with the separatist Moro

National Liberation Front that set boundaries for a Muslim homeland on the

southern island of on Mindanao (Johnson, D. & Ross, S., 2017).

 2010 - In February, prosecutors charge 196 more people with murder over
 the Maguindanao massacre in November, including Andal Ampatuan Snr, a

former provincial governor and ally of President Arroyo (BBC, 2018).

2. MAJOR ECONOMIC EVENTS

 2001 - The stock market surged 30 % and businessmen praised Arroyo’s

skills and abilities. Arroyo launched free market and anticorruption policies

that were welcomed by both the local and international business

communities (Hays, J., 2015).

Investment dried up as a result of global slowdowns and security concerns. Direct

foreign investment was only $319 million in 2001 compared to $1.8 billion in 1992

(Hays, J., 2015).

 2004 -The deficit grew at an alarming rate as the government spending

increased and tax revenues fell. The government’s debt peaked in 2004

when it settled at 74 % of GDP (Hays, J., 2015).

 2001 to 2009 - Touted as the best in over 30 years—official reported

growth in gross domestic product (GDP) during the Arroyo administration

averaged 4.5% annually (Africa, S., n. d.).

The longest period of high unemployment in the country’s history with the

true unemployment rate averaging some 11.2% (Africa, S., n. d.).

3. MAJOR SOCIAL EVENTS

 2003 - In February, ceasefire with Moro Islamic Liberation Front

breaks down, then reinstated; hundreds of mutinous soldiers demonstrate

 against the regime (Johnson, D. & Ross, S., 2017).

Protest for low pay and demanding the resignation of President Arroyo and the defense

secretary (Johnson, D. & Ross, S., 2017).

 2003 - President Arroyo declared state of rebellion (“Philippines History

Timeline”, 2017).

 2005 - Heavy fighting between troops and MILF rebels breaks July 2003

ceasefire (BBC, 2017)

 2007 - In January, Death of Abu Sayyaf leader Khaddafy Janjalani in 2006

confirmed (BBC, 2018).

 2008 - Worldwide financial crisis in full swing (Stenholm, S., 2012).

 2009 - "State of calamity" declared by President Gloria Arroyo due to

Typhoon Ketsana which caused landslides, flooding; nearly 500 people died

(“Philippines History Timeline”, 2017).

I. f. BENIGNO AQUINO III

1. MAJOR POLITICAL EVENTS

 2010 - Benigno S. Aquino III is elected president during the first automated

national elections in the Philippines (Johnson, D. & Ross, S., 2017).

 2011-Former President Gloria Arroyo arrested on vote-fraud over Senate

election in 2007 (“Philippines History Timeline”, 2017).

 2012 - On May 29, Chief justice Renato Corona was removed from office

after an impeachment trial and conviction by the Senate for failure to

declare about $4.2m. The vote was a watershed moment in Philippine

 politics, marking the first time an upper level official has been impeached

and removed through official channels (Johnson, D. & Ross, S., 2017).

 2012 - In October, the Philippine government and the Moro Islamic

 2014 - The MILF rebel group signs a peace deal with the government,

bringing an end to one of Asia's longest and deadliest conflicts (BBC,

2018).

Supreme Court approves birth control law, which requires government health centres to

distribute free contraceptives. The bill marks a defeat for the Catholic Church, which

campaigned strongly against it (BBC, 2018).

2. MAJOR ECONOMIC EVENTS

 2010 to 2013 - The Philippines economy picks up in the 2000s under

Benigno Aquino III, expanding by 7.2 % in 2013, 6.8 % in 2012, 3.7 % in

2011 and 7.6 % in 2010. In 2012, gross domestic product surpassed the

government’s forecast for growth of 5 % to 6 %. The Philippines had the

second-highest growth rate in the world 2012, after China. Government

expenditure in the Philippines jumped nearly 12 % in 2012, while private

spending, which was bolstered by remittances from abroad, was up 6.1 %

(Hays, J., 2015).

 2012 - Standard & Poor’s raised the country’s debt rating to just below

investment grade, the highest rating for the country since 2003 and

equivalent to that of Indonesia (Hays, J., 2015).

3. MAJOR SOCIAL EVENTS

  2011 - U.S. committed to defense of the Philippines amid rising tensions in

South China Sea with China over the Spratly Islands (“Philippines History

Timeline”, 2017).

 2012 - In May, Philippines and Chinese naval vessels confront one another

off the Scarborough Shoal reef in the South China Sea. Both countries claim

the reef, which may have significant reserves of oil and gas (BBC, 2018).

 2013- Typhoon Haiyan, called Typhoon Yolanda in the Philippines,

affected 4.28 million people and at least 270 towns. Six weeks after the

disaster, the death toll surpassed 6,000, with 1,800 people missing (Johnson,

D. & Ross, S., 2017).

 2015 - Hundreds of Muslim rebels in the southern Philippines register to

vote in 2016 elections under peace deal designed to end four decades of

conflict (BBC, 2018).

II. PHILIPPINE PESO TO US DOLLAR EXCHANGE RATE

Foreign exchange, also known as forex, is the conversion of one country's currency

into another (Lioudis, 2019). For example, as of writing, it takes 50.79 Philippine pesos

to buy 1 US dollar according to the Philippine Peso exchange rate (“Philippine Peso

Exchange Rates Table Converter”). This result is acquired by multiplying 1 to the

foreign exchange rate of the currency one wishes to convert to.

The exchange rate of economies depends on Inflation due to the balance of

purchasing power of one of the economies involved. Inflation is affected by Interest

Rates which in turn also affect the exchange rate. Abstract factors like Speculation,
which does not directly affect the exchange rates, but if economists feel that a certain

currency will fall then they will be actively trading. Public debt is also a factor because it

could lead to inflation or boost an economy ("5 Factors That Influence Exchange Rates",

2015).

III. GROSS DOMESTIC PRODUCT (GDP)

According to Chappelow (2019), Gross Domestic Product (GDP), simply explained,

is the monetary value, or in the context of this paper, the price in Philippine peso of all

finished goods and services made within the country during a specific period. It is

calculated by adding Consumption (how much money the country’s household spent in a

given period); Government spending (how much the government spent); Investment

spending (how much businesses spent); and Net Exports (Export minus Imports). In

formula it is GDP = C + G + I + NX ("Boundless Economics"). GDP provides an

economic snapshot of a country, estimating the size of an economy and its growth rate. It

can also be adjusted for inflation and population to provide deeper and more accurate

insights (Chappelow, 2019)

In recent years, technological progress has sped up average productivity of resources

which has led to more relaxation for workers which affects their spending in different

areas of life. Activities which are performed unofficially affect the taxes of a country

that then makes the economy unable its maximation of grosses. Pollution along with

other main factors that reduces the quality of life affects the GDP because the country

needs to fix these problems which are caused by these activities. Quality of life of people

in their everyday lives, whether it has a developed or developing economy will determine
the citizens spending capacity. The inequality of the economy is expected to pull up or

bring down the GDP as it would depend on how many people could be part of the

middle-class families or better financial state ("5 Factors That Influence Exchange

Rates", 2015).

IV. DEBT-TO-GDP RATIO

The debt-to-GDP ratio is the ratio of a country's public debt to its gross domestic

product (GDP). In other words, it measures a country’s ability to pay off debts (“Debt-to-

GDP Ratio - Overview, Formula, Example, and How to Interpret”). A low debt-to-GDP

ratio indicates an economy that produces and sells goods and services sufficient to pay

back debts without incurring further debt. The higher the debt-to-GDP ratio, the less

likely the country will pay back its debt and the higher its risk of default. A study by the

World Bank found that if the debt-to-GDP ratio of a country exceeds 77% for an

extended period of time, it slows economic growth (Kenton, 2019).

Exportation or increase tax revenues and other activities that the government does

would not only benefit the economy by reducing its debt but would also boost the

economy’s welfare. The demographics of people, with regards to their capacity on what

usually they acquire or borrow from the government also plays a role in this ratio ("5

Factors That Influence Exchange Rates", 2015).

V. SUMMARY AND CONCLUSION

After an extensive review of each of the economic performance of each of the

presidents’ terms, the group has come to the conclusion that Ferdinand Marcos was the
president who caused the Philippines’ economic downfall. Under his administration the

value of the Philippine peso dropped drastically and never recovered, the GDP was at its

lowest among the 6 presidential terms, and the Debt-to-GDP ratio was at an all-time

high. The other Philippine presidents (except for Estrada) performed well economically

speaking despite the turbulent political and economic environment of their times.

VI. INDIVIDUAL INSIGHTS

ABELLAR

My personal learning in this activity is that almost all of the people in our generation

lack the knowledge of the currency of our money in the Philippines.

COTELO

Much of my preconceived ideas about Marcos were disproved after discovering that

the value of the Philippine peso, which was at its highest in the beginning of his term,

also plummeted because of him. I have also learned that a nation that is politically

unstable and at war with itself will never see economic prosperity. The people must

come first. But as much as I have learned about Philippine history doing this assignment,

I am left with more questions. I am more curious about economic history now after

seeing the importance of learning it.

GEMINO

My personal learning in this activity is that each of the presidents have many events

that have either contributed or diminished the economic standard of our country and

some of the events that they were trying to put effort to have positive outcomes for our

country somewhat failed and we the people are trying to blame them for their failure and
not trying to look at the effort they have exerted for the country.

JARA

I learned that our generation doesn't know a lot about our history. I thought that the

Philippines experienced its downfall during GMA's term but all along, our country

experienced a great downfall during Marcos' term.

LIM

In this activity, I have learned how the presidents handled our economy. There may

be positive and negative outcomes but what is important is that these experiences will

help the present and the future administrations in building our economy.

SY

Different perspectives are shown by different presidents, with no real right or wrong

answer. It just shows the types of paths which they have taken. We could continue to

grow as a nation by improving the future of our country through the strengths of each

president and also learn from each one's mistakes. There is hope for our country, this

generation of the youth should just step into the limelight and show what they can

contribute.

VIVERO

The Philippines have been governed by different administrations for the past

decades. Along with this, countless projects and different laws have been administered.

The country’s totality has been dependent on every administration’s approach when

leading; a roller coaster ride. The perception of others may also be the different from

someone else’s viewpoint. Learning some parts of what has happened in the past made

me realise that everything is a matter of perspective. However, one must not also
overlook the facts. It will always happen; It happened in the past and it will, in the future.

The good and the bad parts—it is inevitable. But just as always, we have to remind

ourselves that what we do isn’t only for us but for our Motherland as well, as a citizen, as

a Filipino.

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