Explaining Philippines-South Korean (Economic) Gap

[jpdm]

A good article explaining the economic gap between Korea and Philippines. Its quite an eye opener but I think alot of pinoy experts know this very well...

Anyway, whta do you think?

Taken from JoongAng Daily
December 28, 2009

[SIZE=4]Explaining the Korea-Philippine gap[/SIZE]

How did the Philippines go from a larger per capita GDP than Korea to becoming the “sick man of Asia?”

Why did Korea became rich, leaving behind other countries in si-milar or better condition in the 1960s, such as the Philippines? What explains the gap in economic and social performance between these two countries in East Asia? What are the implications to economic development models?

These questions sound simple, even tedious and useless. Yet these issues are often topics for dinner conversation, an appetizer in confidence building between Koreans and Filipinos who want to be serious friends, business partners or even spouses.

Aside from economic indicators such as income, trade, investment, productivity or employment, social and cultural factors should be important explanations. Variations in work ethic, values such as pride in one’s nation and culture, and even climate and geography are likewise significant. Differences in history and politics should not be ignored as well.

Raw discussions of the gap between Korea and the Philippines often reveal one’s prejudices and ignorance. Korea and the Philippines have had 60 years of diplomatic relations, since 1949. Serious scholars need to explain the gaps between Korea and the Philippines, to promote better relations in business, economics and culture.

The Philippines, named after a Spanish king no one remembers for doing anything useful, has 7,100 islands with numerous ethno-linguistic groups.

In contrast, South Korea is a peninsula, with Korean as a common language acting as a strong unifying force. The Philippines attracted three foreign colonizers: Spain for 330 years, the United States for 45 years and Japan for three years. Koreans are most bitter at Japan’s colonization from 1910 to 1945. Korea’s strong national unity is a legacy of the Joseon Dynasty rulers, while Filipinos had fragmented, ethnic-led, and failed rebellions against colonizers.

Harmonious relations emphasized by Confucianism and Buddhism make up the religious culture of Korea. The virtues of cannibalism, suffering, poverty, and forgiveness of sins in Spanish Catholicism dominate the Philippines. Korea has favorable weather and few natural disasters, while the Philippines is vulnerable to numerous devastating typhoons and volcanic eruptions all year round.

In the late 1950s, the Philippines had average per capita income of about $1,100, while Korea had $900 per capita. The war with the North devastated Korea’s economy.

After the Korean War, international assistance, mostly from the U.S., and industrialization propelled South Korea’s economy. South Korea’s per capita gross domestic product grew from $1,226 in 1960 to $1,745 in 1980, an increase of 42 percent. Korea’s GDP per capita then jumped to $11,347 in 2000 - a giant 550 percent leap! Korea’s GDP per capita is estimated at $16,450 in 2009. South Korea’s transformation into a developed country during this short time period is known popularly as the “miracle on the Han River.”

In contrast, the Philippine economy has experienced repeated boom-and-bust cycles in the five decades since the nation became independent from the United States in 1946. Philippine per capita GDP was $672 in 1980, growing to just $718 in 1990 (7 percent growth), $987 in 2000 (37 percent growth), and $1,720 in 2009 (74 percent growth).

[SIZE=3]In the 1950s and early 1960s most statistics show that the Philippine economy ranked as the second-most-progressive in Asia, next to that of Japan. [/SIZE]

However, the U.S. continued to wield power and influence through compliant political and economic elites ?? the “comprador bourgeoisie” - parasites benefiting from American trade and business. Attempts at agrarian reform failed as big landlords continued their feudal practices in agriculture, limiting domestic market development and capital accumulation.

In Korea, agrarian reform carried out in the wake of the Korean War supported local capital accumulation. Land redistribution was accomplished swiftly after the war. Land ownership gave farmers incentives to increase productivity, incomes and savings which sustained capital accumulation and domestic markets.

After 1965, when Ferdinand Marcos became president, the Philippines experienced economic problems and social unrest. Corruption and cronyism - social plagues also known as “bureaucrat capitalism” - worsened, as friends or relatives of the elite were appointed to well-paid posts even without merit or qualifications.

In 1972, with America’s blessings, Marcos declared a dictatorship under martial law to stifle unrest and achieve a “new society.” Democratic institutions disappeared, as huge foreign debts and peso devaluations brought down the economy. The Philippines became the “sick man of Asia.”

The power of the Philippine landlords, however, continued, and their parasitic hold over economic and social policies preventing capital accumulation and efficient, competitive markets from taking root. Economic policies such as industrial and anti-poverty programs failed from one landlord-dominated presidency to another: Aquino in 1986 to the current Arroyo administration.

After the Korean War, with U.S. support, the military, as the most organized social unit, became the leading force in Korea’s society and economy. After the coup d’etat by General Park Chung Hee in 1961, the military government intervened systematically and comprehensively in many areas of economic life. Yet, after his assassination by his intelligence chief, Park died relatively poor, with no evidence of illegal wealth.

Today, the South Korean economy is dominated by large business groups known as jaebeol - family-owned business conglomerates. These include companies such as Samsung, LG, Hyundai, Daewoo, Kia and SK. The jaebeol are government-supported multinationals.

[SIZE=3]Most important, there is a strong national passion throughout Korean society to get even with Japan and catch up with the West through technological innovation.

In contrast, people in the many isolated Philippine islands have still to build a strong nation, overcome social divisions and structures and adopt continuous innovation and hard work as patriotic values for growth and development.
[/SIZE]

*The writer is a professor of business at Hanyang University. & a member of the PhilRPG.

by Maragtas S.V. Amante

[A121]

+1

Also compare the work ethics between these guys and us.

[donbuggy]

When I was working in Japan, our Japanese manager was the first to arrive at the office in the morning and he was the last to leave in the evening. That's dedication, considering we worked for long hours. In the Philippines it is the reverse. The Pinoy manager comes to the office mid-morning and is the first to leave.

Pinoy managers are usually the ma-PR, maboka type. Japanese managers are humorless and serious.

In Japan our work place was boring. Nose to the grindstone talaga. In the Philippines, fiesta mentality rules. Kuwentuhan, asaran. Masaya.

[uls]

those "professors" and "experts" have been pointing to land reform for years

it's not land

it's culture, it's work ethic, it's mentality

when your people are highly productive, very work oriented, time-sensitive, may malasakit sa company they work for, may malasakit sa bansa, your country becomes an economic powerhouse, producing a mind-boggling volume of goods

pinoys are too family-oriented, too leisure-oriented

pinoys view work as torture... kung pwede lang i-fast forward ang oras sa trabaho para makauwi na at makasama ang pamilya

ang oras naman sa trabaho hindi maximized

work that could be finished in one day takes days or weeks to finish

add to that the number of days na walang pasok sa loob ng isang taon

hindi time-sensitive ang pinoy... pinoys do not value time. pinoys do not value their own time and other people's time

no wonder the economic output of the Philippines is always less than that of other Asian countries

when you have people who are not work-oriented, not very productive, time-wasting, walang malasakit sa company, walang malasakit sa bansa...

when you have people who are laid back (enjoy, have fun, relax), never serious (kenkoy), geared for consumption, not geared for production, leisure-oriented...

you get a country with lots of malls and supermarkets, lots of restaurants, bars and nightclubs, lots of resorts and spas, lots of end-user consumption businesses, lots of importers, not a lot of factories, not a lot of B2B (businesses-to-business) businesses

and you also get a country where more than 10% of the population have to work abroad, so they can send money to their families here so their families can do what pinoys do best -- enjoy, have fun, relax, and consume

[ghosthunter]

we should be proud of our pinoys! ... the best consumers of leisure items in the world.

[Benji_DCP]

Damaged Culture: Blame it on the spanish colonizers and the americans who damaged our culture as a people and nation... Obviously, americans have a low regard for the Filipino. You dont see them treat the Japanese, Korean or the Chinese the same way as they treat the Filipinos. Case in point. after World War II, though the americans remained victorious over the Japan, they still treated the Japanese with respect.

I have quoted a few paragraphs from an article published in 1987 by James Fallows, which I believe can explain the root cause of our predicament:

The four hundred years that the Philippines spent under Spain's thumb obviously left a lasting imprint: at first glance the country seems to have much more in common with Mexico than with any other place in Asia. The Spanish hammered home the idea of Filipino racial inferiority, discourging the native indios from learning the Spanish language and refusing to consecrate them as priests. (The Spanish are also said to have forbidden the natives to wear tucked-in shirts, which is why the national shirt, the barong tagalog, is now worn untucked, in a rare flash of national pride.) As in Latin America, the Spanish friars taught that religion was a matter of submission to doctrine and authority, rather than of independent thought or gentleness to strangers in daily life. And the Spanish rulers set the stage for the country's economic problems in the twentieth century, by giving out huge haciendas to royal favorites and consigning others to work as serfs. As in Latin America, the Spanish thereby implanted the idea that "success' meant landed, idle (that is, non-entrepreneurial or commercial) wealth. The mainly Malay culture with which the Spanish interacted was different from the Aztec and other Indian cultures in Latin America; for instance, societies throughout the Malay regions (including what are now Indonesia and Malaysia) are usually described as being deferential to their leaders, passive rather than rebellious. Perhaps for this reason the Philippines has not overthrown its clergy or its landed elite in the twentieth century, the way most Latin American countries have tried to do.

But for all that might be said about the Spanish legacy, the major outside influence on the modern Philippines is clearly the United States. America prevented the Filipinos from consummating their rebellion against Spain. In 1898 the United States intervened to fight the Spanish and then turned around and fought the Filipino nationalists, too. It was a brutal guerrilla war, in which some half million Filipino soldiers and civilians died. Losing an ugly war has its costs, as we learned in Vietnam; but wining, as in the Philippines, does too. In opposing our policy in the Philippines, William James said, "We are puking up everything we believe in.' His seems a prescient comment about the war, especially compared with President William McKinley's announcement that conquest was necessary to "Christianize' a country that in ironic point of fact was already overwhelmingly Catholic.

In its brief fling with running a colony, America undeniably brought some material benefits to the Philippines: schools, hospitals, laws, and courts. Many older Filipinos still speak with fondness about the orderly old colonial days. But American rule seemed only to intensify the Filipino sense of dependence. The United States quickly earned or bought the loyalty of the ilustrados, the educated upper class, making them into what we would call collaborationists if the Germans or Japanese had received their favors. It rammed through a number of laws insisting on free "competition' between American and Philippine industries, at a time when Philippine industries were in no position to compete with anyone. The countries that have most successfully rebuilt their economies, including Japan and Korea, went through extremely protectionist infant-industry phases, with America's blessing; the United States never permitted the Philippines such a period. The Japanese and Koreans now believe they can take on anybody; the confidence of Filipino industrialists seems to have been permanently destroyed.

[A121]

Land reform *might* be the catalyst to change the culture but the likely scenario would be farmers would just sell their lands to buy new tvs.

[Benji_DCP]

Here is a copy of the entire 1987 article by James Fallows:
Damaged Culture: A New Philippines
http://jamesfallows.theatlantic.com/...new_philip.php

[uls]

not just TV

won't be complete without a DVD player with 10,000 songs built in

and a microphone and amplified speakers

and beer... lots of beer... and kambing

ayan

happy happy na

[uls]

the curse of remittances:

According to a new study by the International Monetary Fund (IMF), remittances may actually encourage government corruption and ineffectiveness. In an analysis of 111 countries between 1990 and 2000, researchers found that high levels of remittances often lead to greater corruption and irresponsible economic policies. In other words, officials in remittance-rich countries are often let off the hook for failing to provide basic services, freeing them to divert resources for their own purposes. “[T]here’s less of an incentive for citizens to demand reforms” when remittances are high, explains Ralph Chami, a division chief at the IMF Institute and a coauthor of the report. And because the government assumes citizens with help from abroad will turn to the private sector for essential services such as healthcare and education, leaders face little pressure to change. “The government says, ‘I know you’re getting money; what’s my incentive to fix [the] situation?’” says Chami.

that's from foreignpolicy.com

that's why the govt keeps encouraging people to go abroad

the more people have relatives abroad to depend on, the less they will depend on the govt for social services

as the standard of living of OFW dependents rise, OFWs' kids go to private schools, OFW dependents go to private doctors and private hospitals for health services

that frees up more public money for corrupt govt officials to take

and as the standard of living of OFW dependents rise, the motivation for the govt to fix what's broken diminishes