Response to 1997 World Bank Development Report Msg

By Kim Scipes, Friday 27 June 1997

I very much appreciated Alex's briefing re the World Bank's World Development Report, and Sam's posting it to the list. Thank you both!

I want to make a few comments that will probably be old stuff to those who have focused much attention on the WB and/or IMF, but I don't think it ever hurts to remind folks, and perhaps they are even more appropriate for those who are fairly new to the issues.

I want to preface my remarks by stating that I've been working on an article on labor control in the Philippines and, as part of this, I've had to delve very deeply into Philippine economic development strategies and performance. This is after writing and publishing my book, KMU: BUILDING GENUINE TRADE UNIONISM IN THE PHILIPPINES, 1980-1994 (Quezon City, Philippines: New Day Publishers). Besides that, I have a pretty good overall understanding of global economic issues and realities. Although this may be open to debate—and I welcome that!—I believe that there is probably no country in the world that the World Bank and IMF have fucked up more than the Philippines.

So, if we want to examine World Bank/IMF practices, it is probably through in-depth studies of their work in particular countries that we can be examine the differences between rhetoric and reality. This is expecially true in light of their inability/refusal, whatever, to publicly critique their own work. If you want an example of some of the grossest hypocritical writing I've seen in a while—and I've seen a lot!—see the section on the Philippines in the World Bank's TRENDS IN DEVELOPING COUNTRIES, 1996: 422-424. Only by reading between the lines—if at all—could one realize that the World Bank was a MAJOR actor in Philippine development in the 1970s and 1980s.

There is quite a bit known about the WB role in the Philippines—for an expose of secret, internal bank documents, see DEVELOPMENT DEBACLE: THE WORLD BANK IN THE PHILIPPINES by Walden Bello, David Kinley and Elaine Elinson (San Francisco: Institute for Food and Development Policy and Philippine Solidarity Network, 1982), and then a follow-up analysis that included in-depth interviews with Filipino technocrats and implementors of the WB/IMF program about what went on, see UNEQUAL ALLIANCE: THE WORLD BANK, THE INTERNATIONAL MONETARY FUND, AND THE PHILIPPINES by Robin Broad (Berkeley and Los Angeles: Univ of California Press, 1988). (I have problems with some of Broad's analysis, but it is an excellent effort, and very useful.) There are also excellent analyses done in the Philippines, but not generally available outside of the country, and some of which I have access to.

And for a general analysis of economic development during the Marcos period (which is when World Bank control over the economy really developed), see THE PHILIPPINES: THE POLITICAL ECONOMY OF GROWTH AN IMPOVERISHMENT IN THE MARCOS ERA by James Boyce (Honolulu: University of Hawaii Press in association with the OECD Development Centre, 1993).

There's too much information to really go into depth in this message, but some quick highlights:

• As the result of Filipino exporters (large export agriculturalists, and particularly sugar planters) and Philippine economists pushing what we call today neoliberal economics—WHICH IS THE BASIS FOR ALL WB/IMF PROGRAMS—joining together with people in the US Government and the IMF, the Philippine state ended import and foreign exchange controls. These controls, initially developed as a reaction to a political economic crisis in 1949, were used to help the Philippines industrialize and, although there were considerable problems, the Philippines had developed significant manufacturing: in 1949, manufacturing provided 3% of total national income, but this was almost 18% in 1960. Frank Golay, a neo-liberal economist, admitted Philippine industrialization, whether measured by growth of output, number of firms, number of plants, or the extent of Filipino participation, has proceeded rapidly since 1950 (Golay, THE PHILIPPINES: PUBLIC POLICY AND NATIONAL ECONOMIC DEVELOPMENT, Ithaca: Cornell Univ Press, 1961).
• When the Philippines ended controls in 1962, the IMF provided a $300 million loan—used to cover approximately $300 million of capital repatriation by foreign firms (mostly American) that left the country upon the ending of controls. This was the beginning of debt dependence. Philippine foreign debt began expanding along with its efforts to implement an export industrialization strategy that had been promoted by the WB: In 1965, Philippine foreign debt was $600 million. By 1972, it was roughly $2.2 billion. By 1983, the foreign debt was $24.6 billion. By 1995, it was $40.6 billion!
• On Sept 21, 1972, Marcos declared Martial Law. The World Bank was a key supporter of this: between 1950-1972, the WB had provided only $326 billion in loans, but between 1973 and 1981, the WB provided more than $2.6 billion.
• Between 1962 (when controls were lifted) and 1986 (the end of the Marcos Dictatorship), workers' wages suffered drastically: daily wages for skilled workers in Manila dropped from $6.18 to $1.72 (in 1986 US dollars), a drop of 72.2%! Daily wages for unskilled workers in Manila dropped from $4.37 to $1.12, a drop of 74.3%! James Boyce notes that wage laborers in metropolitan Manila experienced a collapse in real wages in the 1970s and 1980s on a magnitude with few precedents in modern economic history (Boyce, 1993: 29).
• But what about economic growth? In 1962, GNP/capita—the favorite measure of economic growth by the WB/IMF— was $495. This was only $1,510 behind Japan, $10 behind Taiwan, and $165 MORE than South Korea. In 1986, after years of following WB programs and proscriptions, Philippine GNP/capita was $540, and was $15,660 behind Japan, $3,259 behind Taiwan, and $1,805 behind South Korea. (These are from Boyce: 2, Table 1.2, and are all in 1986 US dollars.)

In other words, the economic policies supported and promoted by the WB and IMF have been an utter disaster to the Philippines. They have failed on the basis of their own neoliberal criteria, and like I said, have been an utter disaster for the large majority of the population: in 1995, according to IBON Databank—the single most reliable source for economic data in the country, and an NGO—the poverty rate in the country was 76%!

So, who has benefitted from the WB/IMF policies in the Philippines? The elites, of course, but also multinational corporations that have invested there.

What I believe we must always keep in mind when considering the WB and IMF: their role is to promote capitalist economic development, and not development of any 'third world' country.

I hope others will publicly share continuing analyses of World Bank/IMF projects.

In solidarity—Kim Scipes

> What I believe we must always keep in mind when considering the WB
> and IMF: their role is to promote capitalist economic development,
> and not development of any 'third world' country.

Hi, Pat. I basically agree with the analysis you forwarded, except perhaps that the sentence above needs a bit of clarification. The kind of development the WB and neo-liberal economists have engineered in the Philippines is probably better described as integration with the global capitalist system than capitalist development per se. We have assembly plants but are unable to manufacture even the most basic products ourselves. We import the simplest hand tools like hammers, pliers, screwdrivers, etc. from Taiwan or Japan. We import the simplest electronic parts like resistors, capacitors, transistors, etc.

In this regard, the Green program is probably best described as import-substitution.

Obet