The Philippine experience after World War II, relative to that of other countries in East and Southeast Asia, has caught the attention of eminent economists studying growth and development. Lucas (1993), for example, asked why the Philippines was not part of the “economic miracle”–the remarkable East Asian transformation featuring Hong Kong, China; the Republic of Korea; Singapore; and Taipei, China. This section describes and tries to account for performance in growth and poverty reduction in the past several decades and the evolution of the Philippine Government's development policy.

Synopsis of Philippine Growth

Following the Philippines' political independence in 1946, in the 1950s, the country embarked on an industrialization drive. During 1950–2006, the Philippine gross domestic product (GDP), expressed in 1985 prices, expanded 11.2 times—an average growth of 4.4% each year. But the growth rate was never smooth. For instance, the economy contracted in 1984–1985, 1990, and 1998.

Accounting for growth in population—which rose from about 19 million in 1950 to 87 million in 2006, for an average annual growth of about 2.75%—in 1960 the Philippines had a per capita GDP of about $612 expressed in 2000 United States (US) dollars (Table 2.1). By this measure, it was ahead of Indonesia, with a per capita income of $196, and Thailand, with $329. The Philippines trailed Hong Kong, China; the Republic of Korea; Malaysia; Singapore; and Taipei, China. By 1984, Thailand's per capita GDP of $933 had overtaken the Philippines' $908.