Abstract

For the advocates of (free trade-based) regional integration, there are two broad underlying assumptions about what good does this project brings to its member countries. It is assumed that: i) there will be increases in the volume of intra-regional trade, investment and migration that would boost the regional and national economies, and by trickledown effect, reduce poverty and inequality between and within countries, and ii) as a ‘single actor,’ the regional body will act in unison so as to protect its regional interest vis-à-vis other regional blocks or the broader multilateral actors. These assumptions are questioned in this paper, using the lessons from Southeast Asian experience.

Saturnino M. Borras Jr., Rural Development, Environment and Population Studies Group, Institute of Social Studies (ISS), Kortenaerkade 12, 2518AX the Hague, the Netherlands; borras@iss.nl . An earlier version of this paper was prepared for and presented at the conference on ‘Regionalismo y Desarrollo en Asia: Modelos, Tendencias y Procesos’ on 4-5 July 2005 in Barcelona, Spain, organized by the Consorci Universitat Internacional Menéndez Pelayo de Barcelona (CUIMPB). I would like to thank Max Spoor and Jennifer Franco for their helpful comments and suggestions.

Borras is a political activist who has been deeply involved with rural social movements in the Philippines and internationally since the early 1980s. His research interests include (transnational) rural social movements, land reform, agrarian transformation, rural livelihoods, and state-society relations. He has published on these themes in academic journals, including the Journal of Agrarian Change, Journal of Development Studies, Development and Change, Journal of International Development, and Critical Asian Studies. He is currently at the Rural Development, Environment and Population Studies Group of the Institute of Social Studies (ISS), the Hague.

1. Introduction

During the past decade or two, regional integration initiatives in different parts of the world have proliferated. While there is great diversity between and within these regional bodies, different countries more or less share common interests, namely, increased intra-regional trade, investment and migration, as well as a more regionally coordinated interaction with the rest of the international/multilateral community in order to protect their national interests. It is broadly within this perspective that Walden Bello (2004: 16) has highlighted the bases for and requirements of regional integration in Southeast Asia:

“For Southeast Asia, in light of the competition posed by China, the EU, and the United States at a global level, it is important to be serious about regional integration. To expect to survive as national economies without becoming part of a larger economic bloc coordinating policies in trade, finance, technology, investment, and development is becoming increasingly unrealistic in a world where big economic blocs become the key players. The Association of Southeast Asian Nations (ASEAN), in short, must become a reality, and this can only be done through a combination of political will and a democratization of the process of regional integration.”

There are two broad underlying assumptions about what good does regional integration brings to its member countries. First, it is assumed that there will be increases in the volume of intra-regional trade, investment and migration that would boost the regional and national economies, and by trickledown effect, reduce poverty and inequality between and within countries. Second, it is assumed that as a ‘single actor,’ the regional body will act in unison so as to protect its regional interest vis-à-vis other regional blocks or the broader multilateral actors.

However, as te Velde, Page and Morrissey (2004) explained, the developmental and anti-poverty impact of regional integration is conceptually assumed rather than empirically demonstrated. Specifically, they lamented that most studies on integration tend to concentrate on the nature, condition, pace, extent and direction of trade, investment, and migration at the regional level, but that these studies rarely cover the impact of regional provisions on poverty at the country level. They call for more empirical studies about, and offer a more concrete way to investigate, the pro-poor effect of regional integration by examining the linkages between regional integration and country level poverty (and inequality). Their own preliminary studies have led them to conclude that indeed regional integration has resulted greater volume of intra-regional trade, investment and migration, but that the benefits of this regional economic growth have been unevenly distributed between and within countries, and that the actual effect on poverty at the country level is often at below the level promised by the regional free trade advocates.

Following te Velde et al, this paper explores the dynamic relationship between regional integration on the one hand and the country level poverty and inequality on the other hand focusing on the case of Southeast Asia and the Philippines. Southeast Asia is an important case to examine because it is one of the regions with a long history of integration process (e.g. ASEAN¹), it is host to some of the most dynamic economies in the world during the past two or three decades, and geographically close to countries that are strategically important in trade and investment, i.e. countries in the Northeast (see Robison and Hewison, 2005). To put Southeast Asia in a global comparative perspective in terms of the degree of regional integration over time, the paper draws from a regional integration index constructed by te Velde et al (2005) - see Table 1. The index shows that, in terms of trade and investment, the American region has been the most integrated, followed by Southeast Asia. In fact, the volume of intra-regional trade, investment and migration has significantly increased in Southeast Asia beginning in early 1990s, posting an average of about 12 percent growth rate per year from 1996 to 2004, and accounting for about one-fourth of the total trade in the ASEAN region in 2003 (ASEAN, 2004).

Table 1: The Regional Integration Index varied across regions and over time

	Investment Provisions			Trade Provisions
(Date of Establishment)	1970s	1980s	1990s	1970s	1980s	1990s
NAFTA (1994)	0	0	3 (1994)	0	0	2 (1994)
MERCUSOR (1991)	0	0	2 (1994)	0	0	3 (1991)
CATICOM (1973)	0	1 (1982)	2 (1997)	1 (1973)	2	3 (1997)
ANDEAN (1969)	- 1 (1970)	1 (1987)	2 (1991)	1	1	2 (1993)
ASEAN	0	1 (1987)	2(1996) 3(1998)	1	1	1
SADC (1992)	0	0	1 (1992)	0	0	1 (1992)
COMESA (1994)	0	0	1(1994)	0	0	1(1994)

Mapping the linkages between the Southeast Asian regional integration and country level poverty and inequality brings our analytic lens to the Philippines, which is a good country case study because it constitutes an anomaly within the region. It used to have one of the most stable and fastest growing economies in the region immediately after the World War II, but later dropped out and has been left behind by Indonesia, Malaysia and Thailand since the 1980s. Its current modest economic growth is still far behind those of the others, and the national poverty incidence and degree of inequality differentiates this country from its more economically vibrant neighbors.

This paper demonstrates that indeed the volume of intra-regional trade, investment and migration, as well as the region’s interactions and transactions with other regional trading blocks and countries, have increased over time. The paper shows however that investments coming from within and outside the region have developed unevenly within the region - with the Philippines benefiting much less. It also shows that while the volume of trade has indeed increased during the past two decades, its impact on the Philippines seemed to be mixed. While it facilitated the entry of cheap food grains into the poor urban-based households in the country, it has at the same time undermined subsistence food producers in the countryside. The Philippines has also lost substantial grounds in several export products, such as electronics, garments and agricultural products - exactly the same commodities in which its Asian neighbors have developed trade competitiveness within and outside the region. In fact, while the ASEAN has been an arena of cooperation and integration, it has also been an arena of competition between countries with very similar goods and services to offer within and beyond the regional border. Beginning in the early 1990s when far-reaching neoliberal reforms have been carried out in the Philippines, coinciding with the decisive moves towards increasing regional integration, the country has been transformed from a net agricultural exporting country to a net agricultural importing country. And since 75 percent of the Philippine poor are rural poor, the adverse impact of such a transformation is certainly far-reaching. Finally, the most concrete (‘bright’) spot for the Philippines vis-à-vis regional integration is on migration because the Philippines has emerged to be the region’s (and Northeast Asia’s) principal supplier of cheap labor: as domestic helpers, construction and factory workers, and entertainers. Today, there are a few hundreds of thousand Filipino workers scattered in Southeast and East Asia, remitting hard-earned money to their families back home, certainly a concrete way by which regional integration has worked for the poor in the Philippines.

The rest of the paper is organized as follows: Section 2 presents an overview of national development trends in the Philippines, while Section 3 analyzes the persistent poverty and inequality. Section 4 examines the loss of regional and global competitiveness of the country, while Section 5 offers short concluding remarks.

2. National Development: Past Record and Current Strategy

Historical Trends in National Development, 1950s to present

For more than two decades after the World War II, the Philippines was among the countries in Asia with the most impressive annual growth rates, averaging at about 6 percent (see Table 2). Exports of agricultural and forest products had been among the key engines of growth during this period. The decade 1970-80 had registered similarly impressive yearly growth rates, averaging at 6.3 percent.² However, the economic expansion of this period was very much foreign debt-driven (Balisacan and Hill, 2003: 10). The Martial Law regime that was imposed by Ferdinand Marcos in 1972 was largely supported by international financial institutions (Bello, Kinley and Elinson, 1982). During this period, the neighbors of the Philippines, namely, Indonesia, Malaysia and Thailand had also been able to sustain its high economic growth. The following decade however was the period when the Philippines was differentiated out from the rest of its neighbors.

During the period 1980-90, the average growth of the Philippines was at a low 1.0, while those of its neighbors were 5 to 7 times higher. The immediate cause of the economic problems was the political crisis that begun in 1983,³ although observers have noted that the foreign debt-driven nature of the economic boom of the 1970s could not have been sustained anyway especially because much of the borrowed money did not actually go to productive investments but into the pockets of the Marcoses and their cronies, as well as the military (see, e.g. Hutchcroft, 1991).

Table 2: Average Growth of GDP in Selected Southeast Asia, 1950-2000 (% p.a.)

Country	1950-60	1960-70	1970-80	1980-90	1990-2000
Philippines	6.5	5.1	6.3	1.0	3.2
Indonesia	4.0	3.9	7.6	6.1	4.2
Malaysia	3.6	6.5	7.8	5.3	7.0
Thailand	5.7	8.4	7.2	7.6	4.2

Source: Balisacan and Hill (2003: 7)

The period of 1990-2000 witnessed a modest economic recovery for the Philippines, averaging at 3.2 percent, below Indonesia’s and Thailand’s 4.2 percent and far below Malaysia’s 7.0 percent. But it must be noted that the latter three other countries suffered heavily from the Asian crisis of 1997 (see Table 3, especially year 1998 - see Robison and Hewison, 2005). The Philippines, the lesser integrated country in the ASEAN region, was relatively less affected by the crisis which was caused by the sudden departure of speculative capital, estimated to be somewhere around US$100 billion, that were over-invested in real estate, finance and banking sectors (Bello et al, 2004). In general, the modest growth rates in the Philippines achieved in the 1990s have been sustained up to the present amidst relatively stable economic trends in Southeast Asia (see Table 3).

Table 3: Comparative GDP Growth Rates of Selected Southeast Asian Countries (in percent)

Country	1992	1993	1994	1995	1996	1997	1998	1999	2000	2001	2002	2003	2004
Philippines	0.3	2.1	4.4	4.7	5.8	5.2	-0.3	3.4	4.4	3.0	4.3	4.7	6.3
Malaysia	8.9	9.9	9.2	9.8	10	7.3	-7.4	6.1	8.9	0.3	4.1	5.3	7.8
Indonesia	7.2	7.3	7.5	8.4	7.6	4.7	-13.1	0.8	4.9	3.3	3.7	3.9	4.4
Thailand	8.1	8.4	9	9.2	5.9	-1.4	-10.5	4.4	4.8	2.1	5.4	6.7	6.4

NEDA (2004: 3)

After an overview of the trends in national development, it is relevant to inquire into the reasons why the Philippines has been left behind by its neighbors in terms of national economic development. Most observers agree that the period to examine is the 1980s because beginning in the 1950s until the 1970s, national economic growth rates were just equally impressive in the Philippines as it was in its neighbors. Of course it is understandable that the political crisis that hit the country in the period 1983-86 was an immediate cause of economic crisis. But then the country failed to recover after the regime transition in 1986, while Indonesia, Malaysia and Thailand continued to register high growth rates.

Observers have pointed out three interrelated factors that caused the inability of the Philippines to march side by side its neighbors beginning in the second half of the 1980s. First, the Philippines received the least amount of Japanese investment between 1985 and 1990 (as compared to Indonesia, Malaysia and Thailand), an investment that proved to be pivotal in Southeast Asia, both in terms of the volume of investments and the timing. During this period, a total of US$51 billion worth of Japanese money was invested in Asia Pacific. According to Bello (2004: 19), the reason for the massive outflow of capital from Japan was the ‘Plaza Accord of 1985.’ “By sharply raising the value of the yen relative to the dollar… this agreement made production in Japan prohibitive in terms of labor costs, forcing the Japanese to move the more labor intensive processes of their manufacturing operations to low-wage areas, in particular to China and Southeast Asia.” A total of more than US$15 billion was invested in Southeast Asia during this period: Indonesia got $3.1 billion, Thailand $10 billion and Malaysia $2.2 billion. The timing was excellent for these countries because it was also the time when international financial institutions started to tighten up on lending due to the debt crisis in developing countries. Substantial investments from Taiwan, Hong Kong and South Korea also followed these Japanese investments, thereby increasing even further the total investments in the host countries. For example, with the combined Japanese, Taiwanese and Hong Kong investments, Thailand got a total of $24 billion during this period. In contrast, the Philippines got $797 million. Hence, “the Philippines was barely integrated into the dynamic regional industrial economy being constructed around the Japanese center” (ibid: 20). The combination of political instability (there was about a dozen military coup attempts during the second half of the 1980s) and weak domestic market were the most probable reasons why the Japanese investors did not take the country as a major investment destination (ibid).

Second, the administration of Corazón Cojuangco-Aquino (1986-92) had pledged to honor all foreign debts of the Philippines incurred during the Marcos dictatorship, most of which did not go to the intended development projects. This move proved to have a debilitating effect on the national economy because beginning in 1986 around one-third of the country’s annual budget has been automatically appropriated for debt payment, leaving almost nothing for productive investments and social services.

Third, compared to its neighbors, the Philippines has the most inequitable distribution of income, as well as land ownership - a key resource in Southeast Asian societies where agriculture remains central to the rural poor’s capacity and autonomy to construct, defend and sustain livelihoods. The inequitable agrarian structure is one of the main causes of persistent rural poverty in the Philippines (Putzel, 1992). The inequitable agrarian structure has led to, and perpetuated a weak domestic market, social division and political instability,⁴ a condition that has likely partly influenced the decision by foreign investors to instead choose other Southeast Asian countries for their investments. This is especially because up to now, around half of the population are in the rural areas, a little over half of the active labor force are rural-based, and that 75 percent of the country’s poor are rural poor (ADB, 2005).

Combined, these three factors have most likely significantly influenced the downturn of the economic development in the Philippines, beginning in the second half of the 1980s, that in turn have caused the country to be differentiated out from its neighbors. These are also among the main reasons of the problematic terms of insertion of the country into the fast-liberalizing regional economy. A closer look at the structure of the Philippine economy could shed more light to the issues that have been discussed so far.

During the past decade, and similar to the trends in Indonesia, Malaysia and Thailand, the share of the agriculture sector in the Philippine GDP shrunk from around one-third in the 1960s-70s to around one-fifth at present. During the same period, the industry sector registered marginal increase, eventually stagnating at low 30s. The main chunk of the economy’s development was accounted for by the phenomenal expansion of the services sector that grew from about 30 percent to around 50 percent of the GDP during the same period. The agriculture sector has remained a key sector, with a current share of one-fifth of the GDP and two-fifths of employment. But as Balisacan and Hill (2003: 25) have explained, when “a broader definition that encompasses agricultural processing and related activities is adopted, the indirect share [of agriculture] rises to about 40 percent and 67 percent, respectively.” However, the performance of the Philippine agriculture sector between 1980 and 2000 was dismal, at an average of 1.4 percent growth rate, below Indonesia’s 3.7, Malaysia’s 2.7, and Thailand 2.6 percent (David, 2003: 177).⁵

Therefore, if one is to look at national economic development and employment in the Philippines, one has to examine more closely the agricultural and rural sector because of the enormity of its share in the overall economy and livelihoods of the people. And if by national development we mean actual eradication of poverty and reduction of inequality, again, the countryside is the place to look for answers because three-fourths of the country’s poor are rural poor. Thus, if regional integration is about development, then in the context of the Philippines it is relevant to take a critical view from the countryside.

Official Targets and Strategy to Eradicate Poverty and Attain Development

From 2001 to 2004 the Philippines has experienced encouraging and steadily increasing economic growth rates - at 3.0, 4.3, 4.7 and 6.3 percent, respectively (NEDA, 2004: 3). Just like in the 1980s-90s, the key growth driver for 2001-04 was the services sector. Within this sector, the expansion was largely due to the rapid expansion of the telecommunications sectors, including ‘call/contact centers’, ‘business process outsourcing,’ and software development. According to the government, “the trade sector has also performed very well due to strong personal consumer spending, which has been supported by the steady growth of the agriculture sector and remittances of overseas Filipino workers…” (NEDA, 2004: 3). Estimates of the total number of overseas Filipino workers were placed between 7 percent and 10 percent of the population, or between 5.6 and 8 million people, respectively. Estimates of the current annual remittances by the overseas Filipinos were between 10 and 15 percent of the country’s GDP, or between US$8 and 12 billion.⁶ Furthermore, during the period 2001-03, the agriculture sector posted an average of 3.8 percent growth rate, although much of this achievement was due to good weather than on government intervention. For the same period, the growth in the industry sector had an average of 2.8 percent (NEDA, 2004: 4). The modest growth rates during the period 2001-04 have inspired government economic planners to aspire for more and to tackle the issue of persistent problem of poverty, pledging to cut by half by the number of poor people by 2010 and to sustain or even increase the level of economic growth rates. The main problem that has been identified by government is the fiscal deficit. The current external debt of the country is US$59 billion (WB, 2004).⁷ And in order to achieve its development goals by 2010, efforts have been renewed in improving tax collection and expanding the tax base, as well as on efforts to increase receipts from exports of goods and services and remittances of overseas Filipinos, while continuing to cut down on public spending.

In order to achieve the development growth targets, the government is currently pursuing strategies that could gain and/or enhance its global competitiveness in several export products. This can be done, according to the government’s main economic planning arm, by “keeping the cost of food items and other wage goods at competitive rates through greater productivity; reducing transport and distribution cost through better transport and digital infrastructure… more competitive power rates… mobilizing and upgrading knowledge to increase productivity; and addressing corruption and simplifying business procedures” (NEDA, 2004: 6-7). Support to micro, small and medium enterprises, as well as agribusiness has also been identified as crucial elements of the strategy. Furthermore, the strategy also rests on “maximizing the use of the country’s natural resources and geographical competitive advantage through wealth creating projects in mining… reforestation and maximizing the use of upland resources. And “given the fiscal constraints, the investment priority plan shall be focused on area where the Philippines has natural and human resource advantage. These are identified as: IT-related industries… tourism, fashion garment, jewelry, medical services/healthcare… electronics, automotive, agribusiness/mariculture, and shipbuilding.” This investment and export-led growth strategy “is expected to boost the industrial sectors - mining, manufacturing, construction, and utilities. Industry growth is expected to rise from the modest rate of 4.4 - 5.2 in 2004 to 8.5 - 9.5 percent by 2010;” the service sector to grow from 5.7 - 6.6 percent in 2004 to 7.2 - 8.2 percent by 2010, while agriculture to grow at 4-5 percent from now until 2010 - the latter’s growth will depend on the plan to develop 2 million hectares of ‘new’ lands for agribusiness (ibid: 7).

With this development targets and strategies, the government predicts that poverty incidence will decline by 10 percentage points from 2000 to 2010, while inequality will decline by the same rate during the same period of time (NEDA, 2004: 8).⁸

The official targets for economic growth and reduction of poverty and inequality via an investment and export-led strategy are unlikely to be achieved. This is because two of the reasons why the Philippines has been differentiated out since the 1980s from the more economically vibrant region have remained. First, drained fiscal resources due to the kind of policy of debt repayment, as well as the skewed distribution of income and productive resources; and second, because even in sectors (electronics, garments, agriculture) where the Philippines used to be competitive vis-à-vis regional and global competitors, the country has lost so much grounds during the past decade. And unfortunately, save for a few items (e.g. IT and overseas Filipino workers), these are the same sectors that the government has currently identified as ‘export-winners.’

3. Persistent Poverty and Inequality

The poverty incidence in the Philippines has been greater than those in Indonesia, Malaysia and Thailand, and the rate of poverty reduction slower in the former than those in the latter. The 2005 Philippine poverty analysis and report released by the Asian Development Bank (ADB) showed that “the poverty incidence of families fell by 10.5% over the period 1985-2000” (or from 44.2% to 33.7% -- see Tables 4 and 6), but that “this was negated by very high population growth rates of 2.36% per year.” By 2004, among the four countries (that are original signatories to ASEAN⁹), the Philippines has the highest percentage of people living on less than US$1/day, at 14.6 percent, as compared to Indonesia’s 7 percent and Malaysia’s and Thailand’s almost negligible levels. The real GDP of the Philippines in 2000 was also far below Malaysia’s and Thailand’s, although it is a little higher than Indonesia’s (see Table 4).

Table 4: Poverty in Selected Southeast Asian Countries

Country	% of people living on less than US$1/day (most recent year)	Average Population Growth Rate by 2003	Real GDP per capita, US$ 2000 (1995 prices)
Philippines	14.6	2.36	1,167
Indonesia	7.0	1.52	994
Malaysia	< 2	1.86	4,797
Thailand	< 2	0.95	2,805

Source: CPRC (2005: 102), except for the population data.

The Philippines also has the highest population growth rate when compared to those in Indonesia, Malaysia and Thailand (see Table 4). As a result, while the poverty incidence in the country declined, the actual number of poor people actually increased. There were over 4 million more poor people in 2000 than there were in 1985 (ADB, 2005: xii).

Furthermore, the degree of inequality is also higher in the Philippines as compared to Indonesia and Thailand (see Table 5). And while the degree of inequality in the Philippines is comparable to Malaysia’s, it is to be noted that the latter has a much higher real GDP per capita and a negligible percentage of people living on US$1/day.

Table 5: Inequality in Selected Southeast Asian Countries

Country	Income Share Held by Lowest 20%	Income Share Held by Lowest 40%	Gini Index of Inequality	Year Income Distribution Data Refers to	Real GDP per capita, US$, 2000 (1995 prices)
Philippines	5.4	14.2	46.2	1997	1,167
Indonesia	9.0	21.5	31.7	1999	994
Malaysia	4.4	12.5	49.2	1997	4,797
Thailand	6.4	16.2	41.4	1998	2,805

Source: CPRC (2005: 102, 116)

Poverty in the Philippines is a rural phenomenon. According to the ADB report, “of the 26.5 million poor people in the country in 2000… 7.1 million were urban and 19.4 million live in rural areas. In other words, nearly 75% of the poor are rural poor” (ADB, 2005: 64). And the poverty incidence among farming households during 1985-2000 has remained almost unchanged. It was 56.7 percent and 55.8 percent, in 1985 and 2000, respectively (ibid: 98).

Table 6: Poverty Incidence of Families in the Philippines, 1985-2000 (%)

	1985	1988	1991	1994	1997	2000
Philippines	44.2	40.2	39.9	35.5	31.8	33.7
Urban	33.6	30.1	31.1	24.0	17.9	19.9
Rural	50.7	46.3	48.6	47.0	44.4	46.9

Source: ADB (2004: 19)

Persistent rural poverty can be partly accounted for by the state of agriculture during the past few decades relative to other sectors of the economy. The gross value added (GVA) of agriculture was a low 1.0 in 1980-90 and 1.8 in 1990-2000 in the Philippines, as compared to much higher GVA for Indonesia, Malaysia and Thailand during the same period. Meanwhile, the real value added per worker during the period 1970-2000 also showed the dismal performance of the agriculture sector: it was almost stagnant for this sector at PhP15,800 in 1970 to PhP17,100 in 2000 - in contrast to the industry sector’s PhP62,300 and PhP72,000, respectively, and the service sector’s PhP36,600 and PhP32,400, respectively (Balisacan and Hill, 2003: 13). Hence, the modest growth in agriculture during the 1990s did not translate into real value added gains for the agricultural households. The Philippine agriculture failed to achieve the promise of Green Revolution that was inaugurated in the Philippines in the early 1970s.¹⁰

If regional integration is to be made to serve the purposes of eradication of poverty and reduction of inequality, then the agriculture sector should be (re)valued appropriately. Given the enormity of share of the rural sector in the country’s poor population, it is correct for development strategies to take into consideration the agriculture sector. The government economic planning agency correctly pointed out: “Agriculture is the bedrock of the rural economy. It is in the rural areas where most Filipinos, including the country’s labor force, live… Agriculture is the major source of raw materials on which the rest of the economy” (NEDA, 2004: 9).

4. The Loss of Regional and Global Competitiveness

Over time and for various reasons, the Philippines has lost substantial grounds to regional and international trade competitors. Due to environmental problems, export of forest products had come to a halt in the early 1990s. It resulted in the closing of a major channel of foreign currency inflow into the national economy; the country even started to import forest products from ASEAN countries. The country also lost its significant share in the garments and electronics sectors mainly due to stiff competition from other countries, especially from the Northeast and Southeast Asian countries. And as will be demonstrated in detail, its agricultural exports have been, in general, quite problematic. In fact, the Filipino workers have remained the major export ‘commodity’ of the country. Moreover, Filipino workers seem to be the country’s main channel and link to regional integration - providing cheap labor to its East and Southeast Asian neighbors.¹¹ There is no doubt that the remittances of overseas Filipinos have been keeping millions of households in the Philippines, especially in the rural areas, above the poverty line, and have been keeping the national economy going.¹² Understandably, the government has identified the (bigger) remittances by overseas Filipinos as one of the most important components of its development strategy towards development and poverty eradication (NEDA, 2004). But while important, exporting Filipino workers is not sufficient to eradicate poverty and attain national development. Without significant structural reforms and vibrant domestic-based wealth generation, the remittances by overseas Filipinos are unlikely to end up in sustainable productive investments in the Philippines. It is therefore important to examine more closely the agricultural and rural sector that is host to the majority of the population, labor force and the country’s poor.

Losing Significant Grounds

Neoliberal trade reform advocates inside and outside the Philippine government have argued that the protectionist policies in the past have been among the main causes of the less than desirable level of performance of the agricultural sector. They have actively advocated for broad neoliberal reforms that they claimed would invigorate the country’s agriculture, create more jobs in the countryside, and eradicate poverty.¹³ Thus, by the late 1980s, policies of privatization, deregulation and import liberalization were, to varying extents, carried out in the country. Government programmes on subsidized farm input and output markets were generally stopped. Many of the restrictions on importation of agricultural products were lifted by radically reducing tariff barriers. The government has also identified and promoted non-traditional agricultural export products in which it believed the country has comparative advantage, regionally and internationally.

Coinciding with the neoliberal reforms was the Philippines’ active participation in the establishment of a regional free trade agreement. It became an original signatory to the ASEAN Free Trade Area (AFTA) in 1992. Since then, free trade has been vigorously pursued in the region. By 2002, only 3.8 percent of products (or 1,683 out of 44,060 items) had tariffs above 5 percent. The current average tariff on goods traded under the AFTA scheme is about 3.8 percent. The liberalized regional trade has expanded from US$44.2 billion in 1993 to $95.2 billion in 2000. As of 2000, 23.3 percent of the ASEAN exports were intra-regional (ASEAN, 2002). The ASEAN leaders have agreed to totally discard import duties by 2010 for the original six members (Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand), and by 2015 for the new members.¹⁴ The ASEAN is also now aggressively seeking bilateral liberalized trade agreements with its Northeast (China, Japan and South Korea) and Southern neighbors (Australia and New Zealand).¹⁵

More than a decade into neoliberal reforms in agriculture, the Philippine agriculture has continued to perform below the predicted levels, and worse, the country has been transformed from a net agricultural exporting to a net agricultural importing country. Table 7 shows that beginning in the early 1990s, the Philippines’ annual trade deficit in agricultural export-import trade has been progressively widening. This was the opposite of what the trade reformers have predicted and promised.¹⁶

Table 7: Total Agricultural Export-Import, in Value (US$), 1971-2002

	1971-74	1975-78	1979-82	1983-86	1987-90	1991-94	1995-98	1999-02
Philippines
Exports	3,456,288	5,533,916	7,121,570	5,340,551	4,854,905	5,440,135	7,152,650	5,851,500
Imports	1,095,292	1,655,647	2,686,723	2,505,581	4,144,210	5,697,601	10,500,096	10,293,519
Balance	2,360,996	3,878,269	4,434,847	2,834,970	710,695	(257,466)	(3,347,446)	(4,442,019)
Indonesia
Exports	2,716,864	5,742,853	8,523,340	9,522,321	11,857,847	14,985,995	22,492,113	20,652,338
Imports	1,770,643	3,983,167	5,983,276	3,377,856	5,656,582	9,945,234	18,629,462	17,042,862
Balance	946,221	1,759,686	2,540,064	6,144,465	6,201,265	5,040,761	3,862,651	3,609,476
Malaysia
Exports	4,707,318	8,917,966	14,168,735	15,337,010	18,398,840	20,958,595	31,110,514	25,833,424
Imports	1,942,225	3,210,261	3,123,882	5,885,799	7,576,555	10,910,318	16,160,069	15,853,830
Balance	2,765,093	5,707,705	11,044,853	9,451,211	10,822,285	10,048,277	14,950,445	9,979,594
Thailand
Exports	3,854,712	8,046,682	14,180,809	13,994,994	20,392,518	25,663,875	33,642,782	30,021,387
Imports	594,790	1,201,118	2,181,170	2,348,731	4,678,507	8,498,990	10,855,770	10,907,895
Balance	3,259,922	6,845,564	11,999,639	11,646,263	15,714,011	17,164,885	22,787,012	19,113,492
Vietnam
Exports	118,280	316,481	458,585	951,845	2,042,037	3,545,078	7,674,665	8,894,943
Imports	1,594,976	1,655,620	1,322,411	728,579	1,013,781	1,388,910	3,954,573	5,313,921
Balance	(1,476,696)	(1,339,139)	(863,826)	223,266	1,028,256	2,156,168	3,720,092	3,581,022

Calculated from FAOSTAT

Regional and international comparative glances can help provide more critical questions about, and probably some answers to, the anomalous state of the Philippine agriculture and rural poverty and inequality. Table 7 shows that the volumes of exports and imports in the Philippines, Indonesia, Malaysia and Thailand (including Vietnam) have significantly increased beginning in the 1990s. The rate of increase in total imports in Thailand from 1991-94 to 1995-98 (the period when trade reforms started to be implemented more thoroughly in these countries) was relatively much lower, from US$8.5 to 10.6 billion, while that in the Philippines was the highest, from US$5.7 to 10.5 billion (if Vietnam is not included). But while the Philippines posted the highest rate in increased importation (less Vietnam) in the period 1991-94 to 1995-98, it registered the lowest rate of export expansion during the same period, from US$5.4 to 7.1 billion - in contrast to Indonesia’s $14.9 to 22.5 billion, Malaysia’s $20.9 to 31.1 billion, and Thailand’s $25.6 to 33.6 billion. It is not surprising therefore that overall Indonesia, Malaysia, Thailand and Vietnam have all posted positive balance in their agricultural export-import activities, while the Philippines had a negative.

A disaggregated glance at the Philippine agriculture sector can give us a clearer picture of some of the factors that have caused the anomalous negative performance of the country relative to its regional counterparts. First, driven by its, arguably, short-sighted rice policy, the government has been flooding the domestic market with rice imported from its Asian neighbors and the USA in order to ensure sufficient supply of cheap rice for its urban-based consumers, especially urban-based workers (for political and economic reasons), in contrast to the rice policies of Southeast and East Asian countries (see, e.g. Ramos, 2000). Second, enticed by the cheap (‘dumping’) prices of maize in the world market, the Philippines opened up its domestic maize markets for massive importation largely due to the successful lobby of politically and economically powerful and well-connected livestock business elites. This has resulted in the bankruptcy of about half a million subsistence corn farmers in the Philippines in the 1990s. Third, in addition to the country losing substantial grounds in its basic grains sectors (rice and corn) it has also lost grounds in traditional export crops, particularly coconut and sugarcane. In the coconut sector, the Philippines started to lose shares in the world market, and Indonesia is an important competitor in this sector;¹⁷ while in the sugarcane sector, the country has even started to import, and Thailand is an important competitor in this sector (ASEAN, 2004).

Meanwhile, the so-called ‘export-winners’, the non-traditional export crops, have also, in general, failed to deliver its promise of export gains. Table 8 shows either a negligible gain, such as in asparagus and papaya, or a boom-bust cycle such as in cocoa, coffee and ramie. The only relatively stable export crops that have substantial aggregate value are banana and pineapple. While the Philippines has remained unrivalled in the banana sector, it is not the case with the pineapple sector where Thailand is a major competitor. While mango has indeed demonstrated a great promise, the total value of this sector remains relatively marginal. Oil palm and rubber have been doomed from the start by stiff competition from Malaysia and Indonesia.¹⁸ The Philippines is also a poor third in ranking in the export of shrimps and prawns, with Indonesia and Thailand the most dominant, although the former remains a major tuna exporter (ASEAN, 2004). The Philippines has also been significantly left out in the processed, canned/bottled food products exported within and outside the region - a sector that is clearly dominated now by Thailand.

Table 8: Exports of Nontraditional Crops, in Value (US$1000), 1971-2002

	1971-74	1975-78	1979-82	1983-86	1987-90	1991-94	1995-98	1999-02
Asparagus	0	0	0	0	463	17,563	43,181	40,068
Banana	112,173	305,310	481,001	470,695	562,724	769,838	893,605	1,138,612
Cocoa*	---	---	7,455	5,886	6,863	412	2,223	157
Coffee**	2,754	105,494	177,214	311,139	130,547	15,482	11,271	1,099
Mango***	3,395	11,479	27,879	55,100	62,181	117,260	175,951	141,055
Papaya	---	---	2	7	738	3,168	1,326	14,974
Pineapple ~	111,084	231,932	418,962	456,316	522,410	567,887	515,418	474,264
Ramie	2,856	6,660	19,110	50,496	74,818	5,426	727	51

* beans; ** green and roast; fruit and juice; ~ fruit, concentrate and canned; ~* includes area planted to non-export variety - export variety covers around 50,000 hectares. Calculated from FAOSTAT.

A closer look at some of the basic data on agriculture partly explains the loss of Philippine competitiveness. For the basic grains, the Philippine average yield per hectare is one of the lowest in East and Southeast Asia (see Table 9). For rice, while Thailand has the lowest yield per hectare in rice production, it has the quantity and quality, making it the world’s top rice exporter. The Philippines, with a very low yield per hectare, has failed to secure the needed quantity (and so it has to import) and quality (and so it fails to export). Meanwhile, Vietnam has an impressive record in increasing its average yield per hectare, putting it second to Thailand in terms of global export of rice, while the US, a regular source of cheap ‘California’ rice for the Philippines has an average yield three times than that of the Philippines’. It is even worse for the Philippines in terms of corn productivity, at below 2 tons per hectare, as compared to its regional counterparts (see Table 9).

It is clear that the Philippines has failed to gain any significant ground in agricultural exports, while at the same time losing its foothold in the basic grains (rice and corn) sectors and other traditional export farm sectors. Thus, instead of being integrated within the region as an exporter, the country has been integrated as a destination of agricultural products from its regional neighbors; it is not a two-way channel, at least as far as some agricultural sectors are concerned.

Table 9: Comparative Yield/Hectare in Rice and Corn in Selected Countries

Rice, Yield Per Hectare (in MT)
	1961	1970	1980	1985	1990	1995	1999
Philippine	1.22	1.74	2.21	2.58	2.97	2.80	2.86
Thailand	1.65	2.02	1.88	2.06	1.95	2.41	2.32
Vietnam	1.89	2.15	2.07	2.78	3.18	3.68	4.10
Indonesia	1.76	2.37	3.29	3.94	4.30	4.34	4.26
China	2.07	3.41	4.14	5.24	5.71	6.02	6.32
USA	3.82	5.17	4.94	6.07	6.19	6.30	6.62
Corn (Maize), Yield Per Hectare (in MT)
	1961	1970	1980	1985	1990	1995	1999
Philippine	0.62	0.82	0.96	1.11	1.27	1.52	1.71
Thailand	2.00	2.58	2.22	2.57	2.40	3.28	3.56
Indonesia	0.92	0.96	1.45	1.77	2.13	2.25	2.64
China	1.18	2.08	3.07	3.61	4.52	4.91	4.88
USA	3.91	4.54	5.71	7.40	7.43	7.12	8.39

Source: FAOSTAT.

Table 10: Trends in Revealed Comparative Advantage in Agriculture and Selected major Agricultural Exports, 1960-98*

Year	Agriculture**	Coconut	Sugar***	Bananas	Pineapple
					(Canned)	(Fresh)
1960	3.0	--	--	--	--	--
1965	2.7	131.8	15.3	--	--	--
1970	2.6	145.0	21.4	--	--	--
1975	3.8	211.2	22.0	29.3	--	--
1980	2.9	224.1	12.1	30.4	82.2	48.9
1985	2.4	212.3	7.6	31.2	91.6	59.7
1990	1.6	212.4	3.8	23.4	70.2	54.6
1995	1.1	153.5	2.0	14.1	41.5	23.6
1998	0.8	105.3	1.4	8.8	33.2	11.5

Notes:
* Estimated as the ratio of the share of a commodity group in a country’s exports to that commodity group’s share of world exports. Except for 1960 and 1998, years represent a three-year average centered on the year shown.
** Includes fisheries
*** Sugar has historically been exported to the United States at a premium price. Hence a value greater than unity does not reveal comparative advantage in this case. However, the sharp declining trend may still be interpreted as a rapid deterioration in comparative advantage.
Source: David (2003: 182)

The dismal performance of the Philippine agriculture, which is directly traced to low labor and land productivity levels (David, 2003), has significantly influenced the country’s overall loss in comparative advantage, as demonstrated in Table 10. Even the comparative advantage in bananas and pineapple, two of the relatively stable export crops, has been eroded over time.

The causes of the problematic state of the Philippine agriculture are principally structural in nature. In contrast to its East and Southeast Asian neighbors, the Philippines has a long history of highly inequitable distribution of land ownership that has been closely linked to an agrarian structure that is generally economically inefficient, socially exclusionary and politically disempowering, ruled by the landed classes, in alliance with sections of the foreign and domestic corporate elites and corrupt government officials.¹⁹ This is despite cycles of peasant mobilizations for tenancy and land reform.²⁰ While the land reform programme that has started to be implemented with relative success in the 1990s has been able to (officially) redistribute a relatively substantial quantity of land to a significant number of rural households, equivalent to about half of the total agricultural land and two-fifths of the total agricultural population, majority of the agricultural households have not (yet) received lands.²¹ And empirical studies show that land redistribution, with minimum package of post-land transfer farm support, has actually resulted in poverty reduction (Reyes, 2002). Unfortunately, by 2004, only 20 percent of the total land reform beneficiaries have received any form of support services from the government (NEDA, 2004). The combination of pending large balance in land reform and the government negligence of the needs of those who already got lands has led to the failure to translate the gains from partial land reform into a productive factor in the national economy.

Moreover, infrastructure support for irrigation and farm machineries in the Philippines has been quite poor, in contrast to its neighbors. For example, only about 15 percent of the total agricultural lands in the country are irrigated, and this has been the same condition since three decades ago - in sharp contrast to the rapid and wide expansion of irrigation facilities in many of East and Southeast Asian countries during the same period. In terms of farm mechanization, the Philippines is also far behind its neighbors. For instance, the total number of hand tractors in use in the Philippines was 11,500 in 2000, while it was 220,000 in Thailand (the two countries have roughly the same size of agricultural land and population), and it was 123,000 in Vietnam. The Philippines also lags behind its neighbors in terms of other infrastructures, such as road, transport, post-harvest facilities, and electrification. Moreover, tens of thousands of prime agricultural lands have been converted to non-agricultural uses beginning in the 1990s for speculative real estate businesses, enclaves for industrial, commercial and tourism parks - and at the same time evading land expropriation.²² Lack of funds has often been mentioned by government as the most important reason for the predicament of rural infrastructure - and rightly so because the government has been automatically appropriating one-third of its annual budget for foreign debt payment. And any available funds that remained in the government seemed to be falling into the ‘blackholes’ of corruption. For example, a substantial portion of the total amount that was recently recovered from the Marcoses and their cronies (in mid-2005, it was nearly US$1 billion)²³ which is legally required to be allotted to agrarian reform, had mysteriously ‘disappeared’ on the eve of the presidential election in May 2004. The government claimed that it was spent on agricultural and food-related projects, although it is widely believed that much of it was spent for the election campaign of President Macapagal-Arroyo (see, e.g. Rimban, 2005).

5. Concluding Remarks

Regional integration in Southeast Asia has indeed led to increasing volume of intra-regional trade, investment and migration. But the process and impact of integration have not been uniform between and within countries. The Philippines has not benefited from the inflows of investments from within the region (Singapore, Taiwan and Hongkong) and from outside the region (Japan, South Korea and China), at least not as much as Indonesia, Malaysia and Thailand have had. Meanwhile, intra-regional trade has significantly increased, and so as trade between countries within Southeast Asia and those from outside the region. The Philippines has posted modest growth rates in the exports of selected goods and services, but at the same time it has been steadily losing grounds in others. The Philippines lost its significant share in the export of electronics and garments, as well as in some agricultural products - as other competitors from within the region and from East Asia took larger shares in the regional and global market. The Philippine agriculture was especially adversely affected, transforming the country into a net agricultural importing country. While the domestic production and trade for rice and corn were unable to compete with imports from its neighbors, the Philippines also started to lose significant shares of exports of coconut and sugar. Moreover, the country’s effort to develop niche in non-traditional agricultural exports has, in general, failed to materialize. Many of the export competitors are countries from within Southeast Asia (and the nearby East Asia) who have very similar goods and services to sell to the regional and global markets. Therefore, the current export-led growth strategy by the Philippine government that is anchored on developing the same products that it recently lost competitiveness to Asian neighbors, i.e. electronics, garments and agricultural commodities, is quite problematic. Meanwhile, tourism in the Philippines, another major element of the current development strategy, is unlikely to compete with Indonesia, Malaysia and Thailand for several reasons, including the continuing political instability in the former.

The only real and relatively substantial gain by the Philippines from the regional integration is on migration, where the country has become the principal provider of cheap labor for the homes, factories, construction sites and entertainment bars of Southeast and East Asian countries. Today, Filipino workers are scattered in this region, remitting back home their hard-earned money and preventing the unemployment and underemployment problems in the Philippines from getting totally out of control. Another area that indeed the Philippines has relatively good comparative advantage is in the IT sector.

From the preceding discussion, it has been shown that the regional integration has not fulfilled its promise of development and reduction of poverty and inequality in the Philippines. Poverty and inequality have persisted in the country despite the modest growth of the national economy due to increased investment, trade and overseas remittances.²⁴ Poverty and inequality are rural phenomena, with three-fourths of the country’s poor being rural poor. Productive resources, such as land, are inequitably distributed in the countryside. For the ordinary rural households, increased foreign (non-agricultural) investments often meant the forcible conversion of their farm lands to non-agricultural uses for tourism, residential complexes, and commercial and industrial parks that have effectively excluded those lands from the ongoing state land reform. For many subsistence food producers, increased regional free trade has meant the flooding of cheap food imports in the domestic market that depressed the farm gate prices of their produce. For many poor peasants in coconut, sugarcane, rubber, shrimps and prawns, increased intra-regional free trade meant the loss of farm jobs and incomes due to significant losses of shares in world exports due to rising competition from its Asian neighbors.

Of course the main reasons for the loss of production efficiency and trade competitiveness of the Philippines in several products have nothing to do with the regional integration, but with the pre-existing structural and institutional conditions, especially the inequitable distribution of productive assets and income. But the neoliberal reforms that have been instigated by multilateral institutions and carried out nationally over time have coincided, overlapped and interlinked with regional integration, and for countries with similar conditions like the Philippines’, the already adverse impact of these neoliberal reforms on poverty and inequality appears to have been aggravated by the regional integration. For the Philippines, a more radical recasting of the pre-existing agrarian structure, partly by completing the implementation of the land reform programme and the promotion of package of farm support, is a better starting point for a development strategy that takes seriously the challenges of eradicating poverty and reducing inequality.²⁵ Moreover, if regional integration is to be made to eradicate poverty and reduce inequality between and within the countries in the region, an ‘activist,’ ‘developmental’ state would be necessary, as demonstrated by the very experience of Southeast and East Asia, because left alone the forces of ‘free’ market are likely to concentrate - not redistribute or democratize access to - the accumulated capital in the hands of the landed and corporate elites, domestic and transnational.²⁶

ENDNOTES

¹ ASEAN stands for Association of Southeast Asian Nations. It was established in 1967 by the five original members: Indonesia, Malaysia, the Philippines, Singapore and Thailand. Brunei Darussalam joined in 1984, Vietnam in 1995, Laos and Burma in 1997, and Cambodia in 1999. By 2004, the total population of the region was about 500 million, with a combined GDP of US$737 billion (ASEAN, 2002).

² The high growth performance was actually until the early 1980s - just until the eve of the political and economic crisis that begun in 1983.

³ This was the year when the Benigno ‘Ninoy’ Aquino, a principal figure in the political opposition against the Marcos dictatorship, was assassinated. The assassination led to popular anger against the Marcos regime. This event, plus other political factors, such as the 1978 parliamentary elections and subsequent electoral exercises held under the dictatorship including the 1985-86 presidential election, sustained people’s anti-dictatorship mobilization ‘from below’, and factionalism within the military and the landed and corporate elite that eventually led to the ouster of the Marcos dictatorship in February 1986 (Franco, 2001).

⁴ Even the Moro conflict in the southern Philippines (an area that has been particularly identified for a special sub-regional free trade zone project with Brunei, Indonesia and Malaysia) has significant roots in the highly inequitable agrarian structure and landlessness (Gutierrez and Borras, 2004).

⁵ In 1970-80, the Philippine agriculture sector had a growth rate of 4.9 percent, while Indonesia had 2.0, Malaysia 6.5, and Thailand 4.2 percent (David, 2003: 177).

⁶ These were estimates based on remittances coursed through formal banking institutions. If remittances sent through informal channels were included, the annual total may double.

⁷ It was US$26 billion in 1986 (Bello et al, 2004: 13).

⁸ Data on poverty incidence differ, depending on the kind of measurement used. The official government data is rather low, at 28 percent (NEDA, 2005), as opposed to ADB’s data of 34 percent (ADB, 2005).

⁹ Singapore, which is more of a ‘city-state’, is the fifth.

¹⁰ For a more comprehensive, critical and historical analysis of the Philippine agriculture, refer to Ofreneo (1980), Feder (1983), and Cristina David’s numerous important works, including David (2003).

¹¹ It must be noted however that the Filipino domestic helpers in Hong Kong, Taiwan and Singapore have, beginning in the 1990s, started to face increasing competition from (cheaper) new entrants coming mainly from Indonesia and some South Asian countries. This and other factors (such as the 1997 Asian fiscal crisis) have contributed to the decrease in number of Filipino workers in these countries, although they have remained the most dominant group in terms of number (Huang, Yeoh and Asis, 2003).

¹² For a village-level study about the impact of overseas remittances on agricultural and rural livelihoods, see Banzon-Bautista (1989).

¹³ Interestingly, the growth rates of the Philippine agriculture during the 1950s through the 1970s, while modest, have been consistently (relatively) progressive. This was the era of trade protection and state-driven agricultural extension programmes that were severely criticized by neoliberal reformers beginning in the 1980s. For a relevant, insightful analysis of the performance of the agriculture sector in Latin America across different policy regimes, refer to Spoor (2002).

¹⁴ Vietnam will join in 2006, Laos and Malaysia in 2008, and Cambodia in 2010.

¹⁵ Estimates of possible value of new trading linkages were as follows: ASEAN-China = $1.23 trillion, ASEAN-Japan = 113.6 billion (in 2000), and ASEAN-South Korea = $28.9 billion (in 2000) (ASEAN, 2002).

¹⁶ For a critical overview on the key agricultural issues hotly discussed during the debate about the Philippine accession to WTO in 1995, refer to Lim (1996).

¹⁷ But even during the peak years of Philippine coconut exports, when the Philippines was the ‘coconut king’ of the world, to borrow James Boyce’s term, the mass of poor tenants and landless farm workers have been among the poorest sections of the rural poor (Boyce, 1992; de la Rosa, 1994). The gains from the export boom in the past and even at present have remained in the hands of the landed elite and traders. And by 2004, 75 percent of the land redistribution balance under the state agrarian reform programme is in coconut lands.

¹⁸ It is important to note that the commercial farm sector is also tightly controlled by domestic and transnational elites, and even during the export boom periods the benefits are not equitably distributed to the mass of poor farm workers (Hawes, 1987; Tadem, Reyes and Magno, 1984). But these plantations were included in the official scope of land reform, and the current production and trade practices and strategies of landed and corporate elites in this sector vis-à-vis regional and global competition can be better understood from this perspective (de la Rosa, forthcoming; Borras and Franco, 2005).

¹⁹ Refer to the critical analyses by Putzel (1992) and Rivera (1994). For a relevant discussion on the role of land reform in national and regional development from a cross-regional comparative perspective, refer to Cristóbal Kay’s (2002) analysis of the East Asian and Latin American experiences.

²⁰ See Kerkvliet (1977), Lara and Morales (1990), Putzel (1992), Riedinger (1995), and Franco and Borras (forthcoming).

²¹ The numbers are: 5.9 million hectares of land redistributed to 3 million rural households, as of early 2005. For nuanced accounting of the ‘real’ extent of land redistribution outcomes in the Philippines from 1972 to 2004, and analysis of the political processes that have led to partial land reform, see Borras (2006, 2005, 2003, 2001); Putzel (2002). But beginning in 2001, progress in land reform was put to a halt, with the Macapagal-Arroyo administration proving to be unwilling and unable to proceed with the completion of the land reform program (Franco, 2004; Franco and Borras, forthcoming).

²² This phenomenon has been widespread in the country, although it tends to concentrate in enclaves identified as export-processing zones. See, for example, Bankoff (1996) and Sidel (1998).

²³ This is the combined amount of the money recovered from the Marcoses plus an initial amount recovered from the so-called ‘coconut levy fund’.

²⁴ The case of the Vietnam is interesting because it joined the regional free trade with a highly egalitarian distribution of productive assets, particularly land for its rural sectors, and income. Years into broadly market-oriented reforms and integration into the regional free trade, a growing degree of inequality among the rural sectors has ensued. See Akram Lodhi (2005) for an insightful analysis.

²⁵ For a relevant argument, but focusing on the historical development processes in East Asia and the role of redistributive agrarian restructuring, see Griffin, Khan and Ickowitz (2002); for a more general discussion about the role of redistributive land reform in the contemporary development thinking and poverty reduction discourse, refer to Borras, Kay and Akram Lodhi (2005).

²⁶ See, for example, the arguments by Wade (2004, 1990), Bello et al (2004), and Robison and Hewison (2005).

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