The Philippines has missed a number of opportunities toward long-term economic development. While it was in pretty good shape in the 1960s through the late 1970s—and certainly highly competitive with other developing countries in Asia—it began to falter at the turn of the decade. 

By the early 1980s it started to miss the boat in terms of sustaining its comparatively strong education and healthcare systems, besides introducing key economic policy reforms, which the four other founding members of Asean (Indonesia, Malaysia, Singapore and Thailand) were beginning to undertake. Such policy reforms included ditching the well-worn import substitution industrialization strategy and, in its stead, opening up the economy to international trade and foreign direct investments (FDIs).

As regards population management, the Philippines adopted a family planning (FP) program in 1970 which was off to a good start, as were the programs of the other Asean countries. However, while these neighbors resolutely sustained their FP programs, adamant opposition from the Philippine Catholic Church hierarchy and conservative prolife groups induced then President Ferdinand Marcos to drop the program in 1980 for political expediency. The move would spell a major difference in the economic growth trajectories of the Philippines vis-a-vis other developing Asian countries, given that population management matters to education and healthcare services delivery apart from employment of the work force and household incomes. 

Quasi-twins

To illustrate how population management can, inter alia, make a considerable difference, it’s instructive to compare the Philippines and Thailand, often regarded as erstwhile quasi-twins. Both introduced their respective FP programs in 1970 when their population sizes were practically the same at around 37 million. Additionally, the Philippines’ gross national income (GNI) per capita was US$220 and Thailand’s was $210, and both countries had identical poverty incidence at 13%.

Fifty years later, those numbers have been drastically set apart, with the Philippines’ population ballooning to 110 million and Thailand’s at 70 million. GNI per capita was $3,430 in 2020 ($3,850 in 2019) for the Philippines, and $7,050 in 2020 ($7,407 in 2019) for Thailand. On the other hand, poverty rate was estimated at >20% in 2020 (16.7% in 2018) for the former, and 8.8% in 2020 (6.2% in 2019) for the latter. Evidently, the drop in GNIs and the increase in poverty rates were due to the Covid-19 pandemic.

An important adverse impact of the Philippines’ failed population management was on its healthcare system capacity that surfaced in bold relief during the pandemic, what with a large population and poverty incidence arguably the highest in Asean. Likewise, given that the education especially of the youth has been severely set back, the scarring of society and the economy is likely to take several years to cure and reverse.

The ultimate objective of population management is typically to reach a desirable level of population stability vis-a-vis a country’s economy and resources which can be achieved through replacement fertility at roughly 2.1 children per couple (the global average). Five Asean countries have achieved this—Singapore in the mid-1970s, Thailand in 1990, Vietnam in 2006, Malaysia and Brunei Darussalam in 2013—while the others are still above 2.1, with Indonesia at 2.3 and the Philippines highest at 2.7 along with Lao PDR. 

The Philippines may achieve replacement fertility between 2025 and 2030 yet.

Necessary condition

Fertility reduction is a necessary condition for demographic transition toward demographic dividend resulting in higher income per capita and poverty reduction, given the right policy environment and flexible labor market facilitating employment of the workforce. Replacement fertility sets the inflection point for demographic dividend to rise sharply, as exemplified by the Philippines’ more dynamic and progressive Asean neighbors—Singapore, Thailand, Malaysia, and Vietnam. Unfortunately, our country’s demographic transition and consequential demographic dividend have been much delayed.

Moreover, it has lagged behind its Asean neighbors in introducing key economic policy reforms, such as opening up the economy to FDIs. For instance, in 1985 the Plaza Accord enabled the United States to devalue the dollar vis-a-vis the Japanese yen and the German mark to deal with its large trade deficit. The appreciation of the yen led to a tsunami of Japanese FDIs in Asian countries which bypassed the Philippines as it was ill prepared to host them, given the political and economic uncertainties then prevailing coupled with its restrictive FDI policies. 

It was only in the first quarter of 2022 that three policies languishing in Congress for some time — the Foreign Investment Act, the Retail Trade Liberalization Act, and the Public Service Act — were signed into law by President Duterte. These are likely to be implemented contingent on the next administration, with lagged effects.

Missed opportunity

Had the Philippines not missed the opportunity of sustaining population management-cum- family planning complemented with the right policies, the economy would have been much better off — higher investment in human and social capital, hence, better healthcare and education systems, more productive workforce and lower unemployment rate, higher GNI per capita, much lower poverty incidence and inequity. In other words, it would be at par with its dynamic and progressive Asean neighbors, resilient and better equipped for pandemics. Unfortunately, the population issue seems to have become passe and, though still highly relevant, is hardly discussed in public forums. 

But those who think hard about the country’s socioeconomic woes would realize that population management is an overriding policy and, in combination with other policies, significantly impinges on many facets of the economy and society.

Ernesto M. Pernia, PhD, is professor emeritus of economics, University of the Philippines, and a former socioeconomic planning secretary, National Economic and Development Authority, Philippines. —ED