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| >> Regional Overview >> Philippines Overview | |||||||||||||||||||||
IntroductionUSAID's assistance to the Philippines has played a prominent role in achieving the United States' goals of trade expansion and financial stability in East Asia. USAID/Philippines' bilateral program, in collaboration with USAID's regional "Accelerating Economic Recovery in Asia" (AERA) program, supports the Government of the Philippines' (GOP) efforts to further liberalize trade and strengthen financial sector governance. The synergy of USAID's bilateral program with AERA has been especially notable in strengthening banking supervision and in the anticorruption campaign. This support has broad impacts through the Philippines' more informed participation in regional fora, the Association of Southeast Asian Nations (ASEAN) and the Asia-Pacific Economic Cooperation, contributing to the overall liberalization trend in the region. Liberalization also offers the prospect of broader access to the Philippine domestic market of 73 million people and the possibility of creating more export-oriented jobs in America. USAID assistance will play a critical role in achieving these goals of improving access and fostering growth by promoting greater financial market stability, enhancing economic competitiveness, improving economic governance, fostering broad-based judicial reform, accelerating infrastructure development, encouraging the adoption of stronger labor standards in the manufacturing sector (to "level up" the living standards of working families), and focusing increased attention on the economic consequences of a population growth rate that is one of the highest in Asia, and of unsustainable natural resource use.USAID seeks to revitalize the Philippine economy and transform governance to accelerate sustainable growth. USAID/Philippines has adopted an approach that is solidly rooted in a sound understanding of USAID's comparative advantage, builds on potentials for synergy within the Mission's portfolio and takes advantage of opportunities for increased collaboration with the GOP and other donors. USAID's program promises to improve the quality of Philippine life, while strongly supporting broader U.S. interests in the Philippines. Broader U.S. interests, as articulated in the Mission Performance Plan, that are supported by the USAID program include: (a) encouraging an open trade and investment regime; (b) promoting U.S. exports and investment; (c) supporting economic development that fosters equitable growth and increased economic opportunity; (d) strengthening constitutional democracy and enhancing the Philippines' role as the region's hub for the promotion of democracy and human rights; (e) alleviating the suffering of those affected by crises and social marginalization; (f) reducing Philippine environmental degradation, promoting increased energy efficiency and encouraging greater Philippine support for U.S. environmental objectives in international fora; (g) reducing the fertility rate; (h) reducing the threat posed by HIV/AIDS and other infectious diseases; and (i) fostering ties to the Philippine government and civil society that provide access to information and can exert influence to promote U.S. interests. Thus, USAID assistance to the Philippines directly supports the stability and progress of one of the U.S. Government's most trusted allies in this rapidly changing part of the world. The Development ChallengeWhile the Philippines has come through the recent Asian financial crisis and a severe drought with limited adverse effects and is now growing again, deeply ingrained obstacles to sustainable growth remain. The persistence and severity of these obstacles is highlighted by the fact that Philippine economic growth has lagged behind most Asian neighbors over the past 30 years. Growth has not only lagged behind the Asian "tigers," but also behind less advanced economies of the region. For example, 1997 per capita income (measured in terms of purchasing power parity) in the Philippines was marginally higher than that of economically troubled Indonesia ($3,520 vs. $3,490). However, the change in per capita income between 1975 and 1997 (measured in 1987 dollars) in the Philippines was only 15% compared to Indonesia's 417%. In East Asia, only Burma, North Korea, and the economies of Indochina have performed more poorly. Ironically, while the Philippines has lagged economically, its democratic system has demonstrated vibrancy and resilience. The failure of the Philippines to more effectively capitalize on its democratic system is the result of several deeply ingrained obstacles to growth, including:
While the development problems posed by the Philippines' high fertility rate have been recognized for some time, the critical significance of the latter two problems was not fully appreciated until the onset of the Asian financial crisis. USAID's current program consists of a series highly focused and inter-connected programs to combat all three of these obstacles to development. Other DonorsAt the 1999 Consultative Group meeting, donors pledged $4.52 billion for development assistance to the Philippines. Based on actual 1998 levels, the United States is the fifth largest donor, after Japan, the World Bank (WB), Asian Development Bank (ADB), and Australia (AusAID). Nevertheless, USAID and the U.S. government continue to play a critical role in Philippine development and policy change because of USAID's experience, expertise, and long established relationships with all of the key players in the GOP and the donor community. Further, USAID collaborates with many multilateral and other bilateral donors in a variety of forums on a daily basis. In FY 2000, USAID/Philippines expects to provide $28.9 million in grant assistance.
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