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Philippines
>> Regional Overview >> Philippines Overview
Summary Tables
Program Summary
Previous Years' Activities
2001Last updated: 55
Introduction
The Philippines is a major U.S. trading partner and a strategic friend on the periphery of continental Asia. As the only market economy in East Asia that has never enjoyed a prolonged period of rapid economic growth, the Philippines remains hobbled by political uncertainty and poverty. The armed insurrection in Mindanao feeds on the lack of development and economic opportunity. Environmental degradation impedes economic development in rural areas that are the backbone of food security and discourages investment in urban areas. Corruption continues to keep the country mired in economic and fiscal limbo, justifying its reputation as one of the most corrupt economies in Asia. The excesses and corruption of President Estrada and his Administration eroded much of the gradual progress that the Philippines had made against these chronic problems. Although the country was pushed to the brink of a financial collapse, the worst was avoided thanks to the peaceful transition of government. The new Administration has moved quickly to reverse previous policies, waging "all-out peace" in the south and developing plans to attack the economic problems that the last several months of political turmoil had exacerbated. The Government of the Philippines (GOP) has announced plans to curb spending and improve tax collection to lower its large budget deficit. Alongside these moves are efforts to strengthen governance and fight corruption.
The U.S. government supports a USAID program that: 1) encourages reforms to reduce corruption and increase transparency and probity in economic governance; and 2) addresses the root causes of instability in Mindanao by providing livelihood alternatives for former and current combatants, should they choose to pursue the road to peace. USAID also plays a prominent role in achieving broader U.S. goals of trade expansion and financial stability in East Asia by supporting Philippine government efforts to further liberalize trade and strengthen financial sector governance. Liberalization offers the prospect of broader U.S. access to the Philippine domestic market of 78 million people and the possibility of creating more export-oriented jobs in the United States. This support also contributes to the overall trend of liberalization in the region by making the Philippines a more informed participant in regional fora.
USAID helps to revitalize the Philippine economy and transform governance in order to accelerate sustainable growth. USAID's approach is rooted in a sound understanding of the new Philippine administration's priorities and knowledge of USAID's comparative advantage. It builds on the potential for synergies within USAID's portfolio and takes advantage of opportunities for increased collaboration with the GOP and other donors. USAID's program contributes to improvement of the quality of Philippine life while strongly supporting broader U.S. interests in the Philippines and in the region. USAID assistance will play a critical role in achieving the goals of accelerating sustainable economic growth and reducing poverty by assisting development of an investment climate less constrained by corruption and poor governance, while strengthening prospects for continued peace in Mindanao. USAID programs help make institutions, policies, and practices more transparent and accountable; and remove competitive barriers to the development of infrastructure and trade. Finally, USAID programs place increased attention on the economic consequences of unsustainable natural resource use and a population growth rate that is one of the highest in Asia.
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. Broader U.S. interests, articulated in the Mission Performance Plan and supported by USAID's program, include: (a) ensuring that the Philippines plays an active role as a security partner in Asia; (b) maintaining Philippine support for expanding its trade and investment regime; (c) increasing U.S. exports and investment; (d) promoting economic development that fosters equitable growth and increased economic opportunity; (e) strengthening constitutional democracy and enhancing the Philippines' role as the region's hub for the promotion of democracy and human rights; (f) alleviating the suffering of those affected by crises and social marginalization; (g) reducing Philippine environmental degradation, promoting global climate change mitigation, promoting sustainable management of natural resources and biodiversity, and encouraging greater Philippine support for U.S. environmental objectives in international fora; (h) reducing the fertility rate; (i) reducing the threat of HIV/AIDS and other infectious diseases; and (j) fostering ties to the Philippine government and civil society that provide access to information and can exert influence to promote U.S. interests.
Development Challenge
Philippine economic growth has lagged behind most of its Asian neighbors over the past 30 years-not only behind the Asian "tigers," but also behind less advanced economies of the region. For example, 1999 per capita income in the Philippines (measured in terms of purchasing power parity) was $3,815. This exceeded only that of China ($3,291), economically troubled Indonesia ($2,439), and Vietnam ($1,755). However, the change in per capita income between 1975 and 1999 in the Philippines (measured in 1987 dollars) was only 14%, compared with 326% in Indonesia and 235% in China. 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:
- High fertility rates and consequent rapid population growth (2.0% per year), and very high rates of infectious diseases such as tuberculosis;
- Profound systemic weaknesses that have allowed corruption to flourish, inhibited development of fully competitive markets, and limited government capacity to raise revenue and make critical investments in human resources and infrastructure; and
- Lack of technical skills, financial capacity, and the political will to protect the natural environment. This in turn threatens basic food security and globally significant biological diversity, promises to greatly accelerate rural to urban migration over the short-term (thereby placing even greater stress on already inadequate infrastructure), and could make large parts of the Philippines virtually uninhabitable over the longer term.
USAID's program consists of a series of highly focused and inter-connected activities to combat all three of these obstacles to development.
Other Donors
Based on actual 2000 levels, the United States is the fifth largest donor, after Japan, the Asian Development Bank, Germany, and the World Bank. Nonetheless, 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 key players in the GOP and the donor community. USAID collaborates with many multilateral and other bilateral donors in a variety of fora on a daily basis. In FY 2001, USAID expects to provide $48.8 million in grant assistance. At the 2000 Consultative Group meeting, donors, including the U.S., pledged a total of $2.6 billion for development assistance to the Philippines.
FY 2002 Program
USAID continues to narrow the focus of its activities in the economic growth, environment, population and health fields to specifically address the obstacles to sustainable growth identified above, and to integrate democracy and governance efforts into the rest of its programs.
As planned, USAID will phase out trade and investment enhancement programs specifically targeted on the island of Mindanao, and will focus on programs aimed at producing national-level impacts. Due to an unexpected escalation of the Mindanao conflict, however, USAID initiated a follow-on program in 2001 to complete the process of assisting former combatants to develop the capability of making a living. This will continue in 2002, along with complementary programs for conflict management and structuring of the political frameworks to establish or improve governance in parts of Mindanao.
USAID's high priority economic policy assistance activities will focus on responding directly to the security crisis and to the Philippines' long-standing governance crisis. Assistance will focus on reforms that institutionalize transparency and accountability in economic governance and reduce barriers to entry in the provision of critical infrastructure services and trade. Planned outcomes include enhanced transparency of economic institutions, improved tax collection, efficient and corruption-free customs valuation, and reform of government budgeting and procurement at both the national and local government levels. Within this program of activities, USAID will also help the Philippines to implement its World Trade Organization (WTO) commitments, foster more productive use of information technology, and commercialize biotechnology.
USAID will integrate its population, health and infectious disease programs for more effective implementation. The new program is expected to result in expanded activities that strengthen the capacity of the private sector and local governments to deliver family health and reproductive health services. It will also result in more focused advocacy for health sector reforms, new initiatives in private sector treatment of tuberculosis, new health insurance packages, and more effective food fortification programs. Activities to combat HIV/AIDS and infectious diseases will focus on sustaining local level capacity for surveillance and education.
In the environment area, USAID has integrated its biodiversity conservation and global climate change activities to focus scarce financial resources and increase synergy among ongoing and planned efforts. A new initiative under the Integrated Resources Management (IRM) program is strengthening local environmental governance as a means to conserve biological diversity, stimulate economic growth, and resolve natural resource use conflicts. Program integration will also focus on the close link between biodiversity conservation and the ongoing global climate change (GCC) program. For the GCC program, USAID will foster the use of innovative technology and promotion of clean technologies and focus on renewable energy programs for power generation in off-grid areas. After passage of the power sector restructuring legislation, USAID will take on the challenge of reducing the Philippine transportation sector's contribution to global climate change.
In addition to the above program, USAID will support implementation of numerous centrally-funded programs. These include, among others, programs in microfinance; anti-corruption and financial sector strengthening programs under the Asia and Near East Bureau's Accelerated Economic Recovery in Asia program; exploration of renewable energy alternatives; and grants to U.S. nongovernmental organizations for activities that complement the Mission's strategic thrusts. Until recently, the Office of Transition Initiatives implemented the Support with Implementing Fast Transition program for ex-combatants in Mindanao. USAID will provide logistical and administrative support for its Mongolia and Japan offices and for the regional offices of the Inspector General, the Office of Foreign Disaster Assistance, and the U.S.-Asia Environmental Partnership. In addition, USAID will provide legal support services to USAID programs in Vietnam, Laos, Cambodia, Thailand, Mongolia and Japan.
Activity Data Sheets
- 492-001 Accelerate the Economic Transformation of Mindanao
- 492-002 Investment Climate Less Constrained by Corruption and Poor Governance
- 492-003 Reduced Fertility Rate and Improved Maternal and Child Health
- 492-004 Environmental Management Improved
- 492-005 Reduced Emissions of Greenhouse Gases
- 492-006 Broadened Participation in Formulation and Implementation of Public Policies
- 492-007 Threat of HIV/AIDS and Other Selected Infectious Diseases Reduced
- 492-008 Assistance to Amerasians
- 492-010 Prospects for Peace in Mindanao Strengthened
Country Background Information Resources
CIA Factbook
Library of CongressNational Geographic Country Maps
State Dept. Country Information
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Last Updated on: May 29, 2002 |
