limited domestic market for automotive vehicles. This dismal experience contrasts with the relatively' successful progressive car manufacturing program in the Republic of Korea whose government had the sense and the will to start with only one firm. The same could be said about another success story in car manufacturing in the last 25 years: the Spanish automotive industry that has long surpassed the annual volume of one million units. When the Spaniards started their car manufacturing program they had only one firm. Only when the domestic market had significantly expanded did the Spanish government allow the entry of other car manufacturing firms.
V
ERY FEW will deny that the
Philippine industrial sector that evolved during the last 36 years since indepen,dence is generally inefficient and unc mpetitive with those of the so-called newly industrialized countries (NIC's) such as Korea, Singapore, Taiwan and Hong Kong. It is not surprising that the oil shocks of the seventies and the financial crises of the eighties have driven many Philippine manufacturing firms to the brink of bankruptcy. But the verdict of economic history should not be too harsh on Filipino entrepreneurs. Their present predicament can be greatly attributed to the investment climate spawned by some unenlightened government policies in the sixties and even in the seventies. It was the government that continued to encourage entrepreneurs to linger too long on import-substitution by not really lowering the effective rates of protection on local industries, even after the decontrol of 19.6 2. This proves once again that entrepreneurs only exploit the market opportunities found in the environment. The phenomenal growth of the so-
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30
called nontraditional exports (e.g. electronic components, garments, frozen and fresh food exports, finished wood products, footwear and leatherware) during the second half of the seventies attests to the presence of entrepreneurs who can shift to export-{)riented industries and who can be reasonably competitive in the world market. Even if the Philippine government has not been able to provide a totally encouraging environment for manufactured exports (because of bureaucratic red tape and inefficient telecommunications), the meager incentives given to exports (subsidized credit and tax exemptions) have boosted the performance of the nontraditional exports to close t9 a 40 per cent annual growth rate in the late seventies (as contrasted with a total export growth of only 15 per cent to 18 per cent annually in the previous two decade.s).
T
HE REMAINING years of this cen-
tury will be economically critical for the Philippines. Still to be won is the battle against mass poverty. Income is still too unevenly distributed. The gains of economic growth are not yet trickling down to the poorest among the poor. At least 25 per cent of the labor force - particularly in the rural areas - can be counted among the underemployed. Industrial activity and economic opportunities in general are still concentrated in Metro Manila and a few urban centers. There is still too much dependence on a few traditional export products for generating mass purchasing power. The recent catastrophic decline of coconut prices showed the vulnerability of the entire economy to the uncertainties of international commodities markets. The demand for imports - though decelerating in recent years - still exerts an undue strain on the ability to earn foreign ex-