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In the three years following the 1983 murder of Benigno Aquino Jr., the Philippine economy steadily declined amid a combination of growing political instability and eroding investor confidence that eventually led to the collapse of the autocratic regime of Ferdinand Marcos. When Marcos first came to power in 1966, the Philippines was one of Asia’s dynamic economies, second only to highly industrialized Japan. By the early 1980s, many of its neighbors had overtaken the Philippines as Marcos perpetrated a regime of misguided economic directions, corruption across the bureaucracy, favoritism in the grant of state incentives and financing that bred inefficient industries under an environment of crony capitalism, and widespread poverty amid a land of opportunities controlled by monopolies. The EDSA uprising of February 1986 — a quarter of a century ago this month — was an inevitability that followed the popular outrage over the Aquino assassination. While the military mutiny against Marcos served as a trigger, the succeeding people power revolt was mostly an outpouring of pent-up anger and frustration with the crippling economic stagnation that by then had stifled most Filipinos’ hopes for better living standards. Obviously the Filipino people’s cry at EDSA was for change—for governance with a heart and for more and widely accessible opportunities for a better life. A review of the failed Marcos economic strategies can help current leaders avoid a similar fate. A few years before the dictator’s ouster, economists were already expressing concern over the failure of the economy to get out of the “boom-and-bust” cycle of short spurts of positive growth that were inexorably followed by decline and dislocation for many economic sectors. When Marcos first came to power, he inherited an economy that was exhibiting dynamic growth in industrial production. Manufacturing activity was expanding from a small base in the food sector to textiles, clothing, metal products, machinery and petroleum products. In agriculture, new high-yielding varieties and improved farm irrigation and mechanization techniques pushed up production and enhanced commercial activity, even if the effects on the net terms of trade, or the purchasing power of exports, were not so profound. Amid that growth, the Marcos regime followed a strategy of import-substitution in further boosting the economy, offering a protective umbrella of tax and tariff incentives to attract investment in industries. However, it failed to make the nimble next step: an export-oriented strategy where local industries could be nurtured into competitive players in the global markets and in the process stimulate related growth in other domestic sectors. The discredited policy mix of import controls—an overvalued exchange rate, subsidies mainly to the urban sector, and tariff protection—continued to be employed to protect domestic industries, while other East Asian economies were sharpening their competitiveness in the export markets. A sudden flood of cheap "petrodollars" flowed into the world capital markets from oil-exporting countries in the early 1970s. That encouraged the Marcos regime to become more aggressive in seeking foreign borrowings to finance a wide range of industrial projects in the country. The Marcos administration went into massive spending sprees on infrastructure projects (roads, bridges, irrigation, dams and communications) and on the development of indigenous energy sources. Financing for these programs, as well as for 11 major industrial projects designed ostensibly to push the economy toward industrialization, was secured from the international capital markets, then overflowing with petrodollars. In 1972, however, there was a dramatic change in the political landscape when Marcos, near the end of his second and last term as president, declared martial law—widely regarded now as a move to perpetuate himself in power and stem the tide of discontent that had been caused by rising unemployment and a surge in consumer prices after massive overspendings his government incurred in the 1969 presidential elections, exacerbated by a devaluation of the peso in 1970. Early in the martial-law regime (which remained in force until 1981), Marcos moved to open the economy to foreign investment. He clamped down on labor dissent to give an appearance of stability in industrial relations. He changed economic strategy from the previous concentration on the export of natural resources to an industrialization initiative that relied on external borrowings. As a result, from only $2.1 billion in 1970, the Philippines' foreign debt level rose to $3.8 billion in 1975 and $12.7 billion in 1980. By 1983, when capital flight forced the Marcos regime to make an accounting of the nation’s foreign debts prior to securing additional obligations, the total had reached $25 billion. On the trade front, the Marcos regime moved toward export orientation through the establishment of enclaves, export processing zones and bonded warehouses. These operations, critics argue, generated only minimal related activity and net gains for the rest of the economy, given that local value-added in their products was low because import content accounted for most of their costs. With the authority of martial law, the Marcos government also took an increasingly interventionist role in the economy. Through decrees, the strongman dispensed monopoly privileges and behest loans to individuals closely associated with him, their enterprises buoyed up by extraordinary financing privileges from state banks. Effectively that elbowed out other, probably more efficient industries from such financing. Thus arose the term "crony capitalism," referring to associates of Marcos who gained monopolistic control over such key industries as sugar and coconut and acquired substantial interests in a wide range of others, such as public works contracting, banking, casinos, low-cost television production, construction of a nuclear power plant and car manufacturing. That era spawned a new set of aberrations, whose adverse effects on the economy would continue to be felt for a long time. With easy foreign and domestic credit available, particularly on guarantees extended by the government, the "crony" industries not only grew into large but inefficient operations, they also drained government resources. When capital on foreign markets started to dry up toward the end of the 1970s, most of these crony companies collapsed — precisely because they were inefficient and therefore crumpled under competition. But the Marcos government still opted to save some of the large crony companies, particularly those whose closure was deemed have more damaging effects on the overall economy. This was achieved through large amounts of government funds, much of it from foreign borrowings. Marcos ordered government financial institutions to extend bail-out financing to the distressed companies. The state-run Philippine National Bank, Development Bank of the Philippines and National Development Co., which administered the rescue financing, ended up owning the troubled companies by converting their debt into equity. Many of these companies, reflecting the state patronage on which they thrived, turned out to be carrying far greater liabilities than assets. The agricultural monopolies of the Marcos era also failed to boost the purchasing power of the rural sector, blocking moves toward more serious, outward-looking modernization of the economy. Food production managed to grow during parts of his incumbency, but price controls kept investors away from the farms. At the start of the 1980s the economy simply crumpled under a worsening external environment marked by a new oil crisis that sent import costs soaring, by sharp increases in interest rates, and by protectionism in major international markets. The Philippine economy was suffering from a severe crisis of confidence as it limped into the new decade. The August 1983 assassination of Benigno Aquino, the charismatic opposition leader who was then coming home from a three-year exile in the US to challenge the Marcos leadership, set off a series of events that led to profound changes in the country. Amid the outrage that followed the Aquino murder while in the custody of the Marcos regime’s security forces, capital flight ensued. Foreign banks froze credit to the Philippines, businesses had to source dollars from the black market to pay for critical import needs, and by October 1983 the Marcos government was forced to declare a debt moratorium. It sought rescue financing from the International Monetary Fund and the World Bank, which, after long negotiations, it got under tight conditionalities that required the government to live within its means. If that was a signal to end its profligate ways, the Marcos regime failed to get it because it later appeared that it continued to incur massive spending in an effort at self-preservation. While the economy stagnated—overall national output contracted by a cumulative 15 percent over 1983-85, many factories were not operating, and inflation soared to over 50 percent—international pressure for Marcos to justify his hold on power was also growing, and the autocrat was forced to call a “snap” election. The February 1986 contest pitted Aquino’s widow, Corazon, against the strongman. Marcos attempted to steal the vote but the effort only served to usher in another series of events that would lead to his exit on February 27, 1986. The ouster of the dictatorship paved the way for reform measures initiated by the new government of Corazon Aquino, whose administration would also succeed in restoring democratic political institutions and in defending these reforms against repeated attacks from some sectors, including known Marcos loyalists.