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The Conflict of Political and Economic Pressures in Philippine Economic This dissertation has been Mic 61-2821 naicrofilmed exactly as received BRAZIL, Harold Edmund. THE CONFLICT OF POLITICAL AND ECONOMIC PRESSURES m PHILIPPINE ECONOMIC DEVELOPMENT. The Ohio State University, Ph.D., 1961 Political Science, public administration University Microfilms, Inc., Ann Arbor, Michigan THE CONFLICT OF POLITICAL AND ECONOMIC PRESSURES IN PHILIPPINE ECONOMIC DEVELOPMENT DISSERTATION Presented in Partial Fulfillment of the Requirements for tjie Degree Doctor of Philosophy in the Graduate School of The Ohio State University By Harold Edmund Brazil, B, S., M. A» The Ohio S tate U niversity 1961 Approved by Adviser Co-Adviser Department of Political Science PREFACE The purpose of this study is to examine the National Economic Council of the Philippines as a focal point of the contemporary life of that nation. The claim is often made that the Republic of the Philippines, by reason of American tutelage, stands as the one nation in the Orient that has successfully established itself as an American-type democracy. The Philippines is confronted today by serious econcanic problems which may threaten the stability of the nation. From the point of view of purely economic considerations, Philippine national interests would seem to call for one line of policy to cope with these economic problems. Yet, time and again, the Philippine government has been forced by political considerations to foUcw some other line of policy which was patently undesirable from an economic point of view. The National Economic Council, a body of economic experts, has been organized for the purpose of form ulating economic p o licy and recommend­ ing what is economically most desirable for the nation. But the fact that the Council has often acted otherwise than purely economic common sense would dictate indicates that there must be overriding political consideratiorts which must at times prevail. V/hat these political pressures are, and what the factors are that cause these political pressures to prevail, constitute the core of this study. The study necessitates first, of course, an explanation of the historical background which has given rise to the grave economic problems which confront the Philippine nation. Part I therefore deals i i i i i with the economic problem in broad perspective and the consequence of the Spanish rule, of the American rule, of the transitional period of the Commonwealth, and o f th e co n d itio n s inherent in th e arrangements under which political independence was attained. Part II deals with the National Economic Council itself, its structure and functions, its legal and political powers, and its activities and policies, all in relation to the nature of the economic problems with which it is primarily concerned. Part II also analyzes the political forces that exercise an influence over the actions of the National Economic Council, explains the reasons for the power of these political forces, and describes in what manner and to what degree these political elements have modified the economic policies of the National Economic Council. Finally, Part III comprises the conclusions regarding the dynamics of Philippine politics and the nature of the inter-relation between economic and political factors in Philippine life. The writer has based this study primarily on three classes of materials; standard published works for the background, periodical accounts for recent and contemporary events, and interviews and corre­ spondence with personages close to the activities under study. These have all been filtered through the writer's own criteria of judgment— formed through academic training and through the first-hand experience of living in the Philippines—for which he iriust in the final analysis assume personal responsibility. TABLE OF CONTENTS PART I 1 , The Problem and Our Approach .......................................................... 1 2, Geographical, Sociological, Human and Other Factors . 14 3, Spanish Policy For the Philippines ........................................,20 4, American Colonialism In tiae P hilippines ......................... .,65 PART I I 5# The P h ilip p in e N ation al Economic C o u n c il.................................. 99 6. Politics and the National Economic Council........................... 12? 7. The NEC and the Issues of Public Morality and Economic Nationalism ..............................................................................177 PART I I I 8. Prospects For the Future ...............................................................217 9. C one lus io n s ................................................................................................ 234 Bibliographical References . .......................................................275 IV PART I CHAPTER 1 THE PROBLEM AND OUR APPROACH In the present age the Far East is both a critical and strategic area. It is a reservoir of practically unlimited natural and human resources and its vast economic potential remains largely undeveloped. The millions of people who inhabit this geographical complex constitute almost one-third of the world’s population. The countries which comprise the region are of great diversity and are divided by sharp differences of tradition, religion, culture, circumstance and economic development. The economies range from the industrial, mercantile composite of Japan to the primitive economies of Viet-Nam, Laos and Cambodia, with those of the Philippines, India, Australia and Taiwan in between. Eight of the eleven Asian countries including the Philippines 1 have achieved their independence since 19^5. Considered as a whole, the area reflects with few exceptions mass poverty, economic and political instability and underdevelopment, shortages of investment capital, technicians and educational facilities, deep resentment of Western colonialism, and fear of new ejqjloitation. It is an area seething with a new spirit of nationalism, social unrest, rising aspirations for economic stability and security and a better life for its millions. In some of the countries a small, landed and wealthy elite asserts a pervading political and economic dominance and influence. Too often ineffectual governments have failed to provide needed national 1 2 leadership. Graft and corruption have sometimes simultaneously represented diminished concepts of individual integrity and public morality. Interrelated with these problems throughout the entire region is a widespread fear of communist aggression and infiltration, attributed to objectives of the world center of international 2 communism in Moscow and the Far East ideological center in Peiping. Most observers, and the people of the area themselves, readily agree that the crucial requirement is the fu ll development of national economies. This is an imperative for the present and future economic well-being of individual Asians, and also as a condition to ensure t h e ir present and fu tu re n a tio n a l s e c u r ity —and freedom. An i l l u s t r a ­ tion of the point is provided by the tiny Southeast Asian Kingdom of Laos. The nation is largely dependent upon foreign assistance for perhaps all its economic development and, even more significant, the cost of supportinf^ its military forces—so as to provide for national 3 security—is borne entirely by the United States. Yet there is a basic interrelationship between national security—in freedom—and national economic development. The primary element, that which must come first and upon which perhaps all else ultimately depends, is 4 effective economic development. VJhat then are the essential requirements, the requisites, for 5 successful national economic development? As a focal point of the present study and as a possibly useful tool of evaluation, it is postulated that at least the following constitute critical require­ ments: (A) adequate natural and human resources; (B) an energetic, potentially intelligent, resourceful and progressively inclined people; (C) applicable, effective development planning; (D) an astute. 3 capable and determined leadership in full control of a strong, central­ ized political organization; and (E) sufficient outside financial and technical assistance to activate and maintain, during the in itial stages, the overall development scheme. These factors and the trends which have accoitpanied them, whether or not they constitute positive requisites for successful economic developirent, vitally concern the Asian nations alike as well as the entire international community. This arises because of the predominate­ ly political nature of the factors involved, because of the indications that the present day global struggle between totalitarian and free nations increasingly focuses upon the Far East as a critical area, and because economic development in the mid-Twentieth Century not only constitutes the principal aspiration of the Asian people but may well 6 be the key to the ideological struggle itself, I'lore specifically, our present concern is a special area of the total problem. On a continent where many nations are only now entering the stage of independence and self-government, there are few that possess an experienced and effective political organization. We must then focus on this question: l-Jhat are the requisite conditions for a successful program of economic development in an underdeveloped Asian nation that does not have a strong, centralized political organization? For some wiiile, the attention of political scientists has been la r g e ly d irected toward nations such as th e S o
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