NOTES
FROM "THREE ESSAYS ON NATIONALIST INDUSTRIALIZATION"
OF
EMMANUEL DE DIOS, MANUEL MONTES, AND JOSEPH LIM
The
following are my personal notes from the essay. Done November 1994.
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WHICH TO STRESS: AGRICULTURE OR INDUSTRY? |
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DE DIOS, EMMANUEL |
MONTES, MANUEL |
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1. THE FORMULA REGARDING INDUSTRY, AND IN
PARTICULAR HEAVY INDUSTRY, BEING THE LEADING SECTOR SHOULD NOT BE TAKEN AS AN
INDICATION OF ACTUAL INVESTMENT PRIORITIES.
"LEADING" SHOULD NOT MEAN "FIRST"; IT SHOULD MEAN "ADVANCED" (p. 28) 2. IT IS NOT THE PRESERVATION OF AGRICULTURE
PER SE BUT THE PRESERVATION OF PROPERTY RIGHTS IN AGRICULTURE WHICH IS
HOLDING BACK INDUSTRIAL DEVELOPMENT (p. 28) 3. PRIORITIES SHOULD BE PLACED ON THE
REDISTRIBUTION OF LAND, THE RAISING OF AGRICULTURAL PRODUCTIVITY THROUGH
SIMPLE COOPERATION AND EFFICIENT NONLABOUR-DISPLACING TECHNOLOGY, THE
PRODUCITON OF MASS CONSUMER ITEMS AND SIMPLE TOOLS AND IMPLEMENTS (LIGHT AND
MEDIUM INDUSTRIES) AND THEN AND ONLY THEN GOING IN HEAVILY FOR HEAVY INDUSTRIES. THIS DOES NOT MEAN
THAT A FEW WELL--CHOSEN HEAVY INDUSTRIAL PROJECTS SHOULD NOT BE UNDERTAKEN
IMMEDIATELY BUT THESE SHOULD NOT EAT UP THE BULK OF INVESTMENT FUNDS (p. 28) |
1. INDUSTRIALIZATION SHOULD BE THE MAIN
PROGRAM WHILE AGRICULTURAL DEVELOPMENT MUST SUPPORT IT (p.
34) 2. THE INDUSTRY-AND-AGRICULTURE POSITION
MIGHT BE HARMLESS BUT WITH THIS POSITION CONFLICT IS AVOIDED AT THE LEVEL OF IDEAS
WHILE ACTUAL PLANNING FOR INDUSTRIALIZATION IS NOT ADDRESSED (p. 33) 3. THE MORE INTENSIVE AND PRODUCTIVE USE OF
AGRICULTURAL RESOURCES FOR FOOD PRODUCTION INSTEAD OF EXPORT CROPS MUST BE
PRIORITIZED. IN TURN, PROPERTY REFORM IN AGRICULTURE AND REORIENTATION
AWAY FROM EXPORTS MUST BE GIVEN MORE PRIORITY TO PERMIT INTENSIVE LAND
USE. BUT THIS DOES NOT MEAN THAT
INCREASING SUSTAINABLE MANUFACTURING ACTIVITIES MUST AWAIT FOR THE SAID
REFORMS TO TAKE PLACE, OR THAT THE
COUNTRY CANNOT UNDERTAKE INVESTMENTS
IN A FEW, WELL-CHOSEN BASIC INDUSTRIES.
(p. 34) |
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DE
DIOS, EMMANUEL
1. there is no hindrance in
economic theory to the possibility that the country may industrialize or deepen
capital accumulation under a protectionist umbrella of tariffs, and subsidies
given to private capital. In practice,
this has been achieved, in different ways and varying degrees, by such formerly underdeveloped countries as
Japan, the NICs, and some countries in Latin America. (p. 12)
2. if monopoly rents are to be allowed in an
industry at all, then it would certainly make more sense for such an industry
to be nationalized, i.e., state owned (p. 15)
MONTES,
MANUEL
1. the guarantee that the
evils of industrialization will be checked is to pursue industrialization
within a democratic political framework
2. the case of Japan and the Asian newly industrializing
countries (NIEs) forcefully demonstrate that natural resources are of secondary
importance to industrialization (p.
32)
3. the agriculture that
industrialization requires is that which will feed the population and the
exports that industrialization requires are those of manufactures, not
agricultural products (p. 33)
4. the imperative for nationalist
industrialization emanates from Philippine historical reality. (p. 34-34-35)
The first reality is that the Philippines had been a colony of
Spain and the United States; nationalist industrialization is directed at
rooting out the colonial economic structure and changing the country's position
in the international division of labor.
The second reality is that the Philippines must attempt to
industrialize within a world dominated by strong industrial powers; industrialization must be nationalist because
sovereign power must be used to
support the growth of domestic
manufacturing capability. The third reality is that assets and incomes
are very unevenly distributed; industrialization must be carried out from a
starting point wherein the majority are very poor and that the people's ability
to participate in industrialization must be raised to make the process
feasible. (p. 34-36)
5. very often, the cost of attracting foreign investments
to the country exceed the benefits. (p. 35)
6. Protection must be provided
to domestic enterprises. This
protection is directed at shielding enterprises from foreign competition so
that they build up the capability to match the world level of efficiency.
Protection should not be directed at granting monopoly privileges. Protected enterprises must earn
protection by periodic demonstration of reducing their production costs. (p. 40)
7. the World Bank and
conservative economists have identified export-orientation as a key factor in
the successful industrialization drive of Korea and Taiwan. The export
successes of these countries have permitted their domestic industries to
expand. We must point out, however,
that the successes in the manufactured exports of these countries depended on
the initial existence of a domestic industrial capacity. These countries
underwent vigorous periods of import-substitution that created the capability
for manufactured exports. (p. 44)
8. export-orientation within
the context of the Philippine industrial structure, discourages domestic processing
of agricultural products and raw materials and requires the massive entry of
foreign enterprises into the country. Export earnings have always finance the
economy's trade deficit and, lately,
service the foreign debt. The proper role exports should play is to
finance the importation of needed capital equipment and technology not yet
domestically available and to take advantage of economies of scale in manufacture when the domestic market is too
small to absorb all of the output. (p. 45)
9. why Philippine efforts to
industrialize failed in the 1950s (p. 46-49)?
a) the
advantages given to protected enterprises were so significant that there was no
incentive at all to expand and integrate operation by selling to markets abroad
b) because
the domestic markets remain small, these protected enterprises eventually
evolved into monopolies or oligopolies, which discouraged further capital
investment
c) the
participation of foreign capital was such that they were drawing much capital
out of the country that it made no sense for them to reinvest
d) wrong
enterprises were being protected to the detriment of others
e) some
enterprises were being protected for too long
f) it
is not protection that caused the failure of the industrialization process but
the inappropriate implementation of protection
LIM,
JOSEPH
1. the primary objective of
a new progressive order need not be the redistribution of wealth and income
(mainly by changing property rights), with efficiency and growth relegated to a
distant secondary role. (p. 51)
2. it is folly for the
country to do the following:
a) to close doors outright to all possible
sources of external financing. (p.
56)
b) to embark immediately on a heavy
industrialization program where the light, medium and labor-intensive
industries are given secondary attention compared to heavy ones such as steel,
automobiles, fixed equipment, and construction industries. (p. 58)
3. studies have shown that
South Korea has in effect protected its heavy industries for decades against
foreign multinational firms even while it has reserved some areas like
semiconductors for multinationals (p.
68)