THURSDAY, March 28, 2024
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Divergent twins: Philippines and Thailand

Divergent twins: Philippines and Thailand

In 1970, the economies of the Philippines and Thailand seemed like identical twins. Almost five decades later, it’s worth recounting just how much that has changed. 

On at least three counts, the Philippines and Thailand were identical in 1970. We had the same population at 36 million. Our populations were growing at exactly the same brisk pace of 3.1 per cent per year. Filipinos and Thais had the same average income (gross domestic product per capita) at US$190. Just 10 years earlier, Filipinos were more than twice richer ($254) than the Thais ($101). In 1980 average income in the two countries was still identical at $684.
By 1990 the Thais – with GDP per capita of $1,508 – had become more than twice as rich as Filipinos (GDP per capita $715). Last year the numbers were $5,901 and $2,951, respectively, still a 2-to-1 ratio. From 1980 to 1990 Thailand’s annual population growth rate had slowed to 1.8 per cent, while ours averaged 2.4 per cent. By 2002 we Filipinos numbered 80 million, while the Thais had only grown to 62 million. Thailand’s annual population growth rate has since slowed further to only 0.3 per cent, while ours is at 1.6 per cent. Today our population of 103 million is closing in on double that of Thailand (68 million).
The relative downswing in Philippine fortunes also shows in the structure of the two countries’ economies. Agriculture contributed 32 per cent of Thailand’s GDP in 1965; for the Philippines the share was smaller, at 26 per cent. At that time, the University of the Philippines was teeming with Thai agriculture students. 
We were more industrialised than Thailand then: Industry accounted for 23 per cent of Thai output, while the industrial sector made up 27.5 per cent in the Philippines. Services accounted for 45.2 per cent of output in Thailand; in the Philippines the share was 46.7 per cent. In 1965 we were also identical twins in foreign trade structures, with exports and imports accounting for 17 per cent of total production in each country.
What a difference five decades makes. Thailand has become the power hub of Asean, with industrial output now at 35.7 per cent of its total output (it peaked at 40 per cent). In the Philippines, the share of industry is 30.8 per cent. Highly productive Thai agriculture now accounts for 9.1 per cent of total output, while in the Philippines, agriculture’s share is 10.3 per cent. Services now make up 55 per cent in Thailand; in the Philippines it is 58.9 per cent. Thai exports now account for 69 per cent of its GDP, while imports are equivalent to 58 per cent. In the Philippines, exports account for only 28 per cent, while imports represent a bigger percentage at 34 per cent.
In 1965, gross domestic investment made up 20 per cent of GDP in both countries. Gross domestic savings as a percentage of GDP were also nearly equal, with the Philippines slightly higher at 20.3 per cent against Thailand’s 18.5. By 1991 the situation had reversed dramatically. Thailand had 39 per cent gross domestic investment, while the Philippines only had 20 per cent. Savings had gone up to 30.4 per cent for Thailand, but had hardly moved at only 21.3 per cent for the Philippines. In 1998, Thailand attracted $7.8 billion in foreign direct investments (FDI), while we settled for $2.3 billion. With such a high saving rate coupled with three times as much FDI, it’s no wonder Thailand has less than a million unemployed workers while we have about 2.5 million.
Obviously, there is something terribly wrong with the way we have managed our affairs compared to our now-estranged twin of five decades ago. We have seen a dramatic reversal, sadly, from that time when Thais considered us their mentor in agriculture and in many other things besides. As a Filipino commentator once put it, “We just taught. We did not do.” Now it’s our turn to be taught.

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