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Monday, October 26, 2009

We were not second to Japan

Once in a while, you get to hear the story of the golden age in Philippine history, the time when we were once next to Japan. Journalists usually evoke this story to illustrate how far we’ve fallen from grace as an Asian tiger. You hear this as well sometimes from conversations with older people, nostalgic of the past, implying that things were better during the pre-Marcos martial law era. If only we didn’t mess things up…

Well, guess what? Data shows that we were never the second best economy in Asia.

Below is a motion chart I made using historical GDP per capita (from Maddison) of various Asian countries going back to the 1950’s (if you're viewing this from facebook, you need to access my blog here). Note that, we were a middling country to begin with, behind Singapore, Hong Kong, Malaysia, Japan, Sri Lanka, and even Taiwan in the early post war years. From then on, we were simply outpaced by Thailand, Indonesia, South Korea, and China. Here’s a link to the bigger chart, in case you want to play around with the data.

I want you to think about this the next time someone claims we had things much better before. We did not. There was no golden age. And perhaps by liberating ourselves with this misguided view, we can press on harder in search for what "works."

13 comments:

Nicole L. Paterno said...

Hey Paolo,

I came across your blog from Leland's FB status. Is there a way I can converse with you? Because I'd like to discuss my work --- and it's called the Brain Gain Network www.bgn.org.

You can also e-mail me: nicole.paterno@bgn.org. Thanks and hope to hear from you soon.

Paolo Abarcar said...

Hi Nicole,

I see you've seen my postings on migration and development - it's an issue I am passionate about. You can contact me at paoabarcar@gmail.com.

Best,
Paolo

Bobing said...

Good of you to do this. You were not a student of mine in Dev econ and in fact this is one of our first topics. May I have this as part of our reading list?

Paolo Abarcar said...

Bobing, feel free to link to anything that you find interesting. Glad my analysis will be able to contribute to some learning. I appreciate it when people read and comment.

Francis said...

er, the notion that "we were second to Japan" in the early postwar years is based on GDP, not GDP per capita. you may want to get other sources of data, that measure GDP after 1945.

in any discussion of size of economy, GDP is the criterion, not GDP per capita. The US, Japan and China are considered the 3 biggest economies in the world, yet several small European nations have much bigger GDP per capita than each one of the big 3.

Paolo Abarcar said...

thanks francis. i invite you to check out the data because if it were GDP, not GDP per capita, then we still wouldn't be second to Japan. I linked to the Maddison data above, which is considered generally as the most reliable datasource for historical GDP. China, Indonesia, India all would dwarf us in GDP because of the sheer number of their people.

Paolo Abarcar said...

Actually, to make it easier, here's the link to the GDP data: China, Indonesia, Bangladesh, India all had better GDP than we had. We were not second to Japan:

http://www.ggdc.net/maddison/Historical_Statistics/horizontal-file_02-2010.xls

Francis said...

"i invite you to check out the data because if it were GDP, not GDP per capita, then we still wouldn't be second to Japan."

That's why i asked you "to get other sources of data, that measure GDP after 1945" because you only cited and relied on GDP per capita in your article. And because anyone who had been writing about "being 2nd to Japan" thought about GDP, not GDP per capita

the link is noted. thanks

You may have to re-write your article then, basing your conclusions on GDP, not GDP per capita.

Particularly your statement "...we were a middling country to begin with, behind Singapore, Hong Kong, Malaysia, Japan, Sri Lanka, and even Taiwan in the early post war years."

At least now there are data that say the Phils was never second to Japan in terms of GDP after the war

But its worth stressing that South Korea sneaked past the Phils in 1970, by Thailand in 1978, by Taiwan in 1984, as per the Maddison list

im curious - how did Maddison become "the the most reliable datasource for historical GDP"?

with respect to Malaysia and Singapore - how come their (individual) GDP is smaller than the Phils.?

and how come the GDP of Hong Kong is also smaller than the Phils.?

Paolo Abarcar said...

Francis, your points are well-noted. When I do get the time to rewrite, I'll place your suggestions. Thank you.

Yes, Maddison is the go-to historical datasource for GDP -- I got word of this from economists I talk to at work. The other one, the World Bank's, only goes up to 1960s. But the results are the same.

Yes, Hong Kong's GDP is smaller since it only has a population of 6mil while the Philippines has 90mil. The bigger GDP is driven solely by the population. And that's why I still maintain GDP per capita is the more appropriate measure... But I agree with you that I should note how it looks through GDP.

Francis said...

Hong Kong, Singapore, and Malaysia, even with their smaller population, have a GDP bigger than the Philippines. Its embarrassing really, because at the surface it shows that their citizens are much more productive than Filipinos

Anonymous said...

Francis is an idiot. Pilosopo but totally does not get the point.

Anonymous said...

You're way too nice to Francis. :)

Anonymous said...

Just when Marcos took over (1966?) the Phils wasa booming economy. Filipino industrialists were surging forward. But gradually up to the onset of Martial Law, the decline began. This was due to Marcos wanting to have a share of any big company for nothing. Hence, the big businessmen left, most of them migrating abroad. During those years, we have electronics products and other industries at par with other asian countries. Remember Ysmael Steel? Had it not been for Marcos, maybe the other Asian would not have overtaken us economically.

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