IN psychology, the Fundamental Attribution Error denotes people’s tendency to overestimate the impact of character or personality on the actions of others and to underestimate the effect of external circumstances. In political economy, such attribution error is committed when we assign full praise or blame to particular presidents for economic gains or losses during their time in office.
What is more likely true is that economic gains and losses during a presidential term occur from a combination of actions taken by the president (and his administration) and external circumstances, including global economic forces and residual effects of actions taken by previous presidential administrations.
It is nearly impossible to completely tease out which portion of economic gains or losses is attributable to a sitting president and which portion to external circumstances. The best we can do is to refine the information that we have in order to reduce, to the extent that we can, the magnitude of attribution error.
For example, it makes more sense to evaluate Philippine economic performance over time relative to the economic performance of its comparable Southeast Asian neighbors. Global and regional forces sometimes come into play, which constrain how much countries are able to grow in certain periods. The current pandemic, the 1997 Asian Financial Crisis, and the 2008 Global Financial Crisis are good examples. A relative comparison is a way of controlling for these external forces, as illustrated below.
The three neighboring countries most often compared to Philippines are Indonesia, Thailand, and Malaysia. The given table shows how the Philippine economy performed vis-à-vis these three countries across different presidential terms.
During the 20-year Marcos rule, Philippine annual GDP growth was lower by 2.9 percentage points compared to its neighbors. Assuming a similar starting base, a difference of this magnitude in annual growth will translate to a difference of more than 70 percent in GDP level after 20 years. This was the period when the country fell far behind its neighbors.
The country also did relatively poorly during the time of President C. Aquino, with annual GDP growth lower by 4.9 percentage points compared to its neighbors. The last two years of President C. Aquino’s term—a period of political instability following repeated coup attempts—were especially tough, as the country’s growth was slightly negative, whereas its neighbors grew by about 7.5 percent per year. Other idiosyncratic shocks during and around the period included the Luzon earthquake in 1990 and the Pinatubo eruption in 1991, both of which likely impacted the economy negatively.
It was only during the time of President Fidel Ramos that the country was able to keep pace with the economic growth of its neighbors. During the six-year Ramos presidency, Philippine annual GDP growth was behind by only 0.2 percentage point compared to its neighbors.
Philippine GDP growth fell slightly behind its neighbors during the two-year term of President Joseph Estrada, and then kept pace with them again during the 10-year presidency of Gloria Arroyo. It is worth noting that a devastating tsunami hit parts of Indonesia and Thailand during this period (in late 2004), and the catastrophic Typhoon Ondoy damaged parts of the Philippines.
It was only during the time of President Benigno Aquino that the country finally surpassed the economic growth of its neighbors. From 2011 to 2016, the Philippine economy grew higher by 1.5 percentage points per year, on average, compared to its neighbors.
During the Duterte presidency (up to 2020), the country has fallen slightly behind again—by 0.3 percentage point per year—relative to its neighbors. The country did well enough from 2017 to 2019—performing better than its neighbors by about 1.7 percentage points.
But when the pandemic came in 2020, the country’s economic growth lagged by 5.8 percentage points relative to its neighbors. On a year-by-year basis, this was the worst the Philippine economy has performed relative to its neighbors in 28 years.
One would get a different impression if Philippine economic growth was not viewed relative to its neighbors’. Growth during the terms of President Marcos, President Ramos, and President Estrada would be almost the same, and President Arroyo’s would be noticeably better than all of them.
Nevertheless, context matters, and the relative comparison illustrated here is just one way of contextualizing historical Philippine economic growth.
Dr. Geoffrey M. Ducanes is an Associate Professor at the Ateneo de Manila University Department of Economics.