• PSR 28 (1980): 81-88

PHILIPPINE UNDERDEVELOPMENT AND

DEPENDENCY THEORY
RANDOLF S. DAVID
University of the Philippines

Dependency theory takes off from the fundamental premises of the theory of imperialism
and traces the roots of backwardnessand underdevelopment to our country's increasing integration
into the vicious circuit of foreign capital, technology and markets. In examining the relationship of
domination and dependency between the advanced capitalist countries and the underdeveloped
countries, the paper describes the situation in the Philippines. The social realities that we now
confront in the country are that we are witnessing the growing and unstoppable domination of our
national economy by transnational corporations, the impossibility of repaying our international
indebtedness, the increasing pauperization of the rural masses, the total degradation of our
marginalized urban poor. to name only a few. There is need then to develop a truly self-directing
economy and we must articulate this critical knowledge in every conceivable forum.

Introduction were told that we should wait, that we must

be patient - for in aspiring for the value of
These are troubled times for many of our independence, we were also giving up the
people. Certain values on which we have built imposed orderliness of colonial subordination.
our society are threatened: the values of Having chosen freedom, we must, accordingly,
economic security. of justice and equality, of now learn to solve our own national problems
freedom and the opportunity to participate in our own way - in short, to live as free men.
the building of our own communities, the
value of peace and political stability. Today, however, decades after we have won
our formal independence, we find the same
Our countrymen feel the threat to these problems plaguing us. The only difference is
values at the individual level, and they that they have become much more serious. So
experience a terrible uneasiness. Our leaders many of our people are still without regular
perceive the existence of a Widespread malaise, employment, or decent housing over their
and they declare that we need a crisis heads, or even enough food for their families.
government. Many continue to die without benefit of
medical care.
In the past, we had experienced similar
difficulties. Many of our people did not have At the societal level, the gap between the

• enough to eat, there were not enough jobs for

everyone, there was much corruption at all
levels of the government bureaucracy, our
very rich, and the marginalized classes has
Widened, and the poor have become poorer
not only in relation to the rich but in
currency was so unstable it was not honoured absolute terms. Galloping inflation has
in international financial circles, and our effectively eroded the purchasing power of the
national economy just managed to survive peso to only 25 centavos as compared' to
from year to year. 1965. Thus, if a worker is getting 16 pesos
today, that is really equivalent to 4 pesos in
Yet we had always been assured by foreign 1965, which is below the minimum wage, for
experts that these were only temporary that year.
traumas that naturally accompanied our
delivery into full independent nationhood. We Yet signs of affluence are everywhere: the

• 81
82· PHILIPPINE SOCIOLOGICAL REVIEW
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palatial mansions in the exclusive subdivisions, their people from persistence poverty, they must
the modem condominium houses -dult dot the unlearn their culture of poverty and all the
Makati landscape, the ultra-modern shopping traits and values associated with it, and they
centres, the five-star hotels and country club must now embrace the culture of progress and
houses that cater -mainly to tourists, foreign the .' modernizing ethos associated with the
investors, and the local elite: All of these have industrial capitalist countries of the West. iil
superficially given Metro Manila the skyline of addition, they must allow the industrial West
a first world country. But behind these to bring in the necessary capital, industrial
buildings, .in the shadow of such affluence technology, . and expertise through TNC
have arisen the slum colonies of the investments, loans, and aid. Such a formula ~
. dispossessed Filipino - a grim testimony to promises to upgrade our traditional societies
the inequality of development Outside of to at least the stage of "take-off' where they
those continental restaurants where the can nurture the resources necessary for a fully
genteel class leisurely finish a meal still with developed industrial society,
half-full plates, little children and old women
busily scan the contents of garbage cans The point of view I have outlined here is
hoping to retrieve some food that can still be justly going out of fashion. In' its place, a
eaten. But the wealthy have learned to protect framework that traces the roots of
their conscience very well against the assault backwardness and underdevelopment to the
of so much poverty and so much inequality. pernicious 'effects of colonialism has been
They have' tinted their airconditioned cars substituted. Today it is. increasingly being
carefully 'so . that they don't have to realized that our salvation from perpetual
acknowledge the presence of beggars on the underdevelopment does not lie - and never
road; they choose their neighbors well so did - in allowing our societies to be further
that the' vista from their porches may not be incorporated into the vicious circuit of foreign
marred by the sight of squatter shanties and capital, technology and markets: More
hovels. They have even constructed their own precisely, we are now beginning to understand'
exclusive places of worship so that their how in a formally free country like ours,
reflections may not be disturbed by the raw modern imperialism and its abiding agents -
suffering that stares at them outside the the transnational corporations and their local
churches of Quiapo and Baclaran, allies among the elites - have firmly established
the disabling conditions and structures of
In the past, the underdevelopment and poverty, inequality, repression and domination.
poverty of Third World countries such as ours
was explained asa function of their being What is this new perspective of which I

•
. traditional societies. According to this view, speak? It is known as. Dependency Theory,
Third World societies are backward because and it is not really new. For it takes off from
.they are predominantly agricultural societies the fundamental premises of the theory of
that produce only a meager surplus if any. imperialism. What is new is that it speaks
- .
They are agricultural because: they are clearly and concretely about the periphery -
late-comers in the development scene. And the former colonies, specifically the Latin
they have remained so because their people do American societies that have come under the
not possess those modernizing entrepreneurial wing of American imperialist domination. The
values that are Widely to be found in the social and economic. conditions that
peoples of the economically advanced or Dependency Theory speaks about bear an
industrialized countries. uncanny similarity with those that we
confront in our own country and in the rest
Accordingly, if the backward countries of
the Third World wish to develop- and rescue
of Asia. Let me discuss very briefly some of
the fundamental theses of this theory,and •
• PHILIPPINE UNDERDEVELOPMENT 83

then we can start looking at our own situation powerful transnational conglomerates, we are
in the Philippines. Essentially, this perspective experiencing the rapid erosion of our national
stresses the importance of examining the culture as a direct result of the invasion by
relationship of domination and dependency aggressive consumerist culture from the
between the advanced capitalist countries advanced capitalist countries.
(me tropolitan countries) and the
underdeveloped countries (also known as These, in brief, are the focal points of
satellites or peripheral economies) as a way of Dependency Theory. Let us now look at our
accounting for the poor countries' continuing own situation at home.
underdevelopment. This relationship is best
described as one of dependency, which means Some Aspects of Dependency
concretely that: and Underdevelopment in the Philippines
The Philippines shares the basic reality of
1. our economy is massively shaped, all Third World countries. This is the reality
distorted, and deformed by even the mildest of dependent and unequal development - a
twist or turn of the global capitalist order; form of development that fattens global
corporations and their local partners while
2. that precisely because of this further impoverishing the poorer classes. The
incorporation into the world capitalist circuit, most abiding agent of this type of
our economy remains preponderantly
development is the ubiquitous TNC or
dependent on a few agricultural export crops
transnational corporation.
like coconuts and bananas, metallic minerals
like copper, and labor-intensive sweatshops
Our government technocrats are convinced

• like garment and electronic semi-conductor

factories to generate foreign exchange;
that the future of our economy lies in our
capacity to ride on the coat-tails of the
transnational corporations. The TNCs are seen
3. that our local elite becomes
as the bearers of capital, technology, and
subordinated to international capital, fulfilling
access to foreign markets which,
a basically comprador and supervisory role,
undisputably, are essential ingredients of any
and raking in huge profits from being simply
industrialization program.
the bridgehead or extension of neo-colonialism
in our country; Under the Martial Law government,
therefore, we have dutifully amended our
4. that as a logical precondition for laws and introduced new legislation to create
sustaining a pattern of dependent and unequal a conducfve atmosphere for foreign
development, a strong' authoritarian and
• repressive regime is increasingly favored by
international capital, and is locally justified as
investments. We have bought precious space in
prestigious international business magazines to
advertise our readiness to serve as a sanctuary
the only effective antidote against perpetual for foreign corporations that are forced to
underdevelopment; move out of their home bases by spiralling
wages, taxes, and stringent anti-pollution laws.
5. that while the local collaborating elites One of the large TNCs which immediately
share in the gains of this dependent responded to this invitation was the Kawasaki
development, the peasants and the workers are Sinter Corporation which set up the Sintering
permanently marginalized by the entire Plant in Villanueva, Misamis Oriental, the
process; same plant that was strongly resisted by the
Japanese residents of Chiba, and subsequently

• 6. that as a society caught in the frenzy of

the international market, controlled by
turned away by the Australian and Peruvian
governments.
 84 PHIUPPINE SOaOLOGICAL REVIEW
•
In Mariveles, Bataan, we have set up an Our technocrats have assured us that it is
industrial export enclave which offers some of natural for developing countries to borrow
the most generous investment terms to be money initially, and that we need not worry
found anywhere in the Third World. Here, in as long as our borrowings are rationally
this enclave, we give tax exemptions forfhe. invested. Someone even suggested that huge
imports and exports of TNCs, we allow them borrowings are a sign that the economy is
tax holidays for the first few years of their dynamic. Increasingly, however, we begin to
operation, and we give them the right to doubt whether the national development
deduct from their subsequent taxable income program .that our government has launched
the losses they may incur during the first five will ever rescue us from perpetual
years of their operation. In both Misamis indebtedness, and indeed, we worry whether
Oriental and Bataan, we have cleared our such loans have really been Wisely used.
lands and driven our own people from their
ancestral homes so that these global giants One thing is certain though - this type of
may have their industrial estates and export development has severely hit the lower sectors
processing zones. of our population most. The landless urban
poor are mercilessly evicted to make room for
industrial sites. Whole communities are
Having discovered that transnational
displaced from their ancestral lands to make
corporations .are animated by the constant
way for export-processing zones, export crop
search for cheap and docile labour, we have
plantations, industrial estates, and
joined our Asian brothers in the debilitating
hydro-electric dams. Urban slum-dwellers are
race to keep our workers' wages down and to
ruthlessly. dumped into relocation sites away
suppress the rights of organized labour.
from the city as part of a massive
Consequently, our economy has become
nothing more than the sweatshop of global
corporations. This hysterical preoccupation
beautification campaign aimed at attracting
and accommodating the increasing number of
foreign-exchange carrying tourists. Instead of
•
with export-oriented industrialization has been
housing programs and medical care for the
thrust upon us by the realization that we
poor, our government has embarked on a
could no longer rely on our traditional
wanton expenditure of the national wealth in
primary exports - like sugar, timber and
high-visibility .international image building
copra - to generate our foreign exchange
campaigns whose components typically
requirements. And foreign exchange we need
include sponsoring international beauty
in large steady amounts. For we have
pageants, international conferences, and
borrowed billions of dollars from international
international basketball,' boxing and chess
lending agencies and private financial consortia
tournaments.
in order to keep our economy operational, as.
well as to meet our outstanding global. . In 1975, for instance, in order to provide
accounts. Each year, our national deficit suitable accommodations to delegates to the
grows bigger, and we realize that we are IMF·WB Conference, we built 13 new 5-star
barely able to meet\ even the interest . hotels. Today, hotel managers rejoice when
payments, let alone the loans themselves. But they can attain a 4m occupancy rate. These
we bravely plod on, eve~as we helplessly are very expensive hotels. Manila Hotel, for
watch the rapid drain of'~our resources example, was re-built reportedly at a cost of
through the massive repatriation and 35,000 US dollars per room. Large amounts
remittance of profits by foreign capitalists, of public funds went into this madness. In
and also by our own local elites who keep particular, money that should have gone to
deposits in Swiss bank accounts as a the construction of low-cost housing went
protection against expropriation or any
sudden change of government.
instead into
accommodations.
the subsidy of tourist
•
• PIDUPPINE UNDERDEVELOPMENT 8S

This is not the end of the story. Concerned Another component of the strategy to keep
economists have told us that such unabated subsistence levels down is the full-blown
government expenditure has contributed program to attain [Link] in basic
heavily to the terrific inflation rate that has staple crops such as rice and com. I would
eroded the value of the peso. Everyone like to discuss this aspect in relation to the
knows that a devalued peso means simply high continuing underdevelopment of peasant
prices. Let me quote from a recent lecture of communities. What is happening in the

• Dr. Gonzalo Jurado on this issue: "In money

rerms, the wage rate of skilled laborers in
Metro Manila increased from about P7.30 in
1966 to approximately P15.40 in 1978, but
Philippines is typical for the rest of Asia. Here
low wages and industrial peace - which are
fundamental prerequisites of TNCs - are
effectively maintained through a combination
the real value of this wage rate fell from P7.30 of political repression and price ceilings on
to P4.70, a decline of more than 35%, because subsistence items like rice and com.
of price increases. . . . To enable him to Accordingly, a low ceiling on the price of rice
maintain a family of six right at the poverty is enforced via the intervention of government
threshold in Metro Manila in 1978, the skilled as a buying and selling agent. This is the role
worker needed to have a wage of P26.18 per of the National Grains Authority. Together
day, or 69% more than his actual wage." with this is a sustained effort to increase rice
production through the use of the HYV
technology. These High Yielding Varieties are
In societies like ours, where the short-term heavily dependent on agricultural inputs such as
and long- term targets do not go beyond chemical fertilizers and pesticides, tractors,
assuring the country's capacity to pay the and efficient irrigation systems - all of which

• annual interests on foreign debts, while

guaranteeing profits for the TNCs and the local
business elites, the objective consequences of
have the net effect of multiplying the capital
needs of the ordinary peasant.

hardship and suffering are bound to be Increasingly, the government calls upon the
singularly absorbed by the already depressed big corporations to go into rice production by
populations. Their needs must be kept simple compelling those that hire not less than 500
and at a minimum level in order that wages employees to supply the rice needs of their
can be kept at a low competitive level. Since own workers. These corporations have no
naked force and coercion always generate trouble generating the necessary capital and
greater unrest in the long run, it is typical for mobilizing managerial expertise to meet the
governments like ours to resort to a soft-sell demands of this type of capital intensive
strategy. agriculture. In contrast, small farmers are not
prepared to invest so much money in
agricultural inputs because they would like to
keep the cost of possible crop failures to a
This soft- sell approach may have several manageable minimum. Consequently, their
components. In the Philippines, we have seen scrimping on fertilizer, pesticide, and irrigation
the massive campaign to reduce family sizes expenses produces for them less than the
through artificial contraception. While we have optimum yield. A Daily Express report, dated
not resorted to outright coercive measures February 27, 1979, describes the financial
such as the compulsory vasectomy program proportions of this predicament: "It now
launched in India by Mrs. Gandhi's son, our takes P64.16 to produce one cavan of palay...
government has started to consider imposing The production cost is P9.16 higher than the
penalties upon prolific families. Already, we present government support price of P55 per

• cannot claim tax deductions for more than four

children.
cavan. Under this pricing set up, a farmer
must now produce 81 cavans per hectare to
 86 PHILIPPINE SOCIOLOGICAL REVIEW
•
break even, as against the average yield of COSts. The official line is that internal
56.9 cavans per hectare in irrigated land as hardships are externally induced. Fine, if that
reported by the BAE and the NEDA, is the case, the logical solution should be to
. agribusiness specialist V.L Domingo said disarticulate ourselves from the external
yesterday." sources of our national- troubles. Yet judging
from the hysterical manner in which we
. The difficulties of the small farmer continue to sell the country to foreign
typically compel him to sell his land to bigger
agricultural entrepreneurs who may use the
land to plant the same crop, or to convert it
investors and the manner in which we
systematically place ourselves in a position of
utter dependency upon agents of the inter-
•
into a real state subdivision, or to make way national capitalist order, it woulct appear that
for a factory site. In any case, after selling his on the contrary our increasing incorporation
land, the peasant, now landless, is compelled into the circuit of global imperialism has been
to move into the city to become a worker - beneficial to some sectors of Philippine
that is, if he can find a job. He is likely to be society. It is these factors that continue to be
joined in this exodus by the thousands of favoured by present government policy.
workers in the Visayan sugar haciendas who
have been displaced as early as 1975 as a In the meantime, our country's increasing
consequence of the crash in sugar prices in the integration into the world capitalist market
international market. . has been wreaking havoc on our cultural
system. The high-pressure peddling of
Meanwhile, as the national economic pie multinational commodities is drastically
becomes smaller as a result of the sustained transforming lifestyles both in the cities and
repatriation of the profits of foreign
corporations, social tensions within the society
are aggravated. When prices go up, and wages
the countrysides. In the cities, as also to a
certain extent in the rural areas, the
ready-made denim pants of the blue-jean
•
are kept down, when jobs a~e not easily TNCs like Levi's and Amco are putting local
obtainable .and public facilities and social tailors out of commission. Canned food and
services deteriorate - that is the time when junk foods have captivated the palate of
the worst in each one of us begins· to villagers who have become dependent on
surface. In self-seeking orgies of profiteering, these, also as a logical consequence of the
hoarding, short-selling and robbery, we pounce spread of wage labour.
on each other in an effort to assure individual
and family survival. American and Japanese TNCs have also
invaded television and radio lines.. While
Ironically, in situations such as this, Mickey Mouse continues to sell the all-time
government by a strong-willed dictator junk, Pepsi Cola, our children have recently
acquires a particular appeal. The poor have, become mesmerized by the heroism of the
always suffered and have never enjoyed the Japanese space robots - V~ltes V, Mazinger
rights of the bourgeoisie in any case, so they Z, Mekanda Robot, and the like - which are
would have. nothing to lose by supporting an now used to sell sausages and luncheon meat
authoritarian regime that expresses itself in for an American multinational food' company.
populist rhetoric. Once again, the State comes
to be perceived as a neutral referee rather . Our failure to develop a truly self-directing
than as a protagonist in the social struggles of economy is further reflected in our inability
the society. Typically, the call for sobriety, to promote a national language. As our
patience, and u-iity is sounded, while a stern . economy deteriorates into an appendage of
warning isissued against anyone who discusses global monopoly
the structural causes of the existing social
capital, it becomes
increasingly logical for Filipinos to learn the •
• PHILIPPINE UNDERDEVELOPMENT 87

language of international business and impossibility of repaying our national

commerce. It is largely because our economy indebtedness, the increasing pauperization of
has remained heavily a captive of the the rural masses, the total degradation of our
American economy that English continues to marginalised urban poor, the intensification of
dominate in our society. That Japan has political coercion as our economy increasingly
surpassed America as our number one trading fails to provide for the needs of the poor
partner is also concretely reflected in the majority, the intensifying participation of the

• growing popularity of Nippongo, Interestingly

- and perhaps as an indication of the nature
of our economic ties - the first to master
military in our national life, and more
aggressive intervention by the United States
and Japan in our national affairs as a result of
Nippongo are our travel agents and the the greater need to secure and protect their
prostitutes of Mabini and M. H. del Pilar. In investments from possible expropriation under
other countries, the presence of a viable and another regime.
meaningful national market constitutes the
fundamental ground for the growth of a If I paint a bleak picture of the national
national language. We hardly even have a situation we confront today, it is not to
shred of a truly pervasive national market. indulge in academic pessimism. It is rather to
That is why while our commercial and suggest that those who have the time to
business elites transact business in English or comprehend the complexity of our national
Nippongo, Filipino peasants and workers deal troubles have a singular obligation to share
with each other in their own regional their understanding with the rest of our
languages. people. This does not mean junking university
education in favor of immediately going into
In the foregoing, I have tried to depict in communities to conscienticize and organize
capsule form the social realities that we now people. Perhaps it means above all
confront in our country. Let me attempt to transforming university education first by
summarize in one long sentence what I have freeing it from market determination.
tried to describe to you. In the Philippines Concretely, it means .spending precious
today, as perhaps in the rest of Third World university time to deepen our understanding
Asia - we are witnessing the growing and of how our society works, and articulating
unstoppable domination of our national this critical knowledge in every conceivable
economy by transnational corporations, the forum.

•
 PHILIPPINE SOCIOLOGICAL REVIEW

•
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