The Philippines is largely an agricultural country. Its economy is based on free enterprise; individuals and nongovernmental entities are free to participate in its development and management, sometimes with the aid of government credit.
Agriculture, forestry, and fishing
The agricultural sector is a major component of the Philippine economy, although it contributes only about one-seventh of gross domestic product (GDP). Crops can be grown throughout the year in the country’s rich and fertile soils, and the sector employs nearly one-third of the total workforce. The principal farm products are sugarcane, rice, coconuts, bananas, corn (maize), and pineapples. Additional products include mangoes, citrus, papayas, and other tropical fruits; coffee and tobacco; and various fibres such as abaca(Manila hemp) and maguey, which are used mainly to make rope. A wide variety of vegetables are raised for domestic consumption.
Rice, the principal staple crop, is grown especially in central and north-central Luzon, south-central Mindanao, western Negros, and eastern and central Panay. About one-fourth of the total farmland is used for rice growing. Since the early 1970s rice production in the Philippines has improved considerably, and in some years there has been enough of a surplus that rice can be exported. Factors contributing to this increase in output include the development and use of higher-yielding strains of rice, the construction of feeder roads and irrigation canals, and the use of chemical fertilizers and insecticides. Use of scientific farming techniques in the Philippines has had its drawbacks, however. The newer strains of rice have required the application of expensive chemicals that generally must be imported, and improper application of those substances has caused serious soil degradation in some areas.
The Philippines is one of the world’s largest producers of coconuts and coconut products, and these are important export commodities. The area devoted to coconut production rivals that used for rice and corn. Sugarcane is cultivated widely in central and north-central Luzon, western Negros, and on Panay. Abaca is grown extensively in eastern Mindanao, southeastern Luzon, and on Leyte and Samar. Both sugarcane and abaca are important agricultural exports.
Fish provides a significant proportion of the protein in the Filipino diet, andfisheries have been growing slowly but steadily since the early 1990s. Canned tuna is the principal fish exported. Commercial fishing is carried on primarily off Palawan, Negros, Mindanao, and Panay. Among the most important commercial fishes are milkfish (a herringlike fish), sardines, anchovies, tuna, scad, and mackerel. Fish are raised in ponds in some provinces of Luzon, the Visayas, and Mindanao. The Sulu Archipelago is known for its pearl farms.
At one time about half of the Philippines’ total land area was covered with forests. Of this area, a large part abounded with trees of commercial value, especially lauan, narra (a species of Pterocarpus used in cabinetmaking), and other tropical hardwoods and pines. Heavy logging and inadequate reforestation measures, however, have reduced considerably the amount of forested land. A ban on the export of hardwoods has been in effect since the mid-1980s, but there is evidence that much hardwood timber continues to leave the country illegally. Trees from Philippine forests continue to provide wood for lumber, veneer, plywood, furniture, wallboard, pulp and paper, and light building materials, both for domestic and international consumption. Other notable forest products include rattan, gutta-percha, various resins, and bamboo.
Resources and power
Although the Philippines is rich in mineral resources, mining activities constitute only a small portion of GDP and employ an even smaller fraction of the population. Most of the country’s metallic minerals, including gold, iron ore, lead, zinc, chromite, and copper, are drawn from major deposits on the islands of Luzon and Mindanao. Smaller deposits of silver, nickel, mercury, molybdenum, cadmium, and manganese occur in several other locations. The Visayas are the principal source of nonmetallic minerals, including limestone for cement, marble, asphalt, salt, sulfur, asbestos, guano, gypsum, phosphate, and silica. Petroleum and natural gas are extracted from fields off the northwest coast of Palawan. Copper has remained the country’s primary mineral, although changing world market demands and investment incentives have rendered its production somewhat volatile.
Until the late 20th century, hydroelectric power supplied only a small proportion of the country’s electrical output, and thermal plants (most of which burned imported oil) supplied the major proportion. The completion of several dam projects on Luzon and the expansion of another project on Mindanao have increased the percentage of power generated by hydroelectric installations; irrigation and flood control have been additional benefits of some of the projects. Dependence on foreign oil has also been reduced by the construction of geothermal and conventional coal-fired thermal plants and, to some degree, by the exploitation of Palawan’s offshore petroleum reserves.
Manufacturing
Much growth in manufacturing took place in the Philippines in the 20th century, particularly in the 1950s and (after a slump in the ’60s) the ’70s. Since that time the sector has remained relatively stable, contributing roughly one-fourth of GDP, though it employs less than one-tenth of the workforce. The government has assisted the private sector by exempting certain new industries from taxation for a certain period. Only nominal taxes are imposed on selected industries, and loans on favourable terms are available to others.
Many factories are licensees of foreign companies or act as subcontractors for foreign firms, turning out finished products for export from imported semifinished goods. A large segment of the manufacturing sector, however, produces goods intended for domestic consumption. Major manufactures include electronics components, garments and textile products, processed foods and beverages, chemicals, and petroleum products.
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