Evaluating the economic costs of martial law in the Philippines: a synthetic control method approach
Date
2016-12
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Abstract
This research paper aims to determine whether the imposition of Martial Law in the Philippines for the period 1972 to 1981 had an adverse effect on the levels of GDP income per capita. We compared the economic performance of the Philippines with a “counterfactual” Philippines, i.e. a Philippines that has not experienced Martial Law using synthetic control method on a group of countries to create a synthetic Philippines. It utilizes
their respective country-level panel data of determinants involving the investment flow, human capital index, population density, and shares of agriculture, industry, services, and manufacturing in the GDP. The models we used involved limiting the list of countries to (1) colonized countries, (2) colonized oil-importing countries, and (3) colonized oil-importing countries with secessionist conflicts. We were able to determine that the income GDP per capita of the counterfactual is consistently underperforming, relative to that of the actual Philippines; an average of the annual differences amounts to $505.19 (in 2011 US dollars) over the Martial Law period. Such a large gap between the two figures can be attributed to the pump-priming of the
Philippine economy during the period through the hastening of infrastructure spending and rapid export-oriented industrialization of the country, among others.
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Keywords
Martial law