What true industrialization should look like
What makes Pax Silica’s “artificial intelligence (AI) hub” in New Clark City so tantalizing is its promise of an industrial great leap forward for the Philippines via critical minerals processing, advanced chip and semiconductor manufacturing, AI data centers, and energy infrastructure.
We definitely need to move beyond being a mere exporter of raw materials, semimanufactures, and cheap labor. But is riding on the United States’ scheme to secure America’s own global AI supply chain the way to do it?
The Philippine economy has always been tied to the needs of its colonizers—Spain followed by the US. Today, we have an import-dependent, export oriented service economy with patches of industrial enclaves serving foreign markets. We have become a left-behind economy that cannot even feed, provide decent jobs and wages, or manufacture enough basic goods for our people.
Proponents say Pax Silica will change all that by moving the Philippines higher up the technological and industrial ladder, providing thousands of new jobs and higher incomes. It’s never that simple.
Any serious national industrialization strategy starts with the needs of our country and our people, not of others.
We need affordable food, housing, electricity, transportation, and medicines. Our farmers need farm machinery, irrigation equipment, fertilizers, storage facilities, and food-processing plants. Our cities need mass transportation. The whole country needs adequate and cheap energy, water, and telecommunications services. Our factories need steel, chemicals, machinery, electronics, and precision instruments.
A national industrialization plan would begin by identifying these needs and systematically developing our capacity to produce them.
This is such a basic principle that both extremes of the ideological fence—the Philippine government and the National Democratic Front of the Philippines—even agree on it. When the peace talks was still alive, negotiators from both sides understood that the aim of any industrialization plan was not simply to attract investments but to build an economy that meets our needs by using the full potential of our natural and human resources.
They drafted a Comprehensive Agreement on Social and Economic Reforms that proposed a balanced industrial structure in which agriculture serves as the economic base, light and medium industry connects agriculture with manufacturing, and heavy and high-technology industries provide the machinery, materials, and technologies needed for long-term development.
The end goal was to develop our capacity to produce consumer, intermediate, and capital goods while striving for full employment, higher wages, reduced inequality, poverty elimination, environmental protection, and greater economic independence.
In contrast, Pax Silica begins with the US’ need to contain China’s rise as an AI superpower. It ends with the Philippines becoming a “hub” of a US-led and controlled AI value chain.
Thus, instead of prioritizing computer chips for the use of American tech companies, a national industrialization strategy would prioritize the manufacture of irrigation pumps, hand tractors, farm implements, dryers, cold-storage equipment and food-processing machinery for our farmers.
Industrialization is not simply about building factories but about creating integrated domestic industries. For starters: iron and steel; oil, gas, and petrochemicals; agricultural and industrial machinery, transport equipment; minerals processing; electronics; precision instruments; information and communications technology; renewable energy; construction; industrial chemicals, pharmaceuticals; food processing; textiles and clothing; and coconut processing. In other words, build domestic value chains first and global value chains later when we have the capacity to do so.
As to foreign investments, job creation would just be one among many considerations. Equally important would be opportunities for technology transfer, whether their inputs are sourced locally, whether local engineers and technicians can learn higher skills, whether capital is to be reinvested, and whether the country’s productive capability improved.
Globalization’s neoliberal ideology told us that we no longer needed integrated industrial structures. That breaking up production into stages and distributing them around the world based on one’s “comparative advantage” would lead to prosperity and world peace. We all know that didn’t happen.
In fact, the major industrial powers are now doing precisely what they discouraged the developing world from doing: subsidizing strategic industries, protecting technologies, restricting exports, directing investment, and reorganizing supply chains according to geopolitical priorities.
Pax Silica is the “Make America Great Again” game plan. We should have our own.
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Teddy Casiño is a former Bayan Muna party list representative and current chair of the Bagong Alyansang Makabayan.
