Economy

The economy of the Philippines has long been based on agriculture, which employs roughly 45 per cent of the labor force and accounts for about 20 per cent of the gross domestic product. Industrial development is encouraged by the government through various incentive programs. Many foreign companies, notably American and Japanese firms, have operations in the Philippines. Overall, economic development has been slow and poverty is widespread. Rapid population growth and a high rate of unemployment are serious problems. Money sent home by Filipinos working abroad is important to the nation's economy.

About a fourth of the land area of the Philippines is suitable for farming. About 17 per cent of the cropland is under irrigation. The central plain and Cagayan River valley of Luzon are the major farming areas, but crops are grown throughout most of the country.

Most farms are small, averaging less than seven acres (3 hectares). Many farmers are tenants, although land reform programs have increased the number of owner-operated farms. The use of chemical fertilizers, pesticides, and mechanized equipment is increasing; most farmers rely on age-old methods and equipment.

The chief food crop is rice, which usually occupies about a quarter of the agricultural land. The Philippines has been a leader in the development of high-yielding strains of rice, which have helped to increase the nation's rice output In most years enough rice is produced to provide for domestic needs. Corn is the second most widely cultivated food crop. Chief commercial crops are coconuts, of which the Philippines is one of the world's largest producers; bananas; sugarcane; and pineapples. Also significant is the production of coffee, cotton, tobacco, and a variety of fruits and vegetables. Livestock and poultry account for a relatively small share of farm income. Hogs and chickens are the chief animals raised.

About 10 per cent of the nation's workers are employed in manufacturing, and manufacturing accounts for about a quarter of the gross domestic product. The processing of foods and the making of textiles, apparel, and wood products and paper are the chief manufacturing activities. Also important is the assembly of electric and electronic devices, mainly from foreign-made components. The processing of metallic minerals, the refining of petroleum, and the making of cement, fertilizer, and industrial chemicals are the chief heavy industries. Manufacturing is centered in and around Manila and in southern Luzon.

The Philippines has an abundance of mineral resources and produces cobalt, chromite, copper, gold, and nickel. Copper and gold usually account for the largest share of the value of mineral production. Iron ore, silver, manganese, lead, and zinc are also produced. Petroleum, from offshore wells, and coal are produced in moderate amounts; most mineral fuel is imported. Much of the nation's mineral wealth remains unexploited, largely because of inadequate transportation and lack of funds for exploration and development.

Hardwoods, chiefly mahogany, are the principal trees harvested commercially. Overharvesting and the clearing of forests for growing crops have caused widespread deforestation. Despite a government ban, there is considerable exportation of hardwoods. Bamboo and the Kapok tree which produces a fiber called kapok, used to make insulation, mattresses, and upholstery, also grow in Philippines. The chief commercial forests are found in eastern Luzon and on Mindanao, Samar, Negros, and Palawan.

Fish are plentiful in coastal waters, especially around the Visayan Islands. Fish are a primary source of protein for most Filipinos. Fish caught include Indian mackerel, milkfish, skipjack, tilapia, and yellowfin tuna. Shrimps and prawns make up an important part of the total catch.

Luzon has the nation's most extensive system of roads and highways, which link most of the large cities. The nation's chief route is the Pan-Philippine Highway, which runs through Luzon, Samar, Leyte, and Mindanao; inter-island crossings are made by ferries. Bright looking shared taxis called jeepneys are a popular mode of transportation. Most of the railway trackage is on Luzon. A light-rail rapid-transit system operates in the Manila region.

The largest airport is at Manila. Philippine Airlines serves both internally and abroad. Numerous international airlines serve the nation, mainly through Manila. The city is also the chief port for international shipping. Other major ports are Cebu City and Davao. Most of the larger islands have one or more ports. Coastal shipping is important.

Major trading partners include Japan, the United States, Taiwan, Germany, and Saudi Arabia.