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Roadblocks to Prosperity: The Role of Corruption and Geopolitics in Slowed Filipino Economic Development

  • Writer: Lana Isabelle Ealdama
    Lana Isabelle Ealdama
  • 9 hours ago
  • 8 min read

Despite a wealth of resources–a large English speaking population, historical ties to the United States economic powerhouse, and a growing labor force competent in manufacturing and services industries–the island nation still waits for the wealth seen by neighboring countries like Singapore and Indonesia. This underperformance is notable given the regional context–southeast Asia is positioned for significant growth, fueled by an influx of resources into booming industries like semiconductors (Weno, R., Suhartono, H., Heryanto, T., Kiantara, R., & Adinda, C., 2025). The rising economic tide, theoretically, ought to lift all boats. Despite the alignment of resources, the Philippines’ economy is on a diverging path from neighbors like Singapore and Indonesia. But what stops the Philippines from realizing its economic promise? Current literature suggests that the cause is twofold. Internal strife, resulting from governmental corruption and vast inequality, are causing many Filipinos to leave the country in favor of external opportunities presented abroad. Geopolitical tensions outside of the Philippines, especially pressures from China and the United States, strains the potential for prosperity.


Coming from a colonial background, the Philippines has long struggled with corruption. When Spanish colonials landed in modern day Cebu in the 1500s, the government was not viewed as friendly; rather, as an invasive and oppressive force (Garrido, 2025). The United States’ own colonization and the Japanese occupation of the Philippines were viewed similarly, but with an opportunistic spin. Corruption through a cronyism economy, political graft, and the bribeable justice system became commonplace, even after Filipino independence was declared in 1946.


Economic and political misconduct, seemingly, has been sown into the Philippines’ 78 year history. These seeds of corruption grow not only as headlines in Filipino newspapers, but in how Filipinos view themselves. In a survey conducted by Pulse Asia, a public opinion polling company based in the Philippines, an

overwhelming majority believe the government is corrupt (Pulse Asia Research

Inc 2025). A total of 97% of Filipinos believe that their government is corrupt, with 78% expressing that misconduct is “very widespread”.



Perhaps this is most relevantly seen with the fall 2025 typhoon floods. Pre- and post-typhoon damage were supposed to have been mitigated by governmentally contracted companies, with the added bonus of generating jobs to create this infrastructure (Gera 2025). However, money given by the government landed into the hands of company shareholders, leaving Filipinos without the opportunities for jobs. In turn, the projects dedicated towards handling weather-related emergencies were found to be either incomplete or subpar. Yet, the effort to do anything about this corruption is often understated–according to the same Pulse Asia polling, 59% of Filipinos also believe that corruption is a normal part of politics. Because governmental corruption happens so often, and financial support for the common Filipino is often diverted, the Philippines struggles in creating and maintaining opportunities for economic growth.


Corruption in the Philippines causes more problems outside of a lack of typhoon infrastructure and the jobs that come with it. First, corruption within the government exacerbates wealth inequality across the island nation. A Grant Thornton Philippines article reports that the diverted money could have gone to long-term and quality transportation resources, social benefits, a stronger healthcare system, and accessibility to higher education (Punongbayan 2025).


The aforementioned uses of money are integral aspects of ameliorating wealth inequality. By invigorating the economy through job creation, Filipinos would be able to consume more, incentivizing investment in business, creating a cycle beyond poverty. Until government funds are allocated properly, however, it is unlikely that this success will see fruition.


The failure of fund appropriation is seen most prevalently with the massive “brain drain” of skilled Filipino workers. While most Filipinos have limited access to higher education, those that do go on to obtain degrees tend to immigrate in large numbers. For example, within the healthcare sector, up to 240,000 Filipino nurses are employed outside of the Philippines, coerced by “low salaries, delayed benefits, understaffing, overwork, and job insecurity” in the Philippines (Alibudbud 2025). The sentiment is echoed across the board–the International Labor Organization, an agency under the United Nations that creates and sets labor standards globally, reports that one million Filipinos leave the island nation for work-related reasons annually (“Labour migration in the Philippines”). Therefore, even if the government chose to invest in education as one way to address the wealth inequality problem, the investment is lost if Filipinos continue to immigrate in large numbers. Filipinos that stay in the motherland, contrarily, repeatedly pay the price for corruption and wealth inequality.


A nation that faces internal strife leaves itself vulnerable to the influence of external authorities, and the Philippines is no exception. Given its reputation as the “gateway to Asia,” the Philippines is both literally and figuratively in between Asia and North America. The two economic powerhouses on either side of the gateway–China and the United States respectively–attempt to court the Philippines’ into allyship, seemingly as a way to influence the opposing country.


With China, the Philippines could continue to benefit from its largest trade partner. Without a stable relationship with China, the nearly $34.5 billion USD of Chinese imports could shake, driving up prices for the average Filipino consumer. At the height of Chinese-Filipino relations, former president Rodrigo Duterte acted accordingly. During his first foreign visit in Beijing, Duterte embraced the potential for loans and aid from China, openly turning away from Western partnership. China reciprocated at the time, pledging $24 billion dollars to build infrastructure across the Philippines (Strangio 2024). Despite this, the Filipino public failed to get on board with Duterte’s open support to China, likely due these funds being misappropriated once again.


Relations have soured with China since the Duterte administration, quickly becoming a cause for geopolitical tension throughout Southeast Asia. With current president Ferdinand “Bongbong” Marcos Jr., the Philippines has pivoted back to anti-China rhetoric following accusations of Chinese trespassment on Filipino soil. Most relevantly, this can be seen with the 2013 legal dispute of the Scarborough Shoal in the South China Sea continuing to as recent as this September, as told by Reuters (Petty & Lema 2025). Encroachment from China unsettles economic growth for two reasons. One, the Philippines’ marine industries rely heavily on the South China Sea. The Southeast Asian Fisheries Development Center, the inter-governmental body governing ASEAN marine economies, reports that Filipinos’ diets are 12% seafood, making seafood incredibly important for economic inflow (“Southeast Asian…) Additionally, the Bureau of Fishing and Agriculture highlights how fishing contributes to employment. In their third quarter Fishing Industry Report 2025, the Bureau reports that there are nearly 2.7 million fishers across the Philippines (Bureau of Fisheries and Agriculture).


Both the producer and consumer side of fishing show how important the South China Sea is to the Philippines, and interference from China threatens the

stability of it. Secondly, encroachment in the South China Sea causes strain for trade with and between other Southeast Asian nations. Historically, according

to researchers at Australian National University, during land disputes with China, both Vietnam and the Philippines folded in the face of economic coercion (Jaknahihan 2025). Thus, China can cause a major economic stalemate or major source of investment for the Philippines. The decision is currently unresolved, as it is not without its considerations of the United States.


The United States has long held a relationship with the Philippines, both economically and politically. The United States remains the top exporter of the Philippines, earning over nine billion dollars in 2024, according to the United Nations Comtrade Database (United Nations 2024). As with China, losing a strong relationship with the United States would drive up prices on commodities. The Philippines has also experienced the promise of investment from the economic powerhouse–$60 billion dollars of foreign assistance would come from the United States in September 2025 (Quitzon 2025). Politically, the Philippines is becoming a military launch pad for the United States, with a new taskforce being established to bolster the safety of the South China Sea (Reuters 2025). The close military presence of the United States to China is a cause for concern to investors. Chinese businesses are reluctant to invest in the Philippines exactly for this reason, according to the Singapore Economic Review, withholding stimulating investments in the Philippines (Camba, A. & Magat, J 2021). Western investors also hesitate to expand businesses into the Philippines in favor of “friendshoring,” where companies move only to where they know they will have predictable social and economic environments (BusinessMirror Editorial). As a result, if the Philippines continues to align with the United States, it risks appearing caught in the crossfire between either side of the economic bridge, causing an all-around complication in attracting the foreign capital necessary to grow the economy.


Though the Philippines faces clear internal and external struggles, the economy has seen growth that hints that the island nation may soon be on par with other ASEAN members. The World Bank Group reports the GDP has expanded 5.6% within the last year, and that the quality of life–from poverty to inequality–has greatly improved. Success comparable to the near trillion dollar economies of neighboring countries like Indonesia and Taiwan is unseen in the Philippines. With extensive infrastructure and stable geopolitics, both countries are able to see an exponential increase in growth (“Cheng-hui”; “"Basri"). Comparatively, with problems in geopolitics and the foundations needed to jumpstart its economy, the Philippines continues to remain stagnant.


The Philippines remains an economic paradox. While the bridge of the financial East and West possesses all the factors necessary for success, internal strife and political tug-of-war weaken the foundations for sturdiness. To see the financial success of its neighbors, the Philippines must make sure that its investments are used appropriately and remain within the country. Until the Philippines addresses its inherent problems, the bridge will remain incomplete, failing to connect to economic prosperity.



References:


Alibudbud R. (2023). Addressing the Burnout and Shortage of Nurses in the Philippines. SAGE open nursing, 9, 23779608231195737. https://doi.org/10.1177/23779608231195737


Basri, M.C., (2025, June 25) Going for economic growth: Lessons from Indonesia. VoxDev. https://voxdev.org/topic/macroeconomics-growth/going-economic-growth-lessons-indone sia


Bureau of Fishing and Agriculture, 2025, [Screenshot]. Bureau of Fishing and Agriculture. https://www.bfar.da.gov.ph/2021-fisheries-industry-performance-1st-2nd-3rd-and-4th-quarter/


BusinessMirror Editorial. (2025, June 13) PHL FDI dips sharply amid global headwinds and structural issues. BusinessMirror Philippines.


Camba A. & Magat J., (2021). How Do Investors Respond To Territorial Disputes? Evidence From The South China Sea And Implications On Philippines Economic Strategy. The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 66(01), pages 243-267. https://doi.org/10.1142/S0217590819500681

Cheng-hui, C. (2024, December 13) NDC launches infrastructure project plans. Taipei Times. https://www.taipeitimes.com/News/front/archives/2024/12/13/2003828420


Garrido, M. (2025). A Thousand Years of Corruption: A History of Corruption and Anti-corruption in the Philippines since 1946. Comparative Studies in Society and History, 67(3), 595–621. doi:10.1017/S001041752500009X


Jaknanihan, A. (18 November 2025). PacNet #97 – The risk of economic coercion looms over ASEAN’s growing dependence on China. Pacific Forum.


Labor Migration in the Philippines. International Labor Organization.


Pulse Asia Research, Inc. (2025), [Screenshot]. Pulse Asia Research Inc., https://pulseasia.ph/updates/september-2025-nationwide-survey-on-corruption


Petty, M. & Lema, K. (2025, September 15). What is the Scarborough Shoal and what is China planning there? Reuters.


Quitzon, J. (2025, September 4) The Uniquely Stable U.S.-Philippines Relationship. Center for Strategic and International Studies.


Punogbayan, B. (2024, November 25). Economic Effects of Corruption. Grant Thornton Philippines.


Reuters. (2025, October 31). US, Philippines form military task force for areas including South China Sea, Pentagon says. Reuters.


Southeast Asian Fisheries Development Center. (2025) Fisheries Country Profile: Philippines 2025. Southeast Asian Fisheries Development Center.


Strangio, S. (2025, September 24). Parsing the Philippines’ ‘Pivot’ to China Under Rodrigo Duterte. The Diplomat.


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Weno, R., Suhartono, H., Heryanto, T., Kiantara, R., & Adinda, C. (2025, October 3). Strengthening ASEAN’s Semiconductor Future: Building a Resilient Regional Supply Chain. ASEAN Business Advisory Council.

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