The earliest inhabitants of the Philippines were the Negritos. Other tribes later arrived from Malaysia and Indonesia. In 1521, the Portuguese navigator, Ferdinand Magellan, financed by the King of Spain, landed on the islands and named them after Philip II of Spain. Friars converted the inhabitants to Christianity and today the Philippines is the only predominantly Christian country in South-East Asia. Spanish explorer Miguel Lopez de Legaspi established the first Spanish settlement in Cebu in 1565; he moved north and defeated the Muslim Rajah Sulayman and established a Spanish base in Manila in 1571, extending the area under Spanish control. In 1896, a revolution against Spanish rule led to the establishment of the first Filipino Republic in 1898, under General Emilio Aguinaldo. Later, the United States took control of the islands and a constitution was drawn up in 1935, giving the Philippines internal self-government.
Broad financial incentives aimed at attracting foreign investment capital, and the creation of five export processing zones (EPZ) with concessionary tax rates and tariffs, prompted strong growth during the early- and mid-1990s. It caused move of international population to and from Philippines. There are hundreds of international moving companies in Philippines today. However, it also produced a somewhat skewed economy in which the Manila area, known as the National Capital Region, now hosts 15 per cent of the population and accounts for one-third of GDP: there are huge income disparities between the capital and the rest of the country.
The Philippines’ economic growth came to a shuddering halt in late 1997 when the collapse of the region’s currencies produced a stock market crash, high inflation, the cessation of foreign investment, and a large budget deficit. El Niño, the climatic system which wreaks periodic havoc upon the Philippines, worsened the situation further. The economy has since recovered fairly well. Current annual growth is 4.3 per cent, while industrial production has picked up after several years of decline. Foreign aid (including a US$100 million subvention from the USA in 2002) has helped the country’s finances, along with a sharp increase in remittances from the thousands of Filipinos working abroad. Unemployment is still a problem, having grown steadily during the last few years to its current level of 11.4 per cent. The Philippines’ longer term economic prospects will depend on the Government’s vigour in pursuing essential and overdue reforms to the tax and banking systems, and improvements to the country’s shaky infrastructure. The Philippines belong to the Association of South East Asian Nations (the anti-Communist bloc which is now assuming an important economic role) and the Asian Development Bank. The country’s major trading partners include The Netherlands, the UK and USA.