Patronage, Weak Institutions, and the Failure to Establish a National Oceangoing Fleet: A Historical Interrogation, 1938-1988

Abstract

When President Corazon Aquino directed the National Development Company (NDC) to transfer its shipping assets to the National Government for eventual privatization in March 1988, the fifty-year effort of the state to participate in the development of a national merchant marine fleet effectively ended. Such an undertaking had been in place since the Commonwealth Period and was meant to make the Philippines competitive as a center for world trade and provide a revenue stream for the government. However, despite the potential of this undertaking and the support of Malacañang, sustained government participation in a national marine fleet never took hold. This paper will, therefore, show how changes in the political landscape got the Government's major stakeholder (the NDC) embroiled in a complex rent-seeking environment that prevented its shipping program from taking off despite the induced demand created by a steady rise in the volume of Philippine exports. It is a testament to how certain historical actors undermined formal institutions and effectively prevented the Philippines from developing an international fleet despite its storied past as a seafaring nation.