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The Philippines is a sovereign island country in Southeast Asia in the western Pacific Ocean. To its north across the Luzon Strait lies Taiwan. West across the South China Sea sits Vietnam. The Sulu Sea to the southwest lies between the country and the island of Borneo, and to the south the Celebes Sea separates it from other islands of Indonesia. It is bounded on the east by the Philippine Sea. Its location on the Pacific Ring of Fire and its tropical climate make the Philippines prone to earthquakes and typhoons but have also endowed the country with natural resources and made it a megadiverse country. The Philippines is the 73rd largest independent nation, covering almost 300,000 square kilometers (115,831 sq mi) and an archipelago comprising 7,107 islands, and is categorized broadly into three main geographical divisions: Luzon, Visayas, and Mindanao. Its capital city is Manila.
With a population of more than 98 million people, the Philippines is the seventh most populated Asian country and the 12th most populated country in the world. An additional 12 million Filipinos live overseas. Multiple ethnicities and cultures are found throughout the islands. In prehistoric times, Negritos were some of the archipelago’s earliest inhabitants. They were followed by successive waves of Austronesian peoples who brought with them influences from Malay, Hindu, and Islamic societies. Thus, establishing various nations either ruled by Datus, Rajahs, Sultans or Lakans. Trade and subsequent Chinese settlement also introduced Chinese cultural elements which remain to this day.
The arrival of Ferdinand Magellan in 1521 marked the beginning of an era of Spanish interest and eventual colonization. In 1543, Spanish explorer Ruy López de Villalobos named the archipelago Las Islas Filipinas in honor of Philip II of Spain. The Spanish Empire began to settle with the arrival of Miguel López de Legazpi from New Spain (present day-Mexico) in 1565 who established the first Spanish settlement in the archipelago, which remained a Spanish colony for more than 300 years. During this time, Manila became the Asian hub of the Manila–Acapulco galleon fleet.
As the 19th century gave way to the 20th, there followed in quick succession the Philippine Revolution, which spawned the short-lived First Philippine Republic; the Spanish–American War; and the Philippine–American War. In the aftermath, the United States emerged as the dominant power; aside from the period of Japanese occupation, the United States retained sovereignty over the islands. After World War II, the Treaty of Manila established the Philippine Republic as an independent nation. Since then, the Philippines has had an often tumultuous experience with democracy, with popular “people power” movements overthrowing a dictatorship in one instance but also underlining the institutional weaknesses of its constitutional republic in others.
The national economy of the Philippines is the 40th largest in the world, with an estimated 2012 gross domestic product (nominal) of $250.436 billion. Primary exports include semiconductors and electronic products, transport equipment, garments, copper products, petroleum products, coconut oil, and fruits. Major trading partners include the United States, Japan, China, Singapore, South Korea, the Netherlands, Hong Kong, Germany, Taiwan, and Thailand. Its unit of currency is the Philippine peso.
A newly industrialized country, the Philippine economy has been transitioning from one based on agriculture to one based more on services and manufacturing. Of the country’s total labor force of around 38.1 million, the agricultural sector employs close to 32% but contributes to only about 14% of GDP. The industrial sector employs around 14% of the workforce and accounts for 30% of GDP. Meanwhile the 47% of workers involved in the services sector are responsible for 56% of GDP.
The unemployment rate as of July 2009 stands at around 7.6% and due to the global economic slowdown inflation as of September 2009 reads 0.70%. Gross international reserves as of July 2011 are $75.174 billion. In 2004, public debt as a percentage of GDP was estimated to be 74.2%; in 2008, 56.9%. Gross external debt has risen to $66.27 billion. The country is a net importer.
After World War II, the country was for a time regarded as the second wealthiest in East Asia, next only to Japan. However, by the 1960s its economic performance started being overtaken. The economy stagnated under the dictatorship of Ferdinand Marcos as the regime spawned economic mismanagement and political volatility. The country suffered from slow economic growth and bouts of economic recession. Only in the 1990s with a program of economic liberalization did the economy begin to recover.
The 1997 Asian Financial Crisis affected the economy, resulting in a lingering decline of the value of the peso and falls in the stock market. But the extent it was affected initially was not as severe as that of some of its Asian neighbors. This was largely due to the fiscal conservatism of the government, partly as a result of decades of monitoring and fiscal supervision from the International Monetary Fund (IMF), in comparison to the massive spending of its neighbors on the rapid acceleration of economic growth. There have been signs of progress since. In 2004, the economy experienced 6.4% GDP growth and 7.1% in 2007, its fastest pace of growth in three decades. Yet average annual GDP growth per capita for the period 1966–2007 still stands at 1.45% in comparison to an average of 5.96% for the East Asia and the Pacific region as a whole and the daily income for 45% of the population of the Philippines remains less than $2. Despite enjoying sustained economic growth during the 2000s (decade), as of 2010, the country’s economy remains smaller than those of its Southeast Asian neighbors Indonesia, Thailand, Malaysia, and Singapore in terms of GDP and GDP per capita (nominal).