How Free Trade Promoted Peace in Mindanao

It is refreshing to read about anecdotes of how the largely unappreciated free markets works unnoticeably in the Philippine setting

Dave Llorito World Bank’s communications officer at World Bank’s East Asia blog writes

“It was a war zone, one of the most dangerous places on earth.” 

That’s how Mr. Resty Kamag, human resource manager of La Frutera plantation based in Datu Paglas (Population: 20,290) in Maguindanao (the Philippines) described the national road traversing the town from the adjacent province.

Residents and travelers, he said, wouldn’t dare pass through the highway after three in the afternoon for fear of getting robbed, ambushed or caught in the crossfire between rebels and government soldiers.

“That was before the company started operations here in 1997,” said Mr. Kamag. La Frutera operates a 1,200-hectare plantation for export bananas in Datu Paglas and neighboring towns, providing jobs to more than 2,000 people.

“Today, the town is peaceful,” he said. “Travelers now come and go without fear of getting harmed. People have better things to do.”

La Fruta Inc. is the Philippines largest banana exporter, whose chairman and president Senen Bacani was conferred the 2006 Entrepreneur of the year award in 2006 by the SGV Ernst and Young (wiki Pilipinas).

And to promote trade, the private sector led by La Fruta and other private firms made huge investments in the region’s infrastructure.

Again Mr. Llorito:

A joint project by foreign investors (Unifruitti group) and Filipinos including Toto Paglas, a charismatic Muslim leader, La Frutera spent millions building roads, bridges, irrigation systems and other facilities.

The company infuses the local economy with 11 million pesos of monthly payroll, encouraging local entrepreneurs to set up retail shops, banks and small businesses. Other companies like Del Monte followed suit establishing agribusiness plantations in other parts of the province.

Today, paved highways cut through thriving towns and fields planted to rice, corn, coconuts, palm oil, rubber trees, and bananas.

The point is that markets on its own will invest and finance on infrastructure projects without the need for taxpayer exposure and for government directive.

Trade reduces war and promotes social harmony and cooperation due to the division of labor.  

As the great Ludwig von Mises wrote (Omnipotent government p.122)

Social cooperation and war are in the long run incompatible. Self-sufficient individuals may fight each other without destroying the foundations of their existence. But within the social system of cooperation and division of labor war means disintegration. The progressive evolution of society requires the progressive elimination of war.