HIAS-E-22

A Curse of ‘Point Source’ Resources?
Cash Crops and Numeracy on the Philippines
19th-20th Century
Jean-Pascal Bassino
ENS Lyon, France
Hitotsubashi Institute for Advanced Study, Japan

Joerg Baten
University of Tuebingen and CESifo, Germany
CEPR, UK

March 18, 2016

Hitotsubashi Institute for Advanced Study, Hitotsubashi University
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http://hias.ad.hit-u.ac.jp/
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A Curse of ‘Point Source’ Resources?
Cash Crops and Numeracy on the Philippines 19th-20th Century

Jean-Pascal Bassino (ENS Lyon, France; Hitotsubashi Institute for Adanced Study, Japan)
Joerg Baten (Universty of Tuebingen and CESifo, Germany; CEPR, UK)

Abstract

Does the shift from subsistence agriculture to a specialization in cash-crop production
affect human capital? We assess the influence of the rapid expansion of the cultivation of cash
crops for export in the mid and late 19th century Philippines, with a focus on the increase or
decline of basic numeracy. Based on the historiography, we expect the expansion of cash
crops (in 19th century Philippines, mostly abacá, sugar, and tobacco) to have a negative effecton human capital of the majority of the population during the first phase. To test thishypothesis, we mobilize a new and large data set based on age statements from parish records,
which includes 228,853 underlying observations. This is the first long term quantitative study
on numeracy in a Southeast Asian country. We aggregate the individual observations by 41
provinces and the birth decades from the 1800s to the 1930s in order to obtain a large andinformative panel (panel observations based on less than 50 underlying age statements are
dropped). This allows us to compare regional levels of numeracy before, during, and after the
introduction of the three main cash crops.
JEL classification: I25, N3, N5, O13, O53,
Keywords: cash crops, human capital, numeracy, age heaping, Philippines, sugar, abaca

Introduction
Which degree of impatience is rational, when an agrarian economy shifts from subsistence
agriculture to a specialization in cash-crop production? It seems reasonable to assume that theshift is taking place because it results in an overall social gain. However, as in any transition
process, there would be a change in income distribution with net winners and losers in the
short term, and it sometimes takes a certain time lag until the distribution of additional income
is beneficial for a broader part of the population. For example, during the first phase of
expansion of cash crop production for export landowners and government officials might
improve their incomes, whereas the poorer part of the population does not benefit as much.
1

When the specialization in cash-crop production is driven by the demand of World
markets, it is sometimes associated with a decline of the cottage industry, especially textile
production, due to competition from imported manufactured goods. This happened inparticular in Southeast Asia in the second half of the 19th century (Bassino and Williamson2015). If a country deindustrializes, the reallocation of labor factors within the national
economy may be costly, and the major part of the costs is usually incurred by tenants oragricultural wage earners who were previously craftsmen. Specialization in cash crops cantherefore result in skill destruction. In such circumstances, a decline in the overall level ofhuman capital accumulation can take place at the country level, particularly if the technology
used in the cash crop sector implies a strict division of labor between skilled and unskilledworkers, thus preventing the trickling down of know-how to unskilled workers. Additional
negative externalities will be discussed below.
Abacá 1, sugar, and tobacco became the three major cash crop export items of thePhilippines after the gradual opening of Manila and later other ports to international trade in
the late 1840s and early 1850s (Aguilar 1994).2
Their combined share in the Philippines total export increased gradually from 69% in
1846 to 95% in 1873, while total export value was increasing from less than 3 million pesos(Mexican $) to more than 23 million during the same interval; the combined share of thesethree items fluctuated thereafter in a range from 71% to 96% between 1873 and 1895 (lastyear before the nationalist uprising of 1896), while total export value was increasing less1

Abacá (Musa Textilis) is a species of banana native from the Philippines that can be processed to obtain a fiber,
Manila hemp, which was mainly used for processing ropes (in particular in North America). For the sake ofsimplicity, we use the term abacá in this paper both for the cultivated species (when discussing issues related tothe plantations of cash crops) and for the processed Manila hemp (when referring to export).
2
These three crops were already commonly cultivated in the 18th and early 19th century in different parts of thearchipelago for domestic demand, mostly for the provincial or regional market, but the later increase wasdramatic. In 1818, sugar was only the third most important export items in value (100,835 pesos) after bird’s
nests and indigo paste (301,568 and 192,000 Pesos, respectively); sugar exports accounted for less than 13% of
the total export value of the Philippines (812,495 pesos). The value of abacá exports (4,444 pesos in total for
fibers, cables, and rigging) was less than the export value of rattan, ebony wood, or tortoise shell (5,364, 4,567,
and 10,850, respectively). Tobacco was not mentioned in the list of export items in 1818 (Yldefonso de Aragon,
Estados que manifestan la Importacion y Exportacion de esta Ciudad, Manila 1819; quoted in Corpuz 1997,133).

2

rapidly than during the earlier period, reaching a peak around 36 million pesos in 1893
(Larkin 1993, 49-50).
The share of sugar and abacá in total export value increased from 34% and 13%,respectively, in 1846, to 58% and 22% in 1873. The share of tobacco, however, declined from
19% to 10% during the same period, but in absolute value tobacco exports increased byaround 200%. During the period 1873-1895, the shares of sugar and abacá in total export
value fluctuated in a range between 30% and 54%, and between 21% and 44% respectively.
Tobacco was of lesser importance, fluctuating in a range between 3% and 20%.
We will assess the influence of the rapid expansion of the cultivation of cash crops forexport in the mid and late 19th century Philippines on human capital formation. Especially theincrease or decline of basic numeracy is assessed in this study. Based on the historiography of
the Philippines, we expect the expansion of cash crops to have a negative effect on humancapital of the majority of the population during the first phase. To test this hypothesis, wemobilize a new and large data set based on age statements from parish records which includes
228,853 underlying observations. This is the first quantitative study on numeracy on thePhilippines in the long term. We aggregate the individual observations by 41 provinces andthe birth decades from the 1800s to the 1930s in order to obtain a large and informative panel(panel observations based on less than 50 underlying age statements are dropped). This allows
us to compare the cash crop regions before, during and after the introduction of the three main
crops.
We contribute to the substantial literature on economic modernization and its cost. For
instance, many economic historians have discussed the externalities of the new factory system
during the industrial revolution period in England together with similar industrialization
developments in continental Europe. The most drastic changes in the developing world were
not related to industry, but to the agricultural sphere. The institutional development around the3extraction of rents from agricultural products, and cash crops in particular, is a heavily
debated issue (Acemoglu et al. 2001, 2002).
Different economic history studies have adopted different views about the welfare
effects of introducing new cash-crops. For example, a slightly more positive, but nuanced
view of the cash crop developments in African countries was recently articulated by Austin(2016) for the colonial period. Other studies contrast the positive income effect with somemore ambivalent inequality externalities during the introduction phase of monoculturally
planted cash-crops (Moradi and Baten 2005).
In this study we also contribute to a large literature in development economics that
discusses the diffusion of cash crops. Development economists have thought about the effectof plantation economies on economic growth and development. For example, Isham et al.
(2005) have argued that not only natural resource exporters, but also plantation economies
which are characterized by very narrow geographic specialization on a certain crop areassociated with worse institutional frameworks and higher inequality. The authors argue thatthese so-called “point source” export economies typically cannot easily respond to external
shocks. However, flexible responses to changing markets are essential for prosperity. In
particular, Isham et al. (2005) assess the economic performance during the 1970s and 1980s,
comparing countries that were characterized by these “point resource” exports to others. Theyfind that countries depending on banana and sugar producing plantations as well as more
traditional natural resource exporting economies perform significantly worse in the wide
range of governance and institutional indicators. In contrast, countries with natural resource
exports for which they use the term “diffuse exports” -- such as exports of a wide array ofdifferent livestock and agricultural products -- which are often produced on smaller family
farms rather than plantations are much more robust against external shocks and more easily
able to recover in a difficult situation economically.

4

1.

Data

Our sample consists of parish records from the Philippines provided by the website
familysearch.org. This data source is made available by the church of Later-Day-Saints (LDS),
centered in Salt Lake City. It is mostly used for genealogical studies. However, it is also a richsource of evidence for the field of economic history. Particularly comprehensive for ourcountry of study are the death registers of the Philippines, for which 228,853 age statementsfrom many different regions are available, mostly between birth years in the 1800s and 1939.
(Clearly we have no evidence on the Muslims living in South East of the Philippines.)
A´Hearn et al. (2009) have already made use of the death registers as a source fornumeracy estimation. Recently, this type of source was applied even to the ancient Roman
period (Baten and Priwitzer 2015) where the authors carefully and comprehensively checked
for potential selectivities and biases. While it is obvious that deceased persons did not reporttheir own age, the literature identified close relatives and friends as the most likely source ofage statements. In some cases the deceased herself or himself informed the priest about her or
his own age before dying. However, in a number of cases priests probably estimated the ageof the dead person, which suggests that numeracy is typically underestimated if deathregisters are used as a source. Priests sometimes used a rounded age if they did not receive
information from the family of the deceased, which is an important caveat to studies based ondeath registers. However, the fraction of ages guessed by the priests must have been small:
Bucher (2014) collected a data set of census and death registers. While the death registerbased estimates were always systematically lower, he found a very close correlation between
the two sources. In addition, we counter-checked our estimates using alternative sources tomake sure that this bias is not a problem (see below).
Looking at the number of cases per birth decade, it is standard to organize all
numeracy estimates by birth decade because numeracy is usually acquired in the first decadeof life (Table 1). We have a substantial amount of data for the 19th and early 20th century. It
5should be noted that the number of cases is particularly low for the first decade which actually
includes here also some late 18th century figures. The earliest decade should also be viewed
with some skepticism due to this small N. Also in the 1930s the number of observations
begins to decline.

2.

General trends of numeracy

How did numeracy develop in the Philippines? In the Figure 1 we see numeracy development
per birth decade. We distinguish between sugar and non-sugar planting districts which will be
important in the following text. In general, there was a decline between the 1820 birth decadeand the 1850s both in sugar and non-sugar planting districts. By the middle of the 19th century
values were as low as 45 % points of numeracy. There was a certain recovery in the 1860s
and 1870s, but only after the 1880s a steady upward increase did set in. The decline by itself
already makes an important contribution to the literature. For example, recently Dennison andOgilvie (2015) mentioned that numeracy tends to increase if people get in contact withmarkets, which might suggest that numeracy should not decrease as long as contact withmarkets is given (or even increases, as in the Philippine case).
As we have a more or less continuous increase in numeracy in many countries of thedeveloping world in the 19th and early 20th century, the Philippine decline of the 19th century
is particularly interesting. Hence, we will discuss in the following bias analysis whether thisdecline is consistent or whether it is a statistical artefact caused by issues like survival bias,
regional selectivity or source type biases.

3.

Checking Potential Biases

Death register Bias:
One of the potential biases could arise from the source that we are mainly using, which isbased on death registers. While death registers in general correlate with evidence that we have6

obtained from relatively unbiased sources such as census registers, they still could be biased
for certain cohorts. For example, one potential bias of death registers is that the person is
obviously not able to report the own age after death. We compare the trends of numeracy
according to the death registers with statements of ages stemming from other institutional
backgrounds. For example, one comparison is possible with a sample of marriage registers for
the Philippines. We adjusted both sources for the well-known death and marriage bias assuggested in the notes to Figure 2 and as a result, both series show a strong decline between
the birth decades of the 1800s and the 1840s. There is one major deviation in the 1820s. The
death-based numeracy estimates are higher than the marriage-based estimates. A potential
reason for this minor deviation could be the regional composition. The marriage and deathregisters do not have exactly the same regional composition.3 In sum, we can conclude thatthe decline of the early 19th century was not caused by the characteristics of the source ‘deathregisters’. Also the level of numeracy estimated based on marriage and death registers is quite
similar, if the usual adjustments are made.
The comparison of marriage registers and death registers suggests that individuals
were not differently selected into death registers. There probably was not a social bias,
because all social data were registered by the Catholic Church. On the basis of the census of
1903, it can be estimated that around 90% of Filipinos were baptised Catholics in the late 19th
century (although practising various ceremonies in a animist-catholic synchretic way), and the
Church presumably kept record of their burials. The native population that remained entirely
animist accounted for a small share of the total population, with the possible exception of
Mindoro island, of the mountainous areas of Abra and Lepanto-Bontoc provinces in northern
Luzon, and the regions with majority Muslim population in the southern island of Mindanao,
in Palawan island and in the Jolo archipelago.
3

In addition, for the death registers, we estimated two decades jointly, so this might also be a reason for thedifferent estimates of the 1820s. (We decided to estimate the 1810s and 1820s jointly on a regional level,
because otherwise for the 1810s and 1820s, the number of observations would have been too small in somecases.)

7

In addition, we can compare numeracy and literacy in 1902 in order to assess whether
the two measures of human capital display similar regional differences (Figure 3). In a
regression of literacy (in logs) on numeracy (weighted by the population size of the provincesin 1902), we obtain an R2 value of 0.43, which is a substantial value (not shown). As isusually the case, the ABCC figures are higher than the literacy estimates – a basic numeracyof, say, 80 percent is achieved earlier than a literacy of 30 percent. The formula to convert
numeracy into literacy for the Philippines would be minus 33 (= the constant) plus 0.72 points
for each additional ABCC unit if we use linear literacy as the dependent variable. In Figure 3,
we show literacy (in logs) compared to numeracy values and in general there is a substantial
correlation. Districts like Manila had of course high numeracy and high literacy but also morerural regions, such as Tayabas, Paragua Sur, Bataan, Rizal were both among the highnumeracy and the high literacy cases, whereas Capiz, Batangas, Antique, Iloilo had both low
literacy and low numeracy. The deviations were Negros Oriental on the one hand, with a highnumeracy but a very modest literary, and Nueva Vizcaya on the other hand, with a relatively
high literacy and a comparatively low numeracy. The correlation coefficient between
numeracy and literacy is 0.58 (p=0.000).
Survivor Bias:Was the decline of Philippine numeracy during the early 19th century caused by survivor bias?
One could imagine that the average age of those born in the 1800 to 1820 decades was muchhigher than that of the persons born thereafter. As we have mostly retrospective evidence, weare organizing the evidence by birth decade. Therefore, there might be a different
subpopulation surviving up to the year of death in which the information about the age wasrecorded. However, consideration of those aged 63 to 72 only is a commonly used strategy toassess whether there was survivor bias. If we do this, we observe quite similarly high levels ofnumeracy in the 1810s and 1820s (1820 as it is called in the figure) and the decline thereafter(Figure 4). Only the value of the 1800s differs for those aged 63 to 72 compared to all ages,
8

but actually in the opposite direction: “The-all-age-sample” had a higher estimated numeracy
value. In general, for the 1830s to 1890s, the all-age estimate is slightly higher, but thedifference is normally not very substantial and the trend is very similar.
Regional Bias
Finally, we want to assess, whether there was regional bias (Table 3) For example, church
records could have been recorded more often in the regions that were more developed fromthe beginning (Figure 1), so the decline of numeracy could have been a statistical artefact
because of this regional bias.
In terms of regional bias, one strategy is to consider which regions were alreadyincluded for the early period with sufficient samples. If we compare the numeracy of the 1800
- 1820s with the 1830s - 1850s, we observe a decline in almost all provinces, mostpronounced in Leyte and Pangasinan and Batangas. Only in one district, Ilocos Sur, there wasa small increase in numeracy, so given that we have 9 provinces with a substantial decline ofnumeracy, it seems unlikely that the overall decline is caused by regional selectivity. It rather
seems to be a widespread phenomenon. It is also interesting to see that the provinces forwhich evidence is available were quite widespread over northern and central Philippines.

4.

Regional economic structure and development of the Phillipines during the 19th C

The regional specialisation in different types of cash crops cultivation, mainly abacá, sugar,
and tobacco, in different socio-economic and environmental setting enables us to consider therole of institutions, exposure to diseases, seasonal migration, and income volatility. In the caseof abacá, the Bicol peninsula (southeast of Luzon) became the most important cash crop
producing region in the mid-19th century. The population grew at a very rapid pace in the firsthalf of 19th century, 1.5% per annum on average, from less than 150,000 in 1794 to almost
400,000 in 1862. In spite of a series of epidemics, demographic growth remained close to 1%
in the last four decades of the 19th century. The population exceded 600,000 in 1903, and it
9increased further in the early 20th century, reaching 1.164 million at the time of the 1938
census (Owen 1984, 116). Abacá requires only limited labor input, as opposed to wet-rice
cultivation. As the cultivation calendars of rice and abacá do not overlap much, these twocrops were not competing in terms of time allocation. Abacá was well suited for cultivation
on non-irrigated land and does not compete with wet-rice cultivation (rice was also cultivatedin rain-fed fields in the early 19th century). Abacá and rice therefore existed side by side in
most districts; the expansion of abacá cultiviation did not require massive seasonal migration.
Rice remained the main agricultural activity of the subsistence economy, and although rice
was mostly self consumed, it was an essential albeit secondary source of cash income formost workers involved in abacá (ibid 121) and the region remained self-sufficient in rice until
the mid-19th century (ib. 130). The institutional arrangements and size of land estates were notmuch different for both main crops, with a combination of cultivation by smallholders as wellas in relatively large land estates owned by the curch or member of the social elite. The
economy of Bicol peninsula gradually evolved from labor scarcity in the early 19th to land
scarcity in the early 20th century. As a result, other provinces with relatively low population
density, such as Leyte in the Visayas and Misamis in nortern Mindanao, became significant
abacá producers in the late 19th century.
Sugar from sugarcane has traditionally been part of the standard diet in most provincesof the Philippines, although in moderate quantities. In the 19th century, it became an important
cash crop supplementing agricultural income from rice in around one third of provinces,mostly in central Luzon and in the Visayas. In contrast to abacá, sugarcane cultivation
required high labor inputs for both plantation work and harvest. In provinces that already had
a relatively high population density and where little uncultivated land of high natural fertility
was available, in particular in Ilocos Norte and Ilocos Sur provinces, sugar competed with ricefor both land and labor. But in most provinces, sugar plantations were established in areas thatwere not previously under permanent cultivation, such as slash and burn areas occupied by
10

Negrito animist populations in Pampanga province (Larkin 1972). This implies land
reclamation and therefore eventual exposure to severe strains of tropical diseases. In addition,in the main two producing provinces, Pampanga in central Luzon and Negros Occidental in
the Visayas, sugar cultivation required migration. In Pampanga, sugar plantations were
established in the western part of the province, as an almost exclusive monoculture, while rice
remained the predominant crop in the central part of the province (Larkin 1972, 6, 8, 67).
Although the distance between the two areas is compatible with seasonal migration, thedevelopment of sugar plantations resulted in a rapid demographic growth in the municipalitiesof the sugar zone (ibid. 68) and land concentration, mostly in the hand of the new mestizosocial elite. In Negros Occidental, where population density was low and virgin land abundant,
most of the labor force had to come from other provinces of the Visayas. The population of
Negros Occidental increased rapidly, from around 35,000 around 1845 to 154,000 around
1886, and 303,000 around 1903; during the same period, sugar output jumped from 3,000
piculs to 575,000, and then 1,384,000 (Larkin 1993, 61).
Tobacco too was cultivated in most provinces of the 18th and 19th century Philippines.
The public monopoly established in 1766 restricted the cultivation for commercial purpose toa small area, the Gapan colección, a group of municipalities including Gapan, in Nueva Ecija
province, and of the Gagayan colección, a group of municipalities in the Cagayan valley, but
small scale production for self consumption was tolerated in all other areas.4 Neither in Gapan
nor in Cagayan did tobacco cultivation compete with other crops for land, but it did for labor.
This was not a problem in the area of the Gapan colección that had already a relatively highpopulation density, by the standards of the Philippines, in the early 19th century. The area of

4

The area of the Gapan colección covered the southern part of Nueva Ecija province, as well as in the northernpart of Bulacan and eastern part of Tarlac province; De Jesus 1980, p. 36). Total output was around 30,000
fardos (one fardo: 4000 tobacco leaves) per year and declined somehow thereafter (ibid., p. 207). The
municipalities of the Gagayan colección were located in the central part of the provinces of Cagayan andIsabela; ibid. p. 108). Tobacco production expanded in these areas mostly from the 1850s: 10,000 to 20,000
fardos in the 1820s, 47,412 in 1850, 253,360 in 1860, 303,162, 462,419 (ibid. p. 209; no data for 1831-1849,
1851-1859, and 1861-1864; continuous series for 1865-1874, around 400,000 per year).

11the Gagayan colección, however, was a land frontier attracting immigrants from the relatively
high population density provinces of central Luzon and the northwestern coast. Apart fromhostility of local rural animist communities, which remained beyond control of the Church
and the colonial authorities until second half of the 19th century, tobacco producers were
facing three main difficulties: risk of exposure to diseases related to land reclamation, delaysin the payment for the sales of tobacco leaves by the monopoly, and the shortage of staples aslocally produced corn was not sufficient for local food consumption. Rice had to be imported
from the high population density provinces of central Luzon and the northwestern coast that
had some surplus in normal years. Tobacco producers were therefore exposed to thefluctuation of relative prices (rice/tobacco and maize/tobacco). In these events, theirdifficulties were amplified by the irregularity of payments to producers by the monopoly andresulted in a long term trend of land concentration.

5.

Regression analysis

In the following, we will assess whether it was really the introduction of cash crops which had
adverse effects on human capital formation.
Simon Kuznets’ idea of rising inequality during industrial development might apply toagricultural innovations as well. While in later stages of development, broader segments ofthe population might eventually obtain their share of the additional income generated by thisnew crop. However, the evaluation of the shift to a cash crop economy is often associatedwith the first phase – if this introductory phase was accompanied by large social problems, theoverall effect of the introduction is perceived to be negative.
Three additional negative externalities were commonly observed in other countries
and periods during the initial phase of expansion of cash crop production: disease exposure,migration, and price/income volatility. Land reclamation in forest areas, particularly intropical countries, increases the exposure to severe strains of diseases, directly affecting the12health component of human capital and indirectly leading to a decrease in its cognitive
component. As cash crop plantations are usually established at some distance from the main
settlements, seasonal work undertaken by unskilled workers results in temporary migrationthat disrupts subsistence agricultural production as well as family life and social relations atthe village level. These temporary migrations generate additional cash income but also
sometimes enhance the demand for child labor at home (because one or both of the parents
are absent) and therefore adversely affect the accumulation of cognitive skills by children.
Plantation wage earners and tenants are exposed to cash crop price and income volatility, withadverse effect on the nutritional status of household members, particularly children. Whencash crop cultivation expands in remote areas with low population density, it is usually thesole crop and plantation workers rely on supply from other regions for their staple foodconsumption. Although the absolute price of staples could be high in plantation areas due totransportation costs, the revenues from cash crops are sufficient to cover these additional costs
in normal circumstances, making the local production of staples uneconomical in a situationof relative labor scarcity.
These externalities would imply that in the introduction or expansion phase of cash-crops, thehuman capital investment might have been lower. But was this really the case on thePhilippines?
We perform regressions of numeracy for the 19th century in which our main explanatory
variables are indicating whether a certain cash crop was cultivated in a certain region (Table4). For example, for sugar, we use those regions which had substantial sugar production. The
literature identified the main sugar production regions (Larkin 1984, 1992; Census 1903). We
included one dummy variable for the introductory phase (1850s-1870s) for all these provincesof sugar production. We also included dummy variables for 1800-1850 for the regions thatwould become later sugar-producers in order to identify potential characteristics that were not13caused by sugar. Finally, we included a dummy for the ‘maturity’ phase of the 1880s and the1890s, which was also characterized by military conflicts.5
For the abacá production, we identified the three provinces of Albay, Ambos
Camarines, and Sorsogon in which this cash-crop was most spreading but we included all
provinces in which it was present (Table 5). For tobacco, we included Ilocos Norte, Ilocos Sur,La Union, and Pangasinan as central provinces for this crop, but again assigned all provinceswith tobacco with a dummy variable.
In addition, we included a dummy variable for urbanization which represents theprovinces that contained the largest cities of the country during the 19th century. We included
also a dummy variable for natural disaster based on the regional history provided in the 1918
census and a dummy for large immigration into a province. Similarly, we control for
population density in 1800 with a dummy based on Reid (1988) that separates the higher
population densities on Luzon and the Visayas from lower density provinces of Mindanao.
In the first column of our regression, we tested the most parsimonious model using
only the different interaction terms of districts of Philippines, which have introduced cash
crops, such as sugar, abacá or tobacco.
As can be observed in the first column, in the pre-1850s the districts which have later
the highest output per capita of the cash crop of sugar had already a substantially lower
numeracy (-10 %), when compared to those which have never introduced any significant
amount of cash crop (the constant; Table 5, see also Figure ). In the introductory phase (18501879), the negative numeracy gap of these regions had declined, i.e. the numeracy in the sugar
provinces improved. Yet, the sugar districts could still not reach the other agricultural districts
represented by the constant during mid-century. In the final phase, the effect in sugar
provinces was insignificant.
5

The nationalist uprising against Spanish rule in 1896-1898, and the military operation between nationalist
troops and the U.S. expeditionary corps that gradual occupied the Archipelago in 1898-1903, resulted in analmost entire collapse of cash crop production.

14

For the second most important cash crop - abacá - according to our regressions, theimpact during all the sub-periods was found to be insignificant. As for tobacco, its estimatedeffect was positive and significant relative to the constant in the pre-cash-crop phase.
However, in the main phase of rapid tobacco expansion (1850s - 70s) the coefficient became
insignificant. Relative to the large positive coefficient of the pre-expansion phase, thissuggests a substantial drop. What can explain the negative development in the tobacco
districts? Studies of the development of cash crop production in 19th century Philippines
suggest that specific institutions played a negative role. The tobacco public monopoly,established in 1766 and abolished in 1880, performed very badly during most of the period of
operation and deprived producers of their income. The expansion of abacá and sugar
cultivation mostly took place in newly reclaimed land tracks, with land titles granted inarbitrary fashion by the colonial administration to members of the local elites of mestizos
resulting of intermarriages between offspring of Chinese immigrants and of traditional
chieftains or village heads (Owen 1984; Larkin 1974, 1993). Huetz de Lemps (2006) argues
that both the local and the central colonial administrations were plagued by corruption.
In sum, the hypothesis that the introduction of the cash crop sugar led to lower
numeracy cannot be confirmed. The low level existed before 1850 already, i.e. during theinitial phase of land reclamation for the establishment of sugar plantations, particularly in theprovinces of Pampanga and Negros occidental. During that phase, output and export volumes
remained small in comparison with the phase of rapid expansion of the 1850s and 1860s. It
seems likely that the cash-crops plantations were founded in provinces that happened to have
low numeracy and immigration of workers from other provinces did not result in changing
these ratios. However, the income from sugar was also not sufficient to generate a substantial
increase of human capital investment. At least it was not large enough to reach “normal”
Philippine level. Only towards the end of the 19th century the cash-crop regions converged tothe ‘other’ agricultural regions. The regions in which tobacco was introduced suffered from15

difficult situation during the cash crop introduction face (1850 – 1879) relative to before andafter.
Finally, we were curious how the effect of the most important cash crop, sugar,
developed in the early 20th century. In particular, we assess whether it might have been notsugar per se which had a potentially negative effect but whether there might have been aninteraction with land inequality. We can measure this variable for the early 20th century (butunfortunately not for earlier periods). We took the land inequality values by calculating theshare of the farms which had at least 30 ha. We use the censuses of 1903 for the birth decadesof the 1900s and 1910s and the land inequality in the census of 1918 to assess the effect on
numeracy of the birth decades of the 1920s and 1930s. We calculated the area share of thelarger farms by province (and took logs of this variable). In order to assess potential nonlinearities, we also added a dummy variable for high land inequality which covers those
districts which have 40% and more area farmed by the large land owners. As an effect, we
still find a small negative correlation between numeracy and sugar in the 1900 and the 1910s
numeracy regression. But we find that this was probably not caused by land inequality,
because we actually have a positive yet insignificant effect for land inequality (Table 6). If weassign the dummy variable to the high land inequality cases, we even have a positive
numeracy effect which might have been caused by a higher productivity in these high land
inequality regions or by other factors. Secondly, if we regress the numeracy of the 1920s and1930s on sugar production kg/capita and include also the ‘high land inequality’ dummy
variable, we find no effect of sugar for this later period, but a positive effect of land inequality.
In this regression, we control for time fixed effects using a dummy variable for one of thebirth decades. In general, we see that it was probably not land inequality that was behind the
cash-crop effect, although we can assess this only for the 20th century. Any potential effect ofsugar disappeared in the early 20th century.

16

6.

International Comparisons

The changes in numeracy levels observed in the Philippines since the early 19th century invite
to further investigate the historical trend in human capital levels in other Southeast Asian
countries. The estimates of numeracy generated by Crayen and Baten (2010) using census
data show an upward trend in the late 19th century in Southeast Asian countries, with absolutelevels well above those of India and Middle Eastern countries, but much lower than in East
Asia (China, Japan, and Korea, were close to the top World level).
High levels of numeracy are observed in the different regions of coastal China in the
19th century (Baten et al. 2005), including in the Fujian province, which was the region oforigin of most Chinese immigrants in the Philippines. This suggest that ethnic Chinese
communities in the Philippines, broadly defined as to include also the mestizo communities
which were more involved in cash crop agricultural production that recent Chinese
immigrants, had brought some skills from China and had a comparative advantage related totheir numeracy level. The upward trend in numeracy starting in the mid-19th century could beinterpreted as the consequence of their high numeracy skills trickling down towards the entire
population. But since the Chinese were already present in the early 19th century, this cannot
explain the high initial level, the downward trend and the specific role of sugar cultivation inthis process.

Conclusion
In this first quantitative study on the numeracy development of the Philippines, we find a highnumeracy level at the beginning of the 19th century. Qualitative information on literacycollected but Reid (1988) suggests that a large part of the rural male and female population ofSoutheast Asian countries was able to read and write poetry well before the arrival ofWesterners. In Luzon and in the Visayas local syllabic scripts derived from Brahmi scripts ofIndia (introduced via present-day Indonesia and Malaysia), in particular baybayin (Scott
17

1984), remained in use until the 19th century. The most common mode of knowledgetransmission was informal at the family or village level. Since numeracy is usually strongly
correlated with literacy, the high numeracy of early 19th century Philippines can be regarded
as a legacy of the pre-colonial past. The disruption of family life and of the social life invillage communities that resulted from massive seasonal migrations during the initial periodof expansion of sugar plantations appears therefore as a plausible explanation for the declineof numeracy observed in the early 19th century.
The results presented above indicate that the Philippines experienced a decline in thelevel of human capital, as measured by numeracy, in the initial phase of expansion of cash
crop cultivation in the mid-19 century. This was a temporary phenomenon. Numeracy fully
recovered the initial level of the early 19th century only during the first decades of the 20th
century. The fact that the same upward trend is observed before the national uprising of 1896
and after the imposition of the US colonial rule in 1898 suggests that local forces were at playin this process before the possible additional effect of mass primary education introduced by
the US colonial authorities. Land inequality does not seem to play an important role as
explanatory variable of differences in numeracy levels across provinces. Therefore, theupward trend in numeracy in the late 19th century could be considered as evidence of the longterm gains of the shift to cash crop production, as opposed to the heavy cost burden for thebirth cohorts of the 1830s to 1880s, or at least of an adaptation of rural population to the newenvironment in which the return on investment to the numeracy component of human capital
was increasing.
In a panel regression analysis of the Philippine provinces and birth decades, westudied whether it was really the cash-crop expansion that was the culprit. Based on the earlier
literature, we expected sugar plantation provinces to the responsible for the decline innumeracy. However, the result was a very differentiated picture. In the (later) “sugar
provinces”, the coefficient changed from very large and negative during the pre-expansion
18

phase to only large and negative in the expansion phase (relative to other rural districts
without substantial cash-crop expansion). Abacá provinces were never much different fromthe constant. It seems that these two cash-crops did not cause the decline of numeracy directly.
However, an indirect effect could be imagined, as the population structure of the Philippineschanged substantially: the sugar provinces experienced massive immigration and population
growth. Hence a smaller part of the decline could have been caused by the increase of the
population share in low-numeracy sugar provinces. Unfortunately, population statistics are
not precise enough to calculate the size of this effect. A second result is that the expansion of
tobacco probably had a negative effect. This development was partially caused by a very
negative institutional setting in the tobacco cash-crop economies. As a conclusion, thehypothesis that there was a “curse of point-source resources” needs to be qualified. The
method of age-heaping based numeracy analysis allows to study the specific effects forindividual cash-crops and different institutional settings, which is an important strategy tounderstand development processes in poorer countries.6

6

It is, however, worth noting that this rise in capabilities related to numeracy did not materialize as improvementin biological standard of living but, quite to the opposite, took place in a context of declining height (Bassino,
Dovis and Komlos 2015). This indicates that the shift from subsistence agriculture to cash crop specialization
resulted in a decline in the biological standard of living in the Philippines. A similar downward trend of heightoccurred in lower Burma, where rice was the main cash crop, during the expansion of paddy cultivation forexport in the second half of the 19th century (Bassino and Coclanis 2008). Often a decline in numeracy isfollowed by a decline in living standards one generation later. This was also the case in China where numeracy
declined in the 1840s and 1850s (height as a measure of living standards in the later 19th century, see Baten et al.
2010). Also in England this was the case around 1800 (height declined in the 1830s and 40s, see Komlos#).

19

References
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Heaping and the History of Human Capital” Journal of Economic History 69-3 (Sept 2009),
783-808.
Aguilar, Filomeno (1994) Beyond inevitability: The opening of Philippine provincial ports in
1855. Journal of Southeast Asian Studies, 25, 70–90.
Alzona, Encarnación. (1932). A history of education in the Philippines from 1565 to 1930.
Manila: University of the Philippines Press.
Bassino Jean-Pascal, and Coclanis, Peter (2008). Economic transformation and biologicalwelfare in colonial Burma: regional differentiation in the evolution of average height”,
Economics and Human Biology, 6, 212-227.
Bassino Jean-Pascal, Dovis, Marion, and Komlos, John (2015). Biological well-being in late
19th century Philippines. World Economic History Congress, Kyoto, 3-7 August 2015,
Session S20057: Heights in development.
Bassino, Jean-Pascal and Williamson, Jeffrey G. (2015). “From commodity booms toeconomic miracle; Why Southeast Asia industry lagged behind. In Kevin O’Rourke andJeffrey G. Williamson eds. The spread of manufacturing to the global periphery. Oxford
University Press (forthcoming). CEPR Discussion Paper No. 10611 (May 2015)
Baten, Joerg, Ma, Debin, Morgan, Stephen, and Wang, Qing (2010). Evolution of living
standards and human capital in China in the 18–20th centuries: Evidences from real wages,
age-heaping, and anthropometrics, Explorations in Economic History, 47, 347–359.
Baten, Joerg and Stefan Priwitzer (2015) “Social and Intertemporal Differences of Basic
Numeracy in Pannonia (1st Century BCE- 3rd Century CE)”, Scandinavian Economic
History Review.
Bucher, Tobias: Regionale Humankapitalentwicklung in England während der Industriellen
Revolution,“ Unpublished Thesis, University of Tübingen)
Corpuz, O.D. (1997). An Economic History of the Philippines. Quezon City : University of
the Philippines Press.
Crayen, Dorothee and Joerg Baten (2010) “Global trends in numeracy 1820-1949 and its
implications,” Explorations in Economic History 47, 1 (January), 82-99.
Cullinane, Michael (1982). The changing nature of the Cebu urban elite in the 19th century.
In: McCoy, Alfred W., and De Jesus, Ed C., eds. (1982) Philippine Social History: Global
Trade and Local Transformations. Quezon City: Ateneo de Manila University Press.
20

De Jesus, Ed C. (1980). The Tobacco Monopoly in the Philippines; Bureaucratic Enterpriseand Social Change, 1766-1880. Manila: Ateneo de Philippines.
Huetz de Lemps, Xavier (2006). L'archipel des épices. La corruption de l'administration
espagnole aux Philippines (fin XVIIIe - fin XIXe siècle), Madrid, Casa de Velázque
Isham, Jonathan, Woolcock, Michael, Pritchett, Lant, and Busby, Gwen (2005) “The Varieties
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Economic Growth” The World Bank Economic Review 19-2 (2005), 141-174.
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Moradi, Alexander and Joerg Baten (2005) “Inequality in Sub-Saharan Africa 1950-80: New
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History. New Day Publishers.

21

Tables and Figures

Table 1: Number of underlying cases by birth decadebdec

Underlying cases

1760s-1800s

132

1810s-1820s

1248

1830

3884

1840

6196

1850

20653

1860

27013

1870

31479

1880

42116

1890

42596

1900

27181

1910

18174

1920

6126

1930

2055

Total

228853

Table 3: Regional bias
22

Was there regional bias, because the earlier provinces might have been a selective sample ofPhilippine provinces? This seems unlikely, because in all provinces except one for which wehave sufficient cases both in 1800-1820 and 1830-50, there is a decline in numeracy, except
one (Ilocos Sur):
provc

bdec18001820

bdec18201850

diffbdec18001820_18301850

Leyte

78.1

32.4

-45.7

Pangasinan

77.7

39.9

-37.8

Batangas

92.3

60.8

-31.4

La Union

88.8

58.8

-30.0

Tarlac

92.7

69.4

-23.3

Pampanga

71.9

52.2

-19.7

Manila

72.7

58.3

-14.3

Cebu

57.7

46.2

-11.5

Iloilo

50.9

42.4

-8.6

Ilocos Sur

54.3

64.9

10.6

Table 4: Regressions of numeracy during the 19th Century
(1)

(2)

(3)

(4)

(5)

-10.31*-10.42*-10.42*-10.40*-10.05(0.062)(0.082)(0.082)(0.087)(0.107)-6.12*-5.92*-5.92*-5.90*-5.32*(0.076)(0.053)(0.055)(0.061)(0.097)

-2.51

-2.29

-2.29

-2.28

-1.67

(0.490)(0.479)(0.483)(0.496)(0.621)

-1.05

1.08

1.08

1.08

1.28

(0.815)(0.829)(0.830)(0.829)(0.799)

-2.78

-0.41

-0.41

-0.40

-0.31

(0.496)(0.909)(0.910)(0.912)(0.931)

0.42

2.82

2.82

2.83

2.94

(0.923)(0.470)(0.476)(0.477)(0.460)

tobacco1_pre1850 24.91**

27.83**

27.83**

27.82**

29.97**(0.024)(0.014)(0.015)(0.015)(0.016)

-1.65

1.13

1.13

1.14

1.87

sugar1_pre1850
sugar1_185070
sugar1_post1880
abaca1_pre1850
abaca1_185070
abaca1_post1880

tobacco1_185070

23

(0.732)
tobacco1_post1880 1.07
(0.812)urban(0.787)(0.788)(0.787)(0.677)

3.84

3.84

3.85

4.52

(0.309)(0.311)(0.314)(0.268)

6.17

6.17

6.14

6.42

(0.200)(0.201)(0.223)(0.203)

0.02

0.02

0.21

(0.995)(0.996)(0.947)

0.62

0.40

(0.912)(0.943)

popdenshigh1800
naturaldisaster
immigration-3.05(0.452)

Constant

61.81***

58.98***

58.97***

58.95***

58.70***(0.000)(0.000)(0.000)(0.000)(0.000)

0

0

0

0

0

Observations

375

375

375

375

375

Adj. R-squared

0.0823

0.117

0.114

0.112

0.117

Table 5: Number of cases by ever planted cash-crop
Period

sugar

abacá

tob

no sugar

1800-49

6372

4431

2256

5088

1850-79

40228

45203

22730

38894

1880-99

42906

47899

22877

41786

1900-39

26344

27776

12761

27186

Total

11585012530960624

11295424

Table 6: Regressions of numeracy during the 20th Century
(1)

(2)

Period1900s/1910s 1920s/1930s

Sugar (kg p.c.)-0.05***-0.00(0.003)(0.978)0.66

3.05**(0.727)(0.029)7.84**

1.98(0.047)(0.819)Time FE

Yes

Yes

Constant

80.80***

95.93***(0.000)(0.000)Observations

115

82

R-squared

0.04360.203

Land ineq
High land ineq

25

Figure 1: Numeracy by Sugar and Non-sugar planting districts

26

Figure 2: Numeracy according to death and marriage registers

Comparing the trends of numeracy according to death and marriage registers (both sources adjusted fordeath/marriage bias). Death register: one value for 1810s/1820s. Both marriage and death register sourcessuggest a decline. The only deviation is caused that we could estimate only one value for the 1810s and 1820s
jointlyNote: Death register: one value for 1810s/1820s. These first estimates were performed by Julia Plötz and Tobias
Bucher (Human
Capital Trends in Central America and the Caribbean from the 18th to the 20th Century; Regionale
Humankapitalentwicklung in England während der Industriellen Revolution: können Indikatoren auf Basis vonSterberegistern gebildet werden?). They compared nuemracy estimates for countries and birth decades for which
we have both census data (usually relatively unbiased), and marriage (upwardly biased) and death registers(downwardly biased). The idea of the figures is that you can look up the observed level of numeracy of marriage
registers on the horizontal axis. The adjustment factor can then be read from the vertical axis. Alternatively, you
can use the formula: Adjustment factor (negative!) = -5.51 + 0.264 * observed_numeracy_in_marriage_register.
For example, an observed marriage register numeracy of 40 would then be adjusted downward by (40*0.264)5.51=10.56-5.51= 5.05. The observed numeracy of 40 is upwardly biased (because most marriages take place inthe early 20s, hence there are many more aged 23 than 30), and the estimate of unbiased numeracy would be 405.05=34.95 then. The same can be done for death registers, but here we have usually a downward bias (as somepersons died without having close relatives who usually informed the priest, and the single/widowed persons
also did not tell the priest their age before dying, so that priest estimated the age in some cases, usually using around number). Here the formula would be Adjustment factor (positive!) = 19.38 - 0.202 *observed_numeracy_in_death_register. For example, an observed death register numeracy of 40 would then be
adjusted upward by 11.3, hence the estimate of unbiased numeracy would be 51.3 then.

27

4

Figure 3: Literacy and Numeracy

Manila3.5

TayabasLiteracy

Nueva Vizcaya

3

AbraAntique
Iloilo2.5

CapizBatangas

Mountain
La LagunaSorsogon
BulacanMoro
Pampanga
CaviteParagua Sur

Rizal
BataanAlbay
Ambos Camarines
TarlacZambalesNueva
LaEcija
Union
Leyte
Pangasinan
MarinduqueMisamisIsabelaCagayanIlocos Sur
Masbate
Bohol
Ilocos Norte
SurigaoRomblonNegros Occidental
Cebu
Samar

Negros Oriental

60

70

Numeracy

80

90

Correlation coefficient between numeracy and literacy 0.58 (p=0.000)

Figure 4: Survivor bias

28

Figure 5, Panel A: Numeracy in “Sugar” Provinces (Coefficients of Model 5 in Table 4)

Figure 5, Panel B: Numeracy in “Abaca” Provinces (Coefficients of Model 5 in Table 4)29

Figure 5, Panel A: Numeracy in “Tobacco” Provinces (Coefficients of Model 5 in Table 4)

30

31

32

33