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Economic Setting:
The Philippines
• Before World War II (1939-1945)the economy of the Philippineswas based on the productionand export of a narrow range ofprimary commodities, mainlyagricultural and forest products.The Supreme Court of the
Economic Setting:
The Philippines
United States ruled in the early20th century that Philippinegoods could enter the Americanmarket without tariff restraints.In the trade that followed, theUnited States importedPhilippine agricultural goods and
Economic Setting:
The Philippines
provided the Philippines withmost manufactured items. ThePhilippines had virtually nomanufacturing other than theprocessing of food products,primarily for the United Statesmarket.
Economic Setting:
The Philippines
After independence in 1946, thePhilippines initially remaineddependent on free-trade accessto United States markets for itsagricultural commodities,especially sugar. Governmentrestrictions on import spending
Economic Setting:
The Philippines
spurred an increase inmanufacturing for the domesticmarket. During the 1950s thePhilippines tried to become anindustrialized nation. In the longterm, however, protectionisteconomic policies provided little
Economic Setting:
The Philippines
incentive for the development oflabor-intensive exportmanufacturing. In the 1970s thegovernment implemented apolicy to encourage exportmanufactures and foreigninvestment, and the rate of
Economic Setting:
The Philippines
economic growth accelerated.The country’s foreign debt rosedramatically, however, and bythe mid-1970s the country facedproblems meeting payments onits international loans. Thisproblem was compounded by a
Economic Setting:
The Philippines
worldwide recession in the early1980s. The recession resulted inless demand for Philippinemanufactures, and the economymoved into a deep recession inthe mid-1980s.
Economic Setting:
The Philippines
At this time the Philippineeconomy also suffered frommore than a decade of economicmismanagement underPresident Ferdinand Marcos,who ruled by decree afterdeclaring martial law in 1972.
Economic Setting:
The Philippines
Under Marcos the governmentgreatly expanded the number ofpublic-sector enterprises.Government-mandatedmonopolies were set up invarious sectors, while subsidiesand special privileges were
Economic Setting:
The Philippines
awarded to close associates ofMarcos. This concentration ofownership and control amongthe president’s closest businessassociates, friends, and relativesbecame known as cronycapitalism. The system allowed
Economic Setting:
The Philippines
for rampant corruption. Duringthe economic recession of the1980s, many of the cronyenterprises experienced severefinancial difficulties. This in turnundermined the viability of thebig government-owned banksand led to an economic crisis.
Economic Setting:
The Philippines
Major structural reformsimplemented during succeedinggovernment administrationsdismantled the monopolies andpromoted privatization.Measures to stabilize theeconomy involved compliance
Economic Setting:
The Philippines
with a severe austerity programof the International MonetaryFund (IMF). Economic reformsreduced governmentintervention in the economy andstimulated the private sector. Bythe mid-1990s the Philippine
Economic Setting:
The Philippines
economy had largely recoveredand was experiencing steadygrowth. It contracted much lessdramatically than other Asiancountries from the regionalfinancial crisis of 1997. Itcontracted much less
Economic Setting:
The Philippines
dramatically than other Asiancountries from the regionalfinancial crisis of 1997. It wasalso slower to rebound,however, due to droughtconditions that caused a sharpfall in agricultural output in
Economic Setting:
The Philippines
1998. The modest pace ofeconomic recovery wasadversely affected by corruptionin government and a globaleconomic downturn in the early2000s that reduced demand forPhilippine manufactures by the
Economic Setting:
The Philippines
country’s two largest tradingpartners, the United States andJapan.
Economic Setting:
The Philippines
In the early 2000s thegovernment was pursuingeconomic reforms to help thePhilippines match the pace ofdevelopment in the so-callednewly industrialized economiesof East Asia. The strategy
Economic Setting:
The Philippines
includes improvinginfrastructure, revamping the taxsystem to increase governmentrevenues, promoting furtherderegulation and privatization ofthe economy, and expandingtrade ties in the region.
Economic Setting:
The Philippines
The estimated governmentalbudget in 2006 includedrevenues of $19 billion andexpenditures of $20.5 billion.Gross domestic product (GDP) in2006 was $117.6 billion, or$1,362.80 per person.
Economic Setting:
The Philippines
Source:
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