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VOLUMEIII

NO

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MARCH-APRIL m

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ISSN 0115-9097

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THE BALANCE OF PAYMENTS CRISIS AND THE ECONOMY Introduction In 1983, the Philippines faced a serious balance-of-payme,ts problem and was forced to declare a moratormm on repayments of its external debts totalling approximately $26 billion. That action set into motion additional shocks to an economy that was already experiencing slow growth, resulting in a recession with inflation in 1984. The adverse economic conditions have thrust the balance of payments into prominence and served to focus attention on the various adjustment measures that have to be carried out to achieve a viable balance-of-payments position compatible with the growth and price stability objectives of the economy, In this note, we attempt to review several of the PIDS papers concerning the country's balance-of-payments problems, as well as similar studies done by other related institutions, covering the period of the seventies to the present, I

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EDITOR _S NOTE: This issue focuses on the Balance-of-Payments Crisis which the Philippine economy is currently experiencing. Our guest writer, Dr. Dante B. Canlas of the School of Economics at the Universi_ of the Philippines, succinctly presents an overview of the problem in the integrative report that follows, The report provides a review of relevant PIDS-sponsored studies as well as studies done by external institutions on the subject of balance.of-payments and its relation to the state of the whole Philippine economy. Responses to the crisis, especially the macro.economic adjustments adopted during the=seventies, are documented and highlighted, to stfow how these have either brought about a relief in the crisis or exacerbated the crisis even further. The Balance of Payments: Ideas

Some Basic

The balance of payments, which is a record of all transactions made by the country's residents with the rest of the world, consists of the trade, service, and capital accounts. A money account serves to maintain the double-entry accounting nature of the balance of payments. The trade account records receipts on exports as inflows and expenditures on imports as outflows. The service account includes as II

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inflows the receipts from capital owned by Filipinos abroad and expenditures of foreign tourists in the Philippines, while payments sent abroad by Filipinos for use of capital in the Philippines owned by foreigners are outflows. The capital account records payments and receipts from items like debt repayments and sales of securities. Foreign borrowings of the Philippine government are recorded as inflows in the capital account. The sum of the trade and the service accounts is the current account which has IIII

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CONTENTS: THE BALANCE OF PAYMENTS CRISIS ...................... UPDATE ON SEMINARS .................................. ON-GOING PROJECTS .................................... NEW STAFF PAPERS .....................................

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STAFF AND WORKING PAPER SERIES ...................... OTHER PIDS PUBLICATIONS ..............................

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modate

capital to the current account yields the overall balance of payments which may either be in deficit or surplus. Financing a deficit or disposing a surplus in the overall balance of payments is marked by changes in the monetary account of the balance of payments. These changes take the form of adjustments in the level of the country's net foreign reserve assets, The level of net foreign reserve assets indicates the country's liquidity position and its capacity to defend its exchange rate.

omic environment. Guidelines on maximum commitments of Fund resources established around 1981 provided for comrrfitment of Fund resources up to an average of 150 percent of quota a year within a maximum of 450 percent of quota over a three-ycar period. There was a maximum limit on total cumulative access to Fund resources, net of scheduled repurchase or repayments, of 600 percent of quota, The stand-by arrangement is the IMF's instrument through which it extends financial assistance to its members on a conditional basis. It is a line of credit

adjustments, specifically in the rate o9 domestic credit creation assume first:order import/race in the short-run. The monetary adjustments are pursued with the minimum of restrictions on the nominal exchange rate. If the size of the imbalance to be corrected is large, a dramatic devaluation of the local currency is usually prescribed. Devaluation is pursued for its expenditure-switching effects. It shifts spending away from foreign goods, the relative prices of which rise as a result of a devaluation, towards domestically produced goods. A devaluation is also pursued for its

". .... Beginning 1974, the governmerit turned increasingly to add# tional borrowing to reduce the current-account deficits. This tendency has been encouraged due to the

spelling out circumstances under which a member can make drawings from the Fund. The arrangement links a member's use of Fund resources to its adoption of a program of action to be pursued for a definite period of time, say, a year. The stand-by arrangement involves phasing and performance criteria. The phasing aims to prevent too rapid use of the borrowed funds and the performance criteria are used by the Fund to institute a review process on the specific policies being

expenditure-reducing effects. By reducing the real value of nominal assets, it reduces aggregate spending on goods and services. Fiscal restraints are also imposed since the current account deficit arises from a government budgetary deficit and the excess of private investments over savings_ Fiscal restraints are designed to keep government spending in line with its revenue-generating capacity.

A deficit member country of the International Monetary Fund (IMF) can draw or borrow from the Fund a foreign cur-

pursued.

Experience A number of authors have examined the balance of payments problems of the

rency, depositing m exchange some additional quantities of its local currency, In case of a surplus, a member country can repurchase its local currency at the Fund with foreign currency. All purchase and repurchase transactions in the local currency can be summed in a given period to yield the country's net fund position with the IMF. A member country is

To get an idea of some of the macroeconomic adjustments favored by the IMF in reducing an external imbalance, it is useful to discuss briefly the monetary approach• to the balance of payments, This approach views a balance-of-pay_ ments deficit and inflation as arising from an excess of aggregate expenditures over aggregate receipts by the country's

Philippines during the decade of the seventies. The decade was marked by two external shocks_ The oil-price shocks in 1973-74 and in 1979-80, led to an unprecedented rise in the relative prices of oil and related energy products.

assigned a quota and permitted to borrow from the Fund an amount equal to its net fired position with the IMF which is the •difference between its quota and the IMF's holdings of the country's local currency. Such borrowings are used to deal with temporary balance of payments difficulties and are to be repaid normally within a period of 3 to 5 years. When the IMF's holdings of local currency reaches the country's quota, the IMF can insist on some policy measures to be taken by the member country to correct its deficit to be able to avail of additional Fund

residents. Financing the deficit entails the purchase by the country's residents of foreign currency from the Central Bank and is reflected in the money account of the balance of payments as a decline in foreign reserves. Residents draw down their nominal cash balances in exchange for foreign currency. Once a critical minimum cash balance position is reached, an increase in the demand for cash balances results, pulling interest rates up, tending to dampen aggregate expenditures. However, this self-correcting mechanism can be immobilized if the Central Bank

show a significant deterioration of the terms of trade, due in no small measure to the rise in the relative price of oil and a heavy reliance on traditional exports .... for the Philippines, the years 1976 and 1982 are examples .... '"

resources. As the borrowings increase, the conditions imposed bylMFbecomemore and more stringent. The conditionality practice of the IMF has evolved over a period of several decades to accomIll

engages in domestic credit creation to accommodate the increased demand for cash. interest rates and aggregate spending remain at their usual levels, the deficit persists, accompanied by dwindling net

ture of the balance of payments. For instance, by looking at the current account and the capital account, a picture of how the government manages its external debt is developed.

of excess

financial

markets

loanable

.funds in

abroad..."

The Role of the IMF

econ-

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been in deficit since 1974. Adding the

presence

a changing international

--

Macroeconomic Adjustments

foreign reserve assets. Hence, monetary

The Balance of Payments: The Philippine_

". ....

Periods

of payments

crises

The monetary approach to the balance of payments serves to focus attention on net foreign reserve assets_ However, some useful insights can also be derived froml an analysis of the composition or struc-


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John Power 1 identified two payments Irises during the seventies, marking the crises as the periods at which peaks in the current-account deficit as a share of total trade occurred. For the Philippines, these were in the years 1976 and 1982. These periods witnessed a significant deterioration of the terms of trade, due in no small measure to the rise in the relative price of oil and a heavy reliance on traditional exports, In an analysis of the performance of exports and imports for the period 19741982, Ponciano Intal 2 identified termsof-trade deterioration and a weak world demand for traditional exports such as sugar, logs, and copper as responsible for much of the deficit inmerchandisetrade, Some gains were made in the exports of copra by-products and some .nontraditional exports, but were not sufficient to offset the losses in the traditional exports. Heavy dependence on imported capital goods was also well indicated in lntal's analysis, In an expanded analysis of terms-oftrade instability, Ponciano lntal 3 found _hat fluctuations in sugar prices accounted for about 40 percent of the variation in the commodity terms of

The banks turned to the less-developed countries as possible borrowers, The use of foreign borrowing to finance current-account deficits is also stressed in the analysis of the 1983 balance of payments problem by Eli Remolona, Mahar Mangahas, and Filologo Palate, Jr. 4 A look at the capital account shows that borrowing even made it possible for the overall balance to register a surplus in 1976 and 1977. The management of the external debt did not appear conservative at all and it was pursued, in an environment of declining growth rates of output. It of course eventually strained the debt-servicingcapacity of the economy. After the 1.979-80 oil price shock, the more developed countries pursued restrictive monetary policies as an anti-inflationary measure. Interest rates went up and the debt burdens of several less developed countries became unbearable. In 1983, the Philippines, like Mexico and Argentina before it, declared a moratorium on repayments of its foreign debts,

trade while copper 34 percent,

which it extends financial assistance to its members on a conditional lCasis -- this involves phasing and performance criteria..."

contributed

about

". .... In .1983, the Philippines, like Mexico and Argentina before it, declared a moratorium on repayments o.fitsfbreign debts..."

". .... The stand-by arraINement is the IMF's instrument through

The fiscal and monetary policies pursued in the face of chronic currentaccount deficits of the seventies con-

It emerges from the above mentioned studies that the absence of a diversified export base limited the economy's capacity to absorb the adverse effects of the oil-price shocks on the current account.

travened the prescriptions based on a monetary approach to the balance of payments. Anticipating a recession as an aftermath of the oil price shock of 1973-74, fiscal authorities stepped up government spending and the Central Bank authorities accommodated the re-

Beginning 1974, the government turned increasingly to additional borrowing to reduce the current-account deficits. The presence of excess loanable fnnds hi _'inancial markets abroad made foreign _orrowing relatively easy. The so-called

sulting government budget deficits by expanding the money supply. This led to record-inflation rates and momentary high growth rates of real output. The expansionary monetary policy affected asset preferences of individualswhichhad

petrodollars found their way into the major banks and had to be relent so that Ihe banks could make profits from holding petrodollar deposits. Most ofthe developed conntries experienced stagflation as an aftermath of th.e 1973-74 oil-price shock and found no need for the loans,

some implications on the local financial market. Real interest rates declined, Private investors with excess peso cash. balances shifted out of savings and time deposits with fixed interest rates in favor of placements in the short-term markets which enjoyed relatively more flexible

MARCH-APRIL

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interest rates. Victoria Licuanan 5 informs us that the period of rapid growth of the short-term money market was observed during this period. This was not a chance occurrence but it was made possible by an expansionary monetary policy pursued under fixed interest rates. The expansionary monetary policy was also pursued under a fixed exchangerate which worsened the balance of pay_ merits problem by encouraging capital flight especMly after the second oil-price shock of 197%80. During this period, the more developed countries pursued restrictive moneta_T policies, targeted monetary aggregates and freed interest rates. The Philippines, like in 1974, stuck to an expansionary monetary' policy. After the rounds of spending by the government, the money ended up in the hands of private investors. The high interest rates abroad encouraged, these investors to convert their excess pesos into dollars. Despite the excess demand for dollars, the exchange-rate remained fixed. Through our links with the world's financial markets, capital flight was made possible. This had adverse effects on the domestic financial market. By 1981, several banks were confronted with serious liquidity problems, a direct result of the massive shiRs from pesos to dollars which were invested in capital markets abroad. The lack of consistency in the exchange-rate policy also encouraged the shift out of pesos to dollars. The anticipation of a devaluation in the face of rising current-account deficits raised the demand for dollars as an asset to hold and . exacerbated the difficulties of commercial banks, savings banks and investment houses that dealt in short-term money placements. By 1983, the external. imbalance reached crisis proportionsthe imbalance was severe enough, to cause

". ....

A devaluation

is pursued

.for

its expenditure-switching and expenditure-reducing effects. For the .former, devaluation shifts spending aw_v ,from foreign goods towards domestically produced goods,.. fbr the latter, by reducing the real value of nominal assets, devaluation reduces aggregate spending on goods

and services."


PIDS DEVELOPMENT RESEARC--'_EWS 4 J I I IIII I III the possible breakdown of the financial debt rescheduling with foreign commermarket. Even large government financial cial 'banks. As expected, the 'stand-by institutions like the Philipphle National arrangement involves phasing and perBank (PNB) and the Development Bank of the Philippines (DBP) were not spared. The problems besetting tile DBP is well described by Mario Lamberte.6 Saddled with a number of nonperforming accounts, DBP is hard pressed to raise funds internally. The current restrictive monetary policies place effective limits on the domestic credit that DBP can avail of from the Central Bank. The exchange-rate policy pursued by

formance criteria. The monetary policy to be pursued imposed ceilings on monetary aggregates, government budgetary deficfts, and external borrowings. The rate of domestic credit creation by the Central Bank has been limited. The Central Bank has resorted to open-market operations to meet a target money base. The peso has 'also been devained and allowed to float against the dollar. Matin Lamberte and

the Central Bank during the decade was of little help in reducing the external imbalances. The exchange-rate was essentially on a managed float. The Central Bank targeted a nominal exchange-rate and intervened in a variety of ways to achieve its target_ Filologo Pante 7 provides an interesting account of Central

others 8 have written a detailed account of specific measures that have been adopted after the October 1983 moratorinm. Some of these measures appear to have been less thought-through than others and were subsequently abam doned after some perfbrmance criteria were applied.

Bank intervention. For one reason or another, the Central Bank was slow to make adjustments in the nominal pesodollar exchange-rate in the face of large

The immediate objective of the macroeconomic adjustments is to reduce the imbalance in the external account by allowing self-corrective forces to be

current-account deficits. When devaluation was ftnally resorted to, an atmosphere of crisis almost a/ways had to prevail,

mobilized. In the long-run, it is /roped that a viable balance of payments can be achieved, whereby current-account defttits can be accommodated by net capital inflows. The international economic

MARCH-APRIL II I I III END NOTES

1John Power, "Response to Balance ot"_ Payments Crises in the 1970's: Korea and the Philippines," Philippine Institute for Devel-

opment Studies, Staff Paper Series No. 83-05, 1983.

2ponciano Intal, Analysis of Philippine

The expansionary

policy under sened

monetary

pursued in the seventies a fixed exchange-rate worthe BOP problem by en-

couraging

capital

.flight ....

environment seems to rule out at this point reliance on foreign borrowings to

and

3ponciano Intal, Terms of Trade

Philippine Institute fox Development Studies Staff Paper SeriesNo. 85-03, 1985. 4Eli Remolona, _lahar Mangahas and Filo-

reliance

on .foreign

With the debt moratorinm of 1983, the government was forced to apply for a stand-by credit arrangement with the IMF. It had to submit a program of action on a number of fiscal and monetary policies designed to restore balance in its external account that would be consistent with growth, price and exchange-rate stability. Approval of the program of action by the IMF was made

There is a lot of loose talks about the conditionality imposed by the LMF on the latest stand-by credit apphed for by the government. Whether these talks carry an element of truth or not, the fact remains: the economy, like it ornot, wiU have to make some adjustments to achieve a more liquid position and restore it to a normnl growth path. Some adjust-

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Debt,

Balance of Pay-

of the PhilippInes and the Financial Crisis: A Descriptive An ysas, Philippine institute for Development Studies, Staff Paper Series No. 84-07, November

1984.

7Filologo Pante, Jr., "Exchange Rate Flexibility and Intexvention Policy ifi the Philip-

pines, 1973-1981,'" Philippine Institute forI Development Studies, Staff Paper Series No.TM 83-01, 1983. 8Matin Lamberte and others, "A Review and Appraisal of the Government Response to the 1983-1984 Balance of Payments Crisis"

[to comeoutasMonograph Series No. 8, 1985.1 Institute tbr Development Studies.

Philippine

to ease BOP difficulties.

. ."

ments are more painful than others. Finding the measures that reduce welfare losses to a minimum is a challenge facing government authorities. One important lesson should not be missed - the balance of payments is a budget constraint that must be observed in the pursuit of fiscal and monetary policies. II

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REFERENCES

bor-

rowings

I

Jr., "Foreign

ments and 1983-84 Philippine Economic Crisis," mimeo, Development Academy of the Philippines 1984 [Also to appear under UNDP cover.] 5Victoria Licuanan, "An Analysis of the Institutional Framework of the Philippine Short-Term Financial Markets," mimeo, Philippine Institute for Development Studies,1984. 6Matin Lamberte, "The Development Bank

'" .... The international economic environment seems to rule out at

Adjustments After 1983

". .... As the borrowings increase, the conditions imposed by IMF become more and more sfringent... "

JL, "Philippine Export instability, 1965-1982"

ease balance of payments difficulties .....

this point

a prerequisite for a new loan package and

Jr., "A Decomposition Export and Import Per-

formance, 1974-1982," Philippine Institute for Development Studies, Staff Paper Series No. 85-02, 1985.

logo Pante,

".....

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Canlas, Dante B., etEconomic aL An Analysis the Philippine Crisis." of A Workshop Report, School of Economics, University of the Philippines, June 1984. Intal, Ponciano Jr. A Decomposition Analysis of Philippine Export and Import Per.fbrmance, 1974-1982, Philippine Institute for Development Studies, Staff Paper Series No. 85-02, 1985. ___ Philippine Export and Terms of Trade Instability, 1965-1982_. Philippine Institute for Development Studies, Staff Paper Series No. 85-03, 1985. Lamberte, Matin B., et at. A Review and Appraisal of the Government'Response III

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to the 1983-84 Balance of Payments Crisis, Philippine Institute for Development Studies (to appear as Monograph Series No. 8), 1985: The Development Bank of the Philippines and the Financial Crisis: A Descriptive Analysis, Philippine Institute for Development Studies, Staff Paper Series No. 84-07, November 1984.

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STAFF SEMINAR ON THE ECONOMIC ANALYSIS OF RESOURCE CONSERVATION BY UPLAND FARMERS IN THE PHILIPPINES The paper presented in this seminar was part of the January-Februaly DRN's issue on Forest Resources Management. The main speaker for the seminar was Ms. Marian _gura delos-Angeles, a PIDS Research Fellow. Another article of Ms.

Licuanan, Victoria. "An Analysis of the Institutional Framework of the Philippine Short- Term Financial Markets,"

delos Angeles which appeared in the same DRN issue is entitled "Upland Economics and Economic Impact Analysis," and is

by the Philippine DevelopOn-going researchInstitute projectfbrsponsored mentStudies, 1984. Pante, Filologo Jr. Exchange Rate Flexibility and Inten, ention Policy in the Philippines, 1973_1981, Philippine Institute for Development Studies, Staff Paper Series No. 83-01, 1983.

land Development in themonograph, Philippines""Upby part of a forthcoming the Agricultural Development Council, Inc.

Power, John. Response to Balance of Payments Crises in the 1970s." Korea

A series of seminars focushlg on Local

SEMINAR-WORKSHOPS ON LOCAL GOVERNMENT FINANCE STUDIES IN THE PHILIPPINES

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tion was h._ld which highlighted Dr. Amelia C. Angcog's paper on the subject. Representativesfromgovemmentcolporations, particularly 'the Local Waterworks Utihties Administration (LWUA), the Home Financing Corporation (liFe), the Farm Systems Development Corporation (FSDC) and the Philippine Virginia Tobacco Administration (PVTA) were among those who attended_

ON"13OING PROJECTS

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Data Base Development in Post-War Foreign Direct Investment in the Philippines Ale]andro Herrin

and the Philippines, Philippine Institute for Development Studies, Staff Paper Series No. 83-05 1983.

Government Finance Studies in the Philippines was conducted during the thffd week of April. The sessions ran for four (4) days, and drew participants and guests

The study aims to develop a data-base of post-war direct foreign investment by compiling and analyzing approximately 1500 cases of direct investment. Mum

Remolona, Eli., et aI. "Foreign Debt Balance of Payments and 19831984 Philippine Economic Crisis," mimeo, Development Academy of the Philippines, 1984. (Also to appear under UNDP cover). I ] IIIII III

from the different government agencies involved in local finance. Joint sponsors of the seminar were the Local Govern.ment Center of the 'U2. College of Public Administration, the Local Finance Team, based at LGC/UPCPA, the Cornmission on Audit, and PIDS, along with

data source for the study are government agencies who are involved in regulating, or otherwise dealing with foreign investors. Location decision-malting among finns will be an issue explored in the study, apart from the type of business activities engaged ha by foreign Finns, the extent of local market exposure, and the reason for investing.

the Ministry of I_cal Governments the Ministry of Finance and the Metro Manila Commission.

SE l-MI NAR >S ' UPI)ATE:1 SEMINAR ON THE USES OF RATIONAL EXPECTATIONS An in-house staff seminar was conducted at the PIDS, on the topic of "Uses of Rational Expectations." Dr. Manuel F. Montes of the UP School of Economics was the presentor for this seminar.

,SEMINAR ,s,TI째N EXPERIENCE1960-1984 IN LIBERALIZATHE PHIL'ON TRADE A staff seminar to discuss the Trade Liberalization Experience in the Philippines was held. The paper presented is co-authored by Dr. Florian Alburo and Dr. Geoffrey Shepherd, and was sponsored by the PIDS. Dr. Alburo is an Associate Professor at the UPSE while Dr. Shepherd is a visiting consultant of the PIDS_

A SURVEYOFINTERNALCOORDINATION AND CONTROL SYSTEMS IN SELECTED PUBLICENTERPRISES A PIDS seninaar on internal coordination and control in government corpora-

PhaseM째deI PolicY-ili and Aamlysis of Payments The Philippine Balance of Payments: A Ponciano Intal, Jr. The study cites the government's active role in the Philippine economy during the 1970's, and how such role has directly or indirectly influenced the balance of payments, An examination is made on government expenditures and public borrowings, together with the pervasive role of public corporations, in an attempt to reflect in part, a conflict between concerns for long-run structural change and the demands of short-run stabilization and whether in fact, this same conflict has brought about the balance-of-payments problem.


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NEW STAFF AND WORKING PAPERS

Econometric Model of the Philippine Economy.Phase V

Financing the Budget Deficit inthePhilippines

Methodology for Measuring Protection and Comparative 2(dvantage

Rolando A. Danao and Manuel F. Montes

Eli M. Remolona Working Paper Series No. 85-02

Erlinda M. Medalla and John H. Power Staff Paper Series No. 85-04

The study is a further revision of an econometric model of the Philippine economy constructed in Phase IV which could be used for forecasting and policy an_yses. Behavioral equations are imputed into the econometric model and discussed in detail, and show how these relate to the macro model,

The study focuses attention on how the budget deficit in the Philippines has been financed in the past and proposes a rule for financing them in the future, A brief review of background literature starts off the discussion where four basic methods of financing a budget deficit are analyzed, and subsequently to what extent such methods have been utilized

Problems and Prospects of Selected NonTraditional Manufactured Exports

in the Philippines. Selected case studies on credit markets lead to a development of a theory of deficit finance. In later chapters, research considerations are high, lighted to further refine the financing

Florian A, Alburo

rule derived in previous sections e

Contemporary issues surrounding the expansion of Philippine non-traditional manufactures are addressed by this rePhilippine Export and Terms of Trade instability, 1965-1982

inter-industry transactions and possible trade distortions, among others. Specific policies and program agenda are suggested to enhance the sector's ability to promote growth and stability in the industry,

Staff Paper Series No. 85-03

TO RE-

SEARCH NEWS (DRN) NOW OPEN. FOR DETAILS, CALL 865-705

or

857-902

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comparative advantage of individual sectots, and another is to assess the effect of price intervention policies on the returns to the producers in the sector. Extensive discussion is made on how government price protection policies affect domestic prices of internally tradeable goods via the mechanisms of government marketing agencies, export taxes and quotas, as well as import dutiese

Food, Fuel and Philippines

search study. The focus is made on the collective and individual problems of the country's non-traditional exports along several aspects - comparative advantage,

ANNUAL SUBSCRIPTION THE DEVELOPMENT

The paper attemptz to accomplish two things. One is to establish measures of

Urbanization

in the

Ale]andro N. Herrin, Manuel F. Montes and Rodolfo F. Florentino Staff Paper Series No. 85-05

Ponciano S. Intal, Jr.

The study aims to trace the factors that have contributed to the instability of file country's export earnings, and the observed deterioration in the terms of trade during the period of 1965-1982. Presently, it becomes imperative to look into the effects brought about by external shocks on domestic production, income and prices. The roles of inter-

Studies on food consumption patterns by socio-economic groups and by ruralurban areas have been few, and this paper reviews existing data on Philippine urbanization and household patterns of food and fuel consumption, with the view of identifying issues for research. A preliminary simulation model designed to capture the implications of various policies on household consumption is taken as the benchmark for deriving more

national reserves and external credit availability in their ability to minimize the distortion to the local economy are also examined, o

precise estimates of income, expenditure l and price elasticities which will serve as inputs for an economic-demographic si,nulationmodelo

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STAFF AND WORKING PAPER SERIES

PID$ WORKING PAPERS 1. W.P, # 8301

2, W,P. # 8302 3. W.P. # 8303

4. W,P. _ 8304 5. W.P. # 8305

6, W.P. # 8306

7, W.P, # 8307 8, W.P. # 8308

9, W.P. # 8309

10.

W.P, _: 8401

11.

W,P. # 8402

12.

W.P. _ 8403

13.

W.P. # 8404

14.

W.P. # 8405

15,

W.P. _¢8406

16.

W,P. #8407

17.

W.P. #8408

18.

W.P, # 8409

"19.

W.P. _ 8501

20.

W. P, #8502

PIDS STAFF PAPERS

Studies on tlTe Wood-Based Furniture, Leather Products and Footwear Manufacturing Industries in the Philippines. bY Niceto Poblador, Adriano Softs, Roy Ybafiez, and 8ienvenido Aragon. Economic Policies and Philippine Agriculture. by Cristina C. David, Changing Comparative Advantage in Philippine Rice Production. Laurian J, Unnevehr and Arsehid M, Balisacan. The Impact of Government Policies on Philippine Sugar. Gerald Nelson and Mercedita Agcaoili. Comparative Advantage and Government Price Intervention Policies in Foreszry, John H. Power and Teresita Tumaneng. Government Expenditures and Agricultural Pollcies in the Philippines 1955,1980. Manuel S.J. de Leon.

1. S.P. # 8201

2. S.P. # 8202 3. S.P. # 8203 4. S.P. #8204 5, S_P.# 8205 6, S-P, # 8301

7. S.P. # 8302 8. S.P-#8303

Economic Incentives and Comparative Advantage in the Livestock Iodustry. Liborio S. Cabanilla. An Analysis of the Economic Policies Affecting the Philippine Coconut Industry, Ramon Clarete and J_Roumasset. Economic Incentives and Comparative Advantage in the Philippine Cotton Industry, Arsenic 8alisacan,

9. S.P. # 8304

10.

S,P. # 8305

11.

S.P. _ 8401

12.

S.P, _ 8402

13.

S.P. # 8403

14.

S.P. #8404

15.

S,P.._ 8405

16.

S.P. # 8406

17,

S.P. # 8407

18.

S.P. #8501

Intersecroral Capital Flows and Balanced AgroIndustrial Development in the Philtppine& Manuel S,J, de Leon. Forest Land Management in the Conte,xt of National Land Use. Adolfo V. Revilla, Jr. Policy Issues on Commercial Forest Management, Cerenil]a A. Cruz and Marian Segura-delos An_qetes, The Impact of Government Policies on Forest Resources Utilization. Gerald C. Nelson. Population Pressure, Migration and Markets: Implications for Upland Development. Ma. Concepcion Cruz, Tenure, Technology and Productivity of Agroforestry Scheme& Aria Doris Capistrano and Sam Fujisaka. Environmental Effects of Watershed Modificat/on& Wilfredo P. David. Management atrd Cost of Watershed Reforestat/on: The Pan#abangan and Magat. Jose A. Galvez. Workshop Papers on "'The Consequences of Small Rice Farm Mechanization in the Philippines'" A Review of Welfare in the Coconut Industry. Sylvia N, Guerrero.

19.

S-P. # 8502

20.

S.P. # 8503

Financing the Budget Deficit Eli M. Remolona

21.

S-P. # 8504

22,

S.P. # 8505

23.

$. P. # 8506

in the Philippines

*Still in the reproduction

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An Analysis of Fertilizer Policies in the Philippines, Cristina C, David and Arsenic M_ Balisacan, (Printed also in J.P.D. 1981) Credit and Price Po/icies in Philippine Agriculture, Cristina C. David. Government Policies and Farm Mechanization in the Philippines. Cristina C. David, Shadow Prices of Goods and Resources in the Philippines An Assessment_ Erlinda M. Medalla. An Analysis of the Behavior of the Commercial Banks. Mario 8, Lamberte Exchange Rate Flexibility and Intervention Policy in the Philippines, 1973-1981_ Filologo Pante, Jr., On the Use of the DRC Criterion in Selecting Projects, Erlinda M. Medalla. Monetary Aggregates and Economic Activity_ Mario 8. Lamberte. Effective Protection Rates and Internal Indirect Taxes in the Philippine Setting, Rosario G, Manasan, Response to Balance of Payments Crises in the 1970s Korea and tire Philippines, John H, Power, A Study of PhEippine Real Property Taxation Cayetano W. Paderanga, Jr., Public Enterprise in the Philippines in 1ÂŁ82 A Definition and Taxonomical Exercise, Rosario G Manasan. Estimating the Shadow Exchange Rate, the Shadow Wage Rate and the Social Rate of Discount for the Philippincs. F:rlinda M. MedaHa. Development Finance and State Banking: A Survey of Experience. Edita A. Tan. Derived Protection for Nontraded Primary Product_ Erlinda M, Medalla. Modelling the Effects of Devaluation on Prices, Output and the Trade Balance: The Philippine Experience_ Ma_ Cecilia Gonzales, The Development Bank of the Philippines and the Financial Crisis; A Descriptive Analysis, Marie 8, Lamberte. The Protection Structure, Resource Flows gnd the Capital-Labor Ratio in Philippine Manufacturing: A Short Empirical Note, Erlinda M, Medal la. A Decomposition Analysis of Philippine Export and Import Performance, 1974-1982. Ponciano S_ Intal. Jr., Philippine Export and Terms of Trade Instability, 1965-1982, Ponciano S, Intal, Jr., Methodology for Measuring Protection and Comparative Advantage, Erlinda M. Medalla and John H. Power. Food, Fuel and Urbanization in the Philippine_ Alejandro N Herr/n, Manuel F, Montes, Rodolfo F, Florentino. Rural Development Experience; pective& Robert E. Evenson.

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PIDS DEVELOPMENT II III

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1. INDUSTRIAL PROMOTION POLICIES IN THE PHILIPPINES Romeo Bautista, John Power and Associates 2. SURVEY OF PHILIPPINE DEVELOPMENT RESEARCH I 3, SURVEY OF PHILIPPINE DEVELOPMENT RESEARCH II 4. SUMMARIES OF COMPLETED RESEARCH PROJECTS, VOL- I 5. INTEGRATION, PARTICIPATION AND EFFECTIVENESS: AN ANALYSI-S OF THE OPERATIONS AND EFFECTS OF FIVE RURAL HEALTH DELIVERY MECHANISMS Ledivina Carifio and Associates 6. ESSAYS IN DEVELOPMENT ECONOMICS IN HONOR OF HARRY T. OSHIMA

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HOW PARTICIPATORY IS PARTICIPATORY DEVELOPMENT? Gelia T, Castillo 8, THE SPATIAL AND URBAN DIMENSIONSOE DEVELOPMENT IN THE PHILIPPINES Ernesto Pernia, Cayetano W. Paderanga, Victorina Hermoso and Associates 9, ENERGY AND STRUCTURAL CHANGE IN THE ASIA-PACIFIC REGION (PAPERS AND,PROCEEDINGS OF THE THIRTEENTH PACIFIC TRADE AND DEVELOPMENT CONFERENCE) 10. PHILIPPINE EMPLOYMENT IN THE SEVENTIES Rosa Linda P, Tidalgo and Emmanuel F. Esguerra 11. MONOGRAPH NO. I: ASTUDY OF ENERGY-ECONOMY INTERACTION IN THE PHILIPPINES Leander Alejo 12, MONOGRAPH NO I1: INDUSTRIAL POLICY AND DEVELOPMENT IN THE ASEAN COUNTRIES Romeo Bautista 13, MONOGRAPH NO. i1{: ECONOMIC EVALUATION OF THE PHILIPPINE ALCOGAS AND COCODIESEL PROGRAMS Armando Armas and Dennis Joyce Cryde 14. MONOGRAPH NO. IV: A SURVEY OF MATERIALS IN INTRODUCTORY ECONOMIC EDUCATION Gerardo P. Sicat 15, JOURNAL. OF PHILIPPINE DEVELOPMENT

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The Balance of Payments Crisis and the Economy