Economic Development Policies of Philippines

Topics: Tax, Income tax, Monetary policy Pages: 68 (23459 words) Published: July 11, 2013
Executive Summary

Planning of economic policies & their implementations are the most vital facts of a country. Overall development of a country largely depends on economic policy design & its proper implementation. Every country has its own economic policies & specific way of their implementation. But some policies are same for all countries such as Fiscal Policy, Monetary Policy, etc. Philippines, as a developing country has set various economic policies & strategies over time with a view to seeking development. In course of time it has adopted a wide variety of economic policies, many of which had long term effects (both positive and negative impacts) on the lives of its people. The crucial policies that the government of the country adopted over time are – Fiscal policy, Monetary policy, Income distribution strategy, Government policy, Tax policy, Trade policy, etc. The impacts of these policies have had widespread effects on various macroeconomic variables of the country. Various surveys and reports show that the economic growth has not been as expected. Growth of the variables has gone at a slow pace. GDP increases over time but with a high fluctuating rate. Rate of educated people, standard of health care, standard of living have improved but it is still poor in comparison with other countries of the region. It is one of the countries whose economy is based on agriculture. A huge portion of the country’s GDP comes from agriculture. But yet it has some major constraints due to what it is still facing some problems and fails to have that much development. Natural calamities are a fact to mention as one of the major constraints in way of agricultural development. It is natural that limitations or constraints appear in the way of development. But achieving success needs to address these constraints properly and the way of their elimination. The main constraints that Philippines faced in the way of its economic development are – poverty, corruption, poor infrastructure, market failure, macroeconomic risks, poor economic policy making & implementation, etc. These limitations have constantly hampered the country’s expected economic growth & performance.

Introductory:

Over the years, Philippines has adopted some crucial economic policies. These policies have been designed with the aim of reducing poverty. Poverty is both more widespread and more persistent in the Philippines than in neighboring ASEAN (Association of South East Asian Nations) countries. While the poverty rate has decreased in the Philippines over the past 25 years, the decline has been slower than in other ASEAN countries. Some of the blame for the Philippines' slow progress in reducing the incidence of poverty can be attributed to past economic policies that retarded growth by discriminating against agriculture and discouraging investment in human capital. These policies, in turn, sustained powerful interest groups that blocked or delayed economic reform. The Philippines began to undertake political and economic reforms in the late 1980s and early 1990s, however, and GDP growth has accelerated to about 5 percent a year since 1994. With faster growth, the percentage of Filipinos living below the poverty line is decreasing, but agricultural reform and increased investment in human capital would allow a more drastic reduction in the poverty rate.

Development Policies From 1985

In 1986, the Philippine economy emerged from the martial law rule with serious imbalances. The consolidated public sector deficit reached about 6% and external debt was close to 100% of gross national product. Foreign reserves fell to a level equivalent to less than 1 month of imports. Inflation hit 50% in 1984 before falling to 23% in 1985. Real GDP recorded 2 consecutive years of negative growth, at –7% (in 1984 and 1985). The central bank was saddled with massive liabilities, and the finance sector was plagued by huge nonperforming loans of the...
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