Political Economy of Philippine Economic Reforms

This essay is concerned with the broader canvas of economic reforms in the Philippines viewed from the framework of political economy. The first part provides a brief discussion of the rationale for economic reforms. The second part presents a tableau of economic policies in perspective over a long-term perspective covering years before political independence. This historical background provides a backdrop for understanding the evolution of economic policies. Before political independence, economic policies were mainly liberal along the framework of economic policies inherited from colonial legacy. A series of crises and within the background of Constitutional policies set forth in 1935, economic policies underwent growing restrictions. These restrictions took the form of trade protectionism and discriminatory policies that affected the employment of the three major factors of production -- labor, capital, and land. Realizing some of the problems of these restrictions, slowly economic liberalization took place in the course of the succeeding stages of economic policy reforms. The third part of the essay summarizes some of the major aspects of economic reforms facing the economy that remain to be attended to. There are structural and institutional problems that continue to be daunting. The major part of the essay on the important factors that affect the political economy of economic reforms focuses on the major aspects of political and institutional factors that affect the progress of reforms. Factors stressed include leadership issues and the peculiar aspects of Philippine politics that affect progress. This is illustrated by commentaries on various economic policy episodes and personalities involved in them. Among other factors cited are the importance of international economic relations and the critical value of having proper economic diagnosis which requires not only improving the technical personnel of the government but also the diagnostic capability that is developed within the nation. The last part deals with four aspects that are related to the pursuit of sound policy and constitute a commentary on four lessons learned that describe the country's experience.