Public Policy Environment

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A. THE TOTAL SYSTEM: ECONOMIC, POLITICAL, SOCIAL, RELIGIOUS, CULTURAL AND HISTORICAL People of different political persuasions have varying ideas about the proper purpose of government. One way to evaluate the success of public policy is to examine the extent to which it increases the well-being of its citizens. But how is well-being defined? Should governments strive for equality of condition, i.e. to eliminate poverty and hunger? Or should governments strive for equality of opportunity, i.e. that all people have access to the tools they need to shape their own future? ECONOMIC POLICY

According to Philip Gerson, “Past economic policies that hampered growth, and the resistance of powerful elites to much-needed reforms, were largely responsible for the high incidence and persistence of poverty in the Philippines. Recent policy changes have spurred growth, but additional reforms could accelerate the reduction of poverty.” The slow pace at which the Philippines has reduced poverty over time can be traced to economic policies that weakens growth, many of which have recently been abandoned, as well as to policies that have more directly achieved income inequality. For several years, the Philippine government tried to pursue economic policies that will help strengthen the economy. One of the policies introduced was the industrial policy that encouraged import substitution rather than promoting exports. Likewise, tariff reforms were introduced in 1991. However, trade policies heavily penalized the primary and agricultural sectors and benefited the manufacturing sector. In addition, the overvaluation of the Philippine peso during several periods between the 1950s and the 1980s contributed to declines in the prices of exports in peso terms and diverted resources away from agriculture and toward import-substituting manufacturing. In addition, incomes in the agricultural sector were depressed by heavy regulation. Beginning in the 1970s, price controls were imposed on rice and other products, and the importation of wheat and soybeans was monopolized. For instance, during the term of President Fidel V. Ramos, he introduced many economic reforms and initiatives to stimulate business growth and foreign investment. These measures, along with greater political stability, resulted in a period of higher growth rates. However, due to onset of the East Asian Financial Crisis in 1997, economic growth slowed and dropped to virtually zero in 1998. These reforms were continued with the administration of Pres. Joseph Estrada. His administration enacted laws to better regulate the banking system and securities markets, liberalize foreign participation in the retail trade sector, and promote and regulate electronic commerce. Expected growth and development did not materialize because Philippine Stock Exchange scandals, widespread corruption, and the President's impeachment for ties to illegal gambling and certain disreputable businessmen discouraged investment. On the other hand, President Gloria Macapagal-Arroyo, formerly an economics professor at University of the Philippines, and her team have made considerable progress in restoring macroeconomic stability and an environment for growth. Recent performance has been strong, with the GNP growing annually at 5% or better for the last 5 years.[5, 6] Long-term growth, however, remains threatened by widespread poverty, severe under-spending on infrastructure, education systems, and social services, and remaining trade and investment barriers. It could be noted that the persistence of policies that have failed to stimulate growth owes much to the important role played by elites in Philippine politics and society. The Philippine government has introduced a number of reforms that have stimulated growth, and these should, in turn, help to alleviate poverty. It could achieve even more by eliminating remaining...
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