Table of contents
The Political Environment
The Present Government
Economic and Financial Analysis
Trade History & Major Products
GDP Growth per capita
Unemployment & Price level Changes Inflation
Exchange Rate Innovations
Investments in the Stock Market
Investments in the Bond Market
Foreign Exchange Reserves
Structure of Industries
The Banking System
Monetary Policy / Money Supply Growth
Asian Currency Crisis
Philippines before the crisis
What caused the Asian Currency Crisis? The effect it had on the Philippines and other countries
Looking into the Future
Prevention as the Best Form of Management
Some Policy Lessons From the Asian Crisis
Need for Great Caution About Financial Liberalization and Globalization
17 Manage External Debt Well and Avoid Large Debts
Manage and Build Up Foreign Reserves
The Need for Capital Controls and a Global Debt Workout System
Conclusion: Summary / Comments / Recommendations
The Philippines were ceded by Spain to the US in 1898 following the Spanish-American War. They attained their independence in 1946 after being occupied by the Japanese in World War II. The 21-year rule of Ferdinand Marcos ended in 1986 when a widespread popular rebellion forced him into exile. In 1992, the US closed down its last military bases on the islands. A quarter-century-old guerrilla war with Muslim separatists on the island of Mindanao, which had claimed 120,000 lives, ended with a treaty in 1996 (www.odci.gov). The Philippines lies off the southeast coast of the Asian mainland. It has approximately 7,100 islands and islets located near the southeastern rim of China. Bordering its coastline to the west and north is the China Sea; to the east is the Pacific Ocean; and to the south, the Celebes Sea and the coastal waters of Borneo. The Philippines' location in Asia is strategic since it is situated on the crossroads of Asia's commerce and transportation. It plays a significant role in international affairs [Appendix A fig. 1] (www.abisnet.com).
Two major languages are spoken in the Philippines: Tagalog and English. Ninety percent of the population are Christians and about 10 percent are Muslims. There is a tropical and humid climate in the lower land areas, but this becomes cooler at the higher altitudes (www.odci.gov). The land area totals 298,170 square kilometers, and the Philippines has a total population of approximately 80 million people. The capital of this large island country is Manila located on the island of Luzon. There are numerous islands in the Philippines that are all prone to earthquakes. Within the Philippines, there lies large mountainous terrain, narrow coastal plains and interior valleys and plains. There are also vast amounts of dormant and active volcanoes, notably Mount Pinatubo in Central Luzon (http://lcweb2.loc.gov).
The Political Environment
The Philippines has traditionally had a private enterprise economy both in policy and in practice. The government has intervened through fiscal and monetary policy and in the exercise of its regulatory authority. Although expansion of public sector enterprises occurred during the Marcos presidency, direct state participation in economic activity has generally been limited. The Aquino government set a major policy initiative of consolidating and privatizing government-owned and government-controlled firms. Economic planning was limited largely to establishing targets for economic growth and other macroeconomic goals, engaging in...
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