The Philippine Economy -The Need for Structural Reform-

Hirofumi Ushikoshi

Summary

The Philippine economy is steadily recovering in part due to deregulation policies of the Ramos administration. The improving investment environment is also attracting overseas investors. However， the economy is still a developing one， and income levels remain low.
Structural factors impeding sustained economic growth in the postwar era include geographical， historical， social， and political factors. The nation seems especially prone to natural disasters and political unrest. Economic factors include late industrialization， trade and current account deficits， accumulated foreign dept， fiscal deficits， and underdeveloped financial markets.
Moreover， direct factors causing poverty are: (1) surplus agricultural labor and stratification of the agricultural population， (2) formation of urban slums due to migration from agricultural areas， and (3) the economic dominance of large landowners， local power brokers， and industrial groups.
Despite the economy's recent strength， little has changed in the underlying economic structure that led to stagnation. To maintain the economy's momentum and achieve sustained growth in the medium to long term， many structural issues will need to be addressed.
Attention has focused on the recent growth in direct investment from overseas as a potential driving force for industrialization. In that sense， the economic reforms of the Ramos administration， including deregulation， are proving to be highly beneficial by producing an exogenous shock to the eonomy.