Economic reform: the Philippines experience

Abstract

Immediately following the Second World War, the country's most pressing problem was the rebuilding of the shattered economy. Under President Manuel Roxas (1946-1948), the government's thrust was the rehabilitiation of the country's productive capacity, primarily directed at the agricultural sector, as well as the repair of infrastructure and other facilities. Sizeable gains were made during this period, with GNP growing at 26 per cent annually. The manufacturing (which was essentially composed of milling activies), mining, and construction industries posted the highest increases, a large part of which the foreign sector contributed to through the importation of capital and consumption goods and the growing amount of foreign exchange from export revenues. Crucial to this development was the Philippine Trade Act of 1946, otherwise known as the Bell Trade Act, which provided much-needed rehabilitation funds in return for US parity rights over the 'exploration and development of natural resources, and signalled the beginning of a new period of RP-US preferential trade relations. This consisted of eight years of 'free-trade' and a subsequent 'twenty-year regime of declining preferences.' By 1949, the US Economic Survey Mission reported that traditional exports had reached 81 per cent of their 1937 volume. Dr. Bernardo Villegas of the Center for Research and Communications (CRC) observed that 'this relationship virtually cemented the country's dependence on imported goods."