A historical and current perspective of Philippine economic problems

The ar.ticle analyzes the problems confronting the Philippine economy and offers an explanation of the reasons and events that led to the current economic crisis in the Philippines. After the author makes the necessary discounts for national political events and time role played by the international economy and other external factors, he focuses on the role played by the market mechanism in the history of the Philippine economy. Much of the problems, according to the author, resulted from a cumulation of situations in which interventions in the market system made the economy less efficient. Deviations from the price mechanism as the prime element of solving essentially market problems aggravated national problems rather than lessened them. The author contends that the most glaring of these deviations was the unrealistic exchange rate policy adopted by government through the years. Consequently, with tile worsening of some problems, the ability of time government to cope with other more basic duties was adversely affected. Sicat cites two major components for recovery in the future: (a) restoration of credit lines and foreign exchange inflows through the sheer economics of readjustment; and (b) restoration of confidence in the Philippine economy. The latter is not only economic; it is essentially governed by political factors.