Eco dev final

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Eco dev final

  1. 1. TERM PAPER FOR ECONOMIC DEVELOPMENT 2 [ANALYSIS OF INTERNATIONAL TRADE AND FINANCE OF THE PHILIPPINES] SUBJECT : Economic Development 2 PROFESSOR : PROF. TAKASHI SHIRASU (Ph.D.) Student : Cyl Bryan A. Bagadiong TERM REPORT FOR AUTUMN SEMESTER Analysis of International Trade and Finance of Philippines 1. TRADE DATA ARE SHOWN BY US DOLLARS. USE THE EXCHANGE RATE OF AVERAGE OF PERIOD, AND CONVERT THEM INTO DOMESTIC CURRENCY.TRADE DATA AS CONVERTED TO Mn Ph Pesousing the EXCHANGE RATE AVERAGE OFPERIOD Item 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006Exports, fob 55619.06 90022.69 86133.19 98707.56 117647.24 149223.91 170002.73 199005.75 242910.82 250634.80 308487.73 356183.11 448640.88 538557.34 743486.82 1206194.36 1369557.10 1682761.63 1639422.43 1816867.74 1963850.90 2223692.40 2272534.87 2411023.98Imports, cif 88668.23 107339.24 101316.75 109960.47 147820.06 184177.83 242820.68 317057.54 353264.88 394550.81 509120.01 598032.57 732554.68 909724.89 1137009.08 1289351.61 1273056.41 1494024.24 1781640.04 2120493.19 2307745.79 2583559.37 2726039.39 2756650.70 - - - - - - - - Trade balance 33049.17 -17316.55 -15183.56 -11252.91 -30172.82 -34953.92 -72817.95 118051.79 110354.06 143916.01 200632.28 241849.47 283913.79 371167.54 -393522.26 -83157.26 96500.69 188737.39 -142217.61 -303625.46 -343894.89 -359866.97 -453504.52 -345626.72 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006Exports, by SITC sectionFood and live animals 10612.63 15713.48 15332.42 17796.72 18264.12 22276.00 23910.37 26133.79 33743.72 28880.15 36042.21 35214.13 34431.72 36492.81 39196.03 51669.00 45988.57 56717.51 66117.25 71291.47 82057.23 86344.75 88820.88 91586.34Beverage and tobacco 422.28 567.76 576.83 591.19 575.90 675.03 739.05 1410.01 2363.16 1377.68 1193.27 1188.77 1080.01 1337.02 1591.42 1708.44 2289.30 2093.11 2700.39 2939.41 6169.42 9004.84 10372.75 9264.82Crude materials excluding fuels 8290.07 9418.07 8931.50 10580.18 11003.72 14956.14 15846.05 13395.09 13244.69 12552.15 10522.48 10857.47 13654.40 11744.81 13792.29 14156.32 14858.03 18767.35 17233.57 17497.26 21563.58 28758.38 31200.89 41143.65Mineral fuels, etc. 1266.85 1452.79 781.51 1345.46 1995.07 3227.49 2564.93 4400.20 5797.98 6071.98 6210.43 5679.70 6762.91 9070.77 8988.56 4918.37 8188.68 19516.31 11743.86 19607.10 27455.13 22769.94 38882.37 49883.90Animal, vegetable oil, and fats 5811.94 10119.41 6921.92 7053.45 8165.38 8965.25 8520.79 9116.44 8545.84 12628.69 10034.33 12970.85 21703.04 15441.28 20482.14 29475.40 13847.84 21059.66 22025.21 19422.77 29017.08 34194.00 38247.73 31553.20Chemicals 955.69 1753.36 2809.70 4953.73 5039.09 5400.24 6064.54 6345.04 8353.49 6862.86 7105.39 8083.66 8820.07 9254.28 11287.28 13918.93 11518.10 14510.80 16238.59 18612.42 21337.36 25082.61 30078.36 38524.31Basic manufactures 4100.59 6195.22 8708.22 8847.39 9646.25 14492.06 16106.89 18038.39 19344.93 17425.04 21695.84 23088.63 28697.38 29912.57 32800.89 38986.28 41005.73 54024.15 53771.95 51495.56 61470.10 81977.53 82930.07 155809.18Machines, transport equipment 2822.63 6963.36 5749.66 7991.19 11373.94 14260.02 20432.50 23629.81 33249.11 42631.39 57466.86 76794.80 99489.40 133623.46 222032.25 337473.11 433600.29 620835.61 631172.93 727083.25 832129.82 969729.49 937342.66 1003494.64Miscellaneous manufactured goods 6800.97 8883.71 9992.12 11966.41 15590.32 20103.25 25997.09 33426.94 39569.18 42274.21 48083.41 52358.89 57729.05 62079.72 71790.63 97690.97 90982.98 117362.16 123977.58 123943.94 130229.91 133513.37 139239.98 154185.70Unclassified goods 14535.41 28955.55 26329.33 27581.85 35993.48 44868.43 49820.52 63110.06 78698.71 79930.66 110133.51 129972.62 176272.90 229548.17 321525.34 616197.55 707277.57 757874.97 694441.09 764974.56 752421.26 832317.48 875419.18 835578.24 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006Exports, by principal commodity 1. Electronic products 0.00 21491.23 18979.45 18530.60 22501.06 27802.81 30170.54 37024.89 48115.03 49978.99 67989.34 93965.98 150018.39 214709.86 326594.30 719818.39 912233.41 1182338.79 1102189.17 1255097.41 1310002.01 1497726.71 1503764.40 1518384.46 2. Garments 0.00 10069.32 11592.35 15330.05 22583.33 27781.72 34235.30 43175.45 51137.67 54596.75 60802.59 62714.43 68374.86 63521.61 69197.20 96362.87 88630.72 113247.66 122542.14 123402.28 122786.83 121681.12 127201.17 134741.18 3. Coconut oil 5734.15 9685.25 6456.73 6788.44 7815.73 8606.64 8194.74 8776.09 8216.10 12271.51 9708.89 12521.75 21240.18 14969.39 19863.25 28856.71 13379.50 20502.51 21291.91 18196.73 27365.09 32379.27 36203.11 29690.62 4. Copper concentrates 2767.06 1920.35 1563.01 1834.71 2241.88 4556.46 5151.60 5032.27 4781.28 3571.75 2956.06 2958.73 3445.74 1363.24 1296.71 1037.91 1664.35 1255.13 527.17 660.10 667.75 799.17 2032.75 4319.48 5. Centrifugal and refined sugar 3322.70 4107.88 3144.63 1773.56 1234.06 1265.68 1934.57 2698.47 3160.04 2245.10 2766.22 1611.45 1697.16 3565.39 2446.07 3271.26 2448.20 2285.40 1160.49 1846.79 3161.97 3743.30 3623.57 4242.66 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006Imports, by SITC sectionFood and live animals 6600.94 7965.28 8987.33 9357.04 10551.23 16622.62 21714.96 29488.64 24510.91 28446.44 34387.91 39784.30 54206.17 66169.44 75444.99 101150.05 88108.21 99550.70 117926.39 127473.72 125492.07 146061.82 162210.08 163268.99Beverage and tobacco 844.57 601.15 1469.98 1528.93 2303.58 2046.19 2021.51 2187.95 2995.17 3393.16 3688.29 6260.88 4345.75 3014.85 6041.49 5892.92 6978.70 8261.83 10312.20 12508.88 14648.27 14091.98 14049.87 12942.00Crude materials excluding fuels 2333.67 2621.70 3126.03 5279.90 6684.50 9619.18 12759.44 14464.75 18300.75 17348.50 21017.85 25809.60 31808.84 35811.19 36278.43 35856.89 44668.22 41888.37 47832.61 45808.08 48853.39 59488.87 58367.99 53684.23Mineral fuels, etc. 24403.49 28471.28 28134.24 18754.84 26881.98 24490.95 32496.37 47308.23 52786.39 55081.49 58633.01 57087.57 67449.13 83236.12 96487.07 90878.84 100290.32 180203.95 182385.52 175843.09 215592.18 278780.87 359390.02 431182.23Animal, vegetable oil, and fats 322.27 601.15 279.11 305.79 308.52 421.89 565.15 656.38 659.49 943.96 705.11 1083.11 1080.01 1651.61 1915.60 2639.65 4328.74 3273.74 2622.67 2882.16 3662.46 6273.29 8437.23 8259.93Chemicals 9512.47 11388.51 11927.28 15860.07 20752.81 23794.82 28627.23 35955.23 39569.18 41279.23 49168.20 57880.09 67269.13 73064.27 92037.00 99680.94 105266.79 127384.95 138061.71 141833.10 168402.19 189605.10 193850.05 198179.43Basic manufactures 11234.94 10419.99 10215.41 14269.99 21184.73 28077.05 41886.62 46943.58 50423.23 59469.64 76315.12 83029.26 101803.71 114538.14 129140.61 124350.77 135477.72 156007.86 171551.60 174367.32 190149.23 208839.36 223931.60 214637.47Machines, transport equipment 18702.67 18852.83 14141.55 17103.60 24537.27 36409.45 57884.83 82047.94 88893.27 112816.28 166678.29 200374.46 238013.41 321514.25 442856.21 518146.35 486161.67 576782.15 607582.97 732667.34 859078.91 904663.79 927999.03 924449.33Miscellaneous manufactured goods 2100.30 1803.46 2084.02 2425.90 3146.86 4240.03 6151.49 7900.91 10139.60 11582.68 16895.64 20499.75 25765.93 31302.02 40315.92 44207.77 46149.69 50427.54 50289.20 50801.92 60839.54 69055.73 66085.78 67989.44Unclassified goods 12612.91 24613.88 20951.82 25074.41 31468.58 38455.64 38713.06 50103.94 64986.89 64189.45 81630.60 106249.98 140812.60 179449.20 216491.76 266547.44 255626.35 250243.12 453075.17 656307.58 621027.56 706698.56 711717.73 682057.63 CYL BRYAN A. BAGADIONG, Philippines | Meiji University Graduate School of Governance Studies 1
  2. 2. TERM PAPER FOR ECONOMIC DEVELOPMENT 2 [ANALYSIS OF INTERNATIONAL TRADE AND FINANCE OF THE PHILIPPINES]Direction of Trade Mn Ph PESOS;calendar year 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006Exports, total 1. United States 19925.07 33931.76 30850.90 34839.16 42369.46 52989.89 63789.39 75449.82 86595.51 98049.13 117741.70 136795.92 159867.56 182621.35 260993.70 414843.13 410141.33 504042.98 458633.56 448475.02 394318.71 403972.59 409243.95 465259.57 2. Japan 10934.90 17266.46 16281.39 17368.62 20156.35 29849.00 34374.42 39431.39 48672.84 44529.77 49123.45 53357.20 70451.04 96160.65 123611.90 173046.09 182168.42 247859.47 257883.86 273152.82 312647.34 447388.38 396794.08 375521.13 3. Netherlands 2467.02 2805.38 2698.06 4362.54 6375.99 6623.74 7102.18 8680.79 9299.23 10364.38 9705.58 13609.75 20518.71 29230.95 49023.63 94839.45 111974.74 131801.47 151776.41 157644.35 158366.32 200788.16 222093.72 122249.14 4. Hong Kong, China 1755.81 3907.50 3479.57 4484.85 5697.25 7256.58 6565.22 8033.92 10761.17 11826.32 14815.76 17185.55 21147.96 22755.57 34526.10 54221.26 76110.97 84288.67 80556.07 121708.64 167699.59 176279.67 183922.22 232886.87 5. Singapore 1544.67 5360.28 4651.83 3139.40 4031.27 4661.93 4724.36 5825.55 6305.05 6437.06 10255.95 18675.32 25562.45 32088.51 47757.56 74926.61 96421.62 138066.60 117666.44 127550.68 131772.02 147413.52 149056.96 253782.05 6. China, Peoples Republic of 0.00 0.00 0.00 2060.79 1807.70 1409.13 1087.69 1501.51 3510.91 2903.93 4527.16 4330.84 5372.61 8598.88 7202.99 14054.23 22468.71 29312.24 40424.74 69965.71 116247.11 148676.10 224565.96 750189.41 7. Malaysia 1800.26 2972.37 3237.67 1977.41 2447.56 2446.99 2167.16 3082.64 3392.21 3261.75 4336.32 5825.52 8076.33 18010.46 18863.93 46684.27 57823.97 60868.57 56685.92 85280.63 133479.96 115993.63 135353.34 135240.89 8. Germany 2311.44 2938.97 3237.67 4912.95 5985.20 6265.13 7244.04 10054.99 13805.08 13310.79 15724.74 17546.41 17966.23 22205.04 31247.19 42329.57 48041.94 58714.64 67467.80 71527.75 66051.60 80459.85 74121.40 90344.98 9. Korea, Republic of 1655.79 1653.17 1395.55 2283.20 2015.63 3375.15 3486.48 5579.36 6262.95 4489.36 5978.29 7696.15 11373.93 9726.17 12854.85 20805.21 40320.30 51816.68 53255.14 69086.38 71197.66 62370.17 76627.79 83073.23 10. Thailand 222.25 150.29 1544.41 1365.84 2570.96 2594.65 3364.17 3803.35 6067.69 2511.14 4524.04 #VALUE! 20541.75 20448.56 25226.12 25941.54 32901.76 53317.01 69245.91 55909.40 66884.16 59608.52 64373.47 93372.01 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006Imports, total 1. United States 20347.35 28604.87 25008.21 26358.71 31653.69 38455.64 46350.47 61709.77 71707.06 66984.34 95782.25 109950.76 134361.35 163667.11 224691.98 268283.43 248837.06 283397.51 326974.24 376134.51 401497.94 463768.84 501550.17 421251.92 2. Japan 14913.24 14210.59 13936.87 18082.12 23632.29 31705.33 47256.02 58262.30 69163.91 78751.73 109064.45 143898.72 162072.84 181310.55 234447.97 246581.52 239845.02 287746.90 338239.02 373229.75 414122.43 430043.47 444599.48 480920.70 3. Singapore 3222.68 1987.15 2363.13 2588.98 4874.54 7446.43 11295.56 12353.02 13064.70 14053.59 26553.02 39325.70 32869.56 44278.99 67404.21 71170.59 68091.87 102730.96 105701.54 119258.50 137781.54 191710.82 205327.35 274054.28 4. Korea, Republic of 1789.14 2588.30 3981.96 3424.80 4134.11 7340.96 9665.01 12125.79 17548.27 17777.82 24459.70 30906.80 36726.48 43073.05 67629.66 89504.55 106454.59 121725.21 106144.16 142128.18 130129.11 153576.79 126389.27 136591.48 5. China, Peoples Republic of 889.02 3807.30 5414.72 2466.67 4463.19 5611.19 5261.54 4416.03 6675.49 4687.79 4942.39 8460.82 16981.21 17119.11 28659.67 49027.84 40644.35 34733.04 49718.80 64593.77 97430.43 149030.83 163746.61 310451.00 6. Hong Kong, China 2944.87 4041.09 3888.93 5279.90 6355.42 8205.84 10875.22 14015.81 16880.49 18390.76 23841.12 30272.26 35342.01 35208.22 48225.56 53148.22 47929.76 54916.76 68073.08 81696.76 86803.33 97439.94 106258.83 141747.03 7. Malaysia 1766.92 5928.04 7256.85 4382.93 4812.84 5210.39 6143.47 6991.41 11086.41 10533.32 9696.03 12859.47 15986.27 20763.15 29971.41 37790.65 38254.45 57760.97 55072.52 66732.23 73661.74 111025.69 98009.77 115908.74 8. Saudi Arabia 9345.78 7180.44 5135.61 4749.87 4566.03 2489.17 5840.15 15082.62 18967.71 22287.08 20069.38 26263.43 44196.80 42732.24 32722.50 24807.74 31682.03 46318.73 45232.99 51600.09 64937.18 71422.85 120193.81 147573.77 9. Thailand 0.00 848.13 1033.82 608.72 909.92 1184.05 1961.56 3644.44 2759.70 3525.04 4862.25 5592.52 10848.79 15074.26 25493.42 32460.90 32119.86 38833.76 47148.73 54293.70 73749.55 88122.18 87185.47 140764.87 10. Germany 4222.83 3389.84 2772.49 4423.70 5800.09 7214.39 9481.98 13692.55 13454.04 17091.36 16706.80 21089.27 25097.12 31669.05 36436.98 33614.37 31294.26 34069.89 40405.21 36533.03 50240.23 67006.35 62326.49 83867.58 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006BALANCE OF PAYMENTS t Mn PhPESOS; calendar year - -Current account 30559.93 -18635.75 -1916.55 19447.96 -9132.06 -8226.93 -31648.64 -62405.05 -23878.90 -21889.73 -81793.32 -77930.74 -84780.71 103632.24 -128227.02 63220.58 -112341.79 -98327.65 -88931.09 -14397.40 15610.55 91232.96 109289.63 257700.41 - - - - - -Balance on goods u 27581.72 -11338.42 -8968.72 -4117.91 -20917.35 -22887.75 -56471.95 -97728.21 -88233.78 119781.19 168739.40 207375.02 229990.49 297343.01 -327920.48 -1145.00 -233634.95 -263871.63 -319468.64 -285367.91 -317143.51 -318530.79 -428179.59 -356890.96 Exports 55619.06 90022.69 86133.19 98707.56 117647.24 149223.91 170002.73 199005.75 242910.82 250634.80 308487.73 356183.11 448640.88 538557.34 743486.82 1206179.93 1338524.63 1650446.09 1596731.28 1775318.65 1915490.42 2174011.88 2217907.49 2368565.46 - - - - - - - - - - - - - - - - - - - - - - - Imports 83200.78 101361.11 -95101.91 102825.47 138564.59 172111.66 226474.68 296733.96 331144.61 370415.99 477227.12 563558.13 678631.37 835900.35 1071407.30 1207324.93 1572159.58 1914317.72 1916199.92 2060686.56 2232633.93 2492542.67 2646087.08 2725456.42Other goods, services, and income -8223.40 -13743.03 0.00 14575.78 0.00 -1687.58 6781.85 17965.46 41630.08 77047.75 67989.34 104717.78 122529.59 178269.48 167865.11 46577.13 -104797.61 -83832.60 -119271.69 -125345.14 -121794.82 -103561.74 -90009.71 -62192.93 Credit 34749.41 43850.79 61180.80 77282.19 71040.84 75772.16 99684.51 117711.44 154539.65 189889.54 203317.14 278701.46 369620.22 498263.20 672963.43 569107.88 242000.00 296662.24 337825.98 347498.64 364191.97 435317.94 466133.50 502520.94 - - - - - - - Debit 42972.81 -57593.82 -61180.80 -62706.41 -71040.84 -77459.74 -92902.66 -99745.98 112909.57 112841.79 135327.80 173983.68 247090.63 319993.72 -505098.33 -522530.75 -346797.61 -380494.84 -457097.67 -472843.79 -485986.79 -538879.68 -556143.21 -564713.87Unrequited transfers v 5245.19 6445.70 7052.17 8990.09 11785.29 16348.39 18041.46 17357.70 22724.80 20843.71 18956.74 24726.50 22680.19 15441.28 31828.36 17788.46 226090.78 249376.58 349809.24 396315.65 454548.87 513325.48 627478.93 676784.30 Credit 0.00 0.00 0.00 0.00 0.00 0.00 18084.93 17430.63 22752.28 21073.33 20231.37 27500.31 29494.53 31066.08 49216.07 30996.89 233322.24 261131.71 363016.32 410145.41 467557.67 527895.86 645106.29 693358.82 Debit 0.00 0.00 0.00 0.00 0.00 0.00 -43.47 -72.93 -27.48 -229.61 -1274.63 -2773.81 -6814.34 -15624.80 -17387.71 -13208.44 -7231.47 -11755.13 -13207.08 -13829.76 -13008.79 -14570.37 -17627.36 -16574.52 vCapital account 0.00 17149.56 19649.31 -1875.48 4915.68 -17339.84 24671.15 43175.45 51604.81 47198.13 76477.84 120119.01 87249.30 290343.31 194300.33 7646.99 6371.51 6098.52 3161.54 1393.30 2926.98 952.68 2203.42 6978.74Financial account w 157215.96 142519.85 43292.72 53100.10 36424.62 -92297.72 120582.16 -95341.97 Direct investment 2455.91 2037.24 911.76 2976.31 7445.51 20736.09 12150.82 12835.94 14536.18 17220.94 23431.51 34051.77 34997.43 35077.14 32800.89 65101.66 43545.15 93466.50 17082.52 76218.52 10190.22 6108.35 91717.36 115046.66 Portfolio investment -1211.28 -1753.36 -595.43 -122.31 -740.44 63.28 6173.22 5056.58 54.96 75848.66 30699.61 23458.47 34663.15 106568.45 34745.96 -1185.90 129580.04 -24438.29 52369.40 38496.29 30462.25 -95996.35 191422.11 140806.44 Financial derivatives 312.71 1944.46 -764.89 -1083.68 -3469.01 -1513.08 -2368.68 -7081.37 Other investments -1316.33 -17339.84 -1934.57 461.90 9590.03 16838.25 -4013.73 26470.03 -1440.01 14156.69 14588.00 49276.07 -16221.94 71547.17 -25394.31 -60531.02 -758.85 -896.64 -160188.63 -344113.70Net errors and omissions x -4856.25 2438.01 20654.10 -795.04 -4566.03 10652.82 10520.56 11669.04 23329.33 9439.63 -2250.94 1347.28 9205.79 -84232.33 -168277.70 -20119.36 89122.92 -72784.55 33094.20 1702.92 -48728.77 -15579.09 -99319.16 24066.41Change in NFA-commercial banks y 14659.23 1099.14 7373.11 -8108.82 17805.19 14502.98 110474.65 35011.19 -177761.87 -31168.57 -29378.19 -8518.06 -84335.90 -238919.38Monetization of gold 0.00 2822.08 4112.21 5687.61 7507.21 6623.74 6260.17 5299.69 6732.26 3316.63 3064.54 4068.25 4551.47 5190.79 3094.42 4825.37 -Overall balance z 23536.70 4057.78 42815.40 25319.04 5429.87 12509.16 9803.25 -2260.88 57787.50 38064.65 -4501.89 47603.79 16225.85 107669.52 -99109.96 55573.59 140368.60 -22493.83 -10300.51 41798.92 6233.38 -15691.17 132756.06 193403.60 -Changes in reserves 0.00 -4057.78 -42815.40 -25319.04 -5429.87 -12509.16 -9803.25 2260.88 -57787.50 -38064.65 4501.89 -47603.79 -16225.85 107669.52 99109.96 -55573.59 -140368.60 22493.83 10300.51 -41798.92 -6233.38 15691.17 -132756.06 -193403.60 NOTE: Columns with blanks means no data on that available year. CYL BRYAN A. BAGADIONG, Philippines | Meiji University Graduate School of Governance Studies 2
  3. 3. TERM PAPER FOR ECONOMIC DEVELOPMENT 2 [ANALYSIS OF INTERNATIONAL TRADE AND FINANCE OF THE PHILIPPINES] 2. HOW THE BALANCE OF PAYMENT HAS CHANGED OVER TIME? Table 1: Current Account (In millions of pesos) CURRENT ACCOUNT 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Balance on goods -27581.72 -11338.42 -8968.72 -4117.91 -20917.35 -22887.75 -56471.95 -97728.21 -88233.78 -119781.19 -168739.40 -207375.02 -229990.49 -297343.01 -327920.48 -1145.00 -233634.95 -263871.63 -319468.64 -285367.91 -317143.51 -318530.79 -428179.59 -356890.96 Exports 55619.06 90022.69 86133.19 98707.56 117647.24 149223.91 170002.73 199005.75 242910.82 250634.80 308487.73 356183.11 448640.88 538557.34 743486.82 1206179.93 1338524.63 1650446.09 1596731.28 1775318.65 1915490.42 2174011.88 2217907.49 2368565.46 Imports -83200.78 -101361.11 -95101.91 -102825.47 -138564.59 -172111.66 -226474.68 -296733.96 -331144.61 -370415.99 -477227.12 -563558.13 -678631.37 -835900.35 -1071407.30 -1207324.93 -1572159.58 -1914317.72 -1916199.92 -2060686.56 -2232633.93 -2492542.67 -2646087.08 -2725456.42 Other goods, services, -8223.40 -13743.03 0.00 14575.78 0.00 -1687.58 6781.85 17965.46 41630.08 77047.75 67989.34 104717.78 122529.59 178269.48 167865.11 46577.13 -104797.61 -83832.60 -119271.69 -125345.14 -121794.82 -103561.74 -90009.71 -62192.93 and income Credit 34749.41 43850.79 61180.80 77282.19 71040.84 75772.16 99684.51 117711.44 154539.65 189889.54 203317.14 278701.46 369620.22 498263.20 672963.43 569107.88 242000.00 296662.24 337825.98 347498.64 364191.97 435317.94 466133.50 502520.94 Debit -42972.81 -57593.82 -61180.80 -62706.41 -71040.84 -77459.74 -92902.66 -99745.98 -112909.57 -112841.79 -135327.80 -173983.68 -247090.63 -319993.72 -505098.33 -522530.75 -346797.61 -380494.84 -457097.67 -472843.79 -485986.79 -538879.68 -556143.21 -564713.87 Unrequited transfers v 5245.19 6445.70 7052.17 8990.09 11785.29 16348.39 18041.46 17357.70 22724.80 20843.71 18956.74 24726.50 22680.19 15441.28 31828.36 17788.46 226090.78 249376.58 349809.24 396315.65 454548.87 513325.48 627478.93 676784.30 Credit 0.00 0.00 0.00 0.00 0.00 0.00 18084.93 17430.63 22752.28 21073.33 20231.37 27500.31 29494.53 31066.08 49216.07 30996.89 233322.24 261131.71 363016.32 410145.41 467557.67 527895.86 645106.29 693358.82 Debit 0.00 0.00 0.00 0.00 0.00 0.00 -43.47 -72.93 -27.48 -229.61 -1274.63 -2773.81 -6814.34 -15624.80 -17387.71 -13208.44 -7231.47 -11755.13 -13207.08 -13829.76 -13008.79 -14570.37 -17627.36 -16574.52 Table 2. Capital (Financial) Account (In millions of pesos) CAPITAL (FINANCIAL) ACCOUNT 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Financial account Direct investment 2455.91 2037.24 911.76 2976.31 7445.51 20736.09 12150.82 12835.94 14536.18 17220.94 23431.51 34051.77 34997.43 35077.14 32800.89 65101.66 43545.15 93466.50 17082.52 76218.52 10190.22 6108.35 91717.36 115046.66 Portfolio investment -1211.28 -1753.36 -595.43 -122.31 -740.44 63.28 6173.22 5056.58 54.96 75848.66 30699.61 23458.47 34663.15 106568.45 34745.96 -1185.90 129580.04 -24438.29 52369.40 38496.29 30462.25 -95996.35 191422.11 140806.44 Financial derivatives - - - - - - - - - - 312.71 1944.46 -764.89 -1083.68 -3469.01 -1513.08 -2368.68 -7081.37 Other investments -1316.33 -17339.84 -1934.57 461.90 9590.03 16838.25 -4013.73 26470.03 -1440.01 14156.69 14588.00 49276.07 -16221.94 71547.17 -25394.31 -60531.02 -758.85 -896.64 -160188.63 -344113.70 NOTE: (blank) means no data available while ( - ) means value less than the value employed Table 3. Cash Account (In millions of pesos) CASH ACCOUNT 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Change in NFA-commercial - 14659.23 1099.14 7373.11 -8108.82 17805.19 14502.98 110474.65 35011.19 -177761.87 - - - -31168.57 -29378.19 -8518.06 -84335.90 -238919.38 banks Monetization of gold 2822.08 4112.21 5687.61 7507.21 6623.74 6260.17 5299.69 6732.26 3316.63 3064.54 4068.25 4551.47 5190.79 3094.42 4825.37 - - - - - - - - NOTE: (blank) means no data available while ( - ) means value less than the value employed Table 4. Over-all Balance (In millions of pesos) BALANCE OF ACCOUNT 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006Overall balance -23536.70 4057.78 42815.40 25319.04 5429.87 12509.16 9803.25 -2260.88 57787.50 38064.65 -4501.89 47603.79 16225.85 107669.52 -99109.96 55573.59 140368.60 -22493.83 -10300.51 41798.92 6233.38 -15691.17 132756.06 193403.60Current account -30559.93 -18635.75 -1916.55 19447.96 -9132.06 -8226.93 -31648.64 -62405.05 -23878.90 -21889.73 -81793.32 -77930.74 -84780.71 -103632.24 -128227.02 63220.58 -112341.79 -98327.65 -88931.09 -14397.40 15610.55 91232.96 109289.63 257700.41 v 0 17149.5649 19649.3088 -1875.4844 4915.6803 -17339.843 24671.1545 43175.448 51604.8108 47198.125 76477.836 120119.0084 87249.2985 290343.3075 194300.3251 7646.991 6371.507 6098.5236 3161.5412 1393.2972 2926.9782 952.6783 2203.42 6978.7448Capital account -4057.7841 -42815.3973 -25319.0394 -5429.8728 -12509.157 -9803.2517 2260.8765 -57787.4958 -38064.65 4501.8868 -47603.7944 -16225.8495 -107669.523 99109.9641 -55573.587 -140368.599 22493.8298 10300.5052 -41798.916 -6233.3795 15691.172 -132756.055 -193403.5967Changes in reserves The Philippines‟ 1983 to 2006 Balance of Payment, a systematic summary of its economic transactions to the rest of the world, reflects the country‟s ever changing economic policy experimentations and inconsistencies. It also reflects how various internal and external factors affect its economy, thus reflecting a “boom and bust” trend as shown in Chart A below. Also, it explains the country‟s quality, or lack thereof, of economic development. The overall Balance of Payment (BoP) does not show any trend to derive a sound projection as shown by the blue bar in the below-mentioned chart, albeit, it can be seen that there were more blue bar that can be counted above the zero line. This means more incidences of surplus, as compared to incidence of deficit and balance. From 1983 to 1989, the BoP showed a picture registering either a surplus or a balance amidst a turbulent political crisis and hostile business environment in the country CYL BRYAN A. BAGADIONG, Philippines | Meiji University Graduate School of Governance Studies 3
  4. 4. TERM PAPER FOR ECONOMIC DEVELOPMENT 2 [ANALYSIS OF INTERNATIONAL TRADE AND FINANCE OF THE PHILIPPINES]highlighted by assassination of Senator Benigno Aquino – a known political opposition – which was blamed to the government in 1983; citizens unrest; and peaceful yetmass upheaval which later to be known as People Power Revolution in 1986. There are several factors that contributed to this picture of BoP. From 1987 to present, BoP was marked by a “boom and Chart A bust” pattern of inflows and outflows. Notable on this pattern is BALANCE OF PAYMENTS the huge deficit in year 1997. This is attributable to the Asian 400000.00 Financial Crisis that greatly affected the Philippines. BoP showed a surplus on the next two years only to demonstrate again a deficit 300000.00 on the next two following years. Even the latest data from 2003 to present cannot establish a permanent trend. This see saw trend in 200000.00 the BoP suggested that the macro-economic fundamentals, especially monetary policies, of the country were weak that its In Millions of Pesos OVERALL BALANCE overall BoP position can be easily affected by various and constant, 100000.00 Current Account sometimes very fluid and volatile, changes of diverse internal and Capital Account external economic and political developments. 0.00 The current account, represented in Chart A in red line, also Changes in Cash Balance (Foreign Reserves) 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 showed how it changed overtime and influenced the trade -100000.00 transactions of the country to the rest of the world. As we can see, from 1998 -2002, the current account exhibited a constant deficit, -200000.00 except in 1998, whereas the Capital Account, represented in the chart in green line, showed the reverse of the former by exhibiting -300000.00 a constant surplus almost mimicking the reverse of the Current Account. Many explanations can be attributed to this trend butgenerally, it shows that the Philippines‟ excess of payments for its imported items are usually compensated by a surplus of the country‟s receipt of foreign loans, bothprivate and public, and investments after deducting the amount they pay for interest and repayment of capital of former loans and investments. This is also the era of“Taiwan‟s money” in form of portfolio investments flooding the country‟s market every now and then to take advantage of the country‟s high exchange rate and interestrates. In short, the Philippines resort, almost always, to borrowings to offset the deficiency of its income from its exports after deducting the expenses it incurred from itsimport. Abetting this surplus in Capital Account, or helping the Capital account to offset the deficiency of the country‟s inflows is its foreign reserves as showed by the violetline which shows the changes in the Cash Balance of the country. Exports gives the Philippines dollars while imports uses up the country‟s dollar reserves, and whatever isleft after importing goes to the foreign reserves. This is because BoP transactions in the Philippines are denominated and/or financed in dollars. This will explain the almostparallel movement of the violet line (Changes in Foreign Reserves) and the red line (current account). This abatement happened in such a way that due to the chronicdeficit of the country‟s current account, it has to use it foreign reserves to pay off its debt and offset the current account deficit. As we can see, the BoP is computed in twoways, either by the so-called above-the-line items which refers to the sum of the balances of the capital, current and financial accounts; or by the so-called below-the-line-items which refers to the change of the country‟s foreign reserves as a result of those transactions as mentioned earlier. Ideally, both ways shall yield the same result butdue to the limitations of the data for the above-the-line items, the overall BoP position is determined using the below-the-line items and discrepancies therein falls underthe category of “Net Unclassified Items”. From 1998 to 1999, however, capital account balance started to become nil and started to decrease. This is so because capital transfers are already virtually non-existent. The country is generating so much bad news in terms of investment favorability under the Estrada Administration and impending civil and political unrestexacerbated this situation. Investor confidence is at its lowest at this time. Government debt already reached staggering heights, thus, the government started effecting a CYL BRYAN A. BAGADIONG, Philippines | Meiji University Graduate School of Governance Studies 4
  5. 5. TERM PAPER FOR ECONOMIC DEVELOPMENT 2 [ANALYSIS OF INTERNATIONAL TRADE AND FINANCE OF THE PHILIPPINES]forced debt management. This forced debt management, according to the Bureau of Treasury of the Philippines, enabled the Philippines to stopped borrowing from WorldBank on commercial terms, re-structure its old loans and rely heavily on Official Development Assistance from various Foreign Government and Institution which offers alower interest rates and longer terms. To further examine the changes that affected this BoP over time,Chart B explains the changes in the current account of the country. As we Chart Bcan see, from 1983, the country‟s balance on goods (blue line) continues to Current Account (83-06) 800000.00increase in the negative side of the scale until 1997. This paints a clearpicture of the growing deficit of the country from its exports and imports. 600000.00Factors contributing to this increasing deficit are not mainly attributable tothe local political turmoil that the country was in, but also its trade driven 400000.00 Balance on Goodseconomic growth which became a victim of the globalization of tariffs andtrade agreements. The country cannot simply compete with other countries 200000.00 Balance on other goods,in an unlevel playing field. While the importation trade is so alive, the services and income 0.00exportation sector is suffering from the protectionist policy of the US such Unrequited Transfer 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006as the exportation ban of shrimps in US simply because the Filipino -200000.00Fisherman is using a net that also able to catch a species of fish that isconsidered as endangered in America. Added to this is the continuous -400000.00depreciation of peso to the dollar thus making importation so costly yetexports income cannot tide over the import expenditures. -600000.00 In 1999, after the Asian Financial Crisis, the World Bank forced the government of the Philippines to adopt fiscal and austerity measures resulting to the suddenreversal of the Balance on Goods. However, the World Bank intervention made even the country‟s current account look worse. Prior to the World Bank Intervention, theprevious Balance on Other Goods, Services and Income (red line) which traversed the positive side of the scale now finds itself on the deficit side while the sudden reversalon the Balance on Goods return to its previous decreasing state (or increasing deficit). The Unrequited Goods, the account that refers to the transfer of assets from onecountry to another without expecting for recompense such as foreign aid grants, became increasingly bigger and bigger from its previous minimal state. This signals theincreasing dependency of the country to Foreign Grants. To further understand the increase of deficit on the Balance of Goods, Chart C will Chart C provide us the clear picture of trends from 1993 to present. It would seems that the Balance Exports and Imports on Goods only appear from 1989 and became persistent to 1997. This period signals the 3000000.00 transition of the country‟s economic structure to exportation of primary products to manufacturing sector of which materials are also imported primarily from other countries, 2000000.00 such as Japan. This is also the period where the country was plagued by several coup de „etat 1000000.00 and was suffering from power shortage in form of long power black-outs. The export income 0.00 or output cannot overtake the import inputs. It took the Ramos Administration then three 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 -1000000.00 years to reverse the trend that had been crowned in the Balance of Goods complete -2000000.00 disappearance in 1998. This year was also marked by massive infrastructure projects and wide-ranging economic reforms. However in 1999, when the then President Estrada took -3000000.00 over, whose administration was characterized by mismanagement and corruption, the health -4000000.00 of export and import industry again suffered resulting to the increasing gap of imports and Balance on Goods Exports Imports exports, thus, affecting the balance sheet of the country in terms of its trade balance. Only in CYL BRYAN A. BAGADIONG, Philippines | Meiji University Graduate School of Governance Studies 5
  6. 6. TERM PAPER FOR ECONOMIC DEVELOPMENT 2 [ANALYSIS OF INTERNATIONAL TRADE AND FINANCE OF THE PHILIPPINES] 2006 that the government was able to seem to decrease the said gap. Also contributing to this change of Balance of Payment is the very fluid Chart D and volatile movement of the Portfolio Investment (red line) and Other Capital (Financial ) Account Investments (green line) as shown in Chart D which comprises the Capital 300000.00 or Financial Account side of the BoP. These however, as had already 200000.00 mentioned in the early paragraphs, are not only attributable to the internal turbulent atmosphere of the country due to its political instability. Also In millions of Pesos 100000.00 Direct Investment 0.00 playing a big role in the decision of the investor to give its confidence to the Portfolio Investment country are some external factors such as interest rates which is affected by 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 -100000.00 Other Investments the law of supply and demand, low value of the local currency against the Fianncial Derivatives -200000.00 dollar, low real value of the local currency as compared against a basket of -300000.00 currency based on the Asian 4 (Malaysia, Thailand, Indonesia and Philippines) currencies, credit ratings issued by foreign Credit Rating -400000.00 Agencies (CRA) such as Moody‟s, Standards and Poors, Fitch, among others. Contributing also on these which also affects the volatility of these investments are the also volatile exchange risk rate, interest rate risk, equity and commodity price risk, etc which are part and parcel of unregulated stock market in the Philippines and liberalized stock trading market in the world due to the globalization and liberalization of the said market. In this arrangement, almost always, Developing Countries, such as the Philippines is on the losing end. In summary, the Philippines BoP changes over time can be attributed and linked to several factors. Definitely, it‟s Economic Policy which focuses more on economics of quantity rather than economics of quality and its failure to utilize fully its comparative advantage played a vital role in advancing its dream of a balance BoP or a Surplus at the least. Political Instability is a key player in affecting changes in its economic account with the world. Sound macro and micro economic fundamentals also influenced movement in the BoP of one‟s country, thus, the Philippines has a need for this. In the era of globalization, the soundness and strength of the country‟s economic fundamentals must be ensured in order for it to be isolated, or be mitigated, from the sudden changes of the global economic developments such as the recent US debt crunch. Although from 1983 to 2000, it exhibited a dismal performance, recent data shows an improvement in the overall picture. Economic Reforms and Policy Changes has been taking place since 2003 in the Philippines such as diversification of its foreign reserves in its effort to detached its economy from the US dollar currency; its slow decoupling from US and Latin America and diversifying its trade relations with Japan and China; practicing debt management and debt risk monitoring; increased in exports and diversifying its exports to service sector while maintaining its lead in electronics; maintaining its competitive and liberal labor supply to further engage the manufacturing sector of automobile and ship building; etc. What is needed now is to maintain this trend in its recent BoP data to finally advance its dream of economic recovery and progress. 3. TRADE BALANCE AND GROSS DOMESTIC EXPENDITURE Compute the Trade Balance over Gross Domestic Expenditure (Xt – Mt) / Yt TRADE BALANCE OVER GROSS DOMESTIC EXPENDITURES; MILLIONS OF PESOS Item 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Exports, fob 55619.06 90022.69 86133.19 98707.56 117647.24 149223.91 170002.73 199005.75 242910.82 250634.80 308487.73 356183.11 448640.88 538557.34 743486.82 1206194.36 1369557.10 1682761.63 1639422.43 1816867.74 1963850.90 2223692.40 2272534.87 2411023.98MINUS: Imports, cif 88668.23 107339.24 101316.75 109960.47 147820.06 184177.83 242820.68 317057.54 353264.88 394550.81 509120.01 598032.57 732554.68 909724.89 1137009.08 1289351.61 1273056.41 1494024.24 1781640.04 2120493.19 2307745.79 2583559.37 2726039.39 2756650.70 GROSS DOMESTIC EXPDIVIDE: (Expenditure on GDP) 369100.00 524500.00 571900.00 608900.00 682800.00 799200.00 925444.00 1077237.00 1248011.00 1351559.00 1474457.00 1692932.00 1906000.00 2171922.00 2426743.00 2665060.00 2976900.00 3354727.00 3631474.00 3963873.00 4316401.77 4871554.00 5437906.00 6032624.00 TRADERESULT: -0.090 -0.033 -0.027 -0.018 -0.044 -0.044 -0.079 -0.110 -0.088 -0.106 -0.136 -0.143 -0.149 -0.171 -0.162 -0.031 0.032 0.056 -0.039 -0.077 -0.080 -0.074 -0.083 -0.057 BALANCE/GDE CYL BRYAN A. BAGADIONG, Philippines | Meiji University Graduate School of Governance Studies 6
  7. 7. TERM PAPER FOR ECONOMIC DEVELOPMENT 2 [ANALYSIS OF INTERNATIONAL TRADE AND FINANCE OF THE PHILIPPINES] 4. TRADE DEPENDENCY Index of Trade Dependency (Xt + Mt) / Yt INDEX OF TRADE DEPENDENCY 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Exports, fob 55619.06 90022.69 86133.19 98707.56 117647.24 149223.91 170002.73 199005.75 242910.82 250634.80 308487.73 356183.11 448640.88 538557.34 743486.82 1206194.36 1369557.10 1682761.63 1639422.43 1816867.74 1963850.90 2223692.40 2272534.87 2411023.98ADD: Imports, cif 88668.23 107339.24 101316.75 109960.47 147820.06 184177.83 242820.68 317057.54 353264.88 394550.81 509120.01 598032.57 732554.68 909724.89 1137009.08 1289351.61 1273056.41 1494024.24 1781640.04 2120493.19 2307745.79 2583559.37 2726039.39 2756650.70 GROSS DOMESTICDIVIDE: EXPENDITURE 369100.00 524500.00 571900.00 608900.00 682800.00 799200.00 925444.00 1077237.00 1248011.00 1351559.00 1474457.00 1692932.00 1906000.00 2171922.00 2426743.00 2665060.00 2976900.00 3354727.00 3631474.00 3963873.00 4316401.77 4871554.00 5437906.00 6032624.00 INDEX OFRESULT: TRADE 0.391 0.376 0.328 0.343 0.389 0.417 0.446 0.479 0.478 0.477 0.555 0.564 0.620 0.667 0.775 0.936 0.888 0.947 0.942 0.993 0.990 0.987 0.919 0.857 DEPENDENCY 5. COMPARE THE GROWTH INDEX OF (Xt + Mt) AND THAT OF GROSS DOMESTIC EXPENDITURES. PLOT A SCATTERED DIAGRAM. WHICH HAS GROWN FASTER? COMPUTE A NEW INDEX IN SUCH A WAY THAT THE GROWTH INDEX OF (Xt + Mt) IS DIVIDED BY THE GROWTH INDEX OF GROSS DOMESTIC EXPENDITURES. OBSERVE THE CHANGE OF THAT NEW INDEX. GROWTH INDEX of (Xt + Mt) and GDE 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Sum of Export and Import 144287.30 197361.94 187449.94 208668.03 265467.30 333401.73 412823.41 516063.29 596175.71 645185.61 817607.73 954215.68 1181195.56 1448282.23 1880495.90 2495545.97 2642613.51 3176785.87 3421062.47 3937360.93 4271596.68 4807251.77 4998574.25 5167674.68 Gross Domestic 369100.00 524500.00 571900.00 608900.00 682800.00 799200.00 925444.00 1077237.00 1248011.00 1351559.00 1474457.00 1692932.00 1906000.00 2171922.00 2426743.00 2665060.00 2976900.00 3354727.00 3631474.00 3963873.00 4316401.77 4871554.00 5437906.00 6032624.00 Expenditure New Index 0.39 0.38 0.33 0.34 0.39 0.42 0.45 0.48 0.48 0.48 0.55 0.56 0.62 0.67 0.77 0.94 0.89 0.95 0.94 0.99 0.99 0.99 0.92 0.86 GROWTH INDEX OF (Xt+Mt) AND GDE New Index (Index of Trade Dependency) 7000000.00 1.20 6000000.00 1.00 5000000.00 0.80 4000000.00 Axis Title 3000000.00 0.60 New Index 2000000.00 0.40 1000000.00 0.20 0.00 1980 1985 1990 1995 2000 2005 2010 0.00 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Growth Index of (Xt + Mt) Growth Index of GDE As shown in the scattered diagram above tabbed as GROWTH INDEX OF (Xt + Mt) AND GDE, it demonstrates that the growth pattern of Gross Domestic Expenditures always far outrace the growth pattern of the sum of export and import except that of the year 2002 to 2003. In general though, the two maintain the same separate growth trend wherein both have maintained an almost the same growth rate but on a different parallel path – the gross domestic expenditure above the sum of (Xt + Mt). This would seems to show that the Growth Domestic Expenditures is always more than the sum of the Exports and Imports of the Philippines, thus, almost always, will generate a deficit result there being the expenditures is always more than the net income it can acquire from its trade transactions of goods and services. Year 2002 to 2004 growth rate seems to accelerate and caught up with the GDE. But this is not the case. Marked by so much political bickering and a government operating in CYL BRYAN A. BAGADIONG, Philippines | Meiji University Graduate School of Governance Studies 7
  8. 8. TERM PAPER FOR ECONOMIC DEVELOPMENT 2 [ANALYSIS OF INTERNATIONAL TRADE AND FINANCE OF THE PHILIPPINES] re-enacted budget of previous years, it was the GDE that had slowed down on these years. Contributing to this is the sudden restraint of domestic spending in anticipation of the difficult years ahead resulting to low interest rates and sluggard domestic trading affecting the GDP growth. After getting the sum of the Exports and Imports and dividing the same by the Gross Domestic Expenditures, a new index had been generated. I plotted the new index in a scattered diagram (shown in a blue line in NEW INDEX (INDEX OF TRADE DEPENDENCY) chart as shown above) after deriving the values to observe the pattern. It would give the impression that the trade dependency index mimics the pattern of the sum of (Xt + Mt). As had been noted, whenever the new index decline, there is also a decline in the sum of (Xt + Mt). This growth trend of the new index exhibits the clear indication that the economy of the Philippines relies heavily on its export industries imitating the Japan‟s example of relying heavily on “processing trade” or “trade as engine of growth” wherein the country export manufactured or semi- manufactured goods from imported materials. I think several factors led the country to pursue this trade dependence as an engine of its growth and take the example set forth by Japan. These factors are the relative small market of the Philippines as compared to other countries, the relative underdeveloped endowments of the country and the constitutional prohibition to further exploit them, and the abundance of cheap but otherwise semi-skilled labor supply. The slight decline of the new index in 2005 and 2006 does not mean that export and import sector became sluggish on these years. In fact there is a noticeable increase on export and imports in the years mentioned. It should be attributed however to the sudden increase of share to the GDP of massive inflows of Overseas Filipino Workers‟ dollar income remittances affecting the trade dependency ratio as it also affects the GDE/GDP variable. 6. EXPORT DEPENDENCY Xt / Yt 1. DRAW A CHART OF EXPORT DEPENDENCY OVER TIMEEXPORT DEPENDENCY 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006EXPORTS (Xt) 55619.06 90022.69 86133.19 98707.56 117647.24 149223.91 170002.73 199005.75 242910.82 250634.80 308487.73 356183.11 448640.88 538557.34 743486.82 1206194.36 1369557.10 1682761.63 1639422.43 1816867.74 1963850.90 2223692.40 2272534.87 2411023.98GROSS DOMESTIC EXP(Expenditure on GDP) (Yt) 369100.00 524500.00 571900.00 608900.00 682800.00 799200.00 925444.00 1077237.00 1248011.00 1351559.00 1474457.00 1692932.00 1906000.00 2171922.00 2426743.00 2665060.00 2976900.00 3354727.00 3631474.00 3963873.00 4316401.77 4871554.00 5437906.00 6032624.00EXPORT DEPENDENCY 0.15 0.17 0.15 0.16 0.17 0.19 0.18 0.18 0.19 0.19 0.21 0.21 0.24 0.25 0.31 0.45 0.46 0.50 0.45 0.46 0.45 0.46 0.42 0.40(Xt/Yt) 0.60 0.50 0.50 0.45 0.46 0.45 0.46 0.45 0.46 0.42 0.40 0.40 0.31 0.30 0.25 0.24 0.19 0.21 0.21 0.17 0.17 0.19 0.18 0.18 0.19 0.20 0.15 0.15 0.16 0.10 0.00 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 export dependency Linear (export dependency) 2. DRAW A SCATTERED DIAGRAM OF GDP (Horizontal Axis) and EXPORT (Vertical Axis). GDP vs EXPORT 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 GDP 369100.00 524500.00 571900.00 608900.00 682800.00 799200.00 925444.00 1077237.00 1248011.00 1351559.00 1474457.00 1692932.00 1906000.00 2171922.00 2426743.00 2665060.00 2976900.00 3354727.00 3631474.00 3963873.00 4316401.77 4871554.00 5437906.00 6032624.00 EXPORT 55619.06 90022.69 86133.19 98707.56 117647.24 149223.91 170002.73 199005.75 242910.82 250634.80 308487.73 356183.11 448640.88 538557.34 743486.82 1206194.36 1369557.10 1682761.63 1639422.43 1816867.74 1963850.90 2223692.40 2272534.87 2411023.98 CYL BRYAN A. BAGADIONG, Philippines | Meiji University Graduate School of Governance Studies 8

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