IDEAS home Printed from https://ideas.repec.org/p/ags/widerw/295385.html
   My bibliography  Save this paper

Country Study 2

Author

Listed:
  • Montes, Manuel F.

Abstract

From 1984 until its fall in February 1986 the Marcos government attempted to implement a standard IMF-type stabilization and adjustment programme. In some respects the programme was startlingly successful: inflation was brought under control and the payments deficit was eliminated. But, as this searching analysis shows, Marcos left a bitter legacy to the new Aquino government in the shape of an unmanageable foreign debt burden, a chaotic financial and banking system and an economy that was on its knees. The external adjustment had taken place entirely by means of a fall in imports rather than an expansion of exports - which also fell during a period when most developing countries' exports were booming. The adjustment period thus completely failed to lay the basis for renewed growth; rather, it perhaps fatally weakened the engines of growth in the Philippine economy.The IMF and World Bank share responsibility for this poor record with the Marcos government. They consistently supported the government with new loans and standby agreements despite clear evidence that it did not have the will or capability to carry out the longer-term structural reforms that were necessary to strengthen productive capacity and the efficiency of the economy. The international institutions turned a blind eye to the obvious fact that the nature of the political support for the regime drained the reform programme of any substantive content, however good it looked on paper. They did not apparently even realize that the official figures understated the country's foreign debt by some $8 billion.Adjustment should have begun much earlier - in 1980 rather than with the payments crisis of 1983. Adjustment was postponed partly because of the support of the international financial community of the Marcos government. When it did start in 1983 it did not tackle the most important issues - the domestic financial crisis, the budget and the foreign debt. Instead, it relied entirely on devaluation and sharp monetary contraction with their predictable accompaniment of soaring interest rates and plunging economic activity. The human suffering occasioned by this misguided strategy will be felt at least to the end of this century.

Suggested Citation

  • Montes, Manuel F., "undated". "Country Study 2," WIDER Working Papers 295385, United Nations University, World Institute for Development Economic Research (UNU-WIDER).
  • Handle: RePEc:ags:widerw:295385
    DOI: 10.22004/ag.econ.295385
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/295385/files/SAPP2.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.295385?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Florian A. Alburo, 1985. "Philippine Trade in Manufactures Structural Change and Adjustment," UP School of Economics Discussion Papers 198509, University of the Philippines School of Economics.
    2. Krugman, Paul & Taylor, Lance, 1978. "Contractionary effects of devaluation," Journal of International Economics, Elsevier, vol. 8(3), pages 445-456, August.
    3. repec:phd:pjdevt:jpd_1981_vol._viii_nos._1&2-a is not listed on IDEAS
    4. Mark Thompson & Gregory Slayton, 1985. "An Essay on Credit Arrangements Between the IMF and the Republic of the Philippines: 1970-1983," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 22(1&2), pages 59-81, March & J.
    5. repec:phd:pjdevt:jpd_1981_vol__viii_nos__1&2-a is not listed on IDEAS
    6. Roumasset, James A. & Clarete, Ramon L., 1983. "An Analysis of Economic Policies Affecting the Philippine Coconut Industry," Working Papers WP 1983-08, Philippine Institute for Development Studies.
    7. David, Cristina C., 1983. "Economic Policies and Philippine Agriculture," Working Papers WP 1983-02, Philippine Institute for Development Studies.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:phd:pjdevt:jpd_1990_vol__xvii_no__2-d is not listed on IDEAS
    2. Antonia López Villavicencio & Josep Lluís Raymond Bara, 2006. "The short and long-run determinants of the real exchange rate in Mexico," Working Papers wpdea0606, Department of Applied Economics at Universitat Autonoma of Barcelona.
    3. An, Lian & Kim, Gil & Ren, Xiaomei, 2014. "Is devaluation expansionary or contractionary: Evidence based on vector autoregression with sign restrictions," Journal of Asian Economics, Elsevier, vol. 34(C), pages 27-41.
    4. Po-Chin Wu & Chung-Chih Lee, 2018. "The non-linear impact of monetary policy on international reserves: macroeconomic variables nexus," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 45(1), pages 165-185, February.
    5. Zhang, Yin & Wan, Guanghua, 2007. "What accounts for China's trade balance dynamics?," Journal of Policy Modeling, Elsevier, vol. 29(6), pages 821-837.
    6. Harry Huizinga & Luc Laeven, 2019. "The Procyclicality of Banking: Evidence from the Euro Area," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 67(3), pages 496-527, September.
    7. Kenneth Kasa, 1998. "Borrowing constraints and asset market dynamics: evidence from the Pacific Basin," Economic Review, Federal Reserve Bank of San Francisco, pages 17-28.
    8. Akbar, Muhammad & Ahmad, Eatzaz, 2021. "Repercussions of exchange rate depreciation on the economy of Pakistan: Simulation analysis using macroeconometric model," Journal of Policy Modeling, Elsevier, vol. 43(3), pages 574-600.
    9. Riccardo Magnani & Luca Piccoli & Martine Carré & Amedeo Spadaro, 2013. "Would a euro's depreciation improve the French economy?," Working Papers hal-01515823, HAL.
    10. Horvath, Julius, 2003. "Optimum currency area theory: A selective review," BOFIT Discussion Papers 15/2003, Bank of Finland Institute for Emerging Economies (BOFIT).
    11. Magda Kandil & Ida Mirzaie, 2006. "Consumption and macroeconomic policies: Theory and evidence from developing countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 15(4), pages 469-491.
    12. Gerando Bracho C. & Julio Lopez G., 2005. "The economic collapse of Russia," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 58(232), pages 53-89.
    13. Steve Brito & Mr. Nicolas E Magud & Mr. Sebastian Sosa, 2018. "Real Exchange Rates, Economic Complexity, and Investment," IMF Working Papers 2018/107, International Monetary Fund.
    14. André M. Marques, 2022. "Reviewing demand regimes in open economies with Penn World Table data," Manchester School, University of Manchester, vol. 90(6), pages 730-751, December.
    15. Debabrata Datta & Susmita Chatterjee, 2013. "A Simple Model of Macroeconomic Instability in the Background of the Indian Economy," South Asian Journal of Macroeconomics and Public Finance, , vol. 2(1), pages 81-106, June.
    16. Codrina Rada, 2007. "A growth model for a two-sector economy with endogenous productivity," Working Papers 44, United Nations, Department of Economics and Social Affairs.
    17. Donyina-Ameyaw, Samuel, 2004. "A Small Macroeconmetric Model Of Trade And Inflation In Ghana," The Warwick Economics Research Paper Series (TWERPS) 696, University of Warwick, Department of Economics.
    18. James A. Roumasset, 2002. "The Microeconomics of Agricultural Development in the Philippines," Working Papers 200210, University of Hawaii at Manoa, Department of Economics.
    19. Magud, Nicolas E., 2010. "Currency mismatch, openness and exchange rate regime choice," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 68-89, March.
    20. Pierre-Richard Agénor, 1991. "Output, devaluation and the real exchange rate in developing countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 127(1), pages 18-41, March.
    21. Muhammad Shahbaz & Mohammad Mafizur Rahman, 2012. "Does Nominal Devaluation Improve Income Distribution? Evidence from Bangladesh," South Asian Survey, , vol. 19(1), pages 61-77, March.

    More about this item

    Keywords

    International Development;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:widerw:295385. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/widerfi.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.