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State of Trade and Investments in the Philippines


  • Jenny D. Balboa


  • Erlinda M. Medalla


The last two decades have witnessed a tremendous increase in global trade and investments. This has been followed by a shift in the pattern of FDI inflow, which had gradually become more favorable to the developing countries. Consequently, this resulted in an increase in competition among developing countries to attract FDI, resulting in further liberalization of economies, removal or loosening of restrictions on operations of foreign firms in host countries and higher investment incentives. This also prompted economies to form or join regional trade agreements and bilateral investment treaties. Like most developing countries, the Philippines positioned itself for this transition. Investment policies had been revised to create a more favorable investment environment. Incentive packages to foreign investors are also improved. Yet despite these efforts, the Philippines continue to lag behind, especially relative to other countries in Southeast Asia, in capturing a sizeable portion of trade and investment flows. The Philippine experience in the past twenty years show that trade and investment policies are not sufficient to pump up inflows. As important are the internal processes that accompany these policies, infrastructure and government support that will sustain the transition.

Suggested Citation

  • Jenny D. Balboa & Erlinda M. Medalla, 2006. "State of Trade and Investments in the Philippines," Trade Working Papers 22612, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:tradew:22612

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    References listed on IDEAS

    1. Putnam, Robert D., 1988. "Diplomacy and domestic politics: the logic of two-level games," International Organization, Cambridge University Press, vol. 42(03), pages 427-460, June.
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    Cited by:

    1. Mari-Len Reyes-Macasaquit, 2008. "Industrial Agglomeration in the Philippines," Development Economics Working Papers 22690, East Asian Bureau of Economic Research.
    2. Philippine Institute for Development Studies, 2008. "Industrial Agglomeration and Industrial Policies : The Philippine Experience," Development Economics Working Papers 22681, East Asian Bureau of Economic Research.
    3. Macasaquit, Mari-Len R., 2008. "Industrial Agglomeration in the Philippines," Discussion Papers DP 2008-14, Philippine Institute for Development Studies.

    More about this item


    foreign direct investment; ASEAN trade and investment flows; government policies; incentives; investment treaties; policy gaps and failures; government support; Infrastructure;

    JEL classification:

    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • P45 - Economic Systems - - Other Economic Systems - - - International Linkages


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