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Policy Reversals, Lobby Groups and Economic Distortions

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  • Aldaba, Rafaelita M.

Abstract

This paper aims to review the impact of the various tariff legislations passed from 1998 to 2003 on the structure of protection in the Philippines. The paper finds that while the overall level of effective protection has declined, it has remained uneven as some selected sectors have continued to receive relatively high effective rates of protection. As such, the economic distortions that characterize our tariff structure have continued to prevail and have led to the inefficient use of resources. The tariff structure continues to favor the manufacture of highly protected import substitutes at the expense of exportables. Oftentimes, the favored sectors are intermediate goods like sugar, petrochemicals, float glass, and steel which are inputs to a lot of products. Since the tariffs on the inputs are higher than the outputs, the cost of production has remained high affecting the competitiveness of the user sectors. The large disparities in tariff protection has provided incentives for lobbying. Thus, sustaining the trade reforms and encouraging competition to promote efficiency and consumer welfare has been very difficult.

Suggested Citation

  • Aldaba, Rafaelita M., 2005. "Policy Reversals, Lobby Groups and Economic Distortions," Discussion Papers DP 2005-04, Philippine Institute for Development Studies.
    • Handle: RePEc:phd:dpaper:dp_2005-04
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    References listed on IDEAS

    as
    1. Dani Rodrik, 1989. "Credibility of Trade Reform — a Policy Maker's Guide," The World Economy, Wiley Blackwell, vol. 12(1), pages 1-16, March.
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    Cited by:

    1. Erwin L. Corong, 2007. "Economic and Poverty Impacts of a Voluntary Carbon Reduction for a Small Liberalized Developing Economy: The Case of the Philippines," Working Papers 2007.9, Fondazione Eni Enrico Mattei.
    2. John Cockburn & Erwin L. Corong & Caesar B. Cororaton, 2008. "Poverty Effects of the Philippines’ Tariff Reduction Program: Insights from a Computable General Equilibrium Analysis," Asian Economic Journal, East Asian Economic Association, vol. 22(3), pages 289-319, September.
    3. Caesar B. Cororaton & Erwin L. Corong, 2006. "Agriculture-sector Policies and Poverty in the Philippines: a Computable General-Equilibrium (CGE) Analysis," Working Papers MPIA 2006-09, PEP-MPIA.
    4. Aldaba, Rafaelita M., 2012. "Trade Reforms, Competition, and Innovation in the Philippines," Discussion Papers DP 2012-06, Philippine Institute for Development Studies.
    5. Cororaton, Caesar B. & Corong, Erwin L. & Cockburn, John, 2009. "Agricultural Price Distortions, Poverty and Inequality in the Philippines," Agricultural Distortions Working Paper Series 52790, World Bank.
    6. David, Cristina C. & Intal, Ponciano & Balisacan, Arsenio M., 2007. "Distortions to Agricultural Incentives in the Philippines," Agricultural Distortions Working Paper Series 48477, World Bank.
    7. Aldaba, Rafaelita M., 2005. "The Impact of Market Reforms on Competition, Structure and Performance of the Philippine Economy," Discussion Papers DP 2005-24, Philippine Institute for Development Studies.
    8. Aldaba, Rafaelita M., 2012. "Surviving Trade Liberalization in Philippine Manufacturing," Discussion Papers DP 2012-10, Philippine Institute for Development Studies.
    9. Cororaton, Caesar B., 2008. "The Philippines: Shadow WTO Agricultural Domestic Support Notifications," IFPRI discussion papers 827, International Food Policy Research Institute (IFPRI).

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    More about this item

    Keywords

    tariff structure; effective protection rate; trade policies;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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