Development Roundtable Series (DRTS) of Focus on the Global South – Philippines Program co-sponsored on July 31, 2011 a roundtable discussion that tackled the importance, prospects and possibilities of Industrial Policy in the Philippines. The roundtable, which was part of the continuing efforts of DRTS-Focus to push for the crafting of an industrial policy in the Philippines, was jointly sponsored by Action for Economic Reforms (AER), EU-ASEAN Free Trade Agreement (FTA) Campaign Network and Philippine Rural Reconstruction Movement (PRRM). The main speaker was Dr. Manuel “Butch” Montes, Chief of Policy Analysis and Development Branch at Financing for Development Office of the United Nations Department of Economic and Social Affairs (UNDESA). Atty. Nepomuceno Malaluan of Action for Economic Reforms (AER) and the Development Roundtable Series (DRTS) Thematic Working Group on Trade, Industrial Policy and Privatization also presented the results of his study on Philippine trade.
Below are videos of the highlights of the RTD.
Ms. Jenina Joy Chavez explains the rationale for the Industrial Policy (IP) Roundtable Discussion and introduces the groups that sponsored the activity.
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Dr. Butch Montes defines industrial policy as purposive state intervention in key sectors, along long-term national objectives. Here in this part of the RTD, he discusses standards that an industrial policy can help set-up to measure proposals of private sector and identify where the state can choose which requests it will accede to or which it can reject. He also underscores how industrial policy does not make any sense unless it includes proper redeployment of private capital for other purposes.
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Dr. Montes proposes a plan on how to undertake industrial policy for domestic development and clarifies that through industrial policy government is able to be selective on certain interventions based on specific indicators.
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Dr. Montes explains why industrial policy is unpopular to the World Trade Organization; touches too on the restrains created by the global trade regime like the WTO and Free Trade Agreements—that IP is a choice between following, stretching or violating the WTO rules, but that domestic policy space is needed to have an industrial policy.
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Dr. Montes underscores the need for an IP and elaborates on how IP draws up targets based on national development objectives and chooses the sectors which have the most backward and forward linkages to other sectors.
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Dr. Montes clarifies that neither the private sector or the state has any advantage in choosing industries which it will invest in, shattering the common “economic notion” that the private sector is better at choosing industries to invest in.
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Dr. Montes stresses the importance of industrial policy in development and how countries without industrial policy will never develop.
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Atty. Nepomuceno Malaluan provides a brief background on government’s trade reform program in the 1980s as part of the structural adjustment program.
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Atty. Malaluan explains the new economic structure that resulted from the implementation of trade liberalization policy Philippine style.
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Atty. Malaluan presents the comparative impact of trade liberalization on the Philippines and its Asian neighbors, emphasizing that the earlier adoption by the Philippines of an in- depth and more aggressive trade liberalization policy was disadvantageous to the country and important sectors.
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