Table of contents

Introduction 2

Country Overview 2

The Political Environment 3

Recent History 3 The Present Government 3 Political Stability 4 Opposition Parties 4

Economic and Financial Analysis 5

Trade History & Major Products 5 GDP Growth per capita 5 Unemployment & Price level Changes Inflation 6 Exchange Rate Innovations 7 Investments in the Stock Market 7 Investments in the Bond Market 8 Foreign Exchange Reserves 9 Structure of Industries 10 The Banking System 10 Monetary Policy / Money Supply Growth 11 Foreign Debt 12 Capital Flight 12

Asian Currency Crisis 13

Philippines before the crisis 13 What caused the Asian Currency Crisis? The effect it had on the Philippines and other countries 13

Looking into the Future 17

Prevention as the Best Form of Management 17 Some Policy Lessons From the Asian Crisis 17 Need for Great Caution About Financial Liberalization and Globalization 17 Manage External Debt Well and Avoid Large Debts 17 Manage and Build Up Foreign Reserves 17 The Need for Capital Controls and a Global Debt Workout System 18

Conclusion: Summary / Comments / Recommendations 19

Works Cited 21

Appendix A 23

Appendix B 24

Appendix C 25

Appendix D 26

Appendix E 27

Appendix F 28

Introduction

The Philippines were ceded by Spain to the US in 1898 following the Spanish-American War. They attained their independence in 1946 after being occupied by the Japanese in World War II. The 21-year rule of Ferdinand Marcos ended in 1986 when a widespread popular rebellion forced him into exile. In 1992, the US closed down its last military bases on the islands. A quarter-century-old guerrilla war with Muslim separatists on the island of Mindanao, which had claimed 120,000 lives, ended with a treaty