Philippine Christian University

Graduate School of Business and Management

Master in Management Major in Public Administration

Philippine Economics: Historical approach in

improving the paradox of Economics

Submitted by:
Jester P. Aguirre

Submitted to:
Abdul Jabar Karim
 Chapter I

Introduction

Public fiscal administration generally refers to the process of the Government in terms
of Revenue generation, Allocation of government funds and Public expenditures,
Evaluation of policies and decision on taxation and revenue administration, resource
allocation, budgeting etc. To define public finance it is a branch of economics which
deals with the revenues and expenditures of government and its impact on the
economywhich include but not limited to the incoming and outgoing project of the
national government for the general welfare of the people.

The purpose of this study is to make comparison regarding the Economic development
track and public expenditure of the Philippines done from the Former President
Ferdinand Marcos up until to the present administration of President Rodrigo Duterte.
Whatever the outcome of this research is nothing political in nature whereas Articles,
Previous research papers, Existing laws, Jurisprudence, Public documents and,
Economist Opinion are being narrowed down to produce factual idea free from bias and
make sure the research paper is being justified in the most respectful manner.

Every time the Filipino elect a new President many of them are hoping to improve
someone’s economic standing and ability to be functional to the society, contribute a
part of our income for the good of the many wherein taxes are being use to provide
basic services for the people, however the big picture is how the government finance
and manage the budget of the people per administration and how big they invest in
every respective sector of the government.
 Chapter II

Review of related Literature

The higher court of the Philippine Republic once quoted that “The Philippine Budget
System has been greatly influenced by western public financial institutions. This is
because of the country's past as a colony successively of Spain and the United States
for a long period of time. Many aspects of the country's public fiscal administration,
including its Budget System, have been naturally patterned after the practices and
experiences of the western public financial institutions. At any rate, the Philippine
Budget System is presently guided by two principal objectives that are vital to the
development of a progressive democratic government, namely:

(1) to carry on all government activities under a comprehensive fiscal plan developed,
authorized and executed in accordance with the Constitution, prevailing statutes and
the principles of sound public management;

(2) to provide for the periodic review and disclosure of the budgetary status of the
Government in such detail so that persons entrusted by law with the responsibility as
well as the enlightened citizenry can determine the adequacy of the budget actions
taken, authorized or proposed, as well as the true financial position of the Government.
(En Banc G.R. No. 209287, July 01, 2014 Maria Carolina P. Araullo v. Benigno Simeon C.
Aquino III et al.)”.

Historically speaking the budget system of our country was greatly influence by the
Western country and changes drastically over time from the medieval period to
Feudalism the start of Capitalism and the existence of Industrial Revolution.
 A. Ferdinand E. Marcos (1965 – 1986)

Former President Ferdinand E. Marcos was the 10th President of the Philippines after
defeating former President Diosdado Macapagal in a re-election bid on 1965.In a
Chapter co-authored by Robert S. Dohner and PoncianoIntal Jr.“Introduction to The
Marcos Legacy: Economic Policy and Foreign Debt in the Philippines” After his
proclamation the administration of the latter moved to improve economic growth with
more aggressive government expenditures and economic policies compare to the
previous administrations as a result economic growth accelerated during mid-1970’s
despite of the first oil shock and recession in the industrialized countries. The author
also point out that the structure of exports had shifted away from primary commodities
to light manufacturing products, during his regime he also expanded agriculture as new
strains of rice turned the Philippines into a rice exporter by the end of the decade. The
author also includes technocrats who are experts in Economic Policy. The Philippines
was also one of the countries that take advantage of the new, extended financing
facilities of the IMF and the World Bank.

The Status of the Philippine Economy during 1970’s

From the time the president won his election bid, Aggressive infrastructure were
executed, mostly came from foreign debt. This section will tackle how the government
have it expenses manage and how they go beyond the limit of its budgetary power. The
national government greatly raised its capital expenditures as it rose by 43% from 1964
to 1968. The GDP rose from 11.5% to 14% and mostly the borrowing came from both
foreign and domestic wherein the national government budget shifted from a slight
surplus to a deficit of 3% of GDP. Development Bank of the Philippines created an
industrial rehabilitation which provided industrial loans for refinancing and convert some
loans into equity. Between 1965 and 1967 domestic credit was increased by 40%. The
aggressive program of the late Ferdinand Marcos resulted to external difficulties while
private investment led to 24% increase in imports by 1967 and further increase the
next year. On 1968 the account deficit reached 3% of GNP.
Tide turning event happened on 1980 as the Least Developed Countries (LDC) was hit
hard by the second oil price shock, unfortunately Philippines was one among them. As a
result major companies were bailed out by the government at its own expense. The
former President Marcos administration tried to counter the growing domestic recession
by raising expenditure and announced ambitious program for energy and industrial
investment. During that time there was aggressive government investment expenditure
but in the end the Philippine was not able to harmoniously blend with the second oil
shock on the contrary the neighbouring countries were successful in restoring its
economic growth and exports.