2 EL PROCESO DE ENSEÑANZA APRENDIZAJE:
A.- El método inductivo
DURING 1971-1989
I. Introduction
The analysis in the previous chapters suggests that poor m acroeconom ic adjustm ent in the Philippines in the last two decades were the major causes of the country's economic failure in recent years. On the other hand, the success of Thailand was attributed to better macroeconomic management. To see whether that proposition has some validity the conduct of fiscal, monetary and exchange rate policies in the two countries is investigated in this chapter. The chapter also seeks to identify any relevant factors, as far as these policies are concerned, that can explain the relatively poor economic performance of the Philippines compared with Thailand.
The chapter is organised into four sections. The next section discusses conduct of fiscal policy in the two countries during 1970-1989. In developing countries, the major factor that determines the conduct of fiscal policy comes from the expenditure side rather than from the revenue side through tax policy. Thus, the chapter first examines the budgetary expenditure trend in the two countries. This is to see how the fiscal authorities in the two countries reacted to the changes in economic situation during the boom and the bust periods in the last two decades. Then, the actual budget deficit of the government and how it was financed is considered. Finally, the chapter looks at the operation of the public sector as a whole and how the public debts were built up in the past.
Section three deals with monetary policy in the two countries. In order to understand the rationale behind formulation and conduct of monetary policy, it also examines the institutional setting of the monetary authorities in both countries. It then discusses the set of monetary policy instruments that were employed in both countries and the effectiveness of those instruments. In section four, it discusses exchange rate policy in the two countries. The last section concludes the analysis about fiscal, monetary and exchange rate policies, and suggests the major differences in macroeconomic policy that were relevant in explaining the difference in economic performance of the two countries.
158
II. Fiscal Policy
In the Keynesian macroeconomic framework, the major instruments of fiscal policy are government expenditure and the tax policy. However, in developing countries, the major factor that determines the conduct of Fiscal policy comes from the expenditure side rather than from the revenue side through tax policy. Budgetary expenditure reflects the intention of the government to stimulate economic growth. Tax policy plays only an accommodating role in financing the government's operation. As expenditure typically exceeds revenue, the government expenditure program and financing of the budget deficit becomes the most important instruments affecting the economy. Therefore, the budgetary expenditure trend of the national government is considered. This represents the policy intention of the government to have a stimulative or restrictive effect on the economy in response to change in economic conditions such as recession or high inflation. The government budget deficit and the way it was financed is then examined. This also includes the build up of public debt in the two countries.
II.1
The Budgetary Expenditure Trend o f the National Government
The size of budgetary expenditure in the Philippines and Thailand during 1971- 1989 is presented in Table 8.1. This is the budgetary expenditure program proposed by the government to the Congress or the Parliam ent in each country. The concept of budgetary expenditure differs in the two countries and therefore needs clarification.
In the case of the Philippines, the level of expenditure shown is based on the obligation basis. This is the level of expenditure that the national governm ent has committed and is authorised by Congress or National Assembly to spend in one fiscal year. It differs from the "cash disbursement" basis in which actual cash disbursements from the Treasury are recorded. Often, the cash disbursement budget constitutes about half of the obligational expenditure due to the multi-year obligations and lags in the implementation of projects and disbursement of funds. However, to gauge the actual fiscal intention of the government in response to the economic situation in any year, the obligational budget should be used. The use of the cash disbursement budget, though reflecting the true effect of government spending on the economy, understates the intention of fiscal policy.
In Thailand, the budgetary expenditure is the proposed expenditure that the government submits to the Parliament or National Assembly as part of the Annual Budget A ppropriation bill. In most circumstances, appropriation of the expenditure will be adhered to. Only in exceptional cases will the government increase its spending by passing an Extra-budget Appropriation bill.
Table 8.1 The size and percentage grow th o f national budgetary expenditures in the Philippines and Thailand
159
Philippines ^ Thailand -
Obligation Percentage Percentage Budgetary' Percentage Percentage
basis growth growth basis growth growth
(million peso) (CPI adjusted) (million baht) (CPI adjusted)
1971 5080.86 28645 1972 6159.28 21.2 5.2 29000 1.2 -3.6 1973 8380.17 36.1 19.9 31600 9.0 -6.6 1974 13490.30 61.0 26.5 360(X) 13.9 -10.4 1975 18734.73 38.9 32.0 48000 33.3 E 28.0 1976 21936.22 17.1 7.4 62650 30.5 26.3 1977 21690.75 -1.1 -11.0 68790 9.8 2.7 1978 28066 29.4 E 22.3 81000 17.7 9.3 1979 34154 21.7 4.2 92CXX) 13.6 E 3.7 1980 38079 11.5 E -6.7 109000 18.5 -1.2 1981 49083 28.9 E 15.8 140000 28.4 15.7 1982 51142 4.2 E -6.1 161000 15.0 9.8 1983 55811 9.1 -0.9 177000 9.9 E 6.1 1984 68625 23.0 E -27.3 192000 8.5 7.6 1985 87390 27.3 4.2 213000 10.9 8.5 1986 114505 31.0 E 30.2 218000 2.3 E 0.4 1987 154975 35.3 31.5 2275(X) 4.4 1.8 1988 167409 8.0 -0.8 243500 7.0 E 3.2 1989 227421 35.8 25.2 285500 17.2 11.8 Mean 24.35 9.53 13.95 6.28 S.D. 15.02 16.87 9.20 10. (X)
Sources: (1) Data for 1971-77 were obtained from Malixi, Boneodin and Follosco (1979), pp. 8-9. Data for 1978-1989 were obtained from Philippine Statistical Yearbook 1990.
(2) Bureau of the Budget, Thailand's Budget in Brief.; 1970-1990.
Note: From 1971-1975, the fiscal year in the Philippines ends at June 30, after that it ends at December 31. The fiscal year in Thailand ends at September 30. S.D. is standard deviation.
E is the year when there was a general election.