Foundation for Economic Freedom and economic policy reform

I was at the launch of a book made from selected writings of five economists associated with the Foundation for Economic Freedom (FEF).

Momentum: Economic Reforms for Sustaining Growth. The book, whose title is this sub-heading, has as its authors Romeo Bernardo, Emmanuel de Dios, Raul Fabella, Calixto Chikiamco, Jr., and the late Cayetano Paderanga, Jr., and was edited by Roel Landingan, a veteran economic journalist. Felipe Medalla, former UP economics faculty and currently a member of the Monetary Board at the BSP, wrote an introductory preface.

The published pieces are short essays on economic policy issues from a joint column, Introspective, that the authors alternatively filled for the BusinessWorld opinion section as part of their public advocacy efforts.

Romy Bernardo was a former undersecretary of finance; Emmanuel De Dios, Raul Fabella, and the late Dondon Paderanga are faculty stalwarts of the UP School of Economics; and Calixto Chikiamco is the president of the FEF. In addition, Paderanga also served in the government as secretary of socio-economic planning or (director-general of NEDA).

The book launched successfully, with a well-attended audience of former public officials, including former president Fidel Ramos, former prime minister Cesar Virata, and many former Cabinet members, and a bevy of FEF admirers in the private sector.

Economic policy-making debate then and now. In this setting, it is wise to discuss economic policy-making and debates in the past. The country has lagged far behind other countries in economic accomplishments when, at the beginning, in the early postwar period, it was poised to become one of the earlier successes. Protectionist policies that lasted almost forever encouraged a different kind of experience. 

It was useful that one of those who spoke during the book launch was former chief justice Artemio Panganiban. In 1996, the then associate justice penned the Supreme Court’s decision that rendered constitutional the country’s entry into the World Trade Organization.

Among others, that decision said: “…[T]he Constitution did not intend to pursue an isolationist policy. It did not shut out foreign investments, goods and services in the development of the Philippine economy. While the Constitution does not encourage the unlimited entry of foreign goods, services and investments into the country, it does not prohibit them either. In fact, it allows an exchange on the basis of equality and reciprocity, frowning only on foreign competition that is unfair.”

Former chief justice Panganiban further explained the context of that decision in his talk at the launch: “At the time this decision was issued more than two decades ago, the reigning economic doctrine was ‘Filipino First.’ Thus, I had difficulty convincing my colleagues of the necessity to abandon isolationist policies and to embrace the new, 21st century economic doctrines. In the beginning, only three members of the court fully concurred with me, with the rest either dissenting or concurring only ‘in the result,’ meaning that they agreed with my conclusions, but not necessarily with the reasons therefor. But after days of patient explanations, discussions and deliberations, I finally convinced all of the 14 other justices to agree, thereby making the decision unanimous.”

When ‘Filipino First’ dominated as economic policy. When I entered the government in 1970 as chairman of the National Economic Council and later as the head of the NEDA, I found it difficult to advocate for economic change that drastically moved away from high protection. It was possible to reform only at small margins.

Nationalist protection was the mantra of economic policy-vetting. The political Constitution was mostly interpreted in very restrictive terms when related to the idea of opening the economy to foreign investments or to foreign competition.

Those who wrote publicly about economic policies often understood little about economics. Persons writing and speaking freely on economic issues was common. Often these writers were writing aggressively on economic issues because they were putting forward issues for special interests.

In my frustrations over the state of policy debate, one of the things I tried to help bring about was to strengthen institutions that helped the growth of competent economists and to expand the quality of research on development issues. It was a long term project at its best.

The fruit of this effort was the establishment of the Philippine Institute for Development Studies (PIDS) and the Philippine Center for Economic Development (PCED) during the late 1970s. The PIDS helped to expand research on national economic development issues by creating a research institution that was independent of the NEDA but closely attached to its objective of expanding economic studies on development. The PCED was simply intended to strengthen the UP School of Economics to become a premier institution for producing highly competent local economists.

These two institutions survived and even strengthened during trying times of economic crisis and instability. Separately, they proved their worth to the nation. The production of economists for the country continued and these helped to guide the improvement of research studies on many aspects of the economy, but more especially on the problems of protection and industrialization.

It was also around1996 that former policy-makers and economists decided to form the Foundation for Economic Freedom.

Today, its members include former and present Cabinet secretaries and undersecretaries, leading figures in academe, respected media personalities and opinion-makers and prominent members in the business and finance community.

My email is: [email protected]. For archives of previous Crossroads essays, go to: https://www.philstar.com/authors/1336383/gerardo-p-sicat. Visit this site for more information, feedback and commentary: http://econ.upd.edu.p h/gpsicat/