This report analyzes the prospects for and consequences of continued global integration of the Philippine economy, and examines the policy implications. Volume 1 summarizes recent economic developments and the nature of financial instability; and focuses on financial policies and risk management, international competitiveness, and strategic and institutional issues in manufactures export development. Volume 1 concludes by discussing economic prospects and requirements for official development assistance. Volume 1 draws on three background chapters contained in Volume 2. Chapter I of Volume 2 compares the evolution of the Philippine global integration with that of other developing and East Asian countries. It then assesses the Philippines competitiveness as a host for foreign direct investment (FDIC), examining infrastructure and labor costs across East Asia. The chapter concludes with a more in-depth labor market assessment, focusing on productivity, compensation, and unit labor costs, and their impact on the competitiveness of tradable sectors. Chapter 2 compares the Philippine export position with those of China, Korea, and Taiwan (China). It then examines three product groups -textiles and garments, electronics, and software- and analyzes the main supply-side determinants of competitiveness. Chapter 3 reviews changes in the concept and development practices of economic zones and identifies international best practice.
