Philippines - Priorities and prospects for development : basic economic report (Vol. 3 of 3) : Investments & resource management

Report No. 1095a-PH l ' The Philinnines Prio-ritioe and Prosprctc for Develonment a I a %-E I ILI'%-. %-, Ls B~ %IaI N-,.r~ - - 1 DB%ic, Eo,icRponrt- UO.DI%.- L-%AjI I%.JI I II%-, L. (in Three Volumes) Volume Ill: Investments & Resource Management May 5, 1976 East Asia and Pacifir Region East Asia arid Pacific Programs Department FOR OFF!C!A! USE ONLY This document has a restricted distribution and may be used by recipients nniv in thp nprformanrp of thpir offirial dities. Its rnntpnts mav not .the r - - --i - e w ----. - ---- __ authori, otherwise be disclosed without World Bank authorization.  CURRENCY AND OTHER EQUIVALENTS Currency Unit = Peso (P) US$1.00 = P 7.5 P 1.00 US$0.1333 US$1 million = P 7,500,000 Fiscal Year Through 1976 July 1 to June 30 Beginning 1977 January 1 to December 31 .. = zero or negligible -- = not aDDlicnble n.a. = not available  FOR OFFICIAL USE ONLY This report is based primarily on the findings of an economic mission whiclh visited the Philippines in April/May 1975. The preliminary findings of the mission were further updated after discussions with the Government in Decomber 1975 and January 1976. Mission Members Russell J. Cheetham Chief of Mission Bruce Jones General Economist Madhusudan S. Joshi General Economist Carroll Long Editor/Urban Specialist (Consultant) Guenter H. Reif General Economist Ellen Schaengold Research Assistant/General Economist Kevin Young General Economist Vladimi.r Dragomanovic Industrial Economist Frank Lowenstein Agricultural Economist Peter K. Pollak Commodity Specialist Augustin V. Que Financial Economist Mr Hlajimu Maeda and Ms Inai Y.-Bradfield also contributed to the mission's worl in the fields of power and transoortati.on, respectively; as did I2s Beatriz A. Florendo in the collection and tabulation of the external debt data. The renort was comnleted under the direction of Mr Rdward K. 1-awkSns3 Senior Economist. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   Chapter 8 THE LEVEL AND ALLOCATION OF INVESTMENT Page No. A. Overview of Investment Needs ...... .................... 2 Past Trends in Investment ....... ...................... 2 Future Level and Allocation of Investment .... ......... 4 B. Expanding-Public Sector Infrastructure Expenditures ... 8 The Past Record . ...................................... 9 Public Investment Needs for the Next Decade .... ....... 13 Planning and ImDlementin2 the Program ..... ............ 17 C. Influncning the Pattern of Private Tnventment .- - 23 The Role of Dirert Foreign Investment oae..-.. --23 Investment Incentives .......... ....................... 23 D. The Role of the Construction Industry ..... ............ 32 General Characteristics of the Industry ..... .......... 32 The Potential Contribution of Construction t Employment ....................................... 33 Mo-sures to Promote the Industry .38 Techni"al No~te......................39   Chanptr A THE LEVEL AND ALLOCATION OF INVESTMENT 8.01 The u-nequal distribution of benefits among the population and the unbalanced pattern of sectoral development that characterized Philippine nrn,f., Far .n..n.At ; 4-ioF ehn-Q hro AnnAoo trot. *1001. 1 4nlrn_.. growth o mL **LucLug fh a LLe past Sh.L. dce Was vcvl'.JO 5l ,,1,eA Lt r eour cL management policies and to the pattern of resource allocation in that period. Al"Cthough t--e aggregate l-evel of resources available for i.vest.ent were relatively high, outcomes in terms of output and employment growth were disappoinr.ting. The reasons for th4s situat.on 4ncluded the 14JtedA -ccss to the investable resources and the concentration of investment in large- scale enterprises, which reinforced rather than changed the-a cocetrte pattern of asset ownership and income distribution that existed at the time of ineedne fJJ .5nU=Ok%LLU~LL..L1_= 8.0 The m- aege fo rura and urbar. develop.ment andU thCe -prog-rams u 'JA.