Since the debt crisis of the 1980s, Philippine economic performance has been an outlier in East Asia, in spite of reform policies that generally have conformed to worldwide norms of trade liberalization and deregulation. In the 20-year period since 1980, the proportion of GDP attributed to manufacturing has declined from 24 to 22 percent. Dependence on commodity exports has declined, and the Philippines' export structure is now less diversified than it was 20 years ago. Market-oriented economic reforms are incomplete, as they are in many other countries, but the Philippines' poor economic performance is mostly a result of macroeconomic instability and low domestic savings, not inadequate reforms. Reform efforts have contributed to political instability, and macroeconomic instability has stifled investment. A model of macroeconomic shortages in domestic, external, and public savings is presented to illustrate the continuing constraints on Philippine economic growth and development.

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