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97 Pages·2003·4.19 MB·English

Agricultural Machinery Industry:
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Impact of Trade Policy Reforms
on Performance, Competitiveness
and Structure
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Frances Myra C. Trabajo
RESEARCH PAPER SERIES NO. 94-04
n,s
Philippine Institutefor Development Studies
Copyright © 1994by the
Philippine InstituteforDevelopment Studies(PIDS)
Printedinthe Philippines.Allrightsreserved.Thefindings, interpretations
and conclusions in this paper _re those of the author and do not
necessarily reflect those of PIDSand other institutions funding and/or
associated withthe Project.
Thepublication ofthisstudyismadepossible byafinancialgrant fromthe
United StatesAgencyforinternationalDevelopmentthroughtheTechnical
Resources ProjectoftheNationalEconomic and Development Authority.
•Pleaseaddress allinquiriestothe:
Philippine Institute for Development Studies
4th Roor,NEDAsaMakatiBuilding
106AmorsoloStreet,LegaspiVillage
1229Makati,MetroManila,Philippines
FaxNo.[phone]
Tel.Nos.893-5705and 892-4059
ISBN971-564-007-9
RP-9-94- 500
Table of Contents
1. Introduction ........................ 1
2. Reviewof Literature ................... 3
Trade Policy and Productivity Performance . . . ...... 3
The "New Theory" of InternationaJ Trade ........ 5
r
3. Theoretical Framework ................. 9
Concepts: Efficiency Performance, Competitiveness and
Market Structure Dimension ............ 10
Efficiency Performance ................. 10
Competitiveness ..................... 14
Market Structure Dimension ........... .... 15
Trade Policy Reform, Performance, Competitiveness and
Market Structure Linkage .............. 15
Other Factors Affecting Industrial Performance ...... 17
4. Data Sources and Research Methodology ........ 19
Data Sources ........................ 19
Research Methodology ................... 20
Measures of Protection ................. 20
Measures of Efficiency ................. 22
Import Penetration Ratio ................ 32
Market Structure and Profitability Indicators ...... 32
Factor Productivity and Intensity ............ 33
5. Industry Background ................... 35
General Profile ....................... 35
Product Description .................... 35
Brief History ...................... 37
iv
Size and Plant Distribution ............... 37
Input Structure ...................... 38
Machine Design and Product Quality .......... 40
Production Technology ................. 43
Industry Concerns .................... 43
Policy Environment ..................... 44
The Issue of Agricultural Mechanization ........ 44
Financial Incentives ...... , ............ 45
Investment Incentives .................. 46
Tariff Reform Program ................. 46
Effective and Net Effective Protection ......... 50
6. IndustrialPerformance .................. 53
Growth ............. '. ............. 53
Value of Output ..................... 53
Census Value Added .................. 55
Sales ........................... 55
Employment Size ..... ............... 56
Production ........................ 57
Imports ................... , ..... 59
Exports ......................... 61
Industrial Market Structure ................. 61
Market Concentration .................. 61
Profitability ........... ............ 63
Barriers to Entry and Expansion ............ 65
Recapitulation ...................... 65
Efficiency Performance ................... 66
Allocative Efficiency and Comparative Advantage... 66
Teclmical Efficiency .................. 72
Factor Prodnctivity and Intensity ............ 73
Competitiveness/Competitive Advantage .......... 75
Comparison with the Agricultural Machinery Industry
of Thailand ..................... 76
7. Conclusionand PolicyRecommendations ........ 79
SelectBibliography...................... 83
ListofTables
1 Product Share: 1975-1992 ................ 36
2 Number of Establishments: 1978, 1983and 1988 .... 39
3 Geographical Plant Location: 1983 and 198825
4 Sales Volume and Growth Rates ofSelected Agricultural
Machineries: 1966-1991 ................ 41
5 Tariff Schedule ...................... 48
6 Effective and Net Effective Protection Rates:
1983 and 1988 ..................... 50
7 Implicit Tariff Rates: 1983, 1986, 1988 and 1991 ..... 51
8 Growth Indicators: 1978, 1983 and 1988 ......... 54
9 Production Statistics of Selected Agricultural Machineries:
1978-1992 ....................... 56
10 Production Growth Rates, 1978-1992 ........... 57
11 Import Statistics ofSelected Agricultural Machineries:
1978-1991 ................ . ...... 60
12 Export Statistics ofSelected Agricultural Machineries:
1978-1991 ....................... 62
13 Concentration Indicators and Price-Cost Margin:
1983 and 1988 ..................... 64
14 Protection and Efficiency Levels: 1983and 1988 . .... 67
15 Distribution of Establishments byEmployment ..... 69
16 Efficiency Levels ofSome Respondents: 1986
and 1991 ....................... 71
17 Factor Productivity and Intensity: 1983 and 1988 ..... 74
Listof Figures
1 Efficiency of the Finn ................... 11
2 Efficiency within the Economy .............. 13
vi
ListofAppendices
1 Institutional Support System ............... 87
2 Agricultural Mechanization Statistics of the Philippines,
1985-1986 ....................... 89
3 CB-IBRD Loan Grants for Farm Machinery
asofJune 30, 1980 ................... 90
Abbreviations
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ACPC Agricukural Credit Policy and Council
AMDP Agricultural Mechanization Development Program
AMIC Agricultural Mechanization Inter-Agency Committee
AMMDA Agricultural Machinery Manufacturers and
Distributors Association
AMTEC Agricukural MachineryTesting andEvaluation Center
BAAC Bank ofAgriculture andAgricultural Cooperatives
BOI Board of Investments
BPI Bureau of Plant Industry
BPS Bureau ofProduct Standards
CAM Committee onAgricultural Mechanization
CB Central Bank
CBU Completely built-up
CIF Cost, Insurance, Freight
CPI Construction Price Index
CR. Concentration Ratio
DA-ItLR.I Department of Agriculture-International R.ice
Research Institute
DBP Development Bank of the Philippines
DR.C Domestic l_esource Cost
DRCM Domestic l_esource Cost at Market Price
DTI Department ofTrade and Industry
ECN Establishment Code Numbers
EEC European Economic Community
E.O. Executive Order
EPR. Effective Protection Rate
FOB Free-on-board
GDP GrossDomestic Product
HI Herfindahl Index
HYV High-yieldingVarieties
viii ,q
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IBRD International Bank for Reconstruction and
Development
ILP Import Liberalization Program
IPP Investment Priorities Plan
IPR Import Penetration Ratio
K/L Capital-Lal0or Ratio
LBP Land Bank of the Philippines
MTI Machinery and Transport Index
NEDA National Economic and Development Authority
NEMO National Emergency Memorandum Order
NIC Newly Industrialized Country
NSO National StatisticsOffice
OER OfficialExchange Rate
PAMP Philippine Agricultural Mechanization Program
PPF Production Possibility Frontier
QR Quantitative Restriction
R&D Research and Development
S-C-P Structure-Conduct-Performance
SCR Seller Concentration Ratio
SEC Securities and Exchange Commission
SER Shadow Exchange Rate
TC Tariff Commission
TEC Technical Efficiency Coefficient
TFP Total Factor Productivity
TRP TariffR.eform Program.
VAT Value-Added Tax
USAID United StatesAgency for International Development