Mixed Economy

What type of economic system exists in the United States today? Although the United States is often regarded
as a capitalist system, it is actually a mixed economy. Adam Smith emphasized that private property rights,
freedom of choice and competition are necessary and fundamental elements of pure capitalism. Does the
United States economy fulfill these conditions? Sort of. The U.S. economic system does have a high degree of
private ownership and individual freedom, but a significant component of the economy is controlled by the
government. In fact, current estimates indicate that Federal government spending accounts for up to one-third
of our economy.
This wasnt always the case. Prior to the Great Depression of the 1930s, the United States was primarily a freemarket capitalist system and government involvement was minimal. But the massive unemployment and
widespread poverty of the Great Depression caused some to believe that capitalism, as an economic system,
had failed. John Maynard Keynes revolutionized economic thought and proposed a system of managed
capitalism. As a result of the Keynesian revolution government took a more active role in regulating the
economy. This period created a change in the nature of government and the assumption of governments
responsibilities. Franklin Delano Roosevelt famously created an economic bill of rights that specified certain
rights that were to be afforded to all. These included the right to an education, affordable health care and
housing. The government assumed the responsibility to house, feed and educate its citizens.

Local, foreign business groups urge

more reforms under PNoy admin
July 30, 2014 7:30pm
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Local and foreign business organizations are rooting for the Aquino administration to enact more
business and policy reforms as a way of supporting economic expansion and promoting inclusive
growth, particularly in the last two years of the President's term.
Philippine Business Groups and the Joint Foreign Chambers (PBG-JFC), composed of 18 local and
foreign business groups, proposed and reiterated a number of measures in a letter sent to President
Benigno Aquino III.
"Entering the latter half of your term, the PBG-JFC would like to take this opportunity to revisit some
of our recommendations," the letter read.
"... Through these measures, the PBG-JFC is firmly convinced that the Philippines will continue to be
among Asias trailblazers and, at the same time, ensure that the gains from good governance and a
flourishing economy will benefit the majority of our people with the greatest of needs," it added.

The Philippine economy grew by 7.2 percent in 2013 from 6.6 percent in 2012 and 3.7 percent in
2011.
In the first quarter, the GDP expanded by 5.7 percent as the economy reeled from the impact of
Typhoon Yolanda.
Unemployment
While the economy continued on a growth path, the business groups took note that it has not
dwindled down to reduce unemployment and underemployment.
"We believe that greater focus on sustainable agriculture and responsible mining will substantially
assist in our shared aim of inclusive growth," the groups noted in a joint statement.
The PBG-JCF proposed the Aquino administration should formulate roadmaps for specific
subsectors in agriculture.
For mining, they are calling for the retention of the Philippine Mining Act, ensuring international
competitive fiscal regime and re-evaluation of "no-go" zones.
The PBG-JFC also pushed for a multi-airport system to serve the country's growing aviation
requirements.
"We strongly believe that we should continue to enhance the advantages given by an international
gateway in close proximity to the National Capital Region, while complementing this with further
improvements in the capacity of Clark International Airport," the statement read.
In July, the Department of Transportation and Communication said the next main airport will be at
former US Naval Station Sangley Point in Cavite City as recommended by the Japan International
Cooperation Agency.
EPIRA

Apart from the full and proper implementation of the Electric Power Industry Reform Act of 2001
(EPIRA), the government should also draft a roadmap towards energy security and electricity price
competitiveness.
" Furthermore... we call on the government to augment the Department of Energy and Energy
Regulatory Commission with capable, proactive, and visionary staff, shifting the pertinent agencies
away from a reactionary stance regarding energy issues," the PBG-JFC said.
In December 2013, Manila Electric Company announced a record P4.16 per kilowatt power rate
increase due to unwarranted shutdowns of some power plants while the Malampaya went on a onemonth preventive maintenance.
This was stopped by the Supreme Court, the latest in April where the high court issued a temporary
restraining order for an indefinite period of time.
Last week, Energy Secretary Carlos Jericho Petilla warned of a power crisis by 2015 as the demand
exceeds the supply from existing power plants, prompting the Cabinet official to advise President
Benigno Aquino III to declare a state of national emergency.
The country should also open up certain areas of the economy to more foreign participation to drive
more job generating investments in the country, the PBG-JCF said.
"Pending any amendments to the Constitution, we suggest an initial and immediate course of action:
to revise the Foreign Investment Negative List by reducing the list of industries where foreign
participation is limited," they said.
In 2013, the Philippines registered $3.86 billion in foreign direct investments, a dwarf compared to
the $12.31 billion in Malaysia, $12.95 billion in Thailand and $18.44 billion in Indonesia, according to
United Nations Conference on Trade and Development's (UNCTAD) World Investment Report 2014.
Good governance
To prevent corruption in government and promote good governance, the PBG-JCF the Aquino
administration should swiftly pass and enforce the Freedom of Information Act and Customs
Modernization and Tariff Act and various measures on Anti-Smuggling.

"In relation to this and most significantly, the business community reiterates the appeal... that the
Supreme Court ruling on certain actions under the Disbursement Acceleration Program must not be
allowed to weaken the determination of your administration to aggressively pursue its key reform
programs in the next two years," the groups said.
Last July 1, the Supreme Court declared as unconstitutional certain acts under the DAP.
Aquino highlighted the benefits of DAP during his fifth State of the Nation Address last Monday, but
also asked Congress to pass a joint resolution clarifying the definition of terms related to government
spending, such as savings. Danessa O. Rivera/VS, GMA News

18 business groups send joint wish list to Aquino

Details
Category: Top News
30 Jul 2014
Written by Catherine N. Pillas

Industry stakeholders, local business groups and foreign chambers in the country have revived
their push for key reforms, as President Aquino enters the final stretch of his six-year term.
In a joint letter sent to President Aquino, 18 trade groups advocated a wide range of policy
initiativesfrom sustaining the good-governance initiative to reforms aimed at increasing
foreign direct investments in the country.
The groups letter was dated July 21, or days ahead of Mr. Aquinos fifth State of the Nation
Address (Sona).
They include the Makati Business Club, the Semiconductors and Electronics Industries in the
Philippines Inc., Employers Confederation of the Philippines, Information Technology and
Business Process Association of the Philippines, Management Association of the Philippines,
Alyansa Agrikultura, Philippine Exporters Confederation, Chamber of Mines of the Philippines,
Federation of Filipino-Chinese Chambers of Commerce and Industry Inc., Financial Executives
Institute of the Philippines, the Philippine Chamber of Commerce and Industry, American
Chamber of Commerce, Australian-New Zealand Chamber of Commerce, Canadian Chamber of
Commerce, European Chamber of Commerce, the Japanese Chamber of Commerce, Korean
Chamber of Commerce and the Philippine Association of Multinational Companies Regional
Headquarters Inc.
According to the groups, in view of the Philippines hosting of the Asia Pacific Economic
Cooperation (Apec) meeting next year, the administration still has several months this year to
cement its reform agenda.

To institutionalize good governance, the groups are pushing for both past and present officials
that have been proven to have engaged in misuse of public funds to be held accountable; and,
more important, for the Freedom of Information bill to be passed before the end of Mr. Aquinos
term in 2016.
The groups also reiterated their call for the issuance of an executive order that will
institutionalize a method by which the public and private sectors can cooperate in clamping
down on corruption. Thus, the groups suggested that government agencies, following the
example of the Department of Public Works and Highways, should force companies that will
engage in bidding for government contracts to sign the Integrity Pledge. In terms of achieving
inclusive growth, which has not translated to addressing rising unemployment thus far, the
groups said there should be a focus on sustainable agriculture and responsible mining.
The groups said since a third of the population is employed in the agriculture sector, there is a
need to implement and formulate road maps for specific subsectors of agriculture, replicating the
move of the Department of Trade and Industry to initiate road mapping for industries. The road
map should be complemented with investments to increase agricultural productivity, the groups
said.
On responsible mining, the groups are backing the retention of the existing Philippine Mining
Act as future foreign investments are hinged, not on changing the legislation, but on proper
implementation. To complement this law, a competitive fiscal regime for mining must be crafted
as well that will balance government revenues from mining activities with equitable and
reasonable return for investors. Notably, the groups are of the position that in determining the
no-go zones, the potential mineral projects should be balanced against agricultural and tourist
concerns, among others.
For infrastructure development, the group reiterates its push for a multiairport system,
particularly the Ninoy Aquino International Airport, Clark and a future third airport, to serve the
countrys current and prospective aviation requirements.
Similarly the groups want the construction of the North Luzon Expressway-South Luzon
Expressway Connector road expedited. There should also be a feeder road to connect it to the
Port of Manila.
Shifting cargo traffic from the Manila port to the ports of Subic and Batangas is also part of the
groups call in the area of infrastructure.
For energy, the 18 groups are reiterating their former appeal to ensure proper implementation of
the Electric Power Industry Reform Act (Epira) rather than opening the law to amendments,
saying this will create an unstable regulatory environment and may drive away investments in
the sector.
Road maps for the energy sector are likewise being pushed to ensure power security and
electricity price competitiveness.
The groups are also calling on the government to augment the staff of the existing agencies of the
Department of Energy and Energy Regulatory Commission.

To increase foreign investments into the country, the groups are pushing for the government to
open areas of the economy to greater foreign participation and, pending any amendment to the
Constitution, to revise the Foreign Investment Negative List by reducing the list of industries
where foreign participation is limited. This should be accompanied by relevant legislation.
On smuggling, the groups are hoping for the swift passage of the Customs Modernization and
Tariff Act and various measures to combat smuggling that are currently pending in Congress.
To have a more focused discussion on smuggling, the groups are renewing their proposal for a
Cabinet-level oversight committee with private sector representation to jointly tackle the
dilemma.
On the Disbursement Acceleration Program of the President, which has gone under much
scrutiny for the better part of 2013 since the revelation of the relatively unknown program of the
Department of Budget and Management, the groups said the said issue must not undermine the
will of the administration to undertake more reforms for the remainder of the Chief Executives
term.

Top 20 Most Valuable Companies in the Philippines

(as of February 7, 2014)

Rank

Company Name

Philippine Long Distance Telephone Company (PLDT)

SM Investments Corporation

SM Prime Holdings, Inc.

Ayala Land, Inc.

Bank of the Philippine Islands (BPI)

Ayala Corporation

Aboitiz Equity Ventures, Inc.

BDO Unibank, Inc.

Manila Electric Company (MERALCO)

10

Alliance Global Group, Inc.

11

Aboitiz Power Corporation

12

JG Summit Holdings, Inc.

13

Universal Robina Corporation

14

Globe Telecom, Inc.

15

LT Group, Inc.

16

Metropolitan Bank & Trust Company (Metrobank)

17

International Container Terminal Services, Inc.

18

Emperador, Inc.

19

DMCI Holdings, Inc.

20

Jollibee Foods Corporation