I am very pleased to be drawn into this gentle conspiracy to surprise the honoree, Dr. Arsenio Balisacan, with a Festschrift on the occasion of his sixty-fifth birth anniversary.

Arsi, as he is known to friends, is an economist, teacher, research scholar, anti-poverty activist and public servant, all rolled into one. In his journey of achievement, he has experienced a difficult tale of passage from poor rural surroundings in the Ilocos region of northern Luzon, through disciplined work in the pursuit of his chosen professional dream. Today, he is one of the nation’s foremost economists, respected by peers and admired by younger ones in the academe and in government, some of whom he had mentored. Importantly too, he holds a high position of influence that can improve the country’s economic future.

I met Arsi in Washington, DC, in 1986, as he was about to head for home. He had just completed his participation as a young research intern in the World Bank’s study of agriculture and economic development. I suggested to him then that he join the School of Economics at the University of the Philippines in Diliman. I sent an encouraging word about him to Dean Jose Encarnacion.

At that time, Arsi reminded me that we had actually first met in the early 1970s in Baguio, the country’s summer capital, when he was a much younger man. He was then a delegate to a national conference of young public high school leaders that I happened to address as inspirational speaker. He was a young student from a poor family possessed by high educational aspirations. In that situation, success depended mainly on the thin and uncertain thread of scarce financial scholarships to support his study. He succeeded in turning small attainments into opportunities. Eventually, he made them into golden steps. Through scholarships he moved from a rural Ilocos state-supported university to the graduate programme in agricultural economics of the University of the Philippines Los Baños and then a PhD in economics with a teaching assistantship at the University of Hawaii and later a doctoral internship at the East-West Center.

INTRODUCTION

Competition disciplines firms to subjugate other objectives to the pursuit of profits, thereby enhancing market efficiency. In his Wealth of Nations, Adam Smith (2008) describes competition as the “exercise of allocating productive resources to their most highly valued uses and encouraging efficiency”. Competition can also incentivize product variety and prices, thus enhancing consumer welfare. Moreover, it plays an important role in encouraging innovation, increasing productivity and propelling growth, thereby promoting a country’s sustained economic development.

Effective competition does not necessarily follow from the mere existence of many competing firms, however. Inappropriate government policies and firm conduct can impair competition and hinder its role in economic development. Weak institutions and rent-seeking by special interests may inhibit competition-enhancing reforms, restrict opportunities for innovation and diminish consumer welfare. This is where competition policy plays a role. Competition policy encompasses competition advocacy as well as laws and regulations concerning anticompetitive behaviour and production structures (Motta 2004). Competition law is a set of enforceable legal rules designed to prevent the abuse of market dominance and anticompetitive behaviour and to break down barriers to entry. Competition advocacy promotes a culture of competition as well as consumer interests (Clark 2005; Rakić 2018). Since effective competition can improve income distribution as well as innovation and productivity, competition policy can be critical in achieving inclusive growth and sustained development.

To investigate the impact of the adoption of competition law on long-term economic growth, we constructed a cross-country data set from 1975 to 2015. Countries may choose to adopt—or not adopt— competition law depending on their circumstances, including level of economic development, institutions and geography. Considering endogeneity and self-selection, we employ an endogenous switching regression, allowing for the interdependence of economic growth and adoption of competition law. Our analysis shows that adoption increased the growth rates in adopting countries but would have decreased growth in non-adopting countries.

In addition to correcting the abuses of anticompetitive behaviour, competition policy should be designed to promote innovation and productivity growth and be well coordinated with trade and domestic policies. We review these arguments, focusing on Asian countries. While the design and organization of competition authorities in Asia vary according to each country’s historical and economic situation, we focus on South Korea, Thailand and the Philippines to capture the characteristics of the competition law and authorities at various stages of maturity.

A Festschrift is intended to review the origins, depth and breadth of the academic works by a noted scholar in the twilight of their career. From this perspective, writing a foreword to a Festschrift for Arsenio M. Balisacan is a strange task for me. Academically speaking, I think of Arsi as my grandson. His promise as a scholar was noted by Professor Cristina Crisostomo David when he enrolled in the master’s programme in agricultural economics at the University of the Philippines Los Baños in 1979. Tina was my PhD student in the early 1970s at the Food Research Institute at Stanford University, where she documented the striking role of fertilizer and rice prices in the political economy of Asian countries. Arsi continued this work at the University of the Philippines Los Baños under Tina’s direction, and then generalized the results into a conceptual approach to positive political economy in his PhD dissertation at the University of Hawaii, under the mentorship of Professor James A. Roumasset.

My first involvement with agricultural policy in the Philippines came in the early 1970s, when Arsi was still in high school. As part of the Stanford project on “the political economy of rice in Asia” that Tina David worked on, Wally Falcon and I commissioned eight country studies in East and Southeast Asia (including one on the United States by Leon Mears, a familiar name in the Philippines’ food policy circles). I worked closely with Mahar Mangahas on the Philippine study, so became acutely aware by 1975 just how complex the Philippines’ story was. I had drafted the Indonesian country study as a prototype for other country authors and worked closely with all of them right through the publication stage.

This earlier work on the region’s political economy of rice set me up for understanding Arsi’s work. My engagement with his work started with rice policy, but extended more broadly to the fields of agricultural development and the nature of pro-poor economic growth. Both fields are well represented in this Festschrift, via contributions from major authors in the field and through the inclusion of Arsi’s own path-breaking research in both fields.

This volume is a Festschrift for Arsenio Molina Balisacan – economist, professor, public servant, colleague, mentor and friend. It pays tribute to his work and honours him as an outstanding economist and public servant. Its themes reflect his research and policy interests over his professional career. These interests are central to understanding the development dynamics in the Philippines and elsewhere in Asia. The overarching theme is overcoming poverty through agricultural and rural development and complementary policies that engender a robust and sustainable structural transformation. Competition policy plays a particularly key role in combating cronyism and rent-seeking that impede that development path.

This project was conceived in November 2018 when the editors and the honouree attended the back-to-back Philippine Economic Society (PES) and the Federation of ASEAN Economic Associations (FAEA) conference held in Cubao, Quezon City, Philippines. We planned the surprise launch of this volume in time for his sixty-fifth birthday on 8 November 2022. In the Philippines, this age also marks an individual’s retirement from government service. Thus began the three-year “gentle conspiracy”, as Gerry Sicat aptly describes the project, among the editors, contributors, SEARCA and ISEAS – Yusof Ishak Institute towards the realization of this volume.

This book came to fruition with the help of many people and organizations whose tremendous support we wish to acknowledge. The enthusiastic responses from our forty-six authors from many countries are testimony to the high esteem and affection for Arsi. We thank our contributors for their fine papers and their collaboration as we worked through the refereeing and editorial production processes. We thank Peter Timmer and Gerardo Sicat for readily accepting our request to write the forewords. Special thanks to Anne Krueger for the back-cover endorsement.

A huge thank you to the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), led by Director Glenn Gregorio, for the funding support for this volume. Many thanks to the SEARCA team for facilitating the physical production of this book, especially Benedict Juliano and Arlene Nadres. Thanks to Lily Tallafer, our excellent and meticulous copyeditor who also happens to be one of Arsi’s long-time associates.

INTRODUCTION

The Philippines has a complex development history. Initially regarded as one of Asia’s prospective stars, by 1980 it had clearly failed to live up to such a lofty expectation. It parted company with its dynamic East Asian neighbours during the 1980s, and experienced prolonged and deep twin crises, both economic and political. Popular commentary over this period labelled it “the sick man of Asia”, “the East Asian exception”, a “crony capitalist economy”, “Asia’s Latin American economy” and various other unflattering descriptors. It appeared at that time that poverty and inequality were deeply entrenched, that agriculture lacked the resilience of its neighbours, that the ethno-religious conflict in Mindanao was beyond resolution, and that macroeconomic adventurism was consigning the country to a bleak period of recurring debt crises. Many of its best and brightest citizens relocated abroad; the prospect was that the Philippines would become a “remittance economy”.

However, just as the earlier optimistic prognostications proved to be mistaken, subsequent developments have been unkind to the 1980s doomsayers. The Philippines transitioned to a workable, decentralized democracy with governments that (mostly) enjoyed electoral legitimacy. Economic reforms introduced in the wake of the 1980s’ crises resulted in economic recovery and a return to growth, which, in turn, generated significant improvements in living standards. Prior to the COVID-19 pandemic, the country had enjoyed more than 70 quarters of continuously positive economic growth. Moreover, from 2000 to 2019, its growth was not far short of those of Asia’s most dynamic economies. Viewed from the crisis decade of the 1980s, both these outcomes would have been unimaginable.

Just as this renewed prosperity appeared to be durable, the COVID-19 pandemic struck with unexpected ferocity. The Philippines experienced one of the most severe economic downturns, with its 2020 decline in gross domestic product (GDP) almost three times the global average. It introduced one of the world’s most severe lockdowns, partly in recognition of the weak capacity of the country’s under‑resourced public health system. Poverty and inequality have increased substantially as many of the poor and near-poor have been unable to sustain their livelihoods, and social protection measures have limited reach.