Graduate Thesis Or Dissertation
 

A policy model for Philippine timber product exports

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  • The Philippines relies heavily on timber product exports for its foreign exchange requirements. In recent years, however, it adopted log export restrictions as a hedge against the rapid depletion of its timber resources. Although conducted independently, its ASEAN partners (Malaysia and Indonesia), have likewise instituted similar restrictions on their own log exports. Considering the major role of these countries in world hardwood production and trade, these policy developments have become a major concern among the hardwood consuming regions, especially the major importers of hardwood logs like Japan and the Asian entrepots. It is necessary to model the linkages among the various hardwood producing and consuming regions in order to effectively evaluate the effects of specific trade and forest policies initiated by the key producers like the Philippines, Malaysia, and Indonesia. The dearth of previous knowledge and effort in this field prompted the development of such a model. The resulting spatial model consisting of 36 supply and demand equations was used to simulate the short-run effects of several trade and forest policies initiated by the Philippines and ASEAN. Using purely economic criteria, the results indicate that the Philippines will not gain from banning its log exports, but would benefit immensely if ASEAN enforced a log export embargo. Additional tariffs on Philippine timber exports discourage product exports but encourage raw log exportation. Removing the current 4% export tax improves the Philippines trading position at the expense of its ASEAN partners. Simulating the possibility of the ASEAN producers trading with each other indicates they could mutually and simultaneously benefit from such a policy. A major Philippine currency devaluation demonstrates the "beggar thy neighbor" effect through Malaysia and Indonesia suffering immensely from the induced price-reduction of Philippine products. The results of the 13 simulations reveal insights on the mechanics of the interactions between the trading regions and confirm the strong interdependence that exists between the Philippines and its ASEAN neighbors.
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