by Prof. Hal Hill
H.W. Arndt Professor of Southeast Asian Economies, Australian National University, Canberra, Australia

Gerardo P. Sicat
Economics (New Edition)
Anvil Publishing, Manila, 2003. Volume 1, pp. 359 + xxii; Volume 2, pp. 467 + xxii; Volume 3, pp. 387 + xxii

This is a monumental book by a remarkable author, the living father of the modern economics profession in the Philippines, and arguably the most eminent academic economist in Southeast Asia.

After a distinguished academic career and a decade as Minister of Economic Planning, in 1983 Gerardo Sicat produced an economics textbook for Philippine university students. This was a pioneering effort to write a book which combined economic theory and analysis with practical applications from Philippine experience. It has since come to be the most widely used text in that country, as well as being adapted for use elsewhere.

The 1983 edition, which was extremely well received, could have been enough work for a lifetime. But 20 years later, at a time when golf courses and retirement might have beckoned, the author has produced this fully revised and updated opus. It comprises three separately published volumes, the first on ‘Elementary Economics,’ mainly microeconomic in orientation; the second on ‘Macro-economics’; while the third focuses on ‘Philippine Economic and Development Issues.’

The first and second volumes are primarily about theory, though there are plenty of Philippine illustrations, while the third employs this theory to address the country’s major development issues. As the book with the greatest international appeal, this review concentrates mainly on the third volume.

The three volumes are student-friendly. Each chapter includes a summary, terms for review, and topics for discussion. The author writes in an engaging manner, emphasizing economic reasoning while keeping maths to a minimum. He effectively draws on the rich empirical material generated by the University of the Philippines School of Economics, and the Philippine Institute for Development Studies, both outstanding institutions and regional leaders in their fields.

The ‘development issues’ volume consists of 12 inter-connected chapters which can be broadly grouped into four major areas: competition, monopoly and market imperfections (chapters 28-30); labor, poverty and income distribution (chapters 31-32); agriculture and land reform (chapters 34-36); foreign investment, trade and industry, and (micro) finance (chapters 33, 37-38); and a summing up of the ‘“isms” of economic order.’

There is an urgency behind Professor Sicat’s measured and careful text, motivated by his obvious frustration with his country’s indifferent socio-economic performance. Despite promising post-independence beginnings and broadly favorable initial conditions (particularly its human capital), most of East Asia has grown faster than the Philippines, especially since 1980. While the author does not have a chapter explicitly focused on this issue, much of the analysis connects to this central issue. For example, the adoption of an inward-looking trade regime in the Philippines from the 1950s is a major part of the story. (In this context, the author is too modest to draw much attention to the fact that he was one of the contributors to the pioneering Little, Scitovsky, Scott OECD studies on trade and development in the early 1970s.)

Another example is that the country has been saddled with inefficient, state-owned (or mandated) monopolies in telecommunications, inter-island shipping, and agricultural marketing. While significant reforms were introduced, especially during the Ramos (1992-98) administration, the unfinished agenda is significant, and complicated by a propensity to play ‘nationalist politics’ in the Congress. Yet another example concerns labor market policies, where the author criticizes the ‘premature adoption of labor welfare laws.’ Populist politics have resulted in comparatively high minimum wages, resulting in disappointing employment growth, sluggish export growth (except among electronics firms in the export zones), widespread attempts at avoidance, and (probably) increased wage inequality between the favored ‘labor aristocracy’ and the rest of the workforce.

It is hard to think of anything missing in these volumes. The balance between principles and empirics seems about right. Issues related to institutions and policy implementation are addressed. The volume is rich in historical perspectives, and there are helpful comparative (mainly Southeast Asian) examples and data. Perhaps, since the author has inhabited academe, the highest levels of government and the finance industry, in addition to working at the World Bank, the reader would be interested to learn a little more about the political economy of policy battles in government, and how reforms have (or have not) been introduced. But the author could surely reply that over 1,200 pages of text is enough! And, if one reads carefully, there is a good deal of nuanced political economy in the narrative. Moreover, he wrote a fine essay examining these issues during the Marcos period in his 1985 Philippine Economic Journal article.

A Japanese reviewer commented on the first edition that ‘no economics textbooks written by Asian scholars seem to be as comprehensive as this and at the same time [as] readable.’ Undoubtedly such a judgment also applies to these three volumes. One can only marvel at the commitment, the stamina, the breadth of interest, the nuanced judgment, and the deft writing skills of the author. A generation of policy makers and university students in the Philippines will be in Professor Sicat’s debt for making economics both interesting and relevant. If only there were more of these books. It has always amazed this reviewer that there are so few useful economics textbooks adapted to local institutions and policy issues in the developing world. There are quite a few translations available, but their modifications rarely appear to go much beyond cosmetics. Is there a market failure somewhere? Or perhaps it’s simply the case that few can match Professor Sicat’s dedication and skill-set.

While written primarily with a Philippine readership in mind, this set and volume III in particular deserves a much wider international audience. They are a model of how to write an interesting country-specific textbook, as well as being illuminating in their insights on general development issues and the Philippine development experience. In the mid 1980s, the founding editor of this journal initiated a project to produce a version of the first edition for Indonesian students, in Bahasa Indonesia, and with examples drawn from that country’s institutions and policy arena. The publication of this three-volume set will hopefully provide a similar inspiration, for economists in other countries to do something similar, or at least to adapt this volume’s contents to their own environment.