ABSTRACT
The chapter investigates the trade policy issue in the context of overall trade policy in a post-General Agreement on Tariffs and Trade economic environment, for countries that are characterized by a dual economic structure, a large agricultural sector and a large degree of poverty among the population. The arguments will be made for the case of the Philippines, an economy that fulfils the criteria, and also a country that is currently attempting to increase its economic growth to match the pattern of other Southeast Asian newly industrializing economies. The policy of unilateral trade liberalization seems an appropriate one for the Philippines from a growth perspective, but only if it is combined with higher levels of domestic effective taxation. The informal sector also produces a composite product that is allocated between a domestic agricultural and a domestic nonagricultural product. It describes an appropriate methodology, presents some empirical results and draws conclusions.
