ABSTRACT
The importance of a system of protection in determining the direction of resource allocation in a country is increasingly recognised. It appears especially among developing countries, however, that the incentives system often does not consistently support national objectives and priorities. There is some evidence that industrial protection in the country has had important effects on the structure of production. High protection to manufacturing has meant that growth was substantially higher than that of the agriculture and other non-agriculture sectors, resulting in the shift toward manufacturing in the composition of output. Protection policy in the Philippines may be said to have started by the end of 1949 when, in response to a balance of payments crisis, import and exchange controls were imposed. Import control was instituted through the creation of an import control board which had the authority to restrict the importation of luxury and inessential items.
