The Grey Chronicles

2008.August.3

Review of Related Literature, Part 3


This is the third, and last, part of an overview of the current research and related studies on the three scenarios NSC faced between 1994 and 2000.


Steel Industry

Zinter’s study (2002) of Minnesota’s Iron and Steel Industry from 1974 to 1990 supported similar claims made by many others that imports are significant contributor to declining employment in the manufacturing sector, however, competition from import prices was not a direct, statistically significant cause of employment decline in Minnesota’s iron and steel industry.

In contrast, Orbeta (2002), using Philippine aggregate and sub-level industry manufacturing data sets, concluded that export inclination shifts labor demand upward the Hecksher-Ohlin model, while doubting the conception of wholesale substitution of imports for domestic production.

In 1999, the Center for Trade Policy Studies hosted an event, which discussed the steel “crisis” of 1998. At that time, the cause for steel’s woes was a combination of poor corporate decisions and macroeconomics. Hundreds of firms in dozens of industries experienced falling profitability, layoffs, and even bankruptcies (Ikenson, 2001). The US steel industry considered 1998 a crisis point when steel imports rose to great heights while return on sales started its downturn. Treado (2004) claimed that between 1998 and 2003, 29 US steelmakers faced bankruptcy leading to a global loss of 67 million metric tons in capacity.

Considering these three scenarios as a backdrop, this research attempted to show their respective and combined ripple effects to NSC’s steel production. There is no existing published research singularly done with this particular viewpoint. Thus, this research attempted to fill this certain gap. Although, this study primarily bolstered the claims of Sauer, Gawande, and Li (2003) pushing for an activist government policy on industrialization, Cook and Uchida (2003) on deficient governmental reforms as the probable cause of negative relationship between privatization and economic growth; yet, this study will inherently show that Filipovic’s (2005) privatization with legal and regulatory reforms proposition was right. The research attempted to show the effect of slow economic growth (Luken, 1999) further dimmed the prospects of NSC’s steel production after privatization.

This study took off where Radelet and Sachs (1998), Ahearn (2002) and other proponents of devaluation left and eventually show that Philippine economic conditions after devaluation did not help the recovery of steel manufacturing per se but rather diminished the steel industry’s growth.

Furthermore, using Philippine steel production data sets, this research hinted the relevance of Zinter’s (2002) conclusion that importation contributes to the declining employment in the steel industry and Orbeta’s (2002) doubting the concept of wholesale import substitution to domestic production.

Lastly, while this paper complemented Basilio and Casaban’s case study (2004) on the effect of NSC’s closure to Iligan City, but it could act as the catalyst to other investigations using NSC’s myriad of data waiting to be studied, analyzed and deliberated before these statistics and records are lost to oblivion.

Back: Review of Related Literature


Notes:

Zinter, Courtney (2002) Explaining Decreased Employment in Minnesota’s Iron and Steel Industry, Issues in Political Economy, 2002, Vol. 11, pp. 14-16 back to first text : second text

Orbeta, Aniceto C. Jr., (2002) “Globalization and Employment: The Impact of Trade on Employment Level and Structure in the Philippines,” Discussion Paper. Manila: Philippine Institute for Development Studies, Series 2002-04, February 2002, p. 13. back to first text : second text

Ikenson, Dan (2002), “Steel Trap: How Subsidies and Protectionism Weaken the U.S. Steel Industry,” USA: Center for Trade Policy Studies, March 1, 2002; Trade Briefing Paper No. 14, p. 1- 16. back to text

Treado, Carey Durkin, (2004). Imports, Technology, and the Success of the American Steel Industry, Proceedings of Sloan Industry Centers Annual Conference, Atlanta, Ga., USA: Center for Industry Studies, University of Pittsburgh, April 19-21, 2004. back to text

Sauer, Christine, Kishore Gawande, and Geng Li (2003). Big Push Industrialization: Some Empirical Evidence for East Asia and Eastern Europe, Economics Bulletin, Vol. 15, No. 9 pp. 1-7 back to text

Cook, Paul and Yuichiro Uchida (2003) Privatization and Economic Growth in Developing Countries. The Journal of Development Studies, Vol.39, No. 6, August 2003. pp. 121-154. back to text

Filipovic, Adnan (2005). Impact of Privatization on Economic Growth Issues in Political Economy, Vol. 14, August 2005: 17 back to text

Luken, Ralph A. (1999), “Industrial Policy and the Environment in the Philippines,” Manila: United Nations Industrial Development Organization, NC/PHI/97/020, July 1999. back to text

Radelet, Steven and Jeffrey Sachs, (1998) “The Onset of the East Asian Financial Crisis,” Research Paper. Cambridge: National Bureau of Economic Research, August, 1998. p. 41. back to text

Ahearn, James, (2002). Should Southeast Asia Devalue? Issues in Political Economy, Vol. 11, Elon University, pp. 14-15. back to text

Clarete, Ramon L. (2005) “What Freer Trade Meant for the Philippines” School of Economics, University of the Philippines, 2005. back to text

Basilio, Leilanie, and Jeremiah Cabasan (2004), “Local Governance and the Challenges of Economic Distress: The Case of Iligan City,” Discussion Paper. Manila: Philippine Institute for Development Studies, Series 2004-45, December 2004, p. 2-3. back to text

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2 Comments »

  1. Hi Rey
    I am a computer engineer by profession but just like you, destiny took me into the steel industry. I spent so many years working for a major roll supplier which gave me the opportunity to visit a lot of long product mills worldwide (over 100 mills so far).

    I have now returned back to our beloved country and I decided to start my own trading company representing the best suppliers in the world covering Southeast Asia down to Australia, New Zealand and Fiji.

    I am interested to meet some fellow kababayans like you who has affiliations in the steel industry. who knows we may be able to do something rewarding together. If you feel the same, please email me.

    Cheers
    Bong

    Comment by Bong — 2009.March.29 @ 09:58 | Reply

  2. hi! where can i contact Mr. Rey Adel? i enjoyed reading his articles and they served useful in my study.

    Comment by ali — 2009.March.1 @ 04:10 | Reply


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