Template-Type: ReDIF-Paper 1.0 Author-Name: Gerardo P. Sicat Author-Name-First: Gerardo Author-Name-Last: Sicat Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Myths and Fallacies in Economic Policy Debate Abstract: A fallacy is often based on a correct argument but applied to a wrong set of circumstances. A myth is a worse form of fallacy because it is not true or correct. Myths and fallacies are used across the spectrum of debates on economic policies. Some fallacies keep acquiring a life of their own, and the object of this paper to expose them as such. The fallacies discussed are most commonly found in debates on the economy across a full spectrum of issues. A number of examples are picked as arguments often used in the debates on industry and trade, social amelioration, and macroeconomics. Specifically, the first of these fallacious arguments fall under the protectionism and industrial policy. A second group of policies relate to the debates designed to help improve the condition of the poor. A few important examples are cited in the area of national economic management. Length: 17 pages Creation-Date: 2000-01 Publication-Status: Published as UPSE Discussion Paper No. DP 2000-01, January 2000 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/79/71 File-Format: Application/pdf Number: 200001 Handle: RePEc:phs:dpaper:200001 Template-Type: ReDIF-Paper 1.0 Author-Name: Edita A. Tan Author-Name-First: Edita Author-Name-Last: Tan Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: 1997-1999 Philippine Economic Downturn : A Preventable One Abstract: The paper tries to trace the downturn in the economy in 1997-1998 and compares it with the crisis experienced in Thailand, Korea and Indonesia. The downturn was not of the magnitude of their crisis and had different causes. GDP fell by a lower rate from 5.2% to -.5%. The decline was of the same magnitude as in the 1990-1991 recession when GDP fell from the average rate of 5.4% in 1986-1990 to .5% in 1991. Supply shocks were the major cause of both recession- in 1990-91 there were the earthquake, Pinatubo, Gulf War and coup attempt, in 1997-1998, there was El Niño that reduced agricultural output by 6.7% that amounted to 2.41 times the drop in GDP. There was a capital upsurge and reversal as happened in the neighbors but the short-term component was not as large. External flows were largely medium-term and long-term. The banks which were major short-term borrowers were able to absorb the currency losses and so remained solvent. There were no massive bank failures as in the other countries. The central bank exacerbated the difficulties of the external borrowers by cutting liquidity. The resulting rise in interest rate added to the losses of the real sector. Length: 35 pages Creation-Date: 2000-03 Publication-Status: Published as UPSE Discussion Paper No. 2000-02, March 2000 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/51/43 File-Format: Application/pdf Number: 200002 Handle: RePEc:phs:dpaper:200002 Template-Type: ReDIF-Paper 1.0 Author-Name: Edita A. Tan Author-Name-First: Edita Author-Name-Last: Tan Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Filipino Overseas Employment─An Update Abstract: The paper is an update of earlier papers on migration (Tan and Canlas 1989, Tan 1993). Overseas employment continued to increase though at decelerating rate. There were changes in destinations and occupations with Asia gradually replacing the Middle East. The overseas workers' occupations were destination-specific as exemplified by the preponderance of domestic workers in Singapore and Hongkong. The overseas workers were not predominantly domestic workers. They formed only 37% of the total outflow. Production workers, seamen and professionals were as important. Available data are for outflows, not stock. The paper made stock estimates and compared them with other estimates. The annual flows were about 700,000 in the 1990, the stock in 1998 is estimated at 2.0 Million. This is smaller than the 4.5 quoted by the Department of Foreign affairs. The stock estimates are used for assessing the reliability of the remittances reported by the central bank. These averaged about 6% of GNP and 20% of exports. They appear to be grsossly underestimated, the actual which include those brought in directly by returning workers and channelled through informal media could easily double the reported values. Length: 30 pages Creation-Date: 2000-03 Publication-Status: Published as UPSE Discussion Paper No. 2000-03, March 2000 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/52/44 File-Format: Application/pdf Number: 200003 Handle: RePEc:phs:dpaper:200003 Template-Type: ReDIF-Paper 1.0 Author-Name: Casimiro V. Miranda, Jr. Author-Name-First: Casimiro Author-Name-Last: Miranda, Jr. Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: The Social Costs of Economic Growth : A Theoretical Depiction Abstract: Under certain features of less developed countries (LDCs), it is shown that external diseconomies of government affecting private production sector, and of private production sector affecting consumers must be accounted for in growth or development. The fundamental equation of sources of growth accounting if modified to include these negative effects may show a lower growth rate of total output. The required genuine social, political and institutional reforms that will at least reduce these external diseconomies are noted but the problem of who will carry these out is left unresolved since this belongs to the realm of normative economics. Length: 10 pages Creation-Date: 2000-03 Publication-Status: Published as UPSE Discussion Paper No. 2000-04, March 2000 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/53/45 File-Format: Application/pdf Number: 200004 Handle: RePEc:phs:dpaper:200004 Template-Type: ReDIF-Paper 1.0 Author-Name: Maria Claret M. Mapalad Author-Name-First: Maria Claret Author-Name-Last: Mapalad Author-Workplace-Name: College of Business, Alfred University Author-Name: Carolyn B. Rodriguez Author-Name-First: Carolyn Author-Name-Last: Rodriguez Author-Workplace-Name: Economics Department, California State University-San Bernardino Title: Measuring Urban Well-Being : Race and Gender Matter Abstract: Studies attempting to measure social well-being focus attention at national levels, failing to provide insights into the actual conditions that are present at sub-national levels. With increased attention being focused on the conditions of urban areas, the need for sub-national evaluation is becoming more apparent. Also, the growing diversity of the population and increase in female headed households leave researchers without resources for evaluating the conditions of these groups in smaller regional settings, in part due to the scarcity of well-being measurements at these levels. This study hopes to fill in the gap needed for measuring well-being at sub-national levels by estimating indices at the country level. Exactly how the level of urbanization and social well-being are related is the subject of our inquiry. Our estimations will focus on urban counties, with particular emphasis on the fifty largest counties. The aim is to evaluate the well-being of the general population in metropolitan areas, comparing it to those for female heads of households and people of color. Length: 21 pages Creation-Date: 2000-06 Publication-Status: Published as UPSE Discussion Paper No. 2000-05, June 2000 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/54/47 File-Format: Application/pdf Number: 200005 Handle: RePEc:phs:dpaper:200005 Template-Type: ReDIF-Paper 1.0 Author-Name: Rebecca N. Coke Author-Name-First: Rebecca Author-Name-Last: Coke Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Post Crisis Microfinance: Borrower Default Characteristics During the Recession in the Philippines Abstract: no abstract Length: 21 pages Creation-Date: 2000-06 Publication-Status: Published as UPSE Discussion Paper No. 2000-06, June 2000 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/44/38 File-Format: Application/pdf Number: 200006 Handle: RePEc:phs:dpaper:200006 Template-Type: ReDIF-Paper 1.0 Author-Name: Renato E. Reside, Jr. Author-Name-First: Renato Author-Name-Last: Reside, Jr. Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Developing a Risk Management Framework for the Philippine Government Abstract: The rationale for this paper is the increasing amount of risk that the Philippine government has been assuming in the last ten years, primarily in the development of various modalities for encouraging private sector participation in infrastructure development and the provision of guarantees for loans of government-owned and controlled corporations (GOCCs). The Philippine government is often not prepared to deal with the financial and non-financial consequences of calls on such guarantees, some of which are triggered by circumstances under its control. With better coordination among line agencies, the DoF, and the BSP, better project preparation, and more prudent provision of guarantees, the large costs of state support could have been avoided. Henceforth, one of the major objectives of this task is to quantify the amount of risk that the government assumes in such activities using conventional scientific and statistical methods presently being employed by private financial institutions in their estimation of their own exposures to loss. The same framework and methodology presented in this paper is being used by international financial regulators in dictating the amount of capital to be set aside against losses by money center banks. Knowing the amount of risk the government assumes will help reduce the moral hazard in guarantee provision and risk assumption. The aim is ultimately to produce better projects and reduce government exposure to risk in the process. Length: 17 pages Creation-Date: 2000-07 Publication-Status: Published as UPSE Discussion Paper No. 2000-07, July 2000 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/57/49 File-Format: Application/pdf Number: 200007 Handle: RePEc:phs:dpaper:200007 Template-Type: ReDIF-Paper 1.0 Author-Name: Renato E. Reside, Jr. Author-Name-First: Renato Author-Name-Last: Reside, Jr. Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Financing Private Sector Participation in Infrastructure Development: An Overview of Conditions and Options in Philippine and International Capital Markets Abstract: The Asian financial crisis has impaired the flow of capital financing the construction of infrastructure crucial for sustaining development in the country. As such, one of the post-crisis challenges has been the development of new and alternative financing mechanisms in light of emerging fiscal constraints of government. This paper presents an analysis of the recent trends and financing needs of infrastructure projects and explores various alternative modalities for the financing of infrastructure projects in the Philippines. Length: 36 pages Creation-Date: 2000-07 Publication-Status: Published as UPSE Discussion Paper No. 2000-08, July 2000 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/58/50 File-Format: Application/pdf Number: 200008 Keywords: Electricity industry, utilities regulation, competition in regulated industries, privatization, Philippine economy Handle: RePEc:phs:dpaper:200008 Template-Type: ReDIF-Paper 1.0 Author-Name: Carlos C. Bautista Author-Name-First: Carlos Author-Name-Last: Bautista Author-Workplace-Name: College of Business Administration, University of the Philippines Diliman Title: Boom-bust Cycles and Crisis Periods in the Philippines: A Regime-switching Analysis Abstract: This study examines Philippine macroeconomic fluctuations using Markov regime-switching techniques. Using all available GDP data, an annual and a quarterly model are constructed to explain Philippine boom-bust cycles as switches into any of three states─a moderate growth state, a low growth state and a crisis state. The number and labeling of states are based on historical events. The annual model shows adequate tracking ability. The quarterly model reveals a finer classification of the bust phase into low growth states and crisis states for the 1990-decade ─ a result that does not appear in the annual model. The crisis dates determined by the quarterly model closely correspond to the four crisis episodes that occured between 1981 and 1999. Length: 22 pages Creation-Date: 2000-10 Publication-Status: Published as UPSE Discussion Paper No. 2000-09, October 2000 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/59/51 File-Format: Application/pdf Number: 200009 Keywords: Boom-bust cycles, Markov regime-switching, Moderate growth state, Low growth state, Crisis state Classification-JEL: E32, O11 Handle: RePEc:phs:dpaper:200009 Template-Type: ReDIF-Paper 1.0 Author-Name: Gerardo P. Sicat Author-Name-First: Gerardo Author-Name-Last: Sicat Author-Workplace-Name: School of Economics, University of the Philippines Diliman Author-Name: Rahimaisa Abdula Author-Name-First: Rahimaisa Author-Name-Last: Abdula Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Philippine Public Finance in Recent History Abstract: This paper reviews public finance policy covering the fiscal deficit, public expenditure, and taxation over a period of two decades until the opening of 2000. The first section reviews national government budgetary operations through the net fiscal stance of the budget. Initially, the fiscal deficit level was high and quite volatile. Through stringent efforts to reduce that fiscal deficit, macroeconomic instability was brought under greater control, with less volatility. This effort took the better part of the first decade and a half, even though this was not clearly evident from just looking at national budgetary operations. But in the recent aftermath of the Asian financial crisis, the fiscal deficit has risen again. The next two sections discuss the evolution of public expenditure and of tax mobilization efforts, emphasizing changes in structural patterns for both the allocation of expenditure and the sources of fiscal revenues. The paper highlights the evolution of real per capita public expenditure as well as efforts to improve the revenue base to reduce the deficit through resource mobilization, tax reform and efforts to raise non-tax sources of revenues. The last section briefly takes up the fiscal implications of the operations of public enterprises, both financial and non-financial. When public enterprise operations sustain persistent losses, the magnitude and severity of financial cash shortages add volatility to macroeconomic management. The budget becomes hostage to their losses and financial liabilities. The problems that they brought to the rest of the economy had very important repercussions on the performance of the fiscal sector. This is one of several papers on fiscal and development issues on the Philippine economy being undertaken by the main author. Length: 28 pages Creation-Date: 2000-10 Publication-Status: Published as UPSE Discussion Paper No. 2000-10, October 2000 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/60/52 File-Format: Application/pdf Number: 200010 Handle: RePEc:phs:dpaper:200010 Template-Type: ReDIF-Paper 1.0 Author-Name: Keiko Morisawa Author-Name-First: Keiko Author-Name-Last: Morisawa Author-Workplace-Name: Institute for Economic Research, Osaka University Title: The Philippine Electronics Industry and Local Suppliers : Developing Supporting Industries through Foreign Captial-led Industrialization Abstract: The Philippine electronics industry is typical of foreign capital-led industrialization. The Philippines wants to develop the supporting industries for electronics in order to localize the electronics industry. The Philippines wishes to foster the development of local suppliers and wishes to strengthen the backwards linkage to promote further industrial development in the Philippines. In this paper, I will describe how supporting industries for electronics themselves are getting involved in global competition and explain that local suppliers do not have the capability to compete at present, based on our field research of the sourcing methods used by Japanse electronics TNCs in the Philippines. Then I will consider the potential development path for supporting industries and local suppliers through foreign capital-led industrialization. Finally I will reflect upon the role of local capitalists and nationalism in the advancement of the global economy. Length: 24 pages Creation-Date: 2000-10 Publication-Status: Published as UPSE Discussion Paper No. 2000-11, October 2000 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/61/53 File-Format: Application/pdf Number: 200011 Handle: RePEc:phs:dpaper:200011 Template-Type: ReDIF-Paper 1.0 Author-Name: Raul V. Fabella Author-Name-First: Raul Author-Name-Last: Fabella Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: The J2K Crisis and the Economy : The Broader Context Abstract: This Analysis views the Jueteng 2000 crisis and its economy impact in the light of the dynamics and governance of the soft state. At the heart of the soft state is the widespread marketization of governance, i.e., of rules and enforcement. The latter generates the soft state’s dominant texture: disorder. Disorder is the revenge of the market on a state that usurps the former's territory of competence. Business (i.e., the market economy) abhors disorder, which guarantee that poor economic performance and the soft state are inseparable. Disorder spikes when traditional bulwarks of the rule of law appear to sell out. The J2K appears to compromise the chief law enforcer in the eyes of business, not so much on the say so of a jueteng lord as on the litany of corroborating past misdeeds. The legalization of gambling is a correct step but a compromised president is vulnerable and invites defiance. Pandemonium followed. The removal and punishment of an erring chief executive will be a giant step in cauterizing the tentacles of the soft state. This is not about a choice between Estrada and Macapagal-Arroyo. This is about empowering institutions and self-respect. If the Senate can collectively prove to be bigger than life, then seldom would “so much (be) owned by so many to so few". Length: 15 pages Creation-Date: 2000-12 Publication-Status: Published as UPSE Discussion Paper No. 2000-12, December 2000 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/80/72 File-Format: Application/pdf Number: 200012 Handle: RePEc:phs:dpaper:200012 Template-Type: ReDIF-Paper 1.0 Author-Name: Renato E. Reside, Jr. Author-Name-First: Renato Author-Name-Last: Reside, Jr. Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Using Monte Carlo Simulation in a System for Project Risk Appraisal : Options for Government and Private Practitioners Abstract: This study is an offshoot of a project on the estimation of contigent liabilities of the Philippine government. The Monte Carlo simulation method adopted for estimating exposure (or expected losses) to NG-assumed risks in many Build-Operate-Transfer infrastructure projects makes it possible for policymakers to classify and rank projects according to risk, and set risk-adjusted guarantee fees, helping to mitigate many adverse selection and moral hazard problems in the project appraisal, approval, and monitoring process. Six projects (not explicitly identified) are analyzed for risk, and risk indicators are constructed for each to facilitate comparison and classification. Projects for which government bears excessive risk may be restructured before approval, while contigency financing may be arranged for projects that have already commenced operations. In addition, expected lesses serve as an input into the calculation of actuarially-fair guarantee premia. Length: 46 pages Creation-Date: 2000-12 Publication-Status: Published as UPSE Discussion Paper No. 2000-11, December 2000 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/62/54 File-Format: Application/pdf Number: 200013 Handle: RePEc:phs:dpaper:200013