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: Direction or Drift : Philippine Economy After 2004 Abstract: “What are the prospects of the Philippine economy after the presidential election of 2004?” Before speculating on this question, the paper discusses four major problems of the economy that the new president will face after the elections. These are (a) the weak long-term performance; (b) the high population growth; (c) the fiscal deficit and the low national saving rate; and finally, (d) the need to reinforce the investment climate. Each of these represents a big challenge. The last issue, in particular, requires dealing with inherently difficult economic reforms. The revision of restrictive economic provisions of the Philippine Constitution will open undercapitalized and high cost sectors of the economy to risk investments in critical infrastructure and allow greater economic exploitation of land and natural resources. The reforms of labor market policies will enhance the country’s competitiveness and raise employment. The essay then discusses the Philippine economy under alternative economic scenarios. Gloria Macapagal Arroyo, the incumbent seeking election, had three years of lead time as successor to deposed Joseph Estrada to establish a track record. However, that record is undistinguished. On the other hand, Fernando Poe Jr. adds greater risk and uncertainty, given his lack of track record on what he could do on a national scale. The country is headed towards an unpromising future, unless the new president displays unusual leadership ability that is not predicted by the objective information available at the moment. Length: 18 pages Creation-Date: 2004-01 Publication-Status: Published as UPSE Discussion Paper No. DP 2004-01, January 2004 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/110/104 File-Format: Application/pdf Number: 200401 Keywords: Philippine economic development, political economy, public finance, population Handle: RePEc:phs:dpaper:200401 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: Labor Issues of Philippine Development During Blas Ople’s Times Abstract: Blas Ople was the key personality in the development of labor policies during the 1960s to the 1980s. Before his political ascendancy in other branches of government after the 1980s, he held the labor portfolio for the longest time. His influence extended to the present period. This essay covers the political economy of labor policies during this period. The key issue about labor market policies is how to balance the promotion of welfare and the creation of employment as the growing labor force continued to grow. External factors during this period added pressures to protect labor from the worst effects of the turbulent macroeconomic shocks. This raised the bar in welfare standards, along with the tendency to fix minimum wages and other wage supplements that tended to be out of line with market forces. Aside from wage issues, the labor policies tried to place limitations on the reduction of employment within the enterprise by requiring permits from the labor department. These policies together brought about a great deal of labor market inflexibility. These policies would make the labor market overly regulated and eventually make it more difficult to encourage the rapid growth of employment. The industrial and trade policies of the period, which focused on protection and import substitution despite efforts to liberalize them, aided the labor market policies in producing this effect on employment generation. Length: 19 pages Creation-Date: 2004-04 Publication-Status: Published as UPSE Discussion Paper No. 2004-02, April 2004 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/111/105 File-Format: Application/pdf Number: 200402 Keywords: Labor economics, Philippine economy, population, labor market policies Handle: RePEc:phs:dpaper:200402 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: “Successes” and Adjustment in the Philippine Labor Market Abstract: A high degree of unemployment and underemployment characterizes the Philippine economic development record. In large part, the mainstream labor policies that emphasized high labor welfare standards and high minimum manages over the creation of employment are responsible for this outcome. In spite of this poor record of employment generation, some successes have been achieved in generating jobs and incomes in specific areas of industry and services. Focusing on these successes gives an insight on what works well. These “successes” in employment and income creation represent a common thread: they try to avoid the jurisdiction of the mainstream labor market policies or they are efforts of firms to adjust to the labor policies within the law to avoid their worst effects on cost and efficiency. The successes that are discussed in this essay are the following: the overseas contract workers; employment of labor in export processing zones; market for professionals among multinational companies; labor employment in the information technology sector; and domestic outsourcing of labor services and manufacturing. In an open economy, the country benefits from outsourcing by taking jobs away from high wage centers to the country. The same pattern of outsourcing happens when firms in the country forsake the country to transfer of their mainline operations in other countries to take advantage of lower wage costs. The main lesson from this paper is to point towards the need to reform the country’s labor market policies so that they attain a higher degree of flexibility. Length: 30 pages Creation-Date: 2004-04 Publication-Status: Published as UPSE Discussion Paper No. 2004-03, April 2004 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/112/106 File-Format: Application/pdf Number: 200403 Keywords: Philippine economy, labor market policies, overseas contract worker, outsourcing and subcontracting Handle: RePEc:phs:dpaper:200403 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: Reforming the Philippine Labor Market Abstract: Philippine labor market policies, in the presence of a high degree of excess labor supply, are highly regulated and they tend to be along standards of highly developed markets. The policies adopted by the government are more pro-employed labor than to promote the overall employment of the labor force. These policies made the country to miss the path of labor intensive development in industrial enterprises, a pattern typical of the early growth of East Asian economies. These policies strengthened a powerful labor bureaucracy in the government. Side effects of the regulations and the culture surrounding the disposition of labor management issues encouraged rent-seeking and other motivational distortions in the behavior of labor when employed. The welfare policies as developed have contributed to the distortion in labor skill formation, the tendency to provide an increase of emoluments without any link to productivity growth, and so on. The last part of the essay focuses on the areas of reform suggested by this state of affairs. The balance between welfare and employment creation needs to be continually brought in the forefront. In undertaking reforms, productivity change needs to be placed in the center stage of reforms. Finally, it is argued that the labor sector would find it in its interest to deal positively with the challenges of globalization. This means recognizing that labor market policies need to adjust to global competition. This further means that it emphasize the need to accept that economic liberalization would require encouraging the growth of investments from all sources – including foreign direct investments. Such a route will create jobs and improved welfare for the working man. Length: 29 pages Creation-Date: 2004-04 Publication-Status: Published as UPSE Discussion Paper No. 2004-04, April 2004 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/113/107 File-Format: Application/pdf Number: 200404 Keywords: Philippine economy, labor market policies, economic reform, employment Handle: RePEc:phs:dpaper:200404 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: International Transmission of US Monetary Policy Shocks: VAR Evidence from the Philippines Abstract: Based on Soyoung Kim's previous work for non-US G6 countries, I use eveidence from recursive vector autoregressions (VARs) in order to analyze the international transmission mechanism of expansionary US monetary policy shocks to other countries. The method not only attempts to ascertain the workings of the mechanism itself, but it also tries to discern which theoretical model's predictions (Mundell-Fleming vs. the intertemporal model of Obstfeld and Rogoff) fit the data best. For the Philippines, at least, the initial evidence suggests that the transmission mechanism follows the traditional Mundell-Fleming model (a US monetary expansion is beggar-thy-neighbor and works primarily through exchange rate and trade balance effects). Length: 20 pages Creation-Date: 2004-04 Publication-Status: Published as UPSE Discussion Paper No. 2004-05, April 2004 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/25/20 File-Format: Application/pdf Number: 200405 Handle: RePEc:phs:dpaper:200405 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: International Transmission of US Monetary Policy Shocks to Asia Abstract: This study estimates the individual responses of major Asian economies to an expansionary US monetary policy shock. The main result is that a US expansion leads to a real appreciation for several small, open Asian economies, with a negative impact on trade balances, eventually leading to a decline in GDP. The observed pattern of responses, where the trade balance plays a central role, is consistent with the Mundell-Fleming model. There is no evidence to support the existence of an interest rate channel in Asia, a central feature of new microfounded open economy macroeconomic models. A US expansion lowers real interest rates in the region, but Asian GDP, consumption and investment also generally fall. Length: 39 pages Creation-Date: 2004-06 Publication-Status: Published as UPSE Discussion Paper No. 2004-06, June 2004 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/26/21 File-Format: Application/pdf Number: 200406 Handle: RePEc:phs:dpaper:200406 Template-Type: ReDIF-Paper 1.0 Author-Name: Joseph J. Capuno Author-Name-First: Joseph Author-Name-Last: Capuno Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Engendering Local Civic Participation via a Citizen Feedback Mechanism in Bulacan and Davao del Norte Abstract: This paper presents the educating effects on civic participation of a citizen feedback mechanism (GOFORDEV Index), which helps promote transparency and accountability in local governance. Using three rounds of household survey data collected during the two-year pilot of the Index in two Philippines provinces, the econometric results show that basic information on local government performance, when disseminated using traditional media, remains an effective way of encouraging membership in local organization or self-participation in public affairs. Further, the participation of organized groups in civic activities is found to reinforce individual commitments. Length: 24 pages Creation-Date: 2004-06 Publication-Status: Published as UPSE Discussion Paper No. 2004-07, June 2004 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/114/108 File-Format: Application/pdf Number: 200407 Keywords: global incentives compatibility, quasi-rent, third party enforcement incentives contract Handle: RePEc:phs:dpaper:200407 Template-Type: ReDIF-Paper 1.0 Author-Name: Samuel S. Lieberman Author-Name-First: Samuel Author-Name-Last: Lieberman Author-Workplace-Name: WB-Vietnam Author-Name: Joseph J. Capuno Author-Name-First: Joseph Author-Name-Last: Capuno Author-Workplace-Name: School of Economics, University of the Philippines Diliman Author-Name: Hoang Van Minh Author-Name-First: Hoang Author-Name-Last: Van Minh Author-Workplace-Name: Hanoi Medical School Title: Health Decentralization in East Asia: Some Lessons from Indonesia, the Philippines, and Vietnam Abstract: This paper examines decentralization experiences in Indonesia, the Philippines and Vietnam during the last 18 years (1985-2003). The analysis suggests that decentralization dividends so far have been modest and concentrated in some areas in the country. This is partly macroeconomic and political context in which decentralization was introduced. More importantly, however, current arrangements within the health sector have not worked well as hoped, including ensuring access for the poor to quality health services. To improve the gains, a stewardship role for the MOH is suggested. In this role, the MOH would focus on critical health functions, namely: communicable disease surveillance and control; standard setting and quality assurance for devolved health services; and pharmaceuticals; ensuring access of the poor to health services; and, sustaining health financing. Length: 38 pages Creation-Date: 2004-08 Publication-Status: Published as UPSE Discussion Paper No. 2004-08, August 2004 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/27/109 File-Format: Application/pdf Number: 200408 Handle: RePEc:phs:dpaper:200408 Template-Type: ReDIF-Paper 1.0 Author-Name: Emmanuel S. de Dios, et al Author-Name-First: Emmanuel Author-Name-Last: de Dios Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: The Deepening Crisis : The Real Score on Deficits and the Public Debt Abstract: In her state of the nation address before Congress last July, President Arroyo drew attention to the government’s worsening fiscal and debt problems, calling the deficit “our most urgent problem”. That was an accurate statement. The looming threat represented by an uncontrolled public debt is indeed the biggest economic challenge the country will have to confront immediately and for the remainder of this decade. Recent events and discussions give ample reason to doubt whether the President’s message has been truly understood and internalized by the political elite and public alike – and hence whether the issue will be given its due importance. The quality of public debate on the issue stirs grave doubts whether the scale and consequences of “our most urgent problem” are indeed being fully appreciated. Length: 26 pages Creation-Date: 2004-08 Publication-Status: Published as UPSE Discussion Paper No. 2004-09, August 2004 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/28/111 File-Format: Application/pdf Number: 200409 Handle: RePEc:phs:dpaper:200409 Template-Type: ReDIF-Paper 1.0 Author-Name: Susan S. Navarro Author-Name-First: Susan Author-Name-Last: Navarro Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Robbery, Economic Incentives and Deterrence: An Intercountry Analysis for 1997 Abstract: Causes of crime were sought in individual's characteristics, sociological aspects and illicit drug use. Since the pioneering work of Gary Becker (1968), economists have analyzed determinants of crime from the perspective of the offender's rational decision to participate in illegal activities. Cross section data for 1997 were used in this paper to examine intercountry differences in effects of economic incentives and deterrence on robbery rates at national levels. Significant negative effects of the total convicted for robbery/total prosecuted for robbery, a proxy for the prabability of being apprehended and punished due to this crime, were found. The finding of an inducing impact of income inequality is consistent with that of Fajnzylber, Lederman, and Loayza, (2000) who analyzed social and economic determinants of robbery and homicide rates (at national levels) in a sample of about 45 countries for homicide and 34 countries for robbery. They used a generalized method of moments (GMM) estimator applied to dynamic models of panel data covering the period 1970-1994. These results are in accordance with Erlich's theory that an increase in the probability of being apprehended and punished has a deterrent effect on offenders and that offenders, as a group, respond to incentives in much the same way that those who engage in strictly legitimate activities do as a group. The decision to participate in crimes involving material gains as an occupational choice is deemed consistent with evidence of positive association between income inequality and the rate of crimes against property. Length: 27 pages Creation-Date: 2004-08 Publication-Status: Published as UPSE Discussion Paper No. 2004-10, August 2004 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/30/25 File-Format: Application/pdf Number: 200410 Handle: RePEc:phs:dpaper:200410 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: Is Asia an Optimal Currency Area? Testing the Robustness of Recent Results Abstract: no abstract Creation-Date: 2004-08 Publication-Status: Published as UPSE Discussion Paper No. 2004-11, August 2004 Number: 200411 Handle: RePEc:phs:dpaper:200411 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: Loretta Makasiar Sicat Author-Name-First: Loretta Author-Name-Last: Sicat Author-Workplace-Name: UP Political Science Department, College of Social Science and Philosophy Title: An International Comparison of Constitutional Style: Implications for Economic Progress Abstract: Using the United States constitution as yardstick for its essential simplicity and completeness in describing the structure of government, the constitutions of twenty-two countries were studied for their language style, brevity and coverage of provisions. Most constitutions of later years have expanded coverage of institutions and the rights of citizens. The outcome is that constitutions became much longer because of broader content but also because they also cover details of institutional processes and structures. The expansion of concerns of constitutions also incorporated economic and social guarantees of citizens in addition to the guarantees of political rights and individual freedoms. Countries with simpler constitutional frameworks have experienced relative constitutional stability more than countries with long and detailed constitutions. The systemic collapse of socialist states in the 1990s brought about some return to constitutions that are simpler in coverage and which incorporate a balance of political and economic and social rights, including protection of property rights. The last part of the study comments on the implications of these constitutional structures to economic progress. Length: 21 pages Creation-Date: 2004-09 Publication-Status: Published as UPSE Discussion Paper No. 2004-12, September 2004 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/117/113 File-Format: Application/pdf Number: 200412 Keywords: Constitutions, comparative study of constitutions, economic growth, economic reform, social and economic rights Handle: RePEc:phs:dpaper:200412 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: Loretta Makasiar Sicat Author-Name-First: Loretta Author-Name-Last: Sicat Author-Workplace-Name: UP Political Science Department, College of Social Science and Philosophy Title: The Constitution and Economic Progress : When “More Is Less and Less Is More” Abstract: This study postulates some relationship between the attributes of constitutions – the style of constitutions regarding brevity, coverage, and presence of economic and social guarantees – with economic factors and the economic performance of countries. Utilizing quantifiable measures of these constitutional characteristics, these economic determinants are used to explain the differences in the economic performance of countries. A simple statistical model is set up to quantify this relationship. Expanded coverage and the presence of extensive social and economic rights in constitutions do not guarantee good economic performance. Extensive coverage of constitutional provisions tends to create a downward effect on the level of economic performance. Excessively detailed constitutional style provides a constraining effect on the level of economic performance. On the other hand, competitiveness of the economy, an economic attribute, raises economic performance. Length: 20 pages Creation-Date: 2004-09 Publication-Status: Published as UPSE Discussion Paper No. 2004-13, September 2004 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/118/115 File-Format: Application/pdf Number: 200413 Keywords: Constitutions; economic growth; economic reform, social and economic rights Handle: RePEc:phs:dpaper:200413 Template-Type: ReDIF-Paper 1.0 Author-Name: Carlos Antonio Tan, Jr. Author-Name-First: Carlos Antonio Author-Name-Last: Tan, Jr. Author-Workplace-Name: School of Economics, University of the Philippines Diliman Author-Name: Joseph J. Capuno Author-Name-First: Joseph Author-Name-Last: Capuno Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: The Economic Burden of Tuberculosis and the Need for Private Sector Initiatives Abstract: Despite the unrelenting effort by the government, tuberculosis still poses a major health risk and remains today a leading cause of morbidity and mortality. In 2003 prices, the economic cost of TB – measured here as the aggregate loss in income estimated based on a selection model of income differential between those with TB and those without it - is about 3.26 billion pesos per annum. In comparison to direct medical costs of DOTS treatment, this estimate exceeds the low-end estimate of 1.81 billion pesos per annum and approximates the high-end estimate of 3.73 billion pesos per annum. Arguably, therefore, TB control is economically viable, but which requires wider private sector participation. However, despite the fact that many TB patients work or seek treatment in the private sector, the private sector’s role in the country’s TB control program has, until recently, not been articulated, as revealed by the inventory of TB and other relevant policies. Increased private sector participation, however, is now expected with the PhilHealth’s TB-outpatient benefit package, but whose design and implementation must be strengthened to make it a wider window of opportunity. Length: 38 pages Creation-Date: 2004-09 Publication-Status: Published as UPSE Discussion Paper No. 2004-14, September 2004 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/119/116 File-Format: Application/pdf Number: 200414 Handle: RePEc:phs:dpaper:200414 Template-Type: ReDIF-Paper 1.0 Author-Name: Ruperto P. Alonzo, et al Author-Name-First: Ruperto Author-Name-Last: Alonzo Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Population and Poverty : The Real Score Abstract: The public debate on the population issue – long settled in most of the developing world – remains unresolved in the Philippines. We aim in this paper to contribute to the debate, in particular to highlight the role the government must play to face up to this development challenge. Length: 24 pages Creation-Date: 2004-12 Publication-Status: Published as UPSE Discussion Paper No. 2004-15, December 2004 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/120/117 File-Format: Application/pdf Number: 200415 Handle: RePEc:phs:dpaper:200415