Template-Type: ReDIF-Article 1.0 Author-Name: Michael M. Alba Author-Workplace-Name: De La Salle University, Manila Title: Why has the Philippines remained a poor country? : some perspectives from growth economics Abstract: Why has the living standard of the Philippines relative to that of the United States not risen unlike its Asian neighbors? Applying a simple neoclassical model and some empirical methods of analysis employed in growth economics on data on national income accounts and the workforce from the Penn World Table (version 6.1) and years of schooling from Barro and Lee [2000], this paper submits three interconnected answers: The country has been stuck in a low-growth trajectory. It is headed for a low steady-state level of output per worker, which explains its slow pace of long-term growth. Most significantly, its total-factor productivity, at 20.9 percent of that of the United States, is horrendously low, which explains its low convergence point. Improving its total-factor productivity is thus the key to solving the country’s low living standard. Classification-JEL: O43, O47, O53 Keywords: economic growth, total factor productivity, convergence Journal: Philippine Review of Economics Pages: 1-31 Volume: 44 Issue: 2 Year: 2007 Month: December File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/226/620 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:44:y:2007:i:2:p:1-31 Template-Type: ReDIF-Article 1.0 Author-Name: Eirene P. Mesa Author-Workplace-Name: China Banking Corporation, Manila Title: Measuring education inequality in the Philippines Abstract: This paper measures the degree of education inequality in the Philippines. It generates the average years of schooling (AYS) and education Gini coefficients of the Philippines as a whole, and all its regions and provinces to examine the economically active population’s level of educational attainment and the distribution of education. The paper finds that although inequality in educational attainment declined from 1960 to 2000, there are wide discrepancies in the educational performance of regions and provinces. Using decomposition analysis, it finds that poor provinces have greater education inequality than nonpoor provinces. It also finds that at the national level, women are facing a more equitable distribution of education than males. The regional and provincial data show that the education Gini index is negatively associated with the average years of schooling and gross domestic regional product, but positively associated with the income Gini index, poverty incidence, and poverty gap. Classification-JEL: D63, I21, I32 Keywords: education, education inequality, education Gini coefficient, inequality Journal: Philippine Review of Economics Pages: 33-70 Volume: 44 Issue: 2 Year: 2007 Month: December File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/227/630 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:44:y:2007:i:2:p:33-70 Template-Type: ReDIF-Article 1.0 Author-Name: Dennis S. Mapa Author-Workplace-Name: University of the Philippines School of Statistics Author-Name: Kristine Joy S. Briones Author-Workplace-Name: University of the Philippines School of Economics Title: Robustness procedures in economic growth regression models Abstract: A central question for empirical economics, particularly economic growth, is which explanatory variables to include and exclude in the regressions. This paper aims to identify variables strongly correlated with provincial income growth in the Philippines by applying robustness procedures in determining which variables are strongly correlated with income growth. The extreme bound analysis and the Bayesian averaging of classical estimates were applied to 15 determinants of income growth from a data set consisting of 74 Philippine provinces for the period 1985-2003 to test which among the explanatory variables are strongly correlated to growth. The tests show that among the 15 variables, five variables stand out as being robust. The log of initial income, the Autonomous Region in Muslim Mindanao (ARMM) indicator, the expenditure Gini and its square, and the proportion of young dependents are all considered as strongly correlated to growth. Classification-JEL: O40, C01, C11 Keywords: robust, extreme bound analysis, Bayesian averaging of classical estimates Journal: Philippine Review of Economics Pages: 71-84 Volume: 44 Issue: 2 Year: 2007 Month: December File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/228/625 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:44:y:2007:i:2:p:71-84 Template-Type: ReDIF-Article 1.0 Author-Name: Zukarnain Zakaria Author-Workplace-Name: Universiti Teknologi Malaysia Title: The impacts of monetary policy on consumption and investment: empirical evidence from selected countries in Southeast Asia Abstract: This paper investigates the effectiveness of monetary policy in four major countries in Southeast Asia by using impulse-response functions within a vector error correction model (VECM) framework. The impacts of interest rate shock on two macroeconomic variables, investment and consumption have been analysed and compared based on the magnitude and the speed of adjustment. The findings show that the effectiveness of monetary policy differs not only between countries but also on the macroeconomics variable used in the analysis. Monetary policy was found more effective in influencing investment in the Philippines compared with Malaysia and Thailand, and the impacts are smallest in Indonesia. For consumption, the impacts are stronger in Thailand and smallest in the Philippines. The impacts of monetary policy on consumption are also less responsive compared with it impacts on investment. Classification-JEL: E52, E21, E22 Keywords: monetary policy, consumption, investment, impulse response Journal: Philippine Review of Economics Pages: 85-97 Volume: 44 Issue: 2 Year: 2007 Month: December File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/229/629 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:44:y:2007:i:2:p:85-97 Template-Type: ReDIF-Article 1.0 Author-Name: Mohammad Afzal Author-Workplace-Name: Gomal University, D.I. Khan Title: Savings and investment in developing countries : Granger causality test Abstract: Additional evidence on savings and investment relationship in developing countries has been provided using conventional and time-series econometrics techniques. This paper finds no long-run relationship between savings and investment in seven countries of the sample, which implies increased degree of capital mobility and weakening of savings and investment relationship since early 1970s. There is bidirectional causality between savings and investment in South Africa, while there is unidirectional causality from savings to investment in Pakistan and Sri Lanka. There is no causality in India, Philippines, Malaysia, and Iran. This divergence might be due to country-specific policies and economic conditions. Strong correlation between savings and investment does not rule out capital mobility across countries. Classification-JEL: C23, F31, F21, F30 Keywords: savings, investment, capital mobility, causality Journal: Philippine Review of Economics Pages: 99-110 Volume: 44 Issue: 2 Year: 2007 Month: December File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/230/627 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:44:y:2007:i:2:p:99-110 Template-Type: ReDIF-Article 1.0 Author-Name: M. Yusof Saari Author-Workplace-Name: University of Groningen, The Netherlands Author-Name: A.R. Zakariah Author-Workplace-Name: Universiti Putra Malaysia Title: Fix- or flex-price behavior? : evidence from the Malaysian manufacturing sector Abstract: Industries can be classified into fix-price and flex-price sectors according to their pricing behavior. Although Hicks [1985] and Morishima [1984] have broadly classified manufacturing industries into fix-price and the rest of the economy into flex-price, using the cost-based input-output model, the present paper reclassifies the Malaysian manufacturing industries into fix-price and flex-price categories. By compiling annual sectoral price indices, both for intermediate and primary inputs, the paper found that most of the flex-price manufacturing industries are from non-agro-based industries whereas most of the fix-price industries are from agro-based industries. Classification-JEL: D4 Keywords: input-output, fix price, flex price, residual profits Journal: Philippine Review of Economics Pages: 111-124 Volume: 44 Issue: 2 Year: 2007 Month: December File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/492/632 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:44:y:2007:i:2:p:111-124 Template-Type: ReDIF-Article 1.0 Author-Name: Muhammad Shahbaz Author-Name: Akhtar Lodhi Author-Name: Muhammad Sabihuddin Butt Author-Workplace-Name: Social Policy and Development Centre, Karachi, University of Karachi, Karachi Title: Financial development under the shade of globalization and financial institutions : the case of Pakistan Abstract: This study investigates the importance of financial institutions, net capital inflows, and trade openness for financial-sector development in a small developing economy like Pakistan. Two approaches (Johansen test and autoregressive distributive lag approach) were employed for the robustness of long-run relationships among the variables under consideration and found that both techniques provide robust results for long-run relationships, in Pakistan’s case. Net capital in inflows has positive impact on financial-sector development in the long run. Trade openness is the main promoter of financial development in both periods. Finally, financial institutions and economic growth also help to improve the development of the financial sector. Further, it examined Rajan and Zingales’s [2003a] hypothesis that predicts combined influence of capital account liberalization and trade openness on financial-sector development. However, such relationship does not exist in the case of Pakistan. In terms of policy implications, our findings suggest that macroeconomic management, which could simultaneously stimulate foreign capital inflows and trade openness, improves quality of financial institutions, and high economic growth in the country would enhance the performance of both capital and financial intermediaries. Classification-JEL: F43, F36, F10 Keywords: capital account liberalization, financial development, trade openness Journal: Philippine Review of Economics Pages: 125-148 Volume: 44 Issue: 2 Year: 2007 Month: December File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/231/635 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:44:y:2007:i:2:p:125-148 Template-Type: ReDIF-Article 1.0 Author-Name: T. Koti Reddy Author-Workplace-Name: ICFAI Business School, Hyderabad Title: Challenges to Indian agriculture : future strategy Abstract: This paper discusses production and productivity trends, and challenges to, and future strategy of, the Indian agricultural sector. The author suggests that there is a need to raise farm productivity, especially in the country’s vast rain-fed areas. Priority should be given not just to crop farming but also to livestock farming, horticulture, fodder plantation, and grassland development. Improved seeds and fertilizers, and proper irrigation facilities can play a crucial role in raising productivity. The growth of the agricultural sector depends on the growth of infrastructure facilities like irrigation, rural roads, market, power, cold storage, etc. The study points out that the decline in public investment in agriculture is mainly due to the diversification of resources in the form of subsidies for food, fertilizers, electricity, irrigation, credit, etc. The study concludes that the diseconomies in cost, lack of quality of domestic products in foreign markets, and cutthroat competition from other agrarian economies are the major constraints to Indian agricultural exports. The author suggests contract farming to raise high-value crops on small farms and public-private partnership in agricultural research. Classification-JEL: O, O10 Keywords: capital formation, production and productivity trends, institutional credit, regulated marketing, infrastructural facilities Journal: Philippine Review of Economics Pages: 149-169 Volume: 44 Issue: 2 Year: 2007 Month: December File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/232/633 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:44:y:2007:i:2:p:149-169 Template-Type: ReDIF-Article 1.0 Author-Name: Sunday Mauton A. Posu Author-Workplace-Name: Olabisi Onabanjo University, Nigeria Author-Name: O. Ismail Soile Author-Workplace-Name: Olabisi Onabanjo University, Nigeria Author-Name: A. O. B. Sangosanya Author-Workplace-Name: Olabisi Onabanjo University, Nigeria Author-Name: Sunday Mauton A. Posu Author-Workplace-Name: University of the West Indies, Jamaica Title: Foreign direct investment and Nigeria’s economic growth : a sectoral analysis Abstract: Aggregate flows of foreign direct investment (FDI) to Nigeria, as in economies of the world, fall into different classified sectors of the economy. Studies on FDI in economic literature have been directed at the macroeconomic effects of FDI on economic growth. As sound as the findings of such studies appear, the growth impacts that FDI flows create on each sector of the economy are, however, masked. Thus this paper, using time-series data for the period 1970-2003 and adopting the ordinary least square technique, investigated the impacts of FDI flows on the outputs of some selected sectors in the Nigerian economy. The parsimonious form of analysis of general-to-specific was applied in the analysis of the model. The results shows that FDI flow was significant to sectoral growth of the mining and quarrying, and the transportation and communication sectors, but was not significant to the growth of the agriculture, forestry, and fishery sector. Classification-JEL: F21, E23, O15, O30 Keywords: foreign direct investment, sectoral growth, human capital, investment flows Journal: Philippine Review of Economics Pages: 171-194 Volume: 44 Issue: 2 Year: 2007 Month: December File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/233/634 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:44:y:2007:i:2:p:171-194