Template-Type: ReDIF-Article 1.0 Author-Name: Felipe M. Medalla Author-Email: Author-Workplace-Name: University of the Philippines School of Economics Author-Name: Karl Robert L. Jandoc Author-Email: Author-Workplace-Name: University of the Philippines School of Economics Title: Philippine GDP growth after the Asian financial crisis : resilient economy or weak statistical system? Abstract: Official statistics from the Philippine National Income Accounts (NIA) depict an economy that grew faster after the Asian financial crisis (AFC). Although higher output growth was accompanied by higher real growth rates of personal consumption and the service sector, import growth compression also figured as the dominant factor that accounted for the rise in the growth rate. In this respect, the Philippine experience is quite different from much of Asia where the growth rates of domestic absorption, exports, and imports rose or fell in tandem with gross domestic product (GDP) growth. This paper takes the view that the Philippines’ uniqueness is more a reflection of the weakness of its national income accounting system than the resiliency of its economy. Furthermore, since trends in many other economic indicators outside the NIA seem to contradict it, it is very likely that GDP growth after the AFC (and after 2000 in particular) has been overstated. Classification-JEL: O1, E01 Keywords: GDP, NIA, economy, financial crisis Journal: Philippine Review of Economics Pages: 1-34 Volume: 46 Issue: 1 Year: 2009 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/192/677 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:46:y:2009:i:1:p:1-34 Template-Type: ReDIF-Article 1.0 Author-Name: Ma. Lourdes A. Sereno Author-Email: Author-Workplace-Name: AIM Policy Center Author-Name: Emmanuel S. de Dios Author-Email: ededios@gmail.com Author-Workplace-Name: University of the Philippines School of Economics Author-Name: Joseph J. Capuno Author-Email: jjcapuno@gmail.com Author-Workplace-Name: University of the Philippines School of Economics Title: Justice and the cost of doing business in the Philippines Abstract: The performance of the judicial system has been thrown into the limelight as business surveys point to its performance as one of the main obstacles and disincentives to doing business in the Philippines. The channels through which judicial decisions may affect business behavior are straightforward: increased uncertainty and high costs. To quantify the perceived effects, a survey of 320 of the top 7000 corporations in the Philippines was conducted in 2001. Our findings show that governance problems are at least as important as economic or financial problems in doing business. Of more direct relevance to the judiciary, difficulties in settling legal conflicts were among the most frequently cited factor affecting business. Further, the current level of functioning of the legal system has an economic impact equivalent to foregoing at least 6-11 percent of total investment in the economy and foregoing at least one-fourth to one-half of a percentage point (0.25-0.46) of GDP growth annually, or an annual loss amounting to between Php7 billion and Php13 billion in 1999 alone. These are significant and recurring economic losses attributable to the nature and functioning of institutions and form a strong case for judicial reform. Classification-JEL: K41, L14, D23 Keywords: Judicial inefficiency, cost of doing business, Philippines Journal: Philippine Review of Economics Pages: 35-86 Volume: 46 Issue: 1 Year: 2009 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/193/680 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:46:y:2009:i:1:p:35-86 Template-Type: ReDIF-Article 1.0 Author-Name: Raul V. Fabella Author-Email: rvfabella@up.edu.ph Author-Workplace-Name: University of the Philippines School of Economics Title: Optimal cash-in-advance contracts under weak third-party enforcement Abstract: We explore the implications of North’s weak third-party enforcement (TPE) on the structure of the ex ante incentives-compatible contracts that require an advance payment by the principal to the agent. This generates appropriable quasi-rent, which the agent can appropriate. To deal with this, we introduce a stronger constraint, the augmented participation constraint, reflecting the quality of tpe that prompts a distinction between insider reservation and outsider reservation utility. We show that a falling TPE raises the agent’s insider reservation utility, reducing the principal’s profit and his willingness to contract. When the cash-in-advance commitment is endogenous, its optimal level falls as TPE falls. tpe erosion thus leads to either the nonexistence of or the flight from more productive contracts and exchange, leading to North’s observation of poorer economic performance. Classification-JEL: 022, 026, 611 Keywords: Cash-in-advance contracts, agent opportunism, weak TPE, flight to spot contracts Journal: Philippine Review of Economics Pages: 87-102 Volume: 46 Issue: 1 Year: 2009 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/194/678 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:46:y:2009:i:1:p:87-102 Template-Type: ReDIF-Article 1.0 Author-Name: Shigeyuki Abe Author-Email: Author-Workplace-Name: Doshisha University, Japan Title: Philippines’ competitiveness and global financial meltdown : a question of Japan’s role Abstract: The global financial crisis has affected all of Asia and hit the Philippine economy also hard. This is because global demand still represents a major factor behind Asia’s export growth. Indeed, the relationship between U.S. import growth and Asian intraregional export growth has actually become stronger over time. Japan shifted her stance from exporting industrial products to the U.S. and Europe to constructing manufacturing bases in Asia after the 1985 Plaza Accord. This started to create greater interdependence in Asia, with the development of a singlewide factory region. This paper explores the changing structure of the Philippines’ international trade and how the economy became so interdependent. How Japan has engaged in this development is also explained. By using measures like revealed comparative advantage and intra-industry trade, the Philippine economy is compared with other East Asian economies and found to possess similar trade structures with other East Asian countries. Suggested policy conclusion is to upgrade industrial structure, to make the structure different, and to use Philippines’ unique strength of mobile human capital. Japan needs to be prepared not only to absorb productions in this area, but must also open and enlarge markets for such mobile natural persons. Classification-JEL: F14, F15, F16 Keywords: RCA, intra-industry trade, FDI, remittance Journal: Philippine Review of Economics Pages: 103-123 Volume: 46 Issue: 1 Year: 2009 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/195/679 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:46:y:2009:i:1:p:103-123 Template-Type: ReDIF-Article 1.0 Author-Name: Rafaelita M. Aldaba Author-Email: Author-Workplace-Name: Philippine Institute for Development Studies Title: SMEs in the Philippine manufacturing industry and globalization : meeting the development challenges Abstract: In view of rapid changes in the international trade and the growing complexity of the global production system, this paper reviews the government’s small and medium enterprises (SME) policies in the manufacturing sector. It shows that despite the number of policies and programs to improve firm competitiveness, the performance of SMEs has not been vigorous enough to boost the manufacturing industry. The deepening of high-technology industries has remained weak due to limited backward linkages and low value added of high-technology export products. The paper also draws on the findings of a survey of SMEs in the automotive, electronics, and garments sectors. It highlights the importance of creating a separate government office that would coordinate SME policies and programs to support the integration of SMEs in the global production chain. Classification-JEL: L60, L53 Keywords: Small and medium enterprises (SMEs), Philippine manufacturing, competitiveness, global production networks Journal: Philippine Review of Economics Pages: 35-86 Volume: 46 Issue: 1 Year: 2009 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/196/691 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:46:y:2009:i:1:p:35-86 Template-Type: ReDIF-Article 1.0 Author-Name: Jan Carlo B. Punongbayan Author-Email: Author-Workplace-Name: University of the Philippines School of Economics Title: School inputs and student performance in public elementary schools in Palawan : a quantile regression analysis Abstract: This study investigates the role of school resources in different measures of student performance in public elementary schools in the province of Palawan. We contend that it is not enough to identify which school resources matter the most, but that it would be more informative for policy purposes to identify which student types may benefit the most from the provision of a given school resource. This way, we may be able to target our allocations toward more productive educational investments. Using quantile regression analysis, we find that in the case of Palawan, improvements in pupil-teacher and pupil-toilet ratios may benefit high-performing schools the most. We also find that class size and pupil-room ratio improvements, along with the provision of guidance counselors and science laboratories, may benefit low-performing schools the most. Our results also give some evidence that conventional ordinary least squares (OLS) procedures may be both insufficient and imprecise in estimating education production functions, and that educational policies based on least squares methods alone may be misguided if not accompanied by other techniques, such as quantile regression, which can offer more valuable insights into education production processes in general. Classification-JEL: I21, I28, C19 Keywords: Quantile regression, academic performance, education resources Journal: Philippine Review of Economics Pages: 189-219 Volume: 46 Issue: 1 Year: 2009 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/197/683 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:46:y:2009:i:1:p:189-219 Template-Type: ReDIF-Article 1.0 Author-Name: Hyun H. Son Author-Email: Author-Workplace-Name: Economics and Research Department, Asian Development Bank Author-Name: Jhiedon Florentino Author-Email: Author-Workplace-Name: Economics and Research Department, Asian Development Bank Title: Ex ante impact evaluation of conditional cash transfer program on school attendance and poverty : the case of the Philippines Abstract: This paper provides an ex ante assessment of the implementation of the conditional cash transfer (CCT) program in the Philippines, called Pantawid Pamilyang Pilipino. The study investigates the impact of CCT on current poverty and that of this extra money on school attendance under different transfer amounts and different targeting criteria such as universal targeting, geographical targeting, targeting of the poor, and progressive targeting. In the poverty simulation approach, it is assumed that transfers given to children are pooled within families and distributed to each member so that all enjoy the same level of welfare. As for school attendance, the study evaluates the potential impact of changes in program design—with alternative benefit levels and targeting scenarios—on the behavioral response and welfare of households. The simulation is carried out based on microeconometrically estimated models of household behavior. Classification-JEL: J22, J13, J24, I38, I32 Keywords: Demand for schooling, child labor, human capital, cash transfers, targeting, poverty Journal: Philippine Review of Economics Pages: 221-248 Volume: 46 Issue: 1 Year: 2009 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/198/682 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:46:y:2009:i:1:p:221-248