Template-Type: ReDIF-Article 1.0 Author-Name: Karl Kendrick Chua Author-Workplace-Name: International Bank for Reconstruction and Development Author-Name: Louie Limkin Author-Workplace-Name: International Bank for Reconstruction and Development Author-Name: John Nye Author-Workplace-Name: George Mason University and the Higher School of Economics in Moscow Author-Name: Jeffrey Williamson Author-Workplace-Name: Harvard University, the University of the Philippines, and the University of Wisconsin Title: Urban-rural income and wage gaps in the Philippines: measurement error, unequal endowments, or factor market failure? Abstract: Income inequality is higher in the Philippines than in most of its Asian neighbors, and spatial inequality accounts for a fairly large share of it. There is little evidence of labor market failure in the Philippines since, when properly measured, wage gaps by skill level are modest. Unequal endowments account for most of the urban-rural income gaps. That is, individual attributes of workers and households explain the majority of the urban-rural gaps, and schooling, skill, and experience are the three individual characteristics that matter most. Provincial variables, like typhoon incidence, government corruption, school crowding, and access to health facilities, matter far less. Workers born in the cities and immigrants to the cities invest more in human capital than do rural workers. However, this paper cannot tell us how much of that is due to better human-capital-building infrastructure supply in the cities and how much is due to higher urban demand for that infrastructure. Classification-JEL: D3, J3, O3, R1 Keywords: regional inequality, wage gaps, migration, the Philippines Journal: Philippine Review of Economics Pages: 1-21 Volume: 52 Issue: 2 Year: 2015 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/921/821 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:52:y:2015:i:2:p:1-21 Template-Type: ReDIF-Article 1.0 Author-Name: Gerardo P. Sicat Author-Workplace-Name: University of the Philippines School of Economics Title: American private direct investment in the Philippines after independence Abstract: The Philippines has lagged behind East and Southeast Asian economic growth successes in the course of contemporary times. A historical perspective is presented to explain this lag. When the country entered the definite road to independence from American rule in 1934, it adopted a political Constitution that limited foreign capital to a minority role in three industries – land, public utilities, and the exploitation of natural resources. During the colonial period and after political independence in 1946, American foreign direct investment in the country was dominant and large. This continued after independence as US citizens were granted equal rights of Filipinos and American businesses received war damage payments to rehabilitate their investments. This was further helped by bilateral preferential trade with the United States during twenty-eight years of economic adjustment. In actual practice, the restrictive provisions in the Constitution invited many virulent forms of nationalistic economic policies of exclusions of foreigners in other lines of economic activity and led to inward-looking economic development policies. These policies discouraged American foreign direct investments causing disinvestment in key areas. The restrictive economic provisions in the Constitution continue to this day even as the economy is opening more to world markets. Classification-JEL: P45, D9 Keywords: Philippine economic history and development, foreign direct investment, American foreign direct investment, Philippine-American economic relations Journal: Philippine Review of Economics Pages: 22-37 Volume: 52 Issue: 2 Year: 2015 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/922/823 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:52:y:2015:i:2:p:22-37 Template-Type: ReDIF-Article 1.0 Author-Name: Chia Siow Yue Author-Workplace-Name: Singapore Institute of International Affairs Title: Singapore’s five decades of development: lessons and future directions Abstract: This paper looks at Singapore’s transition from a Third World economy at the time of political independence in August 1965 to a First World economy five decades later. It is a unique city-state with a dearth of land and natural resources and pursuing a government-led, mnc (multinational corporation)- led, and export-led development strategy. Government and governance have been outstanding, and the city-state overcame its constraints by adopting open trade and investment policies, making the region and the world its economic hinterland. Five decades later, while facing the same demographic and land constraints, it has to overcome the challenges of transitioning into a private-enterprise-driven and innovation-driven economy. Classification-JEL: F1, F2, H1, J1, O1, O2 Keywords: Singapore development model, economic policy, social policy, city-state economy Journal: Philippine Review of Economics Pages: 38-64 Volume: 52 Issue: 2 Year: 2015 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/923/824 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:52:y:2015:i:2:p:38-64 Template-Type: ReDIF-Article 1.0 Author-Name: Dante B. Canlas Author-Workplace-Name: University of the Philippines School of Economics Title: The Philippines: on the road to being an emerging economy Abstract: In the 1980s, the Philippines was viewed as a failure in terms of its goal to industrialize. But in the past few years of the current century, the country’s economic prospects improved and the country is predicted to be joining the next group of “breakout nations”. The paper looks at the short-run macroeconomic policy reforms and long-term growth-oriented policies since 1986 that have contributed to improved growth performance and bright economic prospects. A responsible budget deficit-reduction program and investments in factors that support long-run growth, such as human capital, have been helpful. Moving forward, stabilization policy has gotten more challenging in an environment of mobile international capital, flexible exchange rates, and “quantitative easing”. In the long run, policies conducive to technological progress are essential. Classification-JEL: E32, O11 Keywords: growth, convergence, stabilization, technological progress Journal: Philippine Review of Economics Pages: 65-83 Volume: 52 Issue: 2 Year: 2015 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/924/825 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:52:y:2015:i:2:p:65-83 Template-Type: ReDIF-Article 1.0 Author-Name: Sarah Lynne S. Daway Author-Workplace-Name: University of the Philippines School of Economics Author-Name: Raul V. Fabella Author-Workplace-Name: University of the Philippines School of Economics Title: Development progeria: the role of institutions and the exchange rate Abstract: In the 1980s, the Philippines was viewed as a failure in terms of its goal to industrialize. But in the past few years of the current century, the country’s economic prospects improved and the country is predicted to be joining the next group of “breakout nations”. The paper looks at the short-run macroeconomic policy reforms and long-term growth-oriented policies since 1986 that have contributed to improved growth performance and bright economic prospects. A responsible budget deficit-reduction program and investments in factors that support long-run growth, such as human capital, have been helpful. Moving forward, stabilization policy has gotten more challenging in an environment of mobile international capital, flexible exchange rates, and “quantitative easing”. In the long run, policies conducive to technological progress are essential. Classification-JEL: 014, 043, F31 Keywords: Development progeria, institutions, real exchange rate, low-income economies Journal: Philippine Review of Economics Pages: 84-99 Volume: 52 Issue: 2 Year: 2015 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/925/826 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:52:y:2015:i:2:p:84-99 Template-Type: ReDIF-Article 1.0 Author-Name: Tham Siew Yean Author-Workplace-Name: Institute of Malaysian and International Studies, Universiti Kebangsaan Malaysia Author-Name: Andrew Kam Jia Yi Author-Workplace-Name: Institute of Malaysian and International Studies, Universiti Kebangsaan Malaysia Title: Malaysia-China trade: old and new routes Abstract: The opening up of China and its subsequent rapid integration into the global economy provided opportunities for Malaysia to increase trade with China through their respective participation in global value chain activities. This paper aims to examine the nature of Malaysia-China trade and the contributory factors to this bilateral trade pattern and to assess the prospects and challenges for this bilateral trade, with the new Silk Road initiatives. The main findings of this paper show increased information and communications technology and palm oil trade between the two countries. But the trade pattern also indicates Malaysia’s trade in electronics and palm oil with China is facing either stagnating or declining revealed comparative advantage. Instead, China’s rise has also raised severe competitive pressures as each country tries to shift up the global value chain. Internal weaknesses also contributed to the weakening competitiveness of Malaysia’s electrical and electronics sector so that the share of this sector’s manufacturing and exports fell substantially, while the share of resource based manufacturing activities gained ground. Malaysia is trying to tap the promises of the new Silk Road initiative for enhancing its trade and investment relations with China. However, realizing this potential faces several hurdles, such as the viability of this initiative and internal challenges within China and Malaysia. The most urgent of the three challenges is for Malaysia to overcome its domestic challenges, since without the requisite domestic changes, no investor, including China, will venture into the country. Classification-JEL: F10, F14, N75 Keywords: Malaysia, China, trade, Silk Road, electronics, palm oil Journal: Philippine Review of Economics Pages: 100-117 Volume: 52 Issue: 2 Year: 2015 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/926/827 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:52:y:2015:i:2:p:100-117 Template-Type: ReDIF-Article 1.0 Author-Name: Joseph J. Capuno Author-Workplace-Name: University of the Philippines School of Economics Title: Class participation in politics in Southeast Asia Abstract: Using the dataset from the Asian Barometer Survey conducted in 2010-2012, we determine the variations in political participation across socioeconomic classes in five Southeast Asian countries and apply Oaxaca decomposition method to explain the variations. In general, we find high rates of voting participation across classes in Indonesia, Malaysia, the Philippines, and Thailand. In Singapore, barely half of the sample voted in previous elections. In Indonesia, Thailand, and Malaysia, the middle classes distinguish themselves from the rest by participating in other political activities, including contacting officials or the news media, joining others to voice out or directly address their common concerns, and attending rallies or demonstrations. Furthermore, interclass differences in political participation is due more to divergence in mean characteristics in Thailand, but they are due more to the heterogeneous effects of these characteristics in Indonesia and Malaysia. Relative to the middle classes in these three countries, those in the Philippines and Singapore each appears politically disengaged. Classification-JEL: D72, Z10, O57 Keywords: political participation, middle class, Oaxaca decomposition, Southeast Asia Journal: Philippine Review of Economics Pages: 118-142 Volume: 52 Issue: 2 Year: 2015 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/927/828 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:52:y:2015:i:2:p:118-142 Template-Type: ReDIF-Article 1.0 Author-Name: Archanun Kohpaiboon Author-Workplace-Name: Thammasat University, Thailand Author-Name: Juthathip Jongwanich Author-Workplace-Name: Thammasat University, Thailand Title: The effect of trade policy on firm productivity in Thai manufacturing Abstract: The paper examines the effect of trade policy on firm productivity using two recent industrial censuses of Thai manufacturing (i.e., 2006 and 2011). Trade policy and global participation are treated as two different variables in our analysis. Controlling for firms’ global participation, which is defined as export-sale ratio and the extent to which raw materials are imported, our study finds that trade liberalization could induce firms to commit to activities that improve productivity. The effective rate of protection, where output and input tariffs are taken into consideration together, matters in improving firm productivity. Thus, it would be risky to continue tariff reform by focusing solely on a reduction in input tariffs while leaving output tariffs untouched. In fact, both input and output tariffs must be taken into consideration to neutralize incentives in trade policy reform. Classification-JEL: F10, N75 Keywords: trade policy, Thai manufacturing, effective rate of protection, productivity and developing countries Journal: Philippine Review of Economics Pages: 143-169 Volume: 52 Issue: 2 Year: 2015 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/928/829 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:52:y:2015:i:2:p:143-169 Template-Type: ReDIF-Article 1.0 Author-Name: Gilberto M. Llanto Author-Workplace-Name: Philippine Institute for Development Studies Title: Households’ access to financial services: some evidence from survey data Abstract: Many studies look at financial inclusion from the supply side. The discussion in those studies revolves around the different types of financial services being developed to provide the excluded segment of the population with access to such services and the evolving regulatory frameworks supporting those innovative financial services. This paper views financial inclusion from the perspective of households who use financial services and asks what factors determine access to financial services. It provides a quantitative estimation of the factors affecting household decision to participate in the formal financial markets and the impact of the utilization of financial services on household incomes. It uses micro-data from the Annual Poverty Indicators Survey in the estimation. The empirical findings provide useful information for designing policies and interventions to foster inclusive finance. It points to financial education of households as a key intervention in financial inclusion strategies.. Classification-JEL: D14, G21 Keywords: financial inclusion, inclusive finance, access to banking services, financial education Journal: Philippine Review of Economics Pages: 170-191 Volume: 52 Issue: 2 Year: 2015 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/929/830 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:52:y:2015:i:2:p:170-191 Template-Type: ReDIF-Article 1.0 Author-Name: Bhanupong Nidhiprabha Author-Workplace-Name: Thammasat University Title: The ASEAN business cycle and China’s slowdown Abstract: The economies in the Association of Southeast Asian Nations (asean) have been integrated through increasing trade relations intensified by tariff reductions and increasing openness to foreign direct investment. Rising volume of networks trade has deepened interconnectedness between asean and China, a recent growth locomotive in the world. asean business cycle is shaped by volatile China’s trade volume. As China’s expansion slows down, adverse consequences on asean economies have become more pronounced. The extent of the damage depends on each member of asean’s trade exposure and China dependency. This paper identifies the most vulnerable asean economies to China’s business cycle. The slowing down of the Chinese economy would undoubtedly result in a decline in long-term growth of some asean economies, unless appropriate policy responses can be implemente Classification-JEL: E32, F43 Keywords: ASEAN Growth, Business Cycles, China’s Slowdown Journal: Philippine Review of Economics Pages: 192-209 Volume: 52 Issue: 2 Year: 2015 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/930/831 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:52:y:2015:i:2:p:192-209 Template-Type: ReDIF-Article 1.0 Author-Name: Ramon L. Clarete Author-Workplace-Name: University of the Philippines School of Economics Author-Name: Philip Arnold O. Tuano Author-Workplace-Name: Ateneo de Manila University Title: Goods trade liberalization under the ASEAN Economic Community: effects on the Philippine economy Abstract: The economy-wide effects of the asean Free Trade Area (afta) on the Philippine economy are computed using the Global Trade Analysis Project (gtap) model of the world economy. Of the 40 industries representing the Philippine economy that were simulated to assess the impacts of afta on sectoral output, 24 industries declined. However, the order of magnitudes of the percentage declines is low, except for rice, whose output decreased by about 4.5 percent. Notwithstanding the contraction of production in the majority of industries, the country comes out a net gainer in aggregate output by around 1.4 percent in total gross domestic product. This implies that, overall, the Philippines is slightly better off with the preferential trade liberalization, with an equivalent variation gain of us$237.4 million. Considerable movement of workers across industries is observed. Reductions in skilled worker employment resulted in 31 industries, and 35 industries do the same in the case of unskilled labor. There is no change in unemployment due to the fact that the empirical model assumes full employment of productive factors. Given the fact that there is a change in employment patterns during trade liberalization episodes, it is important to assess the empirical relationship between trade liberalization and unemployment which remains difficult to pin down. The empirical literature in developing countries shows that the employment response of trade reforms is dependent on infrastructure, trade facilitation measures, and other policies. Therefore, policies related to providing information and new market opportunities, organizing value chains, facilitating coordinated investments along the chain, clustering of related small and medium enterprises to boost external economies, and providing information to employers and workers of job opportunities, including training, are important. Classification-JEL: F150 Keywords: ASEAN Economic Community, ASEAN Free Trade Area, trade liberalization Journal: Philippine Review of Economics Pages: 210-233 Volume: 52 Issue: 2 Year: 2015 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/931/832 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:52:y:2015:i:2:p:210-233 Template-Type: ReDIF-Article 1.0 Author-Name: Emmanuel S. de Dios Author-Workplace-Name: University of the Philippines School of Economics Author-Name: Katrina Dinglasan Author-Workplace-Name: University of the Philippines School of Economics Title: Just how good is unemployment as a measure of welfare? A note Abstract: Governments are rightly concerned with employment generation to make growth inclusive. The use of the open unemployment rate to measure success, however, may be misplaced. In a developing country like the Philippines, with a large informal sector and in the absence of unemployment insurance, open unemployment is primarily a middle-class phenomenon: the unemployed are not predominantly poor, and the poor are not predominantly unemployed. Measures of productivity and shifts of labor across sectors may contain more information and be more welfare-relevant Classification-JEL: J21, I32, O15 Keywords: unemployment, underemployment, labor force, welfare, poverty, development economics Journal: Philippine Review of Economics Pages: 234-245 Volume: 52 Issue: 2 Year: 2015 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/932/833 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:52:y:2015:i:2:p:234-245