Discussion Papers Series 1999-2004
DP 2004-35 The Dynamics of Philippines-Japan Economic Cooperation: The Case of Japan's ODA in the Philippines
Jose V. Camacho Jr. and Agham C. Cuevas
The Japan-Philippines Economic Partnership Agreement is envisioned to further boost Japan's ODA to the Philippines, particularly for capital formation in the infrastructure sector. It will stimulate an increase in investment and capital accumulation causing more employment opportunities to be created. Output capacity will expand and so with cost of production. Moreover, export volume will increase at lower prices, thus enhancing competitiveness in the world market. Trade and business facilitation particularly among Japanese firms in the Philippines will be further enhanced due to an improvement in infrastructure and other support services, for instance, farm-to-market roads, energy, power and telecommunication, irrigation and information technology. Potential economic gains on technical assistance and development cooperation for capacity-building in the fields of information and communication technology, science and technology, intellectual property, human resource development and the enhancement of the country’s capacity to design an appropriate competition policy are evident from the Agreement. Furthermore, the proposed pact for economic partnership will be more beneficial to the Philippine economy as its institutions and their capabilities are upgraded particularly through technical cooperation in the areas of trade and investment activities, energy infrastructure development, government procurement, ecommerce and paperless trading. Philippine small-medium enterprises (SMEs) will capture immense economic benefits since the proposed economic cooperation will enhance greater trade and business facilitation. An increase in Japanese ODA channeled to the social sector will significantly improve poverty alleviation and human development. It will translate to an enhancement of skills and IT literacy that will ultimately improve the quality of labor force needed by the various sectors, particularly the industry and services. These skilled and IT literate labor force can fill up the demand for well-trained technical professionals in Japanese economy. This will be further explored if mutual recognition of performance standards and assessment procedures of technical professionals will be agreed upon under JPEPA.
DP 2004-34 Exploring Potentials of a Japan-Philippines Economic Partnership in Human Resource Development
Jhoana V. Alcalde, Niño Alejandro Q. Manalo and Rodger M. Valientes
This paper explored the potentials of including the broad realm of human resource development into the proposed bilateral economic agreements between Japan and the Philippines. The authors greatly recognized that the extent and sustainability of a nation’s economic development is largely anchored on the degree of development of its largest asset, the human resource, hence exploring possible areas where such asset can be developed and make the most of is essential.
DP 2004-33 Philippine-Japan Economic Linkages: A Case Study of Cebu
The impact of the Japan-Philippine Economic Agreement (JPEPA) can be enriched by providing a regional dimension in its macro-analysis. Cebu-Japan cooperation largely hinges on Cebu’s economic competitiveness which manifests itself through its quality human resources, its dynamic export sector and tourism industry, its proximity to international entry and exit points, its infrastructures, its cost of doing business, its quality of life and the responsiveness of LGU to business needs. On the other hand, Cebu, as a destination of Japanese investments, is hampered by the relatively high wages of both unskilled and skilled labor, an unstable wage rate environment and moderately high costs of telecommunication, water, gas, and container transport. With this, the exercise on cost-benefit analysis yielded positive gains for Cebu’s economy. The foreign exchange loss, driven by the balance of trade deficit between Cebu and Japan, and the foregone corporate income taxes were offset by the Japanese direct investments, salaries and mandatory contributions of Cebu Economic Zones (CEZ) employees, income for Japanese tourists, remittances of OCWs in Japan, estimated cost-of-living expenses of Japanese nationals residing in Cebu and the Japanese ODA to Cebu.
DP 2004-32 Towards a Philippine-Japan Economic Cooperation in Agriculture
Amelia Bello, Zenaida Sumalde and Carlos Lorenzo Vega
Agriculture is a sensitive issue for both the Philippines and Japan. Thus, promoting economic cooperation cannot be a crop for crop basis. Concessions to have a greater market access for Philippine agricultural exports may have matched by concessions in other industries/ sectors e.g., retirement, contract workers, etc. Japan’s tariff rates are lower than the Philippines. Freshness and safety considerations are major concerns of the Japanese consumer and are issues that will never be compromised. Existing trade must be facilitated; the direct route of distribution may be explored; and produced may be grown using Japanese seeds and technology. In addition, technical assistance to upgrade the Philippines phytosanitary standards as well as to increase the value added of the Philippine export may be sought.
DP 2004-31 Developing the Japanese Market for Philippine Tourism and Retirement Services: Prospects and Impediments
Winston Conrad B. Padojinog and Ma. Cherry Lyn S. Rodolfo
This paper aims to assess the prospects and impediments to developing the Philippine’s tourism and retirement services for the Japanese market. The impediments identified are in the areas of air access, peace and order situation, marketing and promotions and market information as well as human resource training. Given that the Japanese population is aging rapidly and the cost of medical and caregiving services in Japan remains to be one of the highest in the world, tourism destinations like Thailand and Malaysia have developed and aggressively positioned themselves in niches like medical and long stay programs. The Philippines currently possesses a relatively good supply of caregivers, real estate facilities for long stay programs and a government agency mandated to devote its resources and efforts in these programs.
DP 2004-30 Small and Medium Enterprise Development Experience and Policy in Japan and the Philippines: Lessons and Policy Implications
Ronald Tamangan, Frances Josef and Cielito Habito
The role of SMEs in economic development has been well recognized. SMEs have been regarded as an important contributor to employment generation and wealth creation in a developing economy. Ironically, however, SMEs have been discriminated against considering a raft of issues. In almost all countries, there is either a separate policy statement for SMEs (or for micro or cottage industries) or a general industrial policy statement with some portions of it relating to SMEs. Philippine SME development policies that have been set in place may have been in light of major Philippine industrial development policies. Historically, the common thread that binds Philippine industrial policies has been the emphasis on policies regarding expansion of exports, increases in foreign investments, development of the private sector, and enhancement of domestic linkages.
DP 2004-29 Philippines-Japan Economic Partnership: Where Is the Philippines in Japan's Plan?
Lydia N. Yu-Jose
Going by the statements of the Japan Ministry of Foreign Affairs, Japan’s top priority with regards to regional and bilateral economic partnerships (EPA) is to carryout the framework of its EPA with ASEAN by 2012 or earlier. It must be stressed that Japan is economically interested in the whole Southeast Asia, and not in any single country in it. This is because the Southeast Asian market is big, but the market of a single country in it is small. Japan’s next target is Mexico, since Mexico has concluded a number of EPAs with other partners, thus greatly disadvantaging Japanese enterprises. Japan has a wait and see attitude towards EPA with China, South Asia, Australia, New Zealand, and Chile
DP 2004-28 A Comparative Study of Bilateral FTA/CEP Arrangements
John Lawrence Avila
This study is a comparative analysis of recently concluded bilateral free trade or closer economic partnership agreements including the Japan-Singapore Economic Partnership Agreement (JSEPA), the New Zealand-Singapore Closer Economic Partnership (NZSCEP), the United States-Singapore Free Trade Agreement (USSFTA), the Singapore-Australia Free Trade Agreement (SAFTA), and the Korea-Chile Free Trade Agreement (KCFTA). The primary objective here is to describe and analyze the structure and institutional aspects of these agreements. This paper draws out the general outlines of these bilateral accords looking into their defined principles, scope of preferences, system of rules, and other regime features. These five bilateral agreements are examined against their consistency with WTO, comprehensiveness defined in terms of the scope and depth of the agreement, the degree of flexibility defined in terms of coverage of exemptions given to members, and the level of institutionalization, referring to the organizational and implementing aspects of the agreement.
DP 2004-13 Towards a Strategy for Manufactured Exports to Japan
Ferdinand Maquito and Peter Lee U
The Philippines has become an export-oriented economy, with exports increasing in significance. The electronics industry, in particular, is a showcase of this newfound export prowess. Traditionally, comparative advantage is the takeoff point for understanding trade patterns in economic theory. This paper tries to augment the static nature of the theory of comparative advantage with the dynamics of the flying geese model of economic growth. Applied to the context of Japanese manufacturing networks in recent years, it provides an understanding of the flow of Japanese investments overseas. Export processing zones or special economic zones seem to have played an important role in the electronic industry's export success by attracting sizable investments. This paper estimates an export output production function for special economic zones in the Philippines and finds that most exhibit constant if not increasing returns to scale.
DP 2004-11 Movement of Natural Persons Between the Philippines and Japan: Issues and Prospects
Tereso S. Tullao Jr. and Michael Angelo A. Cortez
Historically, the economic relations between the Philippines and Japan have been shaped by factors leading to the movements of goods, capital and people. Lately, the interspatial transfer of people has been defined by the asymmetric needs of each country. Considering the demographic changes in Japan, particularly its ageing population, and the Philippines’ excess labor and the ability to train health workers, this paper explores the possibility of meeting the asymmetric needs of both countries, examines how welfare and protection can be promoted, and analyzes the impact on productivity enhancements to both countries.
DP 2004-10 Prospects and Problems of Expanding Trade with Japan: A Survey of Philippine Exporters
The paper looks at firm-level factors that affect Philippine exports to Japan with the main objective of recommending provisions for the proposed Japan-Philippines Economic Partnership Agreement (JPEPA) that will enable existing and prospective Philippine exporters to fully exploit the potential of the Japanese market. To this end, the study identifies Philippine products with export prospects in Japan and conducts a SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis of these production sectors.
DP 2004-09 Understanding the Political Motivations Behind Japan's Pursuit of an EPA with the Philippines: Considerations for the Philippine Side
Ronald A. Rodriguez
This study examines the historical dimension of Japan’s foray into regionalism and bilateralism—a radical shift from an exclusively multilateralist orientation to the more strategic and flexible “dual approach.” It explains that such policy change draws motivation from certain developments taking place both in and out of Japan, including but not limited to, the country’s lingering economic decline, the unforeseen turn of events in the World Trade Organization (WTO), and the challenging ascent of China. The study clarifies that Japan’s choice of the Philippines as one of the first countries to negotiate with for a possible EPA after Singapore does not necessarily reflect Japan’s bilateral priorities in Asia.
DP 2004-08 Prospects of Services Trade Liberalization in Japan-RP Bilateral Agreement
Gloria O. Pasadilla
The paper provides a background for services trade negotiations with Japan. It summarizes various discussions on international trade in services, the challenge of further services trade liberalization, and the rise of regional trade agreements. It discusses the different modalities of services trade negotiations that have arisen out of the different regional and bilateral trading arrangements in different parts of the world. The paper also analyses the level of liberalization in services based on existing multilateral and regional commitments of the Philippines and Japan, and suggests a few key points in different services sector that can help the Philippines benefit more from a bilateral trade agreement with Japan.
DP 2004-07 Preferential Rules of Origin for the Japan-Philippine Economic Partnership: Issues and Prospects
The design of rules of origin (ROO) in preferential trade agreements is critical because to the extent that it determines which products are eligible for trade preferences, it influences the magnitude of economic benefits arising from a free trade area (FTA) and who gets them. The challenge in the JPEPA is to craft an ROO that fosters trade but at the same time pegs transaction costs low. This article reviews the nature and principles of different ROO regimes and highlights the economics of ROO setting. Three conclusions emerge from the study. First, given current (2001) level of exports and tariff structures, Japan will stand to benefit more in terms of enhanced market access under the JPEPA. Second, there are indications that Philippine exports to Japan are well placed to satisfy varying levels of ROO restrictions under a value added approach. Third, the existing bilateral template on the ROO under the Japan Singapore Economic Partnership Agreement (JSEPA) will not unduly prejudice Philippine access to the Japanese market if it were to be adopted by the JPEPA.
DP 2004-06 An Analysis of Industry and Sector Specific Impacts of a Japan Philippines Economic Partnership
Royce Elvin O. Escolar
The paper aims to identify industry and macro-level factors that affect competitiveness of selected sectors upon the implementation of the JPEPA. Priority sectors identified by the Department of Trade and Industry, accounting for 82% of total Philippine exports to Japan in 2002, were included in the study. For Philippine industries to gain, market access issues on trade facilitation, non-tariff barriers and recognition of standards come into play especially for the service and agricultural sectors. Internal industry-level factors deal with access to raw materials, lowering input costs through growth of support industries and infrastructure development, SME financing, exploiting economies of scale, firm-level flexibility in part due to utilization of new technologies, greater knowledge of the Japanese market and sustainability of human capital competitiveness through training.
DP 2004-01 Philippine-Japan Bilateral Agreements: Analysis of Possible Effects on Unemployment, Distribution and Poverty in the Philippines Using CGE-Microsimulation Approach
Caesar B. Cororaton
The paper employs an integrated CGE-microsimulation approach to analyze the possible effects of the Philippine-Japan bilateral agreements on unemployment, income distribution and poverty. The results indicate contraction in agriculture but expansion in industry, particular in the nonfood manufacturing sector. Factor prices drop in agriculture while increase in industry. Unemployment in agriculture deteriorates while in industry improves. Thus, income inequality worsens. However, poverty improves, but the improvement is much higher in the National Capital Region (NCR) than in other areas, especially rural. NCR has the least poverty incidence while rural has the highest. The generally favourable poverty effects are due to the overall increase in household income and the reduction in consumer prices.
DP 2003-09 Maintaining a Competitive Advantage in the Hotel Industry: Emerging Patterns of Employment and Challenges for HRD
Factors such as globalization and the Asian economic crisis have brought about changes in work and employment in Philippine tourism organizations. With the underlying philosophy that a competitive advantage can be achieved more readily in organizations that are able t o assess and adapt to their changing environment, the task now is to determine the scope and intensity of such changes and address new challenges brought about by these. This study aims to identify how tourism related establishments can maintain their competitive advantage through HRD strategies and interventions in the light of changes in work and employment patterns. Recommendations as to how management, labor and government can deal with the situation are advanced. In particular, policies and programs recommended are made with due consideration of the unique characteristics of service organizations in the tourism sector.
DP 2003-08 A Comparison of Tourism Policy Frameworks: Philippines and Thailand
Cherry Lyn Rodolfo
The Arroyo administration has identified tourism as one of the pillars of growth and development. It recognizes that tourism should become truly competitive in attracting visitors, in generating the expected economic benefits, and in pursuing sustainability. This can be achieved as the Philippines continuously measures its performance against its competitors. This study is an attempt to compare the policy frameworks of Philippines and Thailand. The objective is to draw lessons from Thailand’s experience which can help Philippine tourism counter threats and exploit opportunities through the use of public policy. Thailand is a relatively good model for marketing and promotions, for using tourism as a tool for economic recovery during the Asian financial crisis and for building on and strengthening past initiatives which have produced positive results for tourism. However, growth was achieved with high costs on the environment and culture in a number of destinations. Overall, Thailand still possesses the potential to be the leading tourism destination in Southeast Asia and has the basis for a long-term growth in tourism given the focus of new masterplans on sustainability.
DP 2003-07 Contested Space: Tourism Power and Social Relations in Mactan and Panglao Islands
Jose Eleazar Bersales
This is a study about l ocal communities in the midst of varying levels of tourism development. Using the anthropological perspective, two resort communities in two islands have been scrutinized using the triangulation method of survey, focus group discussion and key informant interview, in order to elicit information on the dynamics brought about by this form of development. A total of 137 households comprising 14 in Danao, 42 in Tawala and 81 in Maribago were surveyed in this study for the Knowledge, Attitudes and Perceptions Survey (KAPS) section. Four focus group discussions were then carried out composed of 7 Panglao residents; 8 Panglao farmers/fisherfolks; 11 Maribago residents; and 12 Maribago fisherfolks. For the key informant section of this study, 16 stakeholders across the two study sites were interviewed regarding their opnions on aspects of tourism development.
DP 2003-06 Towards Sustainable Tourism Development in the Philippines and Other ASEAN Countries: An Examination of Programs and Practices of National Tourism Organizations
Reil G. Cruz
National tourism organizations (NTOs) play a central role in tourism development in the Asean (Association of Southeast Asian Nations) region. Such active intervention has been widely credited for the rapid development of the tourism industries in the Philippines, Malaysia, Singapore and Thailand. Over the last forty years, the growth of tourist arrivals and tourist receipts in these countries (with the exception of the Philippines) were among the highest in the world. By 2000, the four countries generated a total of nearly US$21 billion in receipts from 32 million arrivals (various sources). However, poorly planned mass tourism in these countries has also led to environmental and cultural degradation. As a major force in the world economy with tremendous impacts on the environment and culture, it came as no surprise that the tourism sector became a target for reform in its approach to development. The new paradigm has come to be known as sustainable development. This paper looks at the ways by which NTOs in the Asean region operationalize the principles of sustainability.
DP 2003-05 The Perceived Impacts of Tourism in Indigenous Communities: A Case Study of Sagada Mt. Province
The discourse on tourism and its impacts on indigenous peoples (IPs) has been highlighted with the emergence of new forms of tourism, notably ecotourism, which target the pristine and natural environments found in indigenous homelands. One of the most marginalized sectors in the global economy, IPs are invisible in tourism impact research and rarely considered in tourism planning. This study describes the perceived impacts of tourism in Sagada, Mt. Province which is one of the most visited destinations in the Cordillera Administrative Region and home to the greatest number of IPs in the Philippines.
DP 2003-04 Development of a Classification Framework on Ecotourism Initiatives in the Philippines
Ramon Benedicto Alampay and Carlos M. Libosada Jr.
Ecotourism’s promise o f sustained environmental, social and economic gains makes it the preferred type of development for many interest groups. However, the diversity of so-called “ecotourism initiatives” in the country has raised questions about whether each project truly embodies the principles of sustainability, environmental sensitivity and respect for local peoples and cultures. This paper looks into the current status of ecotourism initiatives in the Philippines and suggests a classification scheme or framework to be followed and adopted by the industry. Building on concepts first proposed by Acott, LaTrobe and Howard (1998) as well as Weaver (2001), the paper defines ecotourism as having three basic elements: a focus on the natural or cultural environment, an emphasis on learning, and a commitment to sustainability. The resulting framework describes ecotourism programs in terms of market scope (mass vs. niche) and intensity of tourist-environment interaction (active vs. passive). Small case studies of Philippine ecotourism offerings are used to illustrate the classification scheme. Implications for policy and for future research are then suggested.
DP 2003-03 Assessment of Physical Resource Capability in Philippine Agriculture
Luis Rey Velasco and Liborio Cabanilla
The study assessed Philippine physical resources (i.e., land, water and weather pattern) with focus on rice, corn and coconut production systems. It specifically: 1) described the country's agricultural capabilities and defined boundaries/interactions among resources that influence agricultural production; 2) mapped out major agricultural production areas and determined possible relationships between performance and resources; 3) compared the Philippines’ physical resources and agricultural performance with countries such as Thailand (rice and corn), Indonesia (rice and coconut) and Malaysia (coconut versus oil palm); and, 4) identified some policy issues on effective and efficient resource use for agricultura
DP 2003-02 Open/Distance Learning and the Changing Labour Market: Toward a Framework for Rethinking Educational Governance Structures
Gerard L. Largoza
The progressive liberalisation of the Philippine economy has produced a domestic labour market characterised by increasing contractualisation and diminished security of tenure. Re-training and continuing education have been suggested as the b asis for a viable safety net system. We argue that while distance learning holds promise as a means of maintaining Filipino competitiveness, its administration must be rationalised and implemented within the context of more wide-ranging reforms within the education sector. In addition, open and distance learning may, in fact, facilitate the reform process itself, particularly in the areas of improving teaching competence, increasing the preparedness of students for higher education, establishing a more uniform accreditation system, as well as updating and harmonising standards for professional services.
DP 2003-01 Cooperativism in Agriculture: The Case of Top Four Cooperatives in Region IV, Philippines
Eulogio T. Castillo
The study demonstrated the importance of cooperative in improving the welfare of members and community, and in modernizing agriculture in Region IV. Starting from manual operation, the feedmilling operations of LIMCOMA Multi-purpose Cooperative, Soro-soro Ibaba Development Cooperative, and Cavite Farmers Feedmilling and Marketing Cooperative became fully mechanized and automated as of year 2000. Padre Garcia Multi-purpose Cooperative became a community-lending cooperative from its modest beginning as a small grain retailers association. All the case cooperatives were stable and mature with business operations of 25 years or more. Operations were profitable, liquid, and solvent. Net surplus and assets were in the multimillion peso levels. Lines of business had expanded from feed milling to granting of services such as production credit, marketing, banking, merchandizing, veterinary and extension services, meat processing, among others. Aside from patronage refund and dividend on capital, members received other benefits from the cooperative such as quality and reliable supply of feeds, technical assistance, educational assistance for children, medical and dental assistance, technical training, and start-up capital. 11 The cooperative reached out the community by giving gifts during Christmas, aid and donations to the needy, and support to development projects of barangays, towns, and cities were the cooperatives are located.
DP 2002-09 The Employment Impact of Business-to-Consumer E-Commerce on the Philippine Workers
Roberto E. de Vera
Public policy- and private decision- makers who are promoting e-commerce need a study that measures the economic effects of e-commerce in the Philippines, particularly on employment growth and changes in the nature of jobs in the future. It is in this context that this study seeks to estimate the impact of e-commerce— specifically business-to-consumer or B-to-C e-commerce—on Philippine workers. Total e-commerce related revenues as of the year 2005 is projected to account for about 1% of (nominal) GDP, contributing up to 8% of GDP growth. Among the 11 industries studied, tour and travel agencies; electrical communication equipment; and forwarding, packing and crating are estimated to grow the most in terms of employment in the next five years, under the three formulated scenarios. However, employment attributed to e-commerce is greatest for tour and travel agencies. The effect on employment of individual industries can be considered insignificant. From 2000-2005, approximately 5,900 additional jobs will be generated for the 11 industries considering the changes in inter-industry relationships (of wholesale and retail trade) as a result of e-commerce. However, in terms of employment generated for the whole economy, there may be significant changes, given an increase in final demand of wholesale and retail trade, as there may be almost 29% additional jobs generated for the whole economy.
DP 2002-08 Towards a National Tax Policy for E-commerce
Peter Lee U
The internet has already revolutionized many aspects of modern business and living and promises to bring even more radical future changes. In contrast, tax laws are normally slow to changing realities. This study looks at some of the problems that electronic commerce has posed. However, taxation covers a very broad spectrum of activities so this study looks only at income and goods taxation for the Philippines. It is anticipated that trade in tangible (physical) goods with e-commerce will not introduce problems. However, trade in intangible (electronic or digital) goods can be problematic because they will be difficult if not impossible to track. Meanwhile, the BIR is likely to miss out on added income tax collections on the increasing trade in services that can be delivered electronically (especially over the internet) by Filipinos to employers and contractors who may not be registered in the Philippines, especially foreign employers.
DP 2002-07 Achieving Food Security: The Role of and Constraints Faced by LGUs
Liborio S. Cabanilla
Implementation of national agricultural development goals was given a different impetus with the enactment of two landmark laws – the Local Government Code (RA 7160) and the Agricultural Fishery Modernization Act of 1997 (RA 8435). This paper is an attempt to understand more clearly, the role of, and constraints faced by Local Government Units in the pursuit of food security objectives. The analysis was done with the premise that food security is not the same as food self-sufficiency. Rather, it is the availability and affordability of food to all citizens in the country. Within this context, production of food (which mainly addresses the supply-side) is necessary, but not a sufficient condition for achieving food security especially at the household level. Poverty alleviation and income generation (which address the demand-side) are equally important elements. The paper argues that LGUs are effective convergence points for the often- disjointed national programs that ultimately lead to the achievement of food security. But more work has to be done in institutional and human resource development.
DP 2002-06 Torn Between Two Lovers: ASEAN and its Evolving Economic Relations with China and Japan
John Lawrence Avila
Last November, ASEAN Leaders met with the Chinese Premier in Brunei and endorsed a proposal for a Framework on Economic Cooperation and to establish a free trade area within the next ten years. Ahead of such an arrangement, the two sides agreed to explore the idea of an “early harvest”, which will precede comprehensive market access negotiations on industrial goods and services between the two sides. And in early January 2002, Japan Prime Minister Junichiro Koizumi toured the Southeast Asian region and proposed the Initiative for Japan-ASEAN Comprehensive Economic Partnership. Koizumi hinted that a free trade arrangement could form part of this enhanced relationship. The Koizumi initiative has been viewed by not a few as a bid by Japan to counter China’s intensified dialogue with ASEAN members. Once fearing increasing irrelevance amidst developments in APEC, the WTO and other regional arrangements, ASEAN is suddenly thrust into limelight. These two initiatives compel its members to consider moving towards closer integration with the two of the biggest economies in the world. Indeed, the evolving economic relations between ASEAN and China and Japan directly impacts on the future of the ASEAN Free Trade Area, APEC, and the position of Asia in the world economy. This paper examines the developments behind these twin proposals, particularly taking the ASEAN perspective. This study will survey the various political, economic and strategic issues that impinge on these arrangements. The paper will conclude with an assessment of the prospects of an expanded free trade area between these countries.
DP 2002-03 The Role of the General Agreement on Trade in Services (GATS)-Financial Services Agreement (FSA) in the Financial Liberalization Efforts of APEC Economies
The study evaluated the commitments made by a major sample of APEC member countries in the Financial Services Agreement (FSA) negotiated under the General Agreement on Trade in Services (GATS). The study also distinctly analyzed the actual practices in the financial services sector across the same major sample of APEC member countries placing emphasis on the level and extent of foreign participation in the domestic financial services sector. The evaluation of the commitments and the actual practices involved the estimation of the frequency-based index as an indicative measure of the extent of market openness in actual practices and binded commitments across a major sample of APEC member countries. Drawing on crucial issues pertaining to the deregulation and progressive liberalization of financial services trade, the study listed possible areas of negotiation strategies and proposals which Philippine negotiators can pursue in the next round of services negotiations, particularly in the financial services sector.
DP 2002-02 Continuing Professional Education: Training and Developing Filipino Professionals Amidst Globalization
Zenon Arthur S. Udani
Continuing Professional Education (CPE) in one’s profession is indicative of a person’s genuine concern for his present and future work. Professional associations are one of the avenues through which CPE is realized. Updating members of professional associations on current issues relevant to their field is unquestionably important. Moreover, professional associations must aim at competence-building and performanceenhancement among their members.1 Likewise, professional associations should take great interest in molding the characters of professionals by inculcating their core values and the related positive attitudes among their members, which should ultimately translate into ethical behavior.
DP 2002-01 Managing Risks and Opportunities of Financial Liberalization and Integration: A Macro-Micro Analysis (Integrative Report)
Ponciano S. Intal, Jr.
The paper examines an overview of the research project “Impacts, Risks and Opportunities of Financial Liberalization and Integration: a Macro-Micro Analysis” focused on four interrelated aspects of the structural and institutional foundations to effective risk management and exploitation of opportunities in an open economy; and draw lessons and insights on (a.) the macroeconomic management in an open economy, (b.) the liberalization of the banking industry, (c.) the human resource implications of financial liberalization and integration, and (d.) the behaviour of APEC member economies towards the Financial Services Agreement (FSA) under GATS.
DP 2001-16 Beyond Economic Cooperation: Institution-Building in APEC
Wilfrido V. Villacorta
The Asia-Pacific Economic Cooperation (APEC) has the objective of pursuing four areas of cooperation: information sharing, trade and investment facilitation, trade and investment liberalization, and economic and technical cooperation. As it realizes its objective, the economic association has to go through the political and legal processes of consolidation. Stimulated by the need to review and analyze its organizational growth, the “Coalition Building and APEC” project was initiated by four member-universities of the Philippine APEC Study Center Network: De La Salle University, Ateneo de Manila University, University of Asia and the Pacific, and the University of the Philippines. Two economists, three political scientists and two law professors collaborated to present the inter-regional linkages of APEC and the Philippine APEC commitments, from the perspectives of political economy, international relations and international law.
DP 2001-15 Toward the Formulation of a Philippine Position in Resolving Trade and Investment Disputes in APEC
Ma. Lourdes Sereno
The task of finding a negotiating position on dispute settlement for APEC is not an academic matter. For one, the drivers of the move to create APEC, principally Australia and to a lesser extent, the United States, promised the world that APEC would show the way to more dramatic multilateral trade liberalization by delivering on a broad range of liberalization reforms coupled with trade investment facilitation actions. The delivery of liberal targets could only be realistic on the assumption that there is every economic incentive for all the Members of APEC to liberalize and that the political costs of liberalization, for the more protectionist Members, were acceptable. It also meant, that should those cost parameters no longer hold true, there is a degree of “binding-ness” in the commitments of APEC individual Members to prevent or minimize backtracking on the reforms. The question of “binding-ness” of the commitments on the other hand, become very material to the question of the choice of a mode for resolving trade and even possibly investment disputes in APEC. On the other hand, the presence, range and experience of and with dispute settlement mechanisms outside the APEC forum impacts on whether in fact, APEC will be the preferred venue for resolving these trade disputes. The degree of usefulness of APEC for resolving trade disputes thus becomes a core issue.
DP 2001-14 Assessing the Situation of Women Working in CALABARZON
Divina M. Edralin
This paper aimed to assess the situation of women working in the CALABARZON in terms of their: (1) recruitment and selection; (2) working conditions; (3) compensation; (4) development; (5) special working conditions; (6) heath, dental, and occupational safety; (7) labor relations; (8) post employment; (9) the impact of globalization on their socio-economic life; and (10) the significant differences in their situation based on the characteristics of their company. Using descriptive, comparative, and evaluative research designs, a survey among 172 firms registered with PEZA operating in the economic zones in Cavite, Laguna, and Batangas was conducted. A total of 327 respondents, composed of 219 women workers and 108 management representatives, were interviewed or answered the questionnaire. Both descriptive and non-parametric statistics (One-Way Anova and Chi-square Tests) were used to analyze the data.
DP 2001-13 Philippine Maritime and Nursing Education: Benchmarking with APEC Best Practices
Veronica Esposo Ramirez
As the manning capital of the world, the Philippines supplies almost every vessel that sails the seven seas with Filipino marines and marine engineers on board. As the biggest health service provider, almost all hospitals in the US, UK and Saudi Arabia have a Filipino doctor, nurse, medical technologist or physical therapist. These Filipinos are employed because of their education and capabilities. However, the extent to which they remain competitive, given the increasing demands of the global market, is the accountability of quality education. If we want to gain more international respect and recognition, we should aim for higher international comparability and standards. It was the aim of the study to benchmark educational practices in Philippine maritime and nursing institutions with best practices in the APEC Region. It was not intended to rank the respondent institutions in any way. It looked into the input, process and output of maritime and nursing education. The benchmarking activities were focused on the quality of inputs to the educational process, the quality of the process itself and the quality of the outputs from the process. Through this benchmarking study, the comparative advantage of Philippine maritime and nursing institutions were identified in the study
DP 2001-12 International Higher Education: Models, Conditions and Issues
Allan B. Bernardo
The study was conducted to answer the following questions: (a) What are the various modes and forms of international education in a globalized higher education environment? (b) How ready are Philippine higher education institutions for international education? (c) What is the implication of having the various modes of international education in the Philippines? Two categories of activities of international higher education were found: (a) activities stemming from the traditional spirit of internationalism (ethos of international cooperationism & appreciation of an international quality) and (b) variations of open market transnational education that were born out of the agenda of globalization. Exemplars of these were described. It was also noted that even those activities born out of internationalism seem to have been transformed recently in ways that converge with the agenda of globalization.
DP 2001-11 Domestic Regulations and the Trade in Services: The Role of the Commission on Higher Education (CHED) and the Professional Regulation Commission (PRC)
Tereso S. Tullao, Jr.
The next round of negotiations under the World Trade Organization (WTO) will focus, among others, on trade in services. While the Philippines has agreed to subject selected industries in the services sector under the rules of General Agreement on Trade in Services (GATS) contingent to certain limitations on market access and national treatment, it did not, however, make any commitment on professional services and a related sub-sector, educational services. Thus, further discussions on liberalization measures in the services sector will put a greater pressure on the Philippines to make commitments in the trade in professional services as well as educational services. One of the rules of conduct embodied in the General Agreement on Trade in Services is the permission for acceding countries to regulate the provision of any service domestically provided that such domestic regulatory measures are not meant to discriminate against the entry of foreign service providers.
DP 2001-10 Human Resource Requirements of the Financial Sector Under a Liberalized Regime
Leila Calderon, Cheryl Villanueva and Tereso S. Tullao, Jr.
The financial sector is one the major sectors of the economy that has undergone extensive liberalization and deregulation in recent years. An essential element of success in any liberalization process is the readiness of parties to compete. Readiness can be viewed in terms of the capability of the domestic firms to face foreign competition and the capacity of the host economy to provide the necessary infrastructure to reap the benefits of liberalization. The study focuses on the analysis of a major component of the soft infrastructure of the economy- the availability and quality of human resources. The study explores on the capability of the country’s financial sector to compete in a liberalized setting from a human resource perspective. In particular, it examines whether the country has the sufficient supply of professionals that is capable of meeting the human resource requirements of domestic and foreign financial corporations as the financial sector becomes more integrated in the world market.
DP 2001-09 Reactions to the Entry of Foreign Banks in the Philippines: A Critical Study of Local Selected Banks
Rene B. Hapitan
In this paper, various reactions to the entry of foreign banks were obtained from a survey of ten (10) local commercial banks. While there was increased competition from the foreign banks, there was little evidence to support that their entry has increased the variety of financial services, has brought incremental intermediation activities, and has brought in new technologies and processes. This can be attributed to relatively high returns on equity and substantial potential revenue losses from the local banks. To meet the increased competition, the most preferred reaction of the local banks is through core marketing strategies as foreign banks were seen more of a “marketing problem” rather than a “banking problem.” This paper hopes to reinforce macro economic studies made in the entry of foreign banks.
DP 2001-08 The Impact of Liberalization of Foreign Bank Entry on the Philippine Domestic Banking Market
Angelo Unite and Michael Sullivan
We use accounting data for Philippine commercial banks over the period covering 1990 through 1998 to investigate how the relaxation of foreign entry regulations affects domestic banks. As part of this analysis, we control for features of ownership structure that are common in many developing economies, namely group affiliation and ownership concentration. We find evidence that foreign bank entry is associated with a reduction in interest rate spreads and bank profits, but only for those domestic banks that are affiliated to a family business group. Foreign entry corresponds more generally with improvements in operating efficiencies, but a deterioration of loan portfolios. Meanwhile, increases in the percentage of foreign ownership of domestic banks reduce these improvements in operating efficiencies and result in less emphasis given to earning income from nontraditional banking sources. Overall, we conclude that foreign competition compels domestic banks to be more efficient, to focus operations due to increased risk, and to become less dependent on relationship-based banking practices. We propose further policy reforms aimed at fully realizing the benefits and reducing the social costs associated with the increased foreign bank presence in the Philippine domestic commercial banking sector.
DP 2001-07 Foreign Bank Entry, Bank Spreads and the Macroeconomic Policy Stance
George Manzano and Emilio Neri, Jr.
The Philippine banking industry was opened to (limited) foreign entry in 1994. The liberalization measure was justified on the basis of enhanced competition. While it was observed that foreign bank entry brought about a slight deconcentration in the banking industry, there appears to be no systematic reduction of bank spreads. On the contrary, bank spreads (using alternative measures) were observed to increase in the period 1994-97, indicating that the relative profitability of banks have improved in the midst of foreign bank entry. This paper offers an alternative explanation to the ‘puzzle’ of widening spreads. The high interest rate policy (due to sterilization) kept lending rates high. On the other hand, there was little incentive for banks to compete for deposits through higher deposit rates because they had ready access to cheaper funds overseas owing to policies of promoting pegged exchange rates. Towards the latter part of the 1990s, a narrowing of spreads was observed. Interestingly, the narrowing of spreads was accompanied by a reversal of the macroeconomic policy stance in the 1994-97 period. The paper thus argues that the prevailing macroeconomic incentives matter in the determining outcomes of liberalization measures.
DP 2001-06 Financial Liberalization and Integration in the APEC Region: Performance and Comparison with Chile and the European Union
Ponciano S. Intal, Jr., Victor Pontines and Jitendra Mojica
The paper examines the growing financial integration in the APEC region; reviews the theoretical and analytical perspectives on financial liberalization and integration; discusses the East Asian, Chilean and European Union experiences; and draws lessons and insights on the macroeconomic management of the risks and opportunities of financial liberalization and integration. Clearly, the policy question is not one of “to integrate or not to integrate” but rather to define a strategy of financial integration, so as to manage the risks and optimize the benefits from financial integration. The contrasting experiences of the European Union, Chile and East Asia provide lessons and implications for the choice of the strategy of financial integration in the country and the region.
DP 2001-05 Labor, HRD and Globalization: The Filipino Worker in a Global Economy (An Integrative Report)
Leonardo A. Lanzona, Jr.
In a world of greater economic integration, strengthening trade linkages, unceasing technological changes and weakening institutions, workers are concerned about their incomes and security in their workplaces. Because of this uncertainty, coupled by large negative reactions against globalization in developed countries, policy makers have expressed skepticism on the benefits of globalization especially as this relates to the labor market. Several issues affect the relationship between greater openness to the world market and human resource development. With the fall in protectionism and breakdown of centrally planned governments, Filipino workers are greatly exposed to the uncertainties that come along with globalization. These include the fear of immiserization, the possibility of unemployment, the concern of labor standards, the dismay over worker participation and the inadequacy of higher educational institutions. The crucial role of state is to create and strengthen the institutions that can provide the necessary economic programs and political incentives and promote long-term development of worker quality and benefit both the individual worker and society.
DP 2001-04 Gender and Technology
Amelia C. Ancog
The study entitled Gender and Technology aims to contribute to APEC’s efforts in building lessons and literature in science and technology and in micro, cottage and small and medium enterprises. It describes selected researches undertaken by Research and Development Institutes (RDIs) of the Department of Science and Technology (DOST), the technologies developed and transferred to individuals and firms, the opportunities and constraints which technology adoptors face as they commercialize the technologies and the participation of women and men in these endeavors. Technologies selected were herbal medicine technology (sambong and lagundi), nutritious food technology (canton noodle with squash) technology for the manufacture of furniture (spray booth and tunnel drying). Data were elicited from respondents including scientists, and adoptors from Metro Manila, Region III and Region VI and key officials, supervisors and researchers of the RDIs, DOST and the University of the Philippines.
DP 2001-03 Existing and Emerging Regional Trading Arrangements
This study presented selected existing and emerging Regional Trading Arrangements (RTAs) to show key features of the new regionalism and to determine if they help advance the cause of multilateralism. In its assessment, it found that these new RTAs go beyond mere trade in commodities and services and incorporate deeper forms of integration, such as liberalization of investment regimes, adoption of mutual recognition arrangements, and in some instances, harmonization of competition policy. Efforts are made to ensure true integration of national markets. Furthermore, the new RTAs tend to be more outward-oriented than the ones established more than two decades ago. Moreover, a number of them include both developed and developing economies, giving rise to possibilities for greater specialization in production and trade. All these suggest that the new RTAs upon up new opportunities to advance multilateral trade liberalization.
DP 2001-02 Framework for a New Regionalism
Dante B. Canlas
This study examines the various issues that have been brought up in the debate on the question of whether the new regionalism is a stumbling block or a building block toward establishing worldwide economic multilateralism. It reviewed the value of Most Favored Nation (MFN) status as well as some existing assessments of the trade and welfare effects of the new regionalism. It also presented some empirical examples of Regional Trading Arrangements (RTAs) that seem consistent with multilateral trade liberalization. The paper concluded that protectionism and trade diversion are threats that RTAs should constantly look out for but the trade created and investment induced by the new regionalism far outweigh them. Hence, RTAs are regarded as building blocks for multilateralism.
DP 2001-01 China's Economic Growth: Implications to the ASEAN (An Integrative Report)
Ellen H. Palanca
The rise of China’s economy in the last couple of decades can be attributed to the favorable initial conditions, the market-oriented economic reforms, and good macroeconomic management in the nineties. As China continues to struggle with the problems of its SOEs, its trade and investment volumes have grown at unprecedented rates making China a major global economic player. Contrary to expectations based on traditional trade theories, the study found that overall, China’s economic growth has not been a competing force in the region but instead has provided a synergy for greater growth in the region. Between 1975 and 1990, all the ASEAN nations have established diplomatic ties with China and since then have developed favorable political relations so as to give economic relations full opportunities to develop from extremely low levels in the seventies. The growth of the ASEAN economies and their total trade volumes increased rapidly since China opened up to the outside world. Bilateral trade with China increased even more sharply although shares remain small. In particular, exports to China have increased faster than imports from China. With respect to direct foreign investments, China’s growing economy has made the East Asian region a focus for investors. The project also found that while in the past decades it was the general political relations between China and the ASEAN nations that set the conditions for bilateral economic cooperation, more recently, with China’s economy becoming more market oriented, most bilateral trade and investment decisions have been based on profitability considerations.
DP 2000-16 A Strategy for Enhancing the Philippine IAP
Cid Terosa and George Manzano
Today, the greatest challenge facing APEC is to sustain the strides already made in its three-pronged agenda in the Asia-Pacific region – liberalization, facilitation and economic/technical cooperation. In 1994, when the Eminent Persons Group enunciated a vision of free and open trade in the Asia-Pacific, APEC was received by the international community with much confidence and promise. The general enthusiasm was raised a few notches higher when the economic leaders, during their annual summits, progressively put substance to the APEC vision. The vision, that of seeing the region acting together as part of the international economy in a market-led process of deepening interdependence that will bring about better living standards for the people in the region (PECC 99), was compelling in the context of the high and ‘miracle’-proportion growth record of the region during that time. However, as recent events such as the Asian financial crisis and the incident in Timor show, maintaining the momentum of the APEC is no easy task. The Philippines continues to be fully committed to the APEC process. It championed the economic and technical cooperation agenda during the Manila APEC summit in 1996. It has not backtracked on its APEC commitments in the midst of the Asian crisis. Similar to the challenge confronting the whole of APEC, the challenge for the Philippines is to maintain the dynamic process for improving and implementing its Individual Action Plans (IAPs) and convincing other APEC members to do likewise. This paper proposes a twofold strategy in enhancing the 1999 Philippine IAP. First, the paper proposes concrete improvements required in order to bring the Philippine IAP at least on a par with the APEC average in all the trade and investment liberalization and facilitation (TILF) areas outlined in the IAP. The second part is meant to address the free-rider problem through the peer review mechanism. Thus, the paper also suggests specific improvements (where appropriate) in the IAPs of the other APEC members to bring them to the level of the Philippine IAP.
DP 2000-14 Competition Policy for the Philippine Downstream Oil Industry
Peter Lee U
The Philippine downstream petroleum industry underwent monumental change with the passage of RA 8180, the original Downstream Oil Industry Deregulation Act. Chapter I surveys the industry developments before and after deregulation. However the original deregulation law was struck down by the Supreme Court on November 5, 1997, because it "encouraged" anti-competitive behavior. Specifically, the following provisions were cited: 4% tariff differential between crude oil and refined products minimum inventory requirement 'prohibition of predatory pricing a. b. It is not clear that these provisions were actually "anti-competitive" from an economics point of view. Chapter 2 analyzes the consistency of the Supreme Court decision with economic theory. The report argues that tariff differentials are currently built into the country's tariff code as a matter of policy, even in the context of the tariff reform program. Thus it is not unreasonable for the deregulation law to incorporate a tariff differential. The report also disagrees with the Supreme Court reasoning on minimum inventory requirements. As with the tariff differential issue, the report points out that whether this constitutes significant barriers to entry is an empirical question. The analysis of the decision, in contrast, treats it as if it were a "yes or no" type of question. Moreover, the paper argues that inventory decisions are best left to individual firm discretion. Thus the high court decision arguably effected the right thing (removal of the inventory requirement) for the wrong reason. Finally, the chapter argues that the decision on predatory pricing does not follow from the court ' s premise. If anything, if the court believed that the tariff differential and inventory requirements posed significant barriers to entry , then a predatory pricing provision could be favorable to competition.
DP 2000-13 The State of Competition in the Philippine Manufacturing Industry
Competition policy is integral to the process of liberalization of international trade regime and deregulation in domestic markets. This paper shows that even if trade barriers are removed, there are other factors that can impede the pro-competitive effects of trade liberalization. These include the presence of non-tradables, absence of effective competition due to the ability of domestic firms to increase prices and still prevent imports from entering the market, and presence of cartels which may divide the markets through price-fixing or geographic market sharing agreements. The case study on cement provides some evidence that despite trade liberalization and deregulation, the highly concentrated nature of the industry enables coordination between firms and allows them to exercise market power. This prevents effective competition from taking place in the industry. These barriers inhibit domestic and international prices from converging, thus muting the gains from trade liberalization. While liberalization may be a precondition for the growth of a free market, it does not, by itself, guarantee effective competition. In the absence of competition laws, there is a risk that liberalization may not be sufficient to foster effective competition and it would also be difficult to control possible abuses of dominant positions by large scale firms including multinationals. If effective competition has to emerge, trade reforms have to be accompanied by the creation of competitive market and industry structures.
DP 2000-11 Analysis of the State of Competition and Market Structure of the Banking and Insurance Sectors
Ma. Melanie R.S. Milo
A successful financial market is characterized as being simultaneously sound and competitive. On the one hand, a competitive but unsound financial system is unsustainable because its lack of soundness will ultimately cause the system to break down. On the other hand, a sound but uncompetitive financial system will increase inefficiency in both the financial system and the entire economy. Both cases will have deleterious effects on the economy’s growth potential and society’s welfare. The major issue confronting financial regulation then is how to balance the need for both soundness and competitiveness. In most markets, simply removing state imposed regulations would improve competition. But in financial markets, some form of regulation is necessary to protect the reputation and soundness of the financial system, as well as the competitive process (Grimes 1999). The regulation of the Philippine financial services sector, particularly the banking sector, has undergone considerable change in the last two decades. On the one hand, there has been the removal of certain regulations such as direct controls on interest rates, as well as a substantial relaxation in other regulations such as restrictions on entry, lines of business, and portfolios. The overall objective of such deregulatory reforms was to promote c ompetitive conditions to foster greater efficiency in the financial sector. On the other hand, there has also been a strengthening of prudential regulation, which was justified as necessary to protect depositors and to preserve the stability of the payments system. The design, implementation and enforcement of regulatory rules have expectedly affected the structure and nature of the Philippine financial services sector, especially since they continue to impose important constraints on the ownership and business powers of financial institutions. This, in turn, has important implications for the competitive process in the financial services sector and ultimately the type, quality and price of the products offered to consumers and business users. This chapter l ooks at how competition and efficiency in the financial services sector, particularly the banking and insurance industries, have been affected by the regulatory regime and market structure.
DP 2000-09 Recommendations for Philippine Anti-Trust Policy and Regulation
Anthony R.A. Abad
The recent introduction of economic reforms in the Philippines through substantial trade and investment liberalization, deregulation and privatization, has led to a slow realization that freer trade and open markets are good for Filipinos in general. This is due largely to the obvious efficiency and welfare gains brought about by increased competition from new products and services. Conversely, it can also be said of the Philippines that our long and sad history of underdevelopment can actually be traced to a lack of competition in our economy.
DP 2000-07 Reassessing Tripartism and the Role of the State in a Period of Restructuring under Globalization
Virginia A. Teodosio
This paper shows how the tripartite discourse and practice have evolved in the 1990s in the context of state governance and globalization. Against the background of intensified internationalization of production and distribution, unions face a profoundly different structure of labor and management relations. Tripartism has played a central part in mediating the structure and dynamics of Philippine industrial relations. Accordingly, a framework for understanding its changing form and character is examined. Lessons are drawn for a broad range of organizational capabilities requirements on the part of the state, labor and employers. Policies and mechanisms are proposed that would be useful in promoting and implementing a broad based sectoral representation that focuses on capabilities and their enhancement.
DP 2000-06 The Legal Characterization of the Asia-Pacific Economic Cooperation (APEC) and the Individual Action Plans in International Law
Sedfrey M. Candelaria
The emergence of various economic groupings in different parts of the world has given rise to the accompanying issue of compliance by member States with their commitments under the respective charters or codes of conduct of their economic or trade regimes. A fundamental concern confronting these regimes is the need to design a system of effectively enforcing the obligations and commitments assumed by member States. Historically, the evolution of law in the realm of international economic transactions took a cautious route. While States have traditionally entered into bilateral agreements in the form of friendship, commerce and navigation treaties, the concept of multilateral economic engagements gained wide acceptance only after the Second World War through the establishment of the Bretton Woods institutions. This development indicated the softening stance of some States towards economic sovereignty. The recognition of economic sub-groupings under the recently adopted WTO Agreement further reinforced the openness of member States towards economic interdependence.
DP 2000-05 An Inquiry into the Competitiveness of Emerging Philippine Cities
Karen G. Tecson, Raymund E. Magdaluyo, Ma. Victoria H. Batac, Annabel T. Genzia, Mario V. Abasar, Jason Santiago Reyes, Francisco M. Largo, Rusela Yuson-Pepito, Vel J. Sumbiggit
An Inquiry into the Competitiveness of Emerging Philippines Cities attempts to approximate the competitiveness performance of ten leading emerging urban centers in the country: Angeles, Baguio, Cagayan de Oro, Davao City, General Santos, Iligan, Iloilo, San Fernando La Union, Tacloban, and Zamboanga. The study uses both ranking and scoring methods that rate the cities vis-A-vis eight major drivers: Cost competitiveness, Human resources endowment, Infrastructure, Linkages with major urban centers and growth areas, Quality of life, Responsiveness of local government units, and Dynamism of local economy. It best serves as a policy and urban management tools -- for concerned local officials and leaders of various private sector groups - that will identify the cities' strengths and areas of improvement. Insights on overall scores and rankings point to the importance of local leadership, emphasis on improving quality of lives in urban centers, and the role of surrounding local and/ or international growth formations in enhancing urban competitiveness. Any combination of these factors actually explains the high rankings taken by General Santos, Angeles City, and Baguio.
DP 2000-04 Trade Liberalization and International Migration: The Philippine Case
Fernando T. Aldaba
The paper examines the determinants of international migration in the Philippines. Specifically, it looks at the relationship of trade and migration. It proposes an eclectic migration model and shows by regression analysis that goods and labor mobility are substitutes in the medium and long terms. In the short run, as economies expand due to market reforms, migration may still continue. Other determinants of international migration include the economic growth of the country and specific factors related to the destination countries like wage rates and the existence of networks. Political stability in the Philippines did not turn out to be significant. The key policy prescription is to continue with the economic reforms such as improving trade openness to increase the employment and income possibilities of the Filipino people. In the short run, government needs to ensure the protection and welfare of the overseas contract workers.
DP 2000-03 An Analysis of Globalization and Wage Inequality in the Philippines An Application of the Stolper-Samuelson Theory
Leonardo A. Lanzona, Jr.
The controversy surrounding globalization revolves around two interrelated issues: (a) the effect of increased trade on the production of goods that are being sold domestically and abroad, and (b) the effect of this change on the social conditions, particularly income distribution. Difficulties in the assessment of these issues stem from the problems of linking trade policy to long-term equilibrium growth and identifying its distributive effects, which are influenced by many factors, including the country's technological conditions and skill accumulation. While the experiences of various developing countries show the value of trade to growth as well as to general welfare improvement, there is less agreement on how trade liberalization affects the level and distribution of gains and losses to producers and workers (Krueger, 1983). Recent studies indicate that while the East Asian open trade experience has narrowed the wage gap between unskilled and skilled workers, the increased trade liberalization in Latin America has widened wage differentials (see Wood, 1997).
DP 2000-02 Factors Influencing the Observance of the Core ILO Labor Standards by Manufacturing Companies
Divina M. Edralin
This paper aimed to determine the factors that influence the degree of compliance by manufacturing companies with the six core ILO labor standards ratified by the Philippines. Using descriptive and comparative research designs, a survey among 125 unionized and non-unionized manufacturing firms in Metro Manila was conducted with 175 both from the union and management representatives taken as respondents. Results revealed that among the six core labor standards, equal remuneration and freedom from discrimination in employment and occupation were highly complied with, while freedom of association and protection of the right to organize were least complied with by the manufacturing firms. Overall, the firms' level of conformity with the six labor standards is only satisfactory, and there is no significant difference in the average degree of compliance based on their characteristics except for the level of profitability and the type of respondent.
DP 2000-01 An Evaluation on the Readiness of the Filipino Professionals to Meet International Standards
Tereso S. Tullao, Jr
With the conclusion of the Uruguay Round and the relaxation of trade in commodities, trade in services will take center stage in the next round of trade negotiations under the World Trade Organization (WTO). The expansion of trade in the context of a growing services sector will have a significant impact on human resource development. There is need to improve the human resource capabilities of the Philippines so as to maximize whatever the country may gain and to minimize the costs to bear in the process of liberalization in the trade in services. It is in this light that there is a need to study the ability of various Filipino professionals to face international competition. Although the benefits of liberalization can be attained through the removal of barriers, reduction of the market power, and the implementation of mutual recognition agreements, a long-term strategy that should be considered seriously is the improvement of the country’s professionals (Tullao, 1998a). Readiness of professionals to compete internationally may be viewed from various perspectives. On one hand, improvement of human resources is a preparation for foreign competition here and abroad. On the other hand, it can be viewed as an investment in human capital and part of expanding the infrastructure of the economy.
DP 99-25 Gender Dimension in APEC
Amelia C. Ancog
The challenges confronting APEC economies in the coming millennium open exciting opportunities for policy innovations and reforms that will contribute to the enhancement of the lives of people. Improving the economic circumstances of people, reducing poverty, and supporting sustainable development are some of the many fundamental goals of society. The attainment of these beneficent purposes implies that access to opportunities will be open to all-an, women, and children. Thus, a number of scholars and policy makers have adopted as part of the agenda of their careers, the study and advocacy gender and development. It is therefore significant that APEC is moving towards a more systematic approach in incorporating gender in its reforms and innovation.
DP 99-24 The Political Economy of Philippine Commitments in APEC: The Legislative Record
Wilfrido V. Villacorta, Tereso S. Tullao, Jr. and Angelo A. Unite
The objective of the study is to examine the political economy of enacting new legislation required to fulfill the commitments of the Philippines in APEC. In particular, the paper describes the process involved in the formulation and deliberation of the proposed legislation, identifies the players involved in this process, examines the conflicts of interest encountered in ensuring the passage of such legislation and proposes measures to address these problems.
DP 99-23 The Macroeconomy of China in the Late Nineties
Joseph Y. Lim
China’s socialist experiment effected important structural and distributional reform s that laid the conditions for an environment conducive to growth. The market and incentive reforms undertaken in the late seventies to the present were able to build on these conditions and release productive forces that have brought about much higher and sustained growth.
DP 99-22 The Great Dragon Effect: Mainland China and the ASEAN Slowdown
We study the impacts of the emergence of a Great Dragon on other countries. We first focus on the labor-abundant Great Dragon (Mainland China) and then on the capital abundant Great Dragon (Japan). We do this in both the static Hechscher-OhlinSamuelson framework and the dynamic East Asian model framework.
DP 99-21 Foreign Direct Investment Flows to and From China
The study traces the growth of direct foreign investment (DFI) inflows in China, and its distribution by sector, receiving regions and source countries. It also looks into the trends and patterns of Chinese outward direct investments. Direct investment flows into China are shown to be significantly affected by China's GDP growth rate, wage rate and exchange rate as well as the world's GDP growth rate. Policy factors play a catalytic role. China's overseas direct investment, likewise, appear to be influenced by home country (e.g.: Chinese government policies, Chinese competitive advantage) and host country (e.g., market considerations, cost and price factors, and receiving countries' policies) variables. The study has also shown that the massive flows of inward DFIs have significantly contributed to China's capital formation and export performance. Furthermore, the improved shares of China as well as the ASEAN-4 countries in the global supply of DFIs do not indicate a crowding out effect. Two-way DFI flows between China and ASEAN countries, particularly Thailand and Malaysia, have become increasingly important since the early 1990s.
DP 99-20 China's Changing Trade Patterns: Implications for ASEAN-China Trade
Ellen H. Palanca
Economic reform in China and the economic prosperity that resulted have brought about tremendous growth and pattern changes in its external trade. In the last couple of decades, merchandise trade between China and all the ASEAN-5 countries, which started at relatively low levels, has grown at impressive rates. This is so despite the increasing similarity in the exports of China and the ASEAN -54 countries reflects intra-industry division of labor as well as trade niche products.
DP 99-19 The Use of One Within the Other: A Theory Based Study of the Effectiveness of ASEAN as a Collective Action Group Within APEC: 1989-1995
This paper, through the further fusion of formal bargaining and collective action theories with the more inductive theories of regionalization and regimes, will attempt to gain a fuller understanding of the roots and the level of the impact the ASEAN regime has had on the shaping of the larger APEC regime’s agenda, institutional makeup, and actions on certain substantive issues. The paper will begin with a theoretical section in which the sociological theories of bargaining and collective action will be integrated with the theories most often used by economists and international relations scholars to analyze economic regionalization and its inter-state groupings such as ASEAN and APEC; regionalization and regime theories. After this integrated framework has been set out and shown to be useful, it will be used to address the interface between the ASEAN economic regime and the larger and fully encompassing APEC economic regime to evaluate the effectiveness of the ASEAN regime in achieving its stated and assumed interests during the formative stages of the APEC regime (1989-1995).
DP 99-18 Regional Cooperation in APEC and ASEM: An Institutionalist Perspective
John Lawrence V. Avila
This paper compares the institutional development of APEC and ASEM. The study makes a survey of the various theories and explanations of institutionalism characterizing regional economic cooperation in Asia. After reviewing realist and liberal approaches to the study of Asian regionalism, this study pursues the premise that institutionalization in Asia is a function of the degree of social learning within and between international organizations in the region.
DP 99-17 China's Relations with Southeast Asia: Political-Security and Economic Interests
Aileen S.P. Baviera
China has always looked at the Southeast Asia as an integral part of its security environment. It values ASEAN for the role it may play in the realization of China’s desired vision of a multipolar order. Southeast Asian countries, on the other hand, appear prepared to accept China’s legitimate interests in the region but fear that China’s ambitions to become an Asia-Pacific military power could be at the expense of its smaller and weaker neighbors. Moreover, tensions over bilateral issues are expected to periodically emerge as part of the normal state of relations.
DP 99-16 The Political Economy of Philippines China Relations
Early history of Philippines-China economic relations (10th-17th C) showed that there were many instances when good political relations often led to good economic relations. There was direct and regular trade. It was extensive and covered large portions of the Philippine archipelago and neighboring Southeast Asia. Conducted in a friendly manner, under the aegis of what the Chinese imperial court called “Vassal tributary missions,” it benefited the Filipino traders on the whole. Recent history has revealed that President Marcos followed good political relations with the PRC. Philippine colonial history (17th –19th C) however was characterized by bad political relations. Spanish colonial policy was discriminatory against the Chinese but regardless of all kinds of impediments placed on the Chinese traders, these did not necessarily impede business relations.
DP 99-15 APEC: A Review and the Way Forward
Ponciano S. Intal, Jr. and Myrna S. Austria
APEC now operates in an entirely different socio-political and economic environment than when it was formed ten years ago. It evolved in an environment of rapid economic growth and growing interdependence through trade among the economies in the Asia-Pacific region, particularly East Asia. However, with the economic and social aftershocks of the financial crisis, the outlook for the global economy in general and the East Asian economy in particular has weakened considerably.
DP 99-14 The Social Impact of APEC TILF: The Philippine Case
Leonardo A. Lanzona, Jr.
This paper gives a broad overview, with supporting statistical evidence, of the relationship and interrelationships between trade liberalization and the inflow of foreign direct investment and social development in the Philippines during the late 1980s and the 1990s. The APEC Trade and Investment Liberalization and Facilitation (TILF) agenda is seen as the major event that has overshadowed as well as influenced economic and social conditions in the Philippines. However, this program seemed to have overplayed the short-run, and in the process underplayed its long-term, implications. In particular, in the case of the Philippines, the focus of the program is primarily on expanding investments and freeing financial markets. This emphasis has led to a disproportionate process of liberalization and facilitation that favored capital and skill-intensive industries, resulting in an increase in poverty incidence and magnitude in the rural areas
DP 99-13 An Inquiry into the Long-Term Prospects of the EVSL: The Case of the Philippines
Leonardo A. Lanzona, Jr. and Marissa M.P. Macam
A major incentive for developing countries to seek Regional Trade Agreements (RTAs) with developed nations is the hope of acquiring market access beyond what they expect to achieve in multilateral negotiations.1 Given the limited extent of developed nations’ commitments through the Uruguay Round of multilateral liberalization, developed countries’ tariff bindings may not be fundamentally altered. Though the WTO limits the use of quantitative measures, the Uruguay Round included restrictions on so-called “gray area” measures, such as voluntary export restraints. Hence, by integrating with other countries, the developing countries are able to phase and manage its exposure to the international markets, and simultaneously promote its objective of gradually liberalizing and increasing trade with developed countries.
DP 99-11 The Changing Expectations of the Private Sector in the APEC Process: APEC Business Advisory Council
Juan Miguel Luz
The voice of the private sector was institutionalized with the creation of the Apec Business Advisory Council (ABAC) by the APEC Leaders at the Osaka meeting in November 1995. This was in response to the business community’s call for a private sector body to advise the leaders made by the forerunner of ABAC, the Pacific Business Forum (PBF). The intent of PBF was to create such a body “to act as an independent voice of the business community with direct input to the Economic Leaders; review progress with regional trade and investment liberalization; and recommend future work to improve the business environment in the region.”
DP 99-10 Social Impact of the Asian Financial Crisis in the Philippines: Preliminary Survey
The Philippines fought hard to be considered part of Asia because for many years since the 1980s, she had somehow been lumped together with Latin countries. Partly because of the same historical Spanish root, partly because while other Asian countries enjoyed robust growth for two decades, the Philippines had muddled through its economic development as many Latin American economies did. To join the ranks of the Asian tigers, starting in the late 1980s, the country vigorously pursued economic and financial liberalization, privatized government corporations, hinged its development strategy on exports, etc., resulting in a relatively modest success.
DP 99-09 The APEC ECOTECH Agenda: Maximizing Partnership Opportunities for Social Development
Fernando T. Aldaba
The recent Kuala Lumpur Summit saw a failed effort to fast-track free trade. An agreement on the early voluntary sector liberalization in nine important industries was not reached. Japan refused to endorse faster tariff cuts in fish and forestry. The proposals were referred to the World Trade Organization.
DP 99-08 Can Ecotech Alleviate the Asian Financial Crisis?
Wilfrido Villacorta and Angelo Unite
This paper has the following objectives: (1) to describe the financial crisis and its causes, (b) to provide a background on ECOTECH as a major APEC concern, and (c) to examine the potential of ECOTECH in addressing the Asian financial crisis.
DP 99-07 The Asian Crisis and Economic Integration in APEC
Cayetano W. Paderanga, Jr.
The Asian crisis has put to question the evolving economic integration among APEC countries. This has taken several forms ranging from the increasingly open questioning of the arguments for economic integration and even up to actual policy reversals, such as the administrative controls on capital flows imposed by Malaysia. There are two dimensions of this phenomenon. First, the crisis has sapped the resources and ability of APEC countries to carry out the activities needed for integration. This includes the fiscal and financial debilitation caused by the crisis. It has the effect of, at least, slowing down the speed of integration. The second aspect is the lessening in the countries' appetites for economic integration indicated by the calls for re-assessment of the assumptions underlying economic integration. This paper surveys the main issues in the aftermath of the Asian crisis and examines the impact of the crisis on the policy options of APEC countries.
DP 99-06 China as a Rising Power: Implications for the Asia-Pacific Region
Aileen S.P. Baviera
It has been said that of the principal defining events facing us as we enter into the new millennium, China's emergence as a world power will have an impact that is far-reaching and wide-ranging. China's successful economic performance has already changed the configuration of the global economy. The PROC economy has been growing by an average of 9% since 1979. From 1978 to 1996, China's foreign trade volume increased 14 times to reach US$289.9 billion, placing it among the world's top 10 trading powers. Finished goods have accounted for more than 80% of China's exports. It now enjoys a small trade surplus, after suffering huge deficits during the 1980s.
DP 99-05 The Great Dragon Effect: Whose Lunch is Mainland China Eating?
The currency turmoil in East Asia has spawned a bubble market for explanatory frameworks and frenzied attempts at some handle and understanding. How the erstwhile Asean economic miracles metamorphosed overnight into IMF wards is an epic whose plotlines are still being written. The Krugman-Young ‘all brawn and no brain” advocates claim they have something to say. The “core-periphery thesis” is thrown straws to grasp at. Conspiracy and dependency advocates have been thrown a lifeline. The Marxist and self-appointed progressives are salivating at the prospect of a revival. The orthodox “domestic financial policy mistakes” view championed by the IMF and the WB still rule the roost.
DP 99-04 Toward Enhancing the Philippine Individual Action Plan (IAP)
George Manzano and Cid Teroza
The Philippines is committed to the APEC vision of building an Asia-Pacific community anchored on free and open trade and investments. Such a vision demands that all members accept market competition, free trade, and open investments as common framework policies. APEC’s way of of liberalization is quite unique.
DP 99-03 Impact of Trade Reforms in the Asia-Pacific Region
Erlinda M. Medalla
Even before APEC was conceived, the Philippines has been starting to implement trade reforms as part of its strategy to transform the country into a globally competitive economy. The main significance of what APEC has done is to strengthen the government’s resolve and commitment to continue with the reforms, and possibly accelerate and deepen the implementation of these reforms. Thus, the Individual Action Plan (IAP) the Philippines submitted to APEC is set within the overall trade and industrial framework the government has chosen to adopt.
DP 99-02 Clinton in Barong: Reflections on Culture, Nationalism and Globalization in a Time of APEC
Michael L. Tan
How does one relate APEC (Asia-Pacific Economic Cooperation) to culture? Neither flora nor fauna; neither human nor machine, APEC seems to be, for want of a better metaphor, an economic animal, and we have been told, constantly, that economics has nothing to do with culture. Yet, the debates around APEC do impinge around issues of nationalism and culture. The task, then, of this paper, is to try to move away from formalist definitions of economics and economic systems and to consider the possibilities of looking into economics as culture, or, perhaps even more radically, culture as economy and economics.
DP 99-01 Labor Mobility Issues in the Asia-Pacific Region
The works on international trade of the classical economists (David Hume, Adam Smith, David Ricardo, and John Stuart Mill, among others) were built on the assumption that factors of production (i.e., labor, capital, and land), while mobile within countries, were immobile between them. The modern factors proportion account of trade (associated with the names of Eli Heckscher and Bertil Ohlin) also rested on this assumption, saying that it is differences in factor endowments that give rise to trade among nations. However even when factors are internationally mobile trade is still possible. In fact if trade is unrestricted, i.e., free, such free trade and factor mobility lead to the equalization of commodity prices and factor prices (Samuelson).