Digital Commons Network^™

Developing Countries And External Debt: What Is Wrong?, Jesus Felipe, Jose Antonio Perez Montiel

Angelo King Institute for Economic and Business Studies (AKI)

LAST DECEMBER, the World Bank published its annual report on international debt (https://www.worldbank.org/en/programs/debt-statistics/idr/products). The report indicates that, in 2022, the developing countries spent $443 billion on debt-service repayment (principal plus interest) of their external public and publicly guaranteed debt, 5% more than in 2021. These payments are expected to rise in 2023 and 2024 due to the increase in interest rates. The report indicates that debt levels and high interest rates have set many countries on a path to crisis.

The Relationship Of Esg Component Scores And Creditworthiness On Publicly Listed Firms In The Asean-5 Countries, Shayne Jefferson Alvarez, Charlene Ashley C. Cu, Lance L. Lamberte, Patrick Henry G. Yap, Paulynne J. Castillo, Roberto B. Raymundo, Joel Q. Tanchuco

Angelo King Institute for Economic and Business Studies (AKI)

ESG ratings are crucial for ASEAN-5 businesses' creditworthiness. While existing studies often concentrate on ESG's impact on financial performance or general pillars, a detailed exploration of the 10 specific ESG components in the ASEAN-5 is lacking. This study addresses this gap, examining how ESG ratings affect a company's creditworthiness (probability of default) in publicly traded companies across the ASEAN-5 countries while considering potential heterogeneity. Utilizing annual data from 2013-2022 for 10 ESG components and Eikon Refinitiv's probability of default via the Starmine Combined Credit Risk Model across ASEAN-5, the study employs a panel OLS regression model with White's Robust Standard …

Analysis On The Credit Accessibility And Growth Of Manufacturing Firms In The Cases Of Indonesia, Philippines, And Vietnam, Sophia Angela Jimenez, Kamille Daquinag, Maria Regina Victoria Sagrit, Brian Irvin Chan, Albert Lamberte, Maria Zunally Rapada, Krista Danielle Yu

Angelo King Institute for Economic and Business Studies (AKI)

Micro, small, and medium enterprises (MSMEs) contribute to income and employment generation, poverty reduction, and industry growth in the ASEAN region (Mendoza, 2015). Their significant contributions to economies have led countries to emphasize the importance of firm growth, which is influenced by credit accessibility. Majority of existing enterprises in Indonesia, the Philippines, and Vietnam are composed of MSMEs with limited financial resources to foster growth (Paratama, 2019). This hinders the potential of manufacturing MSMEs to have sufficient funding. However, existing literature suggests that credit access significantly provides a positive impact on firm growth only until a certain threshold point (Nizam …

Can The Philippines Achieve Its Co2 Reduction Commitment With Renewable Energy?, James Benedict Cuesta, Edward Josh Cruzado, Princess Camila Martinez, Stephanie Noling, Arlene B. Inocencio, Albert Lamberte, Alellie B. Sobreviñas, Marites M. Tiongco

Angelo King Institute for Economic and Business Studies (AKI)

The Philippines always aims to achieve economic growth, which requires expanding economic activities, resulting in increased pollution (Stern, 2017). The country signified its intention to reduce carbon dioxide (CO2) emissions by 75% in COP26 (United Nations Framework Convention on Climate Change [UNFCCC], 2021). Part of its strategy to combat CO2 emissions is by increasing its share of renewable energy (RE) sources to at least 35% of the total energy matrix (Department of Energy [DOE], 2021). The Philippines’ ability to reach its COP26 commitment through a scenario approach on the effects of increasing GDP and share of RE to CO2 emissions …

Argentina And The Philippines: Similar Development Struggles, Jesus Felipe, Matias Vernango

Angelo King Institute for Economic and Business Studies (AKI)

ALTHOUGH the economies of Argentina and the Philippines are very different, the two share structural problems that make both nations’ development a complex process. The election of Javier Milei as the new president elect of Argentina, gives us the opportunity to review the differences and parallels between the two economies.

Milei is a radical libertarian populist economist with authoritarian tendencies. His proposals range from the dangerous in economics (dollarization, closing the Central Bank, a drastic reduction of social spending) and social issues (curtail human rights and democratic advances, loosen gun ownership laws, and the elimination of all those institutions that …

Will The Philippine Development Plan 2023-2028 Targets Be Met?, Jesus Felipe

Angelo King Institute for Economic and Business Studies (AKI)

EARLY THIS YEAR, President Ferdinand Marcos, Jr. signed the Philippine Development Plan 2023-2028 (PDP). The document contains hundreds of targets. Some of the key targets to be attained by 2028 are as follows (in fact, the Plan provides yearly targets):

1.) an annual growth rate of 6.5-8% (since 2024); 2.) a gross national income per capita of $6,044-$6,571 (50% higher than that in 2023); 3.) inflation between 2%-4% (from 2.5%-4.5% in 2023); 4.) a government fiscal deficit of 3% (from 6.1% in 2023); 5.) a debt-to-GDP ratio of 48%-53% (from 60%-62% in 2023); 6.) an unemployment rate of 4%-5% (from …

Why The Public Discourse On Education Is Wrong, Jesus Felipe

Angelo King Institute for Economic and Business Studies (AKI)

ONCE upon a time, the Philippines was praised for its relatively well-educated labor force. Not anymore. The situation seems to have reversed: policymakers and commentators single out education as one of the primary causes for the country’s poor performance (lack of competitiveness) and the unemployability of many of its workers.

To put the discussion in the correct context, I will start by arguing that the relevant measure of progress for a developing nation like the Philippines is productivity. Without productivity increases, there cannot be increases in income. Productivity in the Philippines is low in general. Is education the key to …

The Role Of Filipino Conglomerates In The Nation's Development, Jesus Felipe

Angelo King Institute for Economic and Business Studies (AKI)

Could the country's small and medium companies be the engines of transformation that it needs to attain and sustain the 6.5-8 percent annual growth targeted in the Philippine Development Plan 2023-2028? I doubt it. They have neither the knowledge nor the financial muscle to do it.

There is another group of companies that could lead the way. These are the large conglomerates of the nation. They have much better knowledge of the economy and financial power. Yet, in general, they do not innovate or export. Instead, they are into non-tradable activities (real estate, banking, distribution, insurance, construction, telecommunications and food). …

Philippine Structural Transformation - With Or Without Maharlika, Jesus Felipe, Mariel Monica R. Sauler, Gerardo L. Largoza, Lawrence B. Dacuycuy, Christopher James R. Cabuay, Jason P. Alinsunurin, Arlene B. Inocencio, Albert E. Lamberte, Natasha Amber Y. Cabiltes

Angelo King Institute for Economic and Business Studies (AKI)

It appears the Maharlika Investment Fund (MIF) is a fait accompli. As we write, our finance officials are in New York and Toronto, pitching the MIF to international bankers and representatives of Middle East sovereign wealth funds. This means once President Marcos, Jr. affixes his signature, a newly-created Maharlika Investment Corporation (MIC) will pool, before the year is over, PhP 75 billion in seed capital from the LandBank and Development Bank of the Philippines. With a further PhP 50 billion plus two full years of dividends from the Bangko Sentral ng Pilipinas (BSP), its nine directors, all presidential appointees, will …

Economic Transformation And Growth In The Philippines: An Analysis Of Political Settlements, Rents, And Deals, Jesus Felipe, Desher Edgar Empeño, Brendan Emmanuel A. Miranda

Angelo King Institute for Economic and Business Studies (AKI)

The main gateway for the Philippines to develop and become an upper-middle-income economy—and eventually, a high-income economy—is to expedite the shift of workers out of agriculture and to produce and export more complex products with a higher income elasticity of demand. The actual growth rate is constrained by the balance-of-payments equilibrium growth rate, about 6%—the maximum the country can attain without incurring balance-of-payments problems. We use the Pritchett-Sen-Werker political-economy framework to analyze the role of different types of firms and the deals environment during successive Philippine administrations until the current one. Due to their economic size and political power, only …

Monitoring The Philippine Economy State Of The Economy Report, Mitzie Irene P. Conchada, Lawrence B. Dacuycuy, Jesus Felipe, Desher Edgar Empeño, Brendan Emmanuel A. Miranda

Angelo King Institute for Economic and Business Studies (AKI)

The Philippine economy recovered from the COVID-19 pandemic during 2022. It posted a very high annual growth rate, 7.6%, although this must be understood in the context of a low base. AKI’s State of the Economy Report focuses on three issues in the context of the new Administration’s 8-Point Socioeconomic Agenda and the Philippine Development Plan 2023-2028: growth, inflation, and the fiscal deficit and national debt. Overall, we have a positive view of the economy over the medium and long-term. However, we argue that:

-The focus of economic policy has to shift decisively toward changing the structure of the economy …

The Administration’S Objective To Reduce The Fiscal Deficit To 3% Of Gdp By 2028: Why And How?, Jesus Felipe

Angelo King Institute for Economic and Business Studies (AKI)

A few weeks ago, the author attended a presentation on the Philippine economy and prospects for 2023. A discussant from the Department of Finance indicated that the Administration aims at reducing the fiscal deficit from 8.6 percent of gross domestic product in 2021 (the result of the COVID pandemic) to 3 percent by 2028. She referred to this reduction as “solid fiscal management” that “will promote long-term growth". This article argues that this is a dubious target because the government cannot control the deficit. Moreover, claiming that this reduction will promote long-term growth is poor economics. So is the idea …

Annual Growth Of 6.5-8% Until 2028: How?, Jesus Felipe

Angelo King Institute for Economic and Business Studies (AKI)

THE KEY outcomes of President Bongbong Marcos’ Philippine Development Plan 2023–2028—to increase income per capita, reduce poverty, and create employment—rest on a necessary condition: to attain a 6.5-8% annual growth rate through 2023 to 2028. If achieved, the Philippines would resemble its East Asian neighbors, which attained similarly high growth rates decades ago. This is much needed given the still low wages and per capita income of the country. Yet, this “target” poses several questions.

Monitoring The Philippine Economy Fourth Quarter Report For 2022, Mitzie Irene P. Conchada, Natasha Amber Y. Cabiltes, Brendan Emmanuel A. Miranda, Edgar Desher P. Empeño

Angelo King Institute for Economic and Business Studies (AKI)

The Philippine economy grew 7.2 percent, featuring robust growth despite facing domestic challenges. Fourth quarter growth reflected a more optimistic consumer sentiment as the economy continued to open up. Economic growth in Q4 2022 was 7.2 percent year-on-year and 17.1 percent quarter-on-quarter (q-o-q), showing the Philippines’ consistent effort to create a positive growth outlook for the economy (see Table 1). Year-on-year growth exceeded the median analyst forecast of 6.8 percent despite accelerating inflation and growing food security issues. Revenge spending continues to drive consumption on the demand side while service sector growth remains headstrong on the supply side amid stunted …

Testing The Relationship Between Confidence And Effort: A Behavioral Finance Perspective On The Problem Of Financial Literacy, Louie Bernard A. Jacob, Miguel Angelo S. Rabago, Hans Erickson A. Tan, Lawrence B. Dacuycuy, Gerardo L. Largoza, Maria Fe Carmen L. Dabbay

Angelo King Institute for Economic and Business Studies (AKI)

This experimental study tested the relationship between confidence and effort with the ultimate objective of discovering how these factors may influence financial literacy. This was done through a modified version of a slider test and ball allocation task. The population consisted of 85 random participants who were primarily approached through social media. A simple OLS regression, along with robustness checks, namely the Tobit model and instrumental variable (IV) regression model using Tobit estimators, were utilized to confirm the causal relationship between confidence and effort.

Examining And Evaluating The Multidimensional Energy Poverty Index (Mepi) In The Philippine Household Context, Anna Katrina R. Ignacio, Maria Sofia Lei P. Puncia, Arlene B. Inocencio, Marites M. Tiongco, Mitzie Irene P. Conchada, Alellie B. Sobrevinas, Rens Adrian T. Calub

Angelo King Institute for Economic and Business Studies (AKI)

Energy poverty refers to insufficient energy consumption to meet one’s basic needs. Measuring energy poverty is a vital calculation for a household assessment concerning accessibility of energy, affordability of energy prices, usage of energy resources, and sufficiency of energy consumption. Previous literature has extensively used the multidimensional energy poverty index (MEPI) to analyze the lack of access to modern energy services, including energy poverty intensity and incidence, and provide a framework for government policymaking. However, there is a variation between countries on how MEPI energy deprivation factors affect household welfare. This study aims to determine more accurate measures of household …

Potential Benefits Of Rcep On The Philippines: Accelerating Recovery Through Trade And Other Economic Opportunities, Caesar Cororaton, Marites Tiongco, Arlene B. Inocencio

Angelo King Institute for Economic and Business Studies (AKI)

The Philippines, as a member of ASEAN, is part of the RCEP, which is the world’s largest trading block in terms of population and GDP. RCEP was signed on November 15, 2020, by 15 member countries. This policy note discusses the potential effects of RCEP on the Philippines. Using a global CGE model calibrated to the most recent GTAP 10 database, the results indicate that the Philippines will benefit from higher exports, lower consumer prices, higher factor prices, and factor incomes of households. Among the Philippine sectors, the largest positive effects are observed in electronic equipment. Interestingly, the impact on …

Effects Of Change In Relative Prices In Existing Decompositions Of Aggregate Labor Productivity Growth: A Resolution Of The Aggregate Effect, Jesus C. Dumagan

Angelo King Institute for Economic and Business Studies (AKI)

Diewert (2015) reworked Tang and Wang’s (2004) growth decomposition and claimed that: “Thus even if all industry labor productivity levels remain constant and all labor input shares remain constant, economy wide labor productivity growth can change due to changes in industry real output prices (italics added)” (p. 370). However, contrary to his 2015 claim, Diewert (2016) found “puzzling” results from Australian data where the sum of price change effects across industries did not matter much and explained this puzzle by an approximation formula that showed price effects sum to zero with the first-order accuracy. In contrast, this paper derives the …

Assessing The Potential Impacts Of The Tax Reform For Acceleration And Inclusion And The Build Build Build Program, Caesar Cororaton, Marites Tiongco, Justin S. Eloriaga

Angelo King Institute for Economic and Business Studies (AKI)

The Tax Reform for Acceleration and Inclusion (TRAIN) Act has prompted key changes in the personal income tax regime through excise taxes on most goods such as petroleum, sugar-sweetened beverages, and automobiles. The TRAIN was implemented to generate funds for the Build Build Build (BBB) program and at the same time to address income inequality and poverty. This paper aims to assess the potential growth, poverty, and distributional effects of the TRAIN Package 1 and the BBB Program using a computable general equilibrium model with poverty simulation. Results suggest that TRAIN I has prompted additional revenue in social programs and …

Modifying The “Generalized Exactly Additive Decomposition” Decomposition”Of Gdp And Aggregate Labor Productivity Growth In Practice For Consistency With Theory, Jesus C. Dumagan

Angelo King Institute for Economic and Business Studies (AKI)

The generalized exactly additive decomposition (GEAD) of GDP and aggregate labor productivity (ALP) growth, originated by Tang and Wang (2004), is gaining attention in the literature and acceptance in practice. This paper shows, however, that the original GEAD is not always consistent with the “theory” that aggregate GDP growth is pure quantity growth and ALP growth depends only on productivity and labor share changes. This paper modifies the original GEAD for consistency, subject to certain requirement, depending on the GDP quantity index that in current practice is either (1) chained Laspeyres, (2) direct Laspeyres, or (3) chained Fisher. GEAD employs …

Monitoring The Philippine Economy Year-End Report For 2017, Mitzie Irene P. Conchada, Won Hee Cho

Angelo King Institute for Economic and Business Studies (AKI)

Growing at 6.7% in 2017, the Philippine economy realized robust full-year forecasts despite domestic and international economic challenges. Economic performance: Aggressive government spending on infrastructure projects, the growth of the manufacturing sector, and an uptick in the agriculture sector strengthen the Philippine economy.

Easing Growing Pains: Supporting The Growth Of Small Businesses In The Philippines, Paulynne Castillo

Angelo King Institute for Economic and Business Studies (AKI)

In explaining the 2015 survey findings that the Philippines has the second to the lowest existing business rate in the ASEAN region, the Philippine Entrepreneurship Report, 2015-16 stated that “business operations become more burdensome as they grow due to the more restrictive regulations on large enterprises” (Velasco et al., 2017, p. 40). Established businesses, particularly firms operating in the formal sector, shoulder higher taxes and are subject to social security contributions, minimum wage, and industry-specific regulations (Velasco et al., 2017; Auriol, 2014).

Strengthening early-stage entrepreneurial activities and supporting their quest for expansion, however, require access to financial, legal, and public …

Nowcasting Philippine Economic Growth Using Midas Regression Modeling, Cesar C. Rufino

Angelo King Institute for Economic and Business Studies (AKI)

Among the most anticipated data releases of the Philippine statistical system is the quarterly real gross domestic product. This all-important variable provides the basis for deriving the economic growth performance of the country on a year-on-year basis. Official publication of this statistics, however, comes at a significant delay of up to two months, upsetting the planning function of various economic stakeholders. Under this backdrop, data scientists coined the term “nowcasting,” which refers to the prediction of the present, the very near future, and the very recent past, based on information provided by available data that are sampled at higher frequencies …

Consistency In Aggregation Of Gdp Indexes And Uniqueness Of Quantity And Price Effects On Growth Of Gdp And Aggregate Labor Productivity, Jesus C. Dumagan

Angelo King Institute for Economic and Business Studies (AKI)

In traditional decomposition of GDP growth in constant prices, an industry’s contribution consisted only of a quantity effect from GDP growth. Tang and Wang’s (2004, 2014) innovation added a price effect from relative price change. Dumagan (2013a, 2016) showed that Tang and Wang’s quantity and price effects for all industries exactly add up to growth of GDP either in chained or in constant prices, that is, regardless of the GDP index. However, this paper shows that it is only when GDP is in chained prices and the GDP index is consistent-in-aggregation (CIA) that quantity and price effects are invariant with …

Monitoring The Philippine Economy Year-End Report For 2016, Mitzie Irene P. Conchada, Regina S. Villasor

Angelo King Institute for Economic and Business Studies (AKI)

Philippine economic growth topped regional performance for 2016. In line with election-year market expectations, annual growth accelerated to 6.9 percent from 6.0 percent in 2015, surpassing China (6.7%) and Vietnam (6.2%). Despite the global economic slowdown, Philippine growth has continuously improved since 2015, showing resilience to external shocks with manufacturing expansion. On the demand side, household consumption and investments flourished with modest inflation and strong imports. On the supply side, the industry sector led as the service sector slowed down. Meanwhile, the agriculture sector continues to contract with the onslaught of weather disruptions like typhoons Karen and Lawin.

Effects Of Relative Prices On Contributions To The Level And Growth Of Real Gdp, Jesus C. Dumagan

Angelo King Institute for Economic and Business Studies (AKI)

Existing procedures for GDP in chained or in constant prices ignore relative prices – ratios of industry GDP deflators to the economy’s GDP deflator – and, consequently, yield economically misleading results by understating (overstating) level contributions of industries with above (below) average relative prices, at the same time understating (overstating) growth contributions of industries with rising (falling) relative prices. These are illustrated by US GDP in chained prices and Philippine GDP in constant prices. However, the above misleading results could be mitigated by this paper’s general formulas for level and growth contributions applied to the same GDP. While allowing for …

Monitoring The Philippine Economy Year-End Report For 2015, Mitzie Irene P. Conchada, Regina S. Villasor

Angelo King Institute for Economic and Business Studies (AKI)

The Philippine economy expanded by 5.9 percent for the year 2015, fortifying its status as one of the best economic performers in the region despite the difficult external environment and the onset of El Nino.

Industry Career Guide: Transportation And Logistics, Gina Ledda, Rhory Fernandez

Angelo King Institute for Economic and Business Studies (AKI)

The transportation and logistics industries involve the physical movement of persons and goods. Logistics specifically refers to the transport of the goods, materials, or products, which includes the management of freight, storage, packaging, and inventory. Transport and logistics encompass a wide range of activities and play a vital role in the growth of other sectors of the Philippine economy. Extreme competition and growing international trade highlighted the role of the Service Sector where Transportation, Communication and Storage (TCS) is a component. In 2010, the Service Sector accounted for P3.2B (55%) of the real Gross Domestic Product (GDP) where TCS contributed …

Pangangapital Sa Yamang-Tao: Susi Sa Pagsulong Ng Rehiyong Asya-Pacifico, Tereso S. Tullao Jr

Angelo King Institute for Economic and Business Studies (AKI)

Maraming akademiko ang naniniwala na ang mga pagbabago sa pagpasok ng ika-21 siglo ay nakatuon sa mga isyung natutungkol sa rehiyon ng Asya-Pasipiko. Ang mga tantiyang ito ay nakabatay sa mga makabuluhang pag-unlad ekonomiko at pagbabagong pulitikal na naranasan ng rehiyon sa mga nakaraang dekada. Sa hinaharap, tinataya na ang istruktura ng lipunan, ekonomiya at demograpiya ng rehiyon ay huhubugin ng ilang mahahalagang salik, kasama na ang pag-angat ng dalawang pinakamataong bansa sa mundo, ang Tsina at India, ang mahalagang papel na ginagampanan ng mga inobasyong teknolohikal na nagaganap sa mga papasulong na ekonomiya hindi lamang sa Japan at Korea …

Monitoring The Philippine Economy Year-End Report For 2014, Mitzie Irene P. Conchada, Edgardo Manuel Jopson

Angelo King Institute for Economic and Business Studies (AKI)

Despite doubts over growth prospects and challenges in the external market, the Philippine economy attained a solid 6.1 percent growth in 2014.