Policies and Research Issues on Energy in the Philippines: The 1980s by Ronald Yacat

Volume III, No. 5

SEPTEMBER - OCTOBER 1985 IIII II

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ISSN 0115-9097

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Po lleles and Rese eh Issues on Energy in the Philippines: The 1980s EDITOR'S NOTE: The Philippines has, since the first oil crisis in 1973, incurred large deficits in its balance of payments. Our guest writer attributes this phe-

Introduction

ular emphasis on energy conservation and

nomenon to the increasing oil import bill which serves to reflect the country's dependence on imported crude oil to meet its energy requirements. In 1973, for example, 94 percent of the country's energy requirements was dependent on imported oil, and it was only in 1980

Prior to the first oil shock of 1973-74, the Philippines, as in many developing countries, had very limited programs and policies that could rightfully be called energy policy. It was only during and after the first oil crisis that the government first embarked on conscious policy-

fuel substitution impacts. The survey concludes with a summary of findings and recommendations that could conceivably provide policymakers some guidance for future planning.

when a slight improvement was felt as the figure went down to 83 percent, Furthermore, the oil import bill ate up about 42.4 percent of export revenues in 1983, from a low 9.9 percent in 1973. Meanwhile, as a proportion of the total value of imports, the share ofoil imports during the second oil shock period (1981) a highrealities 30. 7percent. It ispeaked with tothese in mind

making and planning for the energy sector because it became evident that energy prices and availability factors are of critical importance to overall development planning, This paper synthesizes relevant studies that have been done on energy economics in the Philippines with emphasis on energy management policies in the 1980s. Policy issues are divided into: (1) those that relate the energy sector with the rest of the macro-economy; and (2) energy sector.specific issues. The energy-economy interaction referred to in (1) can be two-way, i.e., the energy sector affecting, and in turn being affected by, economic variables. Energy sector issues, on the other hand, are mostly related to the price and non-price policies affecting energy demand and supply with partic-

Energy.economy interaction is a cornplex two-way process that can most effectively be evaluated by a simultaneous equation mOdel which treats both energy sector and the rest of the economy not as separate and independent sectors, but mutually interacting through certain linkages. The usual linkages include an activity variable (e.g., Gross Domestic Product or GDP) which affects energy demand, and conversely, energy as an input into a production function. Previous studies undertaken (Alejo, 1980; 1983) belong to this type of simultaneous equation modelling. Another possible linkage is through prices. Energy prices affect domestic prices (measured, for instance, by the Consumer Price Index or CPI) directly through the weight assigned to it in the

that the September_October issue weof present the Development Research News (DRNJ, which focuses on energy policies. Our guest writer is Mr. Leander Ale/o of the Bank of the Philippine Islands, and a former Visiting Research Fellow at the Philippine Institute for Development Studies. This issue presents an overview of previous as well as current Continued on page 9

by Leander J. Ale]o

Issues in Energy.Economy

C_:

Interactions

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AND RESEARCH ISSUES ON ENERGY IN THE PHILIPPINES: THE 1980s

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price index as well as indirectly through cost-push process from the point of view of supplies of goods and services. Pricecost analysis using the input-output framework to trace the impact of energy price increases on domestic industries' cost are of this type (Mijares, 1980). On the other hand, energy demand is also affected by relative prices (i.e., energy prices vs. CPI), as well as any indirect effect energy prices may have on GDP, which in turn affects energy demand, Various other examples abound as, for instance, energy demand affecting energy imports and hence, the balance of payments; energy taxes affecting both energy prices (and demand) and government revenues and deficits and hence,

The approaches for estimating the elasticities are: (i) the simp!e elasticity approach; and (2) the partial elasticity approach, The simple approach arrives at an estimate by getting the simple ratio of growth rates of aggregate energy consumption and GDP. Using this approach, a study (Alejo, t985) has observed a significant decline of the simple income elasticity of aggregate energy demand. From a high 1.43 during the pre-energy crisis period, elasticity dropped to 1.12 during, and immediately following, the first energy crisis period (1974-75), declining further to 0.79 during the relatively stable period of 1976-79. As an aftermath of the second off crisis, the simple income

domestic prices; fiscal and monetary policies affecting economic growth and hence, demand for energy (Alejo, 1983).

elasticity seemingly overreacted and registered a perversely negative figure of-0.16 in 1980-82 before normalizing to 0.58 during the 1983-84 period of declining oil prices, The simple approach neglects the effect of other relevant determinants of energy demand such as energy price, the omission of which would normally result in an underestimation of the income elasticity during periods of rising oil prices, The second approach to estimating the income elasticity of energy demand is econometric and involves joint estimation of the effects of price and income variables on energy demand. The observed decline in the elasticity of energy demand is confirmed by econometric estimates previously done for different time periods. The Ministry of Energy (1980), using annual data which extends back to the early 1960s up to the late 1970s, estimated an income elasticity of energy demand of 1.67. On the other hand, another study (Alejo, 1983) used semestral data from 1970 to 1979 and estimated a lower elasticity of the consuming sector (households and industries) of 0.91. The latter study which made use of a more recent sample period focused mainly on the energy crisis period and subsequent adjustments. Latest estimates (Alejo, 1985)eoveringthe 1974-84 period suggest a further lowering of the income elasticity to 0.55 in the short run and 0.87 in the long run. This decreasing trend in income elasticity of energy demand indicates a measurable success in aggregate energy conservation, An observation that can ............. be drawn

Economic Growth and Aggregate Energy Demand: Some Explanatory Notations Assuming that economic growth is exogenous, aggregate energy demand (or the total demand for energy by consumers and industries) may be determined by making use of two alternatives _for estimating the income elasticity of energy demand. This indicator measures the proportional change in aggregate energy demand/consumption resulting from a given percentage change in. income. As will be pointed out in later paragraphs, a declining income elasticity of energy demand means that despite the positive growth in GDP over the years, there is less than proportional increase in aggregate energy demand. This may indicate that the country is becoming more efficient in the use of energy, thus reducing considerably the energy requirements of households and industries, Increased efficiency in energy use may have been brought about by heightened consciousness on the need for conservation and also by improvements in industrial systems and techimlogies. On the other hand, an increasing income elasticity of energy demand indicates that the increase in GDP is more than matched proportionately by an increase in the aggregate demand for energy. Changes in the elasticity estimate(s) over time would presumably reflect structural changes in the economy which could have significant implications for effective formulation of energy demand management policies.

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I from the-preceding figures is that the limit to a further decline in the income elasticity seems to have been reached in very recent years (Alejo, 1985) as evidenced by the movements in the energyGDP ratio. This ratio is an indicator of aggregate efficiency in energy use. The biggest gains in aggregate energy conservation were, however, observed during the second oil shock period and immediate years thereafter. Impact of Energy on the Macroeconomy Domestic Prices andlnflation. Clearly, energy being a necessary raw material input to production could bring about cost-push inflation as its price is increased. In determining the correct price of energy input to the economy, it is necessary to convert the dollar price of energy imports into peso terms since the latter is the effective price to the economy. It is significant to note that the equivalent peso cost of crude petroleum imports has continuaUy increased from 1972 to 1984 in spite of declining dollar oil prices in 1982-84. This is because of the accelerated exchange rate depreciation coin. cidentat with the period of declining world oil prices. The significant thing about this is that, insofar as the domestic economy is concerned, the period of energy price decline of 1982-84 was never felt as the peso price of petroleum imports accelerated (Alejo, 1985)_ In order to isolate the contribution of oil price increases (particularly during the two oil shock periods) to domestic inflation, several types of analytical techniques have been e:m_ ployed in the past. Mijares (1980) applied standard input-output analysis focused on cost-push factors, and estimated the response of consumer prices to petroleum price increases. Using the 1979 update of the InputOutput Table for the Philippines, this study came out with an elasticity estimate of 0.127, i.e., a 10% increase in import price of crude petroleum would, ceteris paribus, increase domestic consumer prices by 1.27%. In a subsequent study (Alejo, 1985) using a partial equilibrium inflation model incorporating both cost-push and demand pull factors, it was shown that there is increased sensitivity of domesm ,=,

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tic prices to externally generated oil price shocks. Moreover, consumer prices were highly affected by the changes in the price of oil imports, Furthermore, the share of oil imports to total imports has been historically substantial for at least a decade. During the second oil shock in 1981, for example, the degree of highest vulnerability was registered when the share of oil imports to total imports increased to 30.7% compared to only 20.7%in 1974. From the above results we can infer that the overall impact of world oil price increases in domestic prices is large during oil shock periods because of the absolutely large jumps in world off prices during these periods. In terms of actual figures, the 107.4% average annual increase in import price of oil in 1974-75, for instance, could account for 8.6 percentage points (43.2%) of the observed average infiation rate of 19.9% for the period, Effect on the Balance of Trade and Payments. To gain some idea of the magnitude of the oil problem in Philippine trade, movements of the ratio of the oil import bill to total imports, total exports, trade balance and the BOP deficits can be compared (MOE, 1982; Alejo, 1985). From 11.7% in 1973, oil imports share of total imports rose steadily and peaked to 30.7% in 1981. From a 9.9% share in 1973, oil imports fully gobbled up 42.4% of export receipts in 1983 as exports declined. Furthermore, the oil import bill more than fully accounted for the balance of trade deficits in 1972, 1974, 1977, 1981 and 1984. Finally, during the years in which the BOP was in deficit, the oil import bill was generally a multiple of the deficit, To sustain such unprecedented increases in the oil import bill, the economy had to finance the trade deficits by heavy borrowings on both short.term and long-term basis, It would, however, be inappropriate to make generalizations on the impact of the oil crisis on the BOP without considering the indirect effect of increased workers' remittances. One positive factor that resulted from the two oil crises was the increased inflow of workers' remittances and personal IIll IIII I

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income, mainly from overseas Fih_ pinos based in the Middle East. As shown in Alejo (1985), personal income receipts grew by an annual average of 33.7% in 1973.80 and further increased to 38.7% annually in 1980-82. Personal income receipts enough to pay for 18.1% of oil iraports in 1974 increased to 44.9% by 1983. Therefore, it can be stated that as far as the Philippines is concerned, while high oil prices and the value of oil importsindeedpostaheavypressure on the BOP, the net effect is not as large considering the indirect inflows contributed by personal income receipts made possible by increased exports of Philippine labor, as a result of increased activities in oil.exporting countries. On an incremental basis, however, imported oil price increases significantly contributed to terms of trade deterioration as it accounted for $473 million of the payments deficits in 1974 during the highest of the first oil shock, and $913 million ha 1980 during the second oil shock. Effects on GDP Growth. The economic cost of higher oil prices has resulted in very significant direct terms of trade effect on GDP, and this alone appears to contribute to an incremental GDP loss of 3.4% in 1974 and 2.7% in 1980 (Alejo, 1985). Moreover, the annual average incremental loss in annual GDP growth has been estimated at 1.0 percentage point, The recent declining trend in world oil prices provides the impetus for a new research area in energy economics in the Philippines. Of particular interest would be the impact on GDP growth and other macro variables, Basically, one would like to know whether or not an "energy crisis in reverse" would have an opposite and symmetrical impact on GDP as in the energy crises of the past. Energy Sector Issues Throughout the years since the first oil crisis, the basic thrust of energy policy has not changed much. The energy plan (MOE, 1982; NEDA, 1984) has always advocated reduced dependence on imported energy particularly crude petroI lllllll I

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leum. The three basic objectives are: (1) to provide and secure adequate and timely energy supphes and support priority activities in the social and economic sectors; (2) to promote more efficient and judicious use of energy, inchiding shifting the consumption mix in favor of indigenous resources; and (3) to ensure that the first two objectives are attained within the limits of environmental acceptability. Two basic policy thrusts support the above objectives, namely Supply and Resource Development Policy and Energy Demand Management Policy. Initial energy sector policy reactions to the first oil crisis were mostly focused on securing a stable and adequate supply of crude petroleum (_Makasiar, 1984). The vulnerability of the Philippine economy to an oil crisis stemmed from (1) the extreme dependence of energy consumption on a single resource-imported crude petroleum, very from high concentration of crude oil (2) sources the highly volatile Middle East region, (3) foreign domination of the domestic oil industry, (4) technology fixes in domestic industries (energy-intensity levels could not readily adjust to abrupt changes in energy prices and supply), and (5) lack of coordination among different institutions and agencies concerned with energy. Energy Pricing Policy Energy pricing policy in the Philippines has played a major role in serving as the main tool in energy demand management per se, and also in furthering other higher non-energy related development goals. Thus, energy pricing together with energy tax policy, has evolved into a complex multi-objective function whose detelmination necessarily involves an implicit weighting scheme that takes into account the trade-offs among competing objectives. We can broadly group these goals into two types: (1)energy demand management goals, including conservation and fuel-substitution objectives; and (2) higher development goals such as growth, efficiency, stability, xevenue generation and equity (Alejo, 1985), The trade-offs among the different policy goals are quite obvious. A-substantial rise in domestic energy prices while effectively reducing energy consumption and contributing to the conservation goal, I III IIII II IIII

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can dampen economic growth, trigger cost-push inflation an4 erode competitiveness of domestic industries, unless compensatory fiscal and monetary policies are adopted (Alejo, 1983; 1985). During the pre-energy crisis period characterized by low world oil prices, energy pricing policy in the Philippines was not generally concerned with energy management but rather (implicitly) with promoting economic growth and revenue generation. At the onset of the first energy crisis, however, the energy conservation and substitution goals gained prominence as world oil prices quadrupled, while revenue generation remained an important goal when new energy taxes were imposed. The short-run impact of these were, of course, a sudden spurt in domestic prices, while the longrun cost was an incremental decline in

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Principles of Energy Pricing. in setting domestic energy prices, particularly with respect to refined petroleum products, policy-makers have been guided by some kind of an incremental cost-plus pricing principle where increases in exogenous world oil prices and changes in the pesoto-dollar exchange rate are passed on in the form of proportionally higher oilcompany-take (pre-tax wholesale prices), insofar as these domestic prices reflect

utilizing energy pricing policy to manage energy demand. Earlier econometric estimates done by this writer (1983) point to an absolute increase in the price elasticity of energy demand from a highly inelastic value of -0.084 for 1973S2 (pre-oil crisis) to -0.176 in 1979S2 (post-oil-crisis). While remaining still highly inelastic in absolute terms, this represents a substantial increase in the price responsiveness after the first oil shock. Other estimates of the price elasticity include that of the Ministry of Energy (1980)which cove_s the 1962_79 observation period. Price elasticity for conventional energy demand _vas estimated to be -0.39, while that for petroleum consumption was found to be -0.42. The higher absolute values of the

world oil price levels and trends, this pricing principle is roughly consistent

price elasticity estimates of the Ministry seems baffling considering that the period

economic growth. These policies were generally continued in the interim period between the two oil crises. Energy prices were also determined so as to reflect a

with marginal cost theory in economics (META Systems, 1984). However, due to a number of factors explained below, the resulting domestic energy prices

covered includes the 1960s when energy prices were extremely low and should theoretically result in even lower price elasticities when included. To further

"socialized" pricing scheme, with energy taxes so structured as to minimize the

were not "first-best" or "efficiency" prices. The reasons for these divergences

test the hypothesis that the price elasticities have really been increasing since the

impact of increased energy prices on low income groups and preferred industries with substantial linkage with these groups (Alejo, 1985). During and immediately after the

from marginal cost pricing principle are: (1) the presence of a vector-valued objective function of policy-makers in setting energy prices which led to considerations other than solely economic efficiency which is just one among many goals; (2) the use of an overvalued exchange rate in actual cost computations which resulted, on an incremental basis, in a lower peso price of energy products; and (3) the presence of domestic distortions (system of tariff protection, domestic taxes and subsidies, price controls, interest ceilings, minimum wages, etc.) that prohibited the adoption of first-best

first oil shock, this author (1985) estimated an aggregate energy demand function for the most recent 197484 period. The results point to a price elasticity of aggregate energy demand of -0.211. With a lag formulation, however, the price elasticity in the short-run is -0.176 with a corresponding long-run value of -0.278. These latest results tend to confirm the observation that the price elasticity of aggregate energy demand has been increasing over time. This would seem to be explained by the fact that domestic energy prices are now

second oil shock, much of the energy conservation and substitution goals had been achieved. Hence, the focus of energy pricing policy shifted to the external stability goal as export receipts began to decline and the sourcing of foreign cornmercial loans became increasingly difficult and expensive, with the BOP showing successive deterioration. Domestic energy taxes were increased not _rly to generate more revenue, but more so to check the progressively burgeoning fiscaldeficitand expanding domestic liquidity, which could otherwise leak into an increased import demand and hence, higher BOP deficits. The underlying rationale seems to be the use of energy pricing policy to help achieve external balance consistent with IMF policy prescriptions, Most recently, however, energy pricing policy had shifted its role to attaining domestic price stability. When the pesoto-dollar exchange rate stabilized somewhat in 1985 and world oil price continued to decline, energy pricing policy was instrumental in lowering the domestic inflation rate. It washoped that by

lowering domestic energy prices, some kind of energy crisis in reverse could, through inter-industry linkages, reverse the inflationary process caused by the successive peso devaluations, and stimulate the economy to a positive economic growth path(Alejo, 1985).

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pricing in the energy sector, Marginal cost pricing principles find particular potential applications with regard to electricity pricing. As observed by Francisco (1983), existing tariff structure in the electricity sector is not based on peak-load and marginal cost pricing principles. As such, net social welfare is not maximized, Price Elasticities of Energy Demand. The degree of responsiveness of energy demand to changes in energy prices are provided by estimates of the price elasticity of energy demand. The estimates can be used to provide a quantitative basis for evaluating the efficacy of

so absolutely high that a 1% increase in its price would solicit a higher demand response compared to the same 1% increase a decade ago when energy prices were just a small fraction of present prices. While it would be ideal to disaggregate the foregoing results into individual energy products for each consuming sector of the economy, past attempts to do rigorous econometric modeling of such detailed demand functions on Philippine data by this author and others have generally 1bred. The most comprehensive work, however, is found in META Systems (1984). Using a combination of regression analysis and expert judgment (mainly based on literature ]1 I

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review), the authors have come up with own-price and cross-price elasticity es-

of both diesel-to-gasoline and fuel oil-todiesel. By mid-1985, the relative price

timates for three major fuels, namely gasoline, diesel and fuel oil for 15 major

between diesel and gasoline was back to its normal level in 1974. Fuel oil prices,

Petroleum. Aside from the supply and demand imbalance referred to earlier

input-output sector,s. In both the aggregative and disaggregative results, we can fairly conclude that prices do matter in energy demand, and pricing policy in the past was an effective energy demand management tool in the Philippines as can be seen

on the other hand, were adjusted at a higher pace than diesel until 1983. Subsequently, the relative price was decreased in 1984-85, presumably as a stimulus for sagging industries to recover from the severe economic crunch, A major factor that explains the sup-

and the implications to petroleum products pricing policy, Sathaye has pointed out the need to modify the refineries' production technologies to adapt to increased diesel production and reduced fuel oil consumption in the medium term. The increased fuel

from its significant impact on energy conservation (own-price elasticity) and fuel switching (cross-price elasticity), Evaluation of Energy Pricing ind Tax Policy The 1974 and 1985 retail prices of

ply and demand imbalance in petroleum products was energy tax policy. In support of the so-called socialized pricing policy, gasoline is taxed most heavily, Effective tax rate (as apercentofwholesale posted price) in 1980 reached 52.6% for premium gasoline and 53.0% for

oil consumption could be brought about by reduced future demand for fuel oil in power generation as power plants shift to alternative sources of energy (hydro, geothermal and nuclear).

majorpetroleumproducts, except for LPG, have more or less grown proportionately over the period, and pricing policy can be said to be generally neutral with respect to allocating price increases among petroleum products,

regular gasoline. In contrast, tax rates were 14.4% for kerosene, 17.2% for diesel, 14.8% for LPG and 15.8% for fuel oil. To gauge the impact of the various factors affecting the retail prices of

Coal. The key issue here is the match in the requirements of cement plants for high-quality and the low-grade coal that is

Looking at annual price movements, however, the picture that emerges seems to indicate a dynamically changing price

petroleum products, an 18-equation recursive model (Alejo, 1985) of the pricing mechanism in the petroleum sector was

relation among the products. In 1974, fuel oil prices which were virtually untaxed in the past were realigned with the

constructed using annual data from 1974 to 1984. With the use of the model, it would be possible to isolate the individual

other petroleum products. During 19751980, gasoline bore most of the price increases as taxes progressively increased, The basic concern during this period was equity since gasoline consumers were deemed to be in a better position to

contribution of each factor - dollar crude petroleum price movements, exchange rate depreciation, taxes and tariff changes. The results show that, wi_h the exception of LPG, over half (51.6% to 54.8%) of the total increase in the

power sector concerns: (1) frequent brownouts in spite of excess capacity, and (2) absence of substantive basis for demand projections by grid. In spite of large reserve margins ranging from 27% in Mindanao to 63% in the

bear the brunt of price increases, as opposed to LPG and kerosene users, most of whom belong to lower income groups, In addition, fuel oil is primarily consumed in industries and power generation. The result of this policy, however, was a shift in the demand pattern, with gasoline demand (especially regular gasoline) decreasing significantly, and diesel and fuel demand conversely increasing at an above average pace. Given the limited flexibility in petroleum refining process, the output mix of petroleum companies could not accommodate such drastic changes in demand patterns, and the country had to eventually import diesel' and fuel oil while exporting locallyrefined excess gasoline, The imbalance in petroleum products supply and demand mix caused energy pricing policy to focus on this concern beginning 1981. The obvious policy reaction was to increase the price ratios

retail price of petroleum products between 1974 and 1984 are accounted for by increases in energy taxes and tariffs, Dollar crude oil price increases accounted for 26.1% to 32.6% while exchange rate depreciation contributed 19.1% to 23.8%. As a general observation, therefore, over the ten-year period 1974-84, energy pricing policy tended to be used mainly as a revenue generating tool. However; this is consistent with the energy conservation goal together with the higher economic goal of external_ stability. The trade-off involved a higher inflation rate as a result of high energy prices and a lower economic growth as energy consumption was constrained,

Visayas, brownouts still frequently occur. This problem has not been adequately addressed. The second problem refers to the inadequate system of forecasting future demand which should ideally be linked to economic activity as well as price (power rates) variables specific to a region.

Selected Policy Issues in Energy Supply A good summary of the most important policy issues in the energy sector is found in Sathaye (1984). This study identifies key issues relating to petroIII IIIII

1cure, coal, power and non.conventional energy.

misthe coal cur-

currently available locally. For firms which have converted to coal, the mismatch has led to a surplus of low-grade coal and the lack of highquality coal, necessitating importation of the latter. Power. Two issues are relevant to the

Non-Conventional Energy. The issue here concerns the expected increased demand for biomass energy products (mainly bagasse, coconut husk/shell and wood/woodwaste). The availability of these alternative fuels which have become relatively cheaper, (compared to LPG, for instance) and worsening income distribution could expectedly increase the consumption of non-conventional fuels such_ as charcoals and fuel wood, and may have a significant effect on forest conservation. Bill

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Alcoggs and Cocodiesel. The World Bank (1982) conducted a cost-benefit

This indicates a considerable achievement in the over-aU energy conservation effort,

These caused an increase in the country's propensity to borrow abroad to finance

study on the economics of the Philippine alcogas program and concluded that under several alternative scenarios, alcogas production is not economically feasible. This finding is supported by an economic rate of return estimate of less than 13% and a domestic resource cost coefficient which indicates a 15-20% higher cost of anhydrous ethanol production than the cost of refining gasoline from reported crude oil. In a more recent study, Armas and Cryde (1984) questioned the data and methodology used in the World Bank study primarily because of(l) the Bank's use of location-specific sugar cost data obtained from only one sugar mill, (2) capital costs based mainly on foreign supphers and Brazilian quotations, and (3) the limited attention to shadow price adjustments. Armas and Cryde improved on the World Bank methodology and data base by incorporating shadow pricing into the major inputs and extending the DRC analysis into regional grouping competitiveness of molassesbased small-scale armexed distilleries in general, Armas and Cryde also evaluated the cocodiesel program and concluded that the foreign exchange foregone due to the use of coconut oil in the cocodiesel program, and the reduction in government revenues due to foregone taxes are sufficiently large to make the program unattractive from an economic viewpoint, As an area for further research, however, economic evaluation of the alcogas and cocodiesel programs need to be updated in the light of changing comparative advantage as current world prices of crude oil, sugar and coconut products are on a declining trend,

Equally impressive gains were achieved in the energy substitution objective. The share of imported energy to total energy consumption was down to only 58.0% in 1984 compared to 92.0% in 1973, while the share of oil likewise dropped to 60.3%in 1984. Significantly, non-conven, tional sources of energy accounted for 15.8% of energy consumption in 1984, while other indigenous resources (hydro, geothermal, oil and coal) contributed 26.2%.

the deficit and maintain respectable growth. Later, this proved to be disastrous in terms of debt servicing burden. To the extent that this can be traced to the oil price shocks, this can be considered as an indirect cost of the energy crises. A lesson to be learned from the past concerns the inevitability of domestic economic adjustments (lower economic growth, higher inflation rate, etc.) to the oil crisis. These adjustments cannot be avoided but can only be postponed. It would have been better had these adjustments been realized earlier, on a programmed basis, and therefore made more manageable.

Concluding Remarks Recent performance indicators in the energy sector point to a substantial degree of success that can only be properly attributed to the energy policies implemented in the past. Energy/GDP ratio, as an aggregate measure of efficiency, has declined by an impressive 16.6% in a span of only ten years (1974-84). The decline was accompanied by a substantial drop in the income elasticity of aggregate energy demand averaging 0.87 during the period, I II II

Since the first off crisis, energy demand management throughout the perioc[ has reliedheavily on energypricingpolicy, particularly energy taxes and tariff impositions that altered the absolute and relative prices of alternative energy products. This policy proved to be highly successful in suppressing demand, instillLug energy conservation consciousness and efficiency, and in affecting the demand pattern to the desired mix. However, the effectiveness of energy pricing pohcy can also result in miscalculations, as in the demand imbalance in gasoline and diesel, resulting from declining diesel gasoline price ratios in the past. The other non-price policies, which included incentive policies and programs, were broadly supportive of the energy demand management policy and complemented the pricing policy. While the granting of standard investment incentives to energy projects is deemed desirable, insofar as it lowers the user's cost of capital, this needs to be supplemented with a concessionary lending program that proponents of energy conservation and substitution projects can avail. This would further hasten private sector participation in the implementation of more capital-intensive energy conservation projects, The economic cost of the oil crises and the management policies it brought about were significant. As has been pointed out, economic growth could have been higher by about 1,0 percentage point had it not been for the oil crises. The contribution to domestic inflation is very substantial during periods of oil price shocks and large devaluation of the peso. The impact on the BOP was significant as the terms of trade, current account, and overall balance deteriorated during oil shocks, g

The prospect for the country's energy sector would depend on the economy's future performance, and the energy policy directions that are implemented. Economic growth is likely to be con. siderably lower in the second half of the 1980s compared to the artificially high growth in the 1970s. This would correspondingly lower the demand for energy, and consequently would remove some pressure from the balance of payments. This factor, together with the continuation of static world oil prices, could conceivably give the Philippine economy the much needed breathing spell to slowly normalize. Energy management should then focus on non-price policies to foster further conservation and substitution, as energy pricing policy especially on petroleum products, seemed to have reached its limit as far as what the market can bear. Moreover, further increases could prove to be outright antigrowth. Non-price policies, particularly the strengthening of incentives and provision of concessional lending programs would be necessary in order to take the place of energy pricing policies that may have proven to be successful in the past but should not be as actively pursued in the future. Energy policy and research couM shift emphasis on areas which were not adequately addressed in the past. These include pricing issues related to geothermal and nuclear pricing, the development of non-conventional energy sources and threshing out of rural energy-related issues. III

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REFERENCES

7 (1982).

Philippine

SEPTEMBER-OCTOBER III mutual interests should facilitate

1985 IIII closer

Alejo, L.J. (1980). "A Macroeconometric Energy Policy Simulation Model for the Philippines: Structural Analysis." The Philippine Economic Journal, No. 45, Vol. XIX, Nos, 3 and 4.

Energy Development Program 198287. Planning Service, Ministry of Energy, Makati, Metro Manila. National Economic and Development Authority (1984). Updated Philippine

(1983). A Study of Interaction in the

Development Plan 1984-87. Republic of the Philippines.

Philippines. Philippine Institute for Development Studies, Monograph Series No. 1.

Sathaye, J.A. (1984). "Philippine Energy Sector Study." Report submitted to the Asian Developmeiat Bank.

(1985). Energy Demand Management in the Philippines. Asian Development Bank, Manila, Philippines (forthcoming).

World Bank (1982). Philippine Energy Sector Survey Report No. 3199-PH, IPD.

The study analyzes the Philippines' experience with financial repression and liberalization. Specifically, it re-examines the traditional financial policies that repressed financial development, and the

NEW

results of financial liberalization efforts. The period covered by the stuffy is 1956-

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84, divided into the following regimes: 1) 1956-73: rigid and low interest rate

Energy-Economy

Atmas, Armando Jr. and Denise Joyce Cryde (1984). Economic Evaluation of the Philippine Alcogasand Cocodiesel Programs. Philippine Institute for Development Studies, Monograph Series No. 3. Arthur D. Little Int'l. Inc. (1984). Industrial Energy Audits and Conservation Program for the Philippines. Report prepared for the Asian Development Bank and the Bureau of Energy Utilization. Francisco, Clodualdo (1983). "Electricity Pricing: An Overview of Philippine Power Situation and A Review of Literature." Philippine Institute for Development Studies. Makasiar, G.S. (1984). "Structural Response to the Energy Crisis: The Philippine Case," in R. Bautista and S. Naya (eds.) Energy andStructuralChange in the Asia Pacific Region. Philippine Institute for Development Studies/ Asian Development Bank, Manila, Philippines. META Systems (1984). "Philippine Petroleum Pricing Study". Draft report submitted to the Ministry of Energy. Mijares, T. and P.Q. Samson (1980). The Use of Inter-Industry Analysis in PriceCost Analysis. Paper presented at the Second National Convention on Statis+ tics, PICC, Manila, 2-3 December 1980. Ministry of Energy (1980). Ten-Year Energy Program 198(_89. Planning Service, Ministry of Energy, Makati, Metro Manila. III I

Rural Development Experience: Economic Perspective by: R.E. Evenson PIDS Consultant Staff Paper Series No. 85-06 The study is directed towards the broad issues of rural development. It is concerned with rural people and the irapacts that government intervention, regulation and market intervention have on their well-being. The general purpose is to discuss the relevance of the perspectives of the economics profession and of the analytic approach to rural development programming. Five bodies of econ+ omic literature are discussed with a view of assessing their contribution to the improvement of the consistency between instruments and objectives in rural development activity and the design and institutional efficiency of these activities. The five bodies of literature as cited deal with: a) the economics of farm production; b) the economics of the family; c) rural markets and institutions; d) research extension, rural development projects mad productivity change; and e) rural development projects, technology, population growth and income distribution, The study makes a general observation that economists have not been as "close" to rural development as have other disci, plines, in particular, sociology. Thus, there is a need for economists to go beyond interpreting and measuring economic relationships. A significant scope of I II I

ties with sociologists, and for that matter, all other social scientists. Financial LiberalizatiOn and the Internal Structure of Capital Markets: The Philippine Case by: Matin B. Lamberte PiDS Research Fellow Staff Paper Series No. 85-07

policy period; 2) 1974-80: transition period; and 3) 1981-84: floating interest rate period. The study also examines the failure of efforts to achieve flexibility and increased medium- and long-term capital, even after the switch towards a fully liberalized regime has been made. Its main conclusion is that there are requirements to successful liberalization efforts, and one such requirement is a low inflation rate. Unfo_rtunately, the inflationary policies pursued during the time, especially those related to rediscounting and financing budget deficits, worked against the desired goals of liberalization. The other requirement pertains to some form of regulation that must be exercised in the portfolio of banks in order to ensure people's confidence in the banking system.

The Rural Banking System: Need for Reforms by: MarioB. Lamberte PlDSResearch Fellow Staff Paper Series No. 85-08

The study reviews important monetary and credit policies affecting 'the perforraance of rural banks, examines the possible roles of rural banks under an entirely different policy environment, and suggests some measures to rehabilirate the rural bankingsystem. In this regard_ several options are explored in 'the study. Recommendations I ii

PIDS DEVELOPMENT II

RESEARCH

NEWS I II

8 III IIIIIIIII IIII

SEPTEMBER-OCTOBER II

1985

that will hopefully lead to an improved rural banking system include: 1) a possible restructuring of arrearages for a tenyear period, with selective application based on a specific set of criteria; 2) a gradual withdrawal of tax exemptions; and 3) internally, or externally-sourced capital build-up. A possible merger or con-

they measure the pace of economic activity affecting business plans and government policies. In particular, leading indicators are identified for each valueadded component of GDP in the study, An examination of the sectoral valueadded estimates in the national income accounts is then made to ensure that the

ral equilibrium (CGE) model of the Philippine economy, tailored specifically to simulate various policies affecting Philippine agriculture. The model is based on the previous model built by the proponent for tax policy analysis. Suitable modifications are made on the model in order to analyze the agriculture poli-

solidation may also be experimented rural banks,

indicators fit the data peculiarity former,

of the

cies envisaged in the present study, with the aim of simulating the effects of

Finally, the study derives GDP as a composite indicator - the weighted aver. age of sectoral output indices. The weights are based on the most recent share of the respective sectors valueadded to GDP (in real terms),

policies on relative prices, efficiency and welfare, income distribution, economic structure and thebehaviorandwell-being of various economic agents. Using the general equilibrium framework, the study analyzes, among others, policies relating to fertilizer pricing, agricultural trade, output prices and labor. In the final context, the study aims to identify appropriate policy directions for the agricultural sector on the basis of analyses of the simulation results.

The study was presented at the Sixth National Agricultural Credit Workshop on June 20-22, 1985 at the Development Academy of the Philippines in Tagaytay City. Social Adequacy and Economic Effects of Social Security: The Philippine Case by: Mario B. Lamberte PIDSResearch Fellow Staff Paper Series No. 85-09 This paper examines the social ade. quacy and economic effects of the social security system of the Philippines as a _hole, irrespective of whether one is dealing with the social security system of the government sector or the private sector, connection, substantial discussionIn isthis made on the merits and demerits

Food Consumption Parameters, Nutritional Impacts, and Philippine Agriculrural Development by: Ma. AgnesR. QuisumbingAssistant Professor, College of Development Eeonomics and Management University of the Philippines at Los Baaos

Producer Core Estimation from Regional Data by: MoisesSardido

Estimating income group-specific food demand parameters for use in consumption policy analysis is the objective of this particular research study. The demand parameters are important in evaluating the differential responses of consumers to food market intervention policies, given that demand behavior varies, across income classes. Income stratum-specific demand parameters are estimated using flexible functional form which satisfies the axioms of demand theory such as homogeneity, symmetry and adding-up, In addition, the study aims to simulate the consumption and nutritional effects of general agricultural and food policies, using a computable general equilibrium model of the Philippine economy. In this

This study is an extension of the work initiated in an earlier study sponsored by the Institute, on the area of Philippine rural and agricultural development for the period 1949-1983. The main objective is to be able to present regional total factor productivity indices for the period, covering nine regions in the Philippines. The estimates of the producer core include several infrastructure variables not initially introduced in the earlier study. Examples are wage 'rates, agriculrural research, literacy, land transfer, road density, rural electrification and regional development expenditures. These variables are taken yearly and are specific to regions. The estimates presented are taken as

Indicators of Seetoral Output

regard, various food market intervention policies are examined, especially as they affect the nutritional intake of nutritionally vulnerable groups,

critical to policy analysis because they directly establish a link between policy variables just mentioned, the supply of agricultural commodities and the demand

by:

Agricultural Development

for agricultural factors of production.

of a social security program as it is applied in the Philippine setting. Moreover, in determining the social adequacy of the system, the paper examines the coverage, benefits and financing schemes provided by social security programs. On the other hand, the economic effects are brought to bear on some macro variables such as savings, investment, labor force participation and income distribution,

ON-GOING P ROJ

ECTS

Benvenuto N. Icamina

in the Philip-

The study aims to construct loading pines: Policy Modelling and Analysis indicators which would adequately reflect by: Cielito F Habito the trends in the overall (GDP)and secAssistant Professor, College of total components of output (value added Development Economics and components of GDP) from the regular Management and existing economic data. University of the Philippines at Developed on a quarterly basis, the Los Bagos indicators capture movements in GDP The study is an attempt to construct a wlfich are deemed important inasmuch as working multi-sectoral computable geneâ&#x20AC;˘ I IIIIII IIIIIII lllI II

SEMINARS: PES-PIDS Policies

Joint

Conference

Tax

A seminar on "Tax Policy Reform in the Philippines" was held last October 25, II

PIDS DEVELOPMENT

RESEARCH

1985 at the Makati Room of the Metro: politan Club. The seminar, which was a joint undertaking of the Philippine Economic Society (PES) and the Philippine Institute for Development Studies, (PIDS), had two main speakers for the event. These were Dr. Angel Q. Yoingco, Executive Director of the National Tax Research Center and Dr. Agustin Kintanar, Jr., currently Professor at the College of Public Administration, University of the Philippines.

NEWS

9 II I

SEPTEMBER-OCTOBER IIII I

Edlto F

year. Topics to be taken up relate to general Philippine economic conditions, more specifically, on output, prices, employment, exports and imports, etc. for the said period, The panelists in this discussion are the same individuals present during the first round, Professor Speaker

Lawrence

Klein

N O t_

•

1985

•

from page 1 energy policies adopted by the government, their effects on inflation and GDP growth as well as on the overall welfare of individuals and industries. Matters related to energy pricing as well asselectecl issues on energy supply, including energy forms being developed and explored, are also brought up in the dis-

Guest

Several issues concerning taxation and

NOBEL PRIZE WINNER FOR ECO-

the fiscal system in general were brought up in the forum, including recent devel-

NOMICS, Professor Lawrence Klein of the Wharton School of Business and Corn-

opments in the tax system. One of these was the gross income taxation scheme which Dr. Yoingco helped fornaulate for application in the Philippines.

The Philippine Economic Society (PES), in collaboration with the Corpo-

merce at the University of Pennsylvania, will be the guest speaker in two specially arranged fora in November that will allow the Nobel laureate to share his views in economics and its practice with members of thePhilippine academic and business communities, Prof. Klein will be the speaker in a seminar to be sponsored by the U.P. School of Economics at the Economics Building in U.P., Diliman on November.

In this issue, we are also happy to announce the start of our DRN Clearinghouse Project on Studies Related to Economic Development Planning and Policy-Making in the Philippines. This project aims to gather, condense and disseminate the features and highlights of completed, on-going, and pipeline research projects conducted by various research, educational, planning and policymaking institutions in the country which deal with economic development and policy-oriented studies on economics.

rate Planning Society of the Philippines (CPSP), and the Philippine Institute for Development Studies (PIDS), will hold the second round of its Panel Discussion Series on "The Economic Outlook for the Philippines for 1985 and 1986" on November 15, 1985. The venue for the thrum is the Metropolitan Club. The session intends to take another look at the forecasts and expectations earlier presented in the first round of discussions held sometime in June of this

28, 1985 at 3:00 p.m. On November 29, Prof. Klein will once again be the special guest in a luncheon symposium at the Philippine Plaza, to be sponsored jointly by the Philippine Economic Society (PES), the Philippine Institute for Development Studies (PIDS), and the Wharton, Stanford, and Columbia Clubs of the Philippines. Prof. Klein's visit to the Philippines is being arranged by the Philippine Institute for Development Studies.

Through this compilation, the DRN hopes to be of service to its readers especially to those interested in knowing what studies had been done, or are currently being done on certain topics that affect economic planning and policymaking in the country. For our initial listing (which is shown on the supplement on pp. 10-23), we have included the studies which have been submitted to us by various institutions as of October 1985.

PES-PIDS-CPSP Joint Panel Discussion on the Philippine Economic Outlook for 1985 and 1986

cussiorL

THE PIDS RESEARCH PROGRAM

In accordance with its mandate of assisting the government in planning

and

policy

formulation,

(d) improving planning and approaches.

methods

the

widely andequitably. In order to allow

the

program

cumulatively

proceed

research

Philippine Institute for Development Studies has evolved a research pro-

The main basis for the substantive content of the Institute's Research

and in a coordinated fashion, PIDS research activities have been organized

gram specifically aimed towards: (a) providing a framework for plan and policy formulation; (b) assessing the effects of policies, programs and projects on the country's development goals; (c) helping in the identification of strategies designed to cope

program is the Philippine Development Plan. Accordingly, the program has emphasized policy issues surrounding the question of how develop_ ment can be accelerated, and sustained with special attention being given to the expansion of productive employment opportunities and to the related

into five research themes, namely: *Employment, Human Resource Development and Technology •Resource Mobilization *Trade Expansion, Agricultural and Industrial Development and Energy *Poverty, Income and Wealth Distribution

with anticipated bottlenecks in the long-run future; and III

III

question of how the benefits of development can be distributed more II II

III

IIIIIII

*Regional, Rural and UrbanDevelopment _

IIl[I

SUPPLEMENT B I I I

SEPTEMBER-OCTOBER I I

I[111111111 IIIII I

1985

COMPILATION OF RESEARCH STUDIES

Agriculture

TITLE OF RESEARCH

GEOGRAPHICAL

PROJECT

PROJECT(S)/STUDY

COVERAGE

DINATOR(S) OR PRINCIPAL INVESTIGATOR

COOR-

SPONSORING

OR INSTITUTIONAL AFFILIATION OF RESEARCHER

AGENCY

Philippine Cash Cropping Project: Southern Bukidnon Province

Southern

Francis C. Madigan, S.J., and Howarth Bouise

International Food Policy Reseaxch Institute with â&#x20AC;˘ the De La Salle Research

Review of Rural Institutions: A Critical Look at

Philippines

NEDA-EPRS

NEDA.EPRS[BAIDS

Land Tenure and Farm Management Technology of Badian-Alegria: Effects on Farm Household Agricultural Productivity

Badian-Alegria

Elizabeth

NEDA-EPRS PDPR

Implications of Selected Soeio-Economic-Demographic Factors on Land Tenure in Operation Land Transfer (OLT) and Leasehold Areas

Philippines

NEDA-Economic Planning and Research Staff (EPRS)

The Textile

Industry

philippines

-0-

The Glass Container Industry

Philippines

-0-

The Semiconductor Industry

Philippines

-0-

The Cement

Philippines

-0-

and Food

Agricultural

Projects

Agricultural

Policies

Extension

Services

Bukidnon

Center

Some Types of Farmer Organizations

Agrarian Reform

II.

M. Remedios

and BIROs

Ministry of A_arian Reform with the NEDA

Industry Industry

Studies

Industry

The Consumer Industry

Electronics

Philippines

-0-

The Fishpond

Sector

Philippines

-0-

of the Fishing Industry Coconut Study

Industry

Sugar Industry

Study

Philippines

The Sugar Industry: Performance and Prospects

Philippines

In Search of a Balanced Agro-Industrial Growth in Northern Mindanao: A

Northern Mindanao

Me. Luz T. Mier Ms. Remedios R; de Leon and various working technical

World Bank]NEDAProjects Economic Staff (PES) and Industry and Utilities

groups

Staff

-ditto-

-0-

Francis C. Madigan I. Sealza

-ditto-

-0-

U.N.F.P.A./NEDA

Study of Corn, Rice, Sugar and Cassava Industries in Interrelation in Bukidnon Province

The Philippine Industry

Mining

Philippines

-0-

â&#x20AC;˘P.IDS DEVELOPMENT

RESEARCH

NEWS

SEPTEMBER-OCTOBER

1985

ON PHILIPPINE ECONOMIC DEVELOPMENT STATUS

ABSTRACT

On-going

The study examines

Completed (October 1984)

Each rural institution examined by the study was established for the purpose of mobilizing farmers' participation in rural community affairs. However, the study finds that the actual operations of these institutions deviated considerably from the concepts and ideals for which they were created. Some of the reasons include: a) ineffectiveness of most of the institutions to serve as vehicles for meeting farmers' needs; and b) the development of these institutions has not been supported by more permanent

the cash cropping project in Southern

changes in the attitudes

of participants

Bukidnon

as it .relates_to the nutrition

prot_fle of the region.

in the organization.

Completed (October 1985)

The study identifies the different forms of existing tenure arrangements and patterns present in Badian-Alegria, the types of farm management technologies. These factors are then related to the farm households' agricultural vity.

Completed (first draft 1985)

The project assesses the demographic, socio-psycho-cultural and economic profile of the members of Agrarian Reform Beneficiaries Association (ARBA) in selected Operation Land Transfer (OLT) and Leasehold Areas (LA). It further explores the implications of household size and age-sex composition on selected socio-psycho-cultural and economic variables.

Completed

Contained in a regular ptzblication of the Economic and Corporate of the Philippines, (PDCP), the lndustry Digest, March-April 1982.

Completed

See the Industry

Digest.

Completed

See the lndustry

Digest, November-December

Completed

See the lndustry

Digest, January-February

Completed

See the Industry

Digest, July-August

1.983.

Completed

See the Indqstry

Digest, July-August

1983.

September-October

Research

Office,

Private Development

including producti-

Corporation

1982.

1983.

Completed (November

1984)

The study analyzes the extent to which the coconut industry is financed instituti6nally. It looks into the different types of Financing programs made available by the banking system to farmers. There is "also a discussion on policies and/or recommendations to alleviate pressing credit problems, especially as these affect the viability of the industry.

Completed (November

1984)

The study reports on the sugar industry in the context of industry realities in the areas of production and marketing. Performance of major participants in the industry are assessed with respect to their profitability, liquidity and credit worthiness as well as fimancial assistance extended to them over the years.

Completed

Contained in a regular publication of the Economic and Corporate Research of the Philippines (PDCP), the Industry Digest, November-December 1983.

Completed (1984)

The study evaluates the influence of the South Bukidnon sugar and the western Bukidnon cassava starch "production facilities upon the various social groups in Bukidnon. Concerns with fertility, mortality and migration patterns of residents are also taken up, as these variables are influenced by the presence of the two facilities.

Completed

See the Industry

Digest, January-February March-April

1985 (lst part)

1985 (2nd part)

lIIll III

Office,

Private

Development

Corporation

SUPPLEMENT IIIII

12 II

Market/Commodity Studies

III

The Production and Export Potential of Pearls

Philippines

Philippine Banana Exports: Performance and Prospects

Philippines

-0-

.-0-

Non-Traditional Exports: Focus on Fresh and Processed. Fruits

Philippines

-0-

The Production and Export Potential of Shrimps

Philippines

Ernando de Leon Yolanda Imperial Evelyn Santos

Central Bank -international

The Production and Export Potential of Coffee

PhiLippines

Vanessa Evangelista

Central Bank - international

Urban Food Markets in Metropolitan Manila: Analysis and Recommendations

Metro Manila

Benjamin

International Dev't. Research Centre (Canada) & the Phil. Center for Economic Dev't.

The Government

Philippines

institute

Programs

in the Coconut Industry: Who Pays, Who Benefits?

III.

international Finance

SEPTEMBER-OCTOBER 1985 !ll I I

IIIIII Fe Mirasol

Central Bank -international

E, Diokno

of Labor

and Manpower

MOLE - ILMS

Studies

Trade and

International

Trade

The Theory Advantage Experience

of Comparative

Philippines

and the Philippine

Mary Ann Celeste

Central

Sosa

(international)

The Philippine Export Performance and Prospects

Philippines

-0-

Philippine

Philippines

Florian

Trade in

-0-

A.Alburo

Manufactures Structural Change and Adjustment

Balance of Payments

Bank

University

of the

Philippines - School of Economics

Income and Price Elasticities of Selected Export and Import Commodities

Philippines

Mary Ann Celeste Sosa Susana B. Napa

Central Bank - international

Export Promotion vs. Import Substitution: A CrossSectional Analysis of the Experience of Developing Countries

Philippines, Korea, Singapore,

Mary Ann Celeste Sosa

Central Bank -international

Malaysia, Indonesia and Thailand

Changing Trade Patterns and Policy Issues: The Prospects for East and Southeast Asian Developing Countries

Asian Newly Industrialized Countries (NICs) & ASEAN

Seiji Naya and Ulrich Hiemenz

Asian Development Bank

Determinants of the Balance of Payments Position of the Philippines: 1970-1983

Philippines

Ma. Cyd TuafioAmador

Central Bank - international

PIDS DEVELOPMENT RESEARCH I III I II I IIIIII I Completed

The study

(September

1985)

dustry's

NEWS

13 IIII I

examines

problems

the potentials

and prevailing

SEPTEMBER-OCTOBER I

of pearls

world market

as an export

commodity

- its production

and marketing

structure,

1985 II the in-

conditions.

Completed

Contained in a regular publication of the Economic and Corporate of the Philippines (PDCP), the Industry Digest, March-April 1984.

Completed

See the Industry

Completed (August 1985)

The study covers the status, demand and supply conditions and the marketing structttre of the local Shrimps industry. it also provides a perspective of tile world demand and supply conditions for shrimps, including the pricing mechanisms. Problems and prospects are likewise identified.

Completed (September

Focusing on the local coffee industry, the study goes into production of the industry, as well as local supply and demand conditions.

Completed (February

1985)

Digest, September-October November-December

Research

Office,

Private Development

Corporation

1984 (1 st part) 1984 (2nd part)

The study aims primarily at improving the state of knowledge a variety of social research methods, including questionnaires,

and marketing

concerns,

the problems

and prospects

of the urban food markets in Metro Manila, combining price monitoring surveys, semi-structttred interviews and

documentary research. The study suggests that the Central government should concentrate its efforts in making more efficient the food distribution system through the existing network of public markets. Basically, government is expected to provide incentives to increase agricultural productivity, facilitate the flow of commodities from producers to consumers, foster competition among wholesalers and retailers, and supervise and monitor health regulations to assure that health standards are observed. Completed (1981)

The study analyzes government programs and policies concerning the coconut industry and their equity implications on the coconut farmers, Essential information about these programs are provided in order to pinpoint areas where government can beneficially intervene to promote the welfare of coconut farmers.

Completed (April 1984)

The study presents the modern theory of comparative advantage and shows how its measurement, resource cost approach(DRC), can be used to assist resource allocation.

Completed

See the Industry

Completed (August 1985)

The study looks into the recent elements that indicate structural

Dige,_r, September-October

thorugh

the domestic

1983.

experience in manufactured exports, especially nomtraditional manufactures; identifies change in industry and trade behavior; and analyzes adjustment patterns arising from,

or in response to, trade performance. Further, the paper explores the question of why the Philippines was unable to achieve a dramatic structural change in industry despite the exuberant growth of non-traditional manufactured exports in the seventies. The study argues that the adjustment processes the country took in the light of this export expansion were not conducive to a more dynamic growth in the manufacturing sector as a whole, and hence has not led to an appreciable structural change.

On-going (October

The study theoretical conditions.

1985)

Completed (May 1985)

The study presents the various to a comparison of economic countries under study.

Completed (February

The paper 1984)

Cempleted (July 1984)

presents income and price elasticities of major export and hnport commodities and evaluates these against expectations. The study also attempts to explain the elasticities obtained based on prevailing world market

examines

the nature

alternative trade strategies for development, performance under the export-promotion

of the adjustment

undertaken

their merits and limitations. A section is devoted and import-substitution schemes across the six

by the Asian NICs and the ASEAN countries

in the 1970s,

given an international economic environment that was far from conducive to rapid export expansion. Issues brought up in the study relates to export commodities, changing commodity patterns, trade partners and patterns of export destination. (i.e. Was there a noticeable shift from North-South to more South-South trade or from extra-regional to intraregional or subregional trade?) Answers to these questions aim to provSde some insight into the trade prospects in the Asia-Pacific region and the options of LDCs for further exports expansion in the 1980s.

The paper adopts the Khan and Knight model to determine the factors accounting for the movements of the balance of payments position in the Philippines. A discussion on the significant variables affecting the BOP is also presented.

IIIII

III

IIII

IIIIIII IIII

SUPPLEMENT

SEPTEMBER-OCTOBER 1985

Monetary Responses to External Shocks: 1960-1983 (submitted to SEACEN Research and Training Centre)

Philippines

Mary Ann Celeste Sosa

-ditto-

The Movement of the Freight and Insurance Accounts in the BOP

Philippines

Evelyn Santos

Central Bank - international

The Philippine Balance of Payments: Patterns of Adjustment to

Philippines

Wflhelmina

Central Bank - international

Determinants of the Balance-of-Payments Position of the Plfilippines 1970-1983.

Philippines

Ma. Cyd TuafioAmador

-ditto-

New International

Philippine

Philippines

Tereso Tullao, jr.

Philippine

Economic

Perceptions of Issues Related to the New

and Wilrfido Villacorta

Development Studies with De La Salle

Exogenous 1973:1981:

Order

C. Mafialac

Shocks,

and Australian

and

Australia

International Economic Order: Foe d Security and Commodity Trade Regional

(Economic)

Cooperation Studies

- ASEAN

Research

for

Center

Study on Possibilities

United

J. Casas and

Tariff Commission

of Securing Tariff and Trade Commitments or Concessions from major trading partners and ASEAN

Japan and EEC countries

R.G. Nazareth

the PhilJppin_ Institute for Development Studies

A Study of Tariff Profiles in ASEAN: An Update

ASEAN

Chulia J. Azareon

Tariff Commission

Narongehai

Asian Development Bank

ASEAN Economies ASEAN Economic

States,

Institute

and

Akrasanee

ASEAN

with

Cooperation

ASEAN-US Relations:

Foreign Assistance Investments

Trade Barriers/ Tariff Reform

and

Trade An Overview

Economic Impact Study of International Governmerit Loan Fund-Assisted Projects (IGLF) Phase II Survey of Tariff Policy Research

Impact Export

Effects Taxes

ASEAN

and

Regions III, IV, VII and NCR

Foregin Trade Barriers Facing Developing Member Countries of the Bank

Institute

of Southeast

Asian Studies (Singapore) with the Asian Development Bank NEDA - Industry and Utilities Staff, National Regional Offices and SBAC

IGLF and the Central Bank

Victor Marcos Venidad

-ditto-

Philippines

Raul FaBella

-ditto-

Asian developing countries

Dean A. de Rosa

Asian Development

-0-

Dean A. de Rosa

the U.S.

...................

Bank

PIDS DEVELOPMENT RESEARCH NEWS ! III I II I I I a historical

account

SEPTEMBER-OCTOBER 1985 II

Completed

/'he paper

(May 1985)

stance maintained by _he monetary action is undertaken. Also, a section tary policy measures.

Completed (August 1985)

The paper analyzes the movements in the freight and insurance component of the BOP and its behavior and imports. The paper also reviews the present method of compiling freight and insurance statistics.

Completed (July 1983)

The study plovides a background perspective of the country's economic structure. It likewise quantLfies the effects external shocks on the BOP and discusses the mode of adjustments to these shocks. Moreover, a section is devoted a discussion

presents

15 III

of the policy measures

of the external

authorities is devoted

adopted

shocks which affected

the country

from

1960 to 1983

by the Central

Bank in response

to these external

relative to exports

of to

disturbances.

Completed (July 1984)

The paper adopts the Khan and Knight model to determine the factors accounting for the movements payments. A discussion on the significant variables affecting the BOP is also presented.

Completed

The paper focuses on ASEAN-Australian relations as it presents the positions of the Philippines t 9 the proposed schemes aimed at resolving issues related to commodity and food security.

On-going (December

and the

in response to these shocks. In addition, an evaluation of the policy Ieto a description of fiscal policy measures adopted alongside and the mone-

in the balance

and Australia with respect

The study identifies specific products where tariff and non-tariff concessions could be requested by the Philippines from trading partners like the United States, Japan and the EEC countries, ineinding ASEAN countries. Lkkewise, offer lists on which concessions may be offered to these countries axe also identified_

1985)

On-going

The study presents comparative tariff profiles of the ASEAN member countries as of 1983. This it does by analyzing: a) the degree of disaggregation of each tariff schedule and the types of effective tariff rates in each member country; b) the over-all average tariff levels in each ASEAN state and how these compare with the regional average; e) average tariff levels applied by each country, classified by major commodity groups, under the SITC and the UN system of elassilication using broad economic categories; and d) comparing the 1978 tariff profiles and those obtained for 1983. In addition, the study also delves into the technical aspect of tariff averaging and demonstrates how the use oftlie averagingmethod, ..... (simple average, nation-trade weighted average and ASEAN trade weighted average) affects the resulting average tariff estimates. Country rankings based on these three methods of tariff averaging are then presented.

Completed (November

The paper serves as a basis to assess the potential schemes of ASEAN economic cooperation_ The ASEAN economies reviewed are those of the current period extending to the year 1990_ In addition to the macro-aggregates, government policies and their implementation in areas relevant to external economic relations are also discussed as these aZe considered basic determinants of possible economic cooperation.

1984)

Completed (July 1985)

Complete_l (December

The study provides commercial policies

an overview of ASEAN-US trade relations, and the factois between the ASEAN countries and the United States.

contTibuting

to recent

trends

in trade and

The study measures the contribution of IGLF-assisted projects in the regions specified in terms of employment, foreign exchange savings/earnings, GNP, utilization of indigenous raw materials and income distribution. In addition, the study assesses the effectiveness of IGLF's lending program as a response to the region's needs and problems.

1984)

Completed (January 1985)

The study puts together the numerous reseaches undertaken on tariff policy since the 1970s: Discussions on the various effects of tariff and the different methodologies that have been used, or proposed, to measure the effects of tariff policy are also made. The paper also deals with non-tariff measures that result in the same or nearly the same protective effects as the tariff measures.

On-going

The study dology of changes in and import

Pipeline (November

estimates the effects of the tariff reform program on output, employment, trade and revenue, using the methoChung Lee. Using the 1979 I/O table, with and without export taxes, sectoral EPRs are derived from wich supply, employment and exports are computed. In keeping with the assumptions involving EPRs, the export sectors are defined a priori.

The paper is a technical study providing detailed impact on the export performance and potentials markets_

1985)

IIIII II

Ul]

analysis of traditional of developing member

illl

and new forms of trade protectionism, countries in industrial and developing

and its country

SUPPLEMENT PIDS DEVELOPMENT RESEARCH NEWS I IIIIIII

16 IIII1|11

SEPTEMBER-OCTOBER 1985 DR 11[111 I II

New Protectionism: Impact on Development Countrie,_

Developing Countries

International Affairs, Office of the Prime Minister

Office of the Prime Minister

Study of Revenue Implications, Output

Philippines

Erlinda MedaUa

Tariff Commission with the Philippine Institute

and

Employment and Balanceof-Payments Effects on the Tariff Reform Program

A Study of Non-Tariff Measures (Paper No. 4 in TC-PIDS project "Assessment of Tariff Liberalization

for Development

Phihppines

Erlinda Medalla

-ditto-

Philippines

Erlinda

-ditto-

Developing Countries

Economic Affairs, Office of the Prime Minister

Office of the Prime Minister

Phihppines

Social Development Comittee, NEDA-EPRS and the Presidential Commission on Re-

NEDA-EPRS

Studies

Program.")

An Assessment of the Current Tariff Reform

Medalla

Program and, Trade Liberalization Measures International Markets

Human

Capital

Developing Country to Capital Markets

Access

Resource

Development A_

Human Resource Development Policies and Programs

A Review of Human Resource Development Policies and Programs

organization Nutrition Health

and

Health and Nutritional Problems and the Utilization of Health Services: The Situation among PreSchoolers in depressed Metro Manila Communities

Manila, Pasay and Caloocan

Pilar Jimenez, Elena Javier and Judy Carol Sevilla

An Assessment of the Incidence of Malnutrtion and its Correlates

Region VII

Jocelyn C. Kintanar and Carmencita Alesna

A Comprehensive and Integrated Assessment of Population, Health, and Nutrition Programs in the Philippines, 1979-1985: A Basis for

Philippines

NEDA - Social Services Staff

Task Force for Population, Health and Nutrition/ Demographic Research and Development Foundation, Inc.

Bulalacao, Oriental Mindoro

Trindad

S. Ostefia

De La Salle Research

Policy Review: Severe Malnurtion of Filipino Pre-School Children

Metro Manila, Region VI

Gabriel

U. lglesias

UNICEF

The Integration of Women in Philippine

Philippines

Rosa. Linda P. Tidalgo

Long-Term

UNICEF with the De La Salle Research Center

NEDA-EPRS with NROs and the PDPR

Planning

Community Participation on the Provision of Basic Health Services in a Tribal Community

in the

Philippines

Women and Youth

University' of the Philippines

Center

PIDS DEVELOPMENT

RESEARCH NEWS studies

the effects of protectionist

SEPTEMBER-OCTOBER 1985

Completed

The

(July 1983)

performance and debt repayment eapabihty. Long-term effects on the economic structure of developing countries are also discussed. Effects of non-tariff barriers on the major exports of these countries (i.e. agricultural and labor-intensive products) is of additional interest to the study.

On-going

paper

The study adopts

(December

.[985)

1985)

On-going (December

1985)

of Chung

on developing

countries,

Lee which is a modification

particularly,

of the Baldwin

its impact

on export

(1976) approach

trade

as well as the

Baldwin, Mutti and Richardson (1980) approach, in estimating trade, employment and welfare effects of tariff reduction. Assuming that sectoral output depends on its effective price (value=added), the estimates start by computing the changes in sectoral output, using the post- and pre-TRP EPRs derived from the 1979 Input-Output Table. Changes in sectoral demand is composed of intermediate and tinal demand wbere the latter is a function of the change in income. Once these effects are specified, changes in employment, trade and revenue follow in a straightforward manner. The study also examines how income are affected by a reduction in tariff i.e. from 50% to 30% (if there is indeed an effect) and by a change in the exchange

On-going (December

the methodology

measures

rate.

TI_ study identifies non-tariff barriers to imports since the 70s. Focus is also made on import hcensing, quantitative trade restrictions, state trading, advance marginal depost requirement, customs procedures and product standards, government procurement, countervailing and anti-dumping duties, as they affect a list of commodities enumerated in CB Circular 1029 dated 12 October 1984. Generally, it seems that for those whose import shares axe significant, the regulations affected relative prices, as expected, in only a third of the sample, while liberalization affected a fifth of the sample. Furthermore, average price ratios were greater than one for most commodities restricted before 1977. In addition, the effects of liberalization are difficult to assess satisfactorily because of events that took place in 1983.

The study concentrates on four industries most likely to be affected by the current tariff reform program and the trade hberalization measures_ Using EPR and DRC measures, the industries studied include: a) the flour milling industry; b) home appliances;

c) textiles;

and d) paper products.

Completed (June 1984)

The study describes the problems faced by developing couuntries relative to the access in international capital markets. In addition, the regulations and practices observed in capital markets of developed economies are discussed with a view of recommending general and specific solutions to improve access to such markets.

Completed

The study assesses the consistency

(May 1982)

opment Plan. More specifically, By so doing, the study identified

On-going

The study explores the health and nutritional problems of pre-schoolers in four depressed communities in Metro Manila, their antecedents, the available health resources and their utilization. Delivery systems for both preventive and curative health services and file difficulties encourtered in its utilization are linked to the current health and nutrfional status of the pre-schoolers.

of agency policies and programs

with the total human development

the review looked into the content, clientele and spatial several policy gaps, program inconsistencies and overlaps.

This is done in order to propose

alternative

strategies

to improve

existing

coverage

thrust

of the Devel-

of agency

programs.

systems.

Completed (October 1985)

The project determines the incidence of malnutrition among children, ages zero to six, of upland "farm families living within the Badian-Alegria Watershed Management project site. Socio-economic-demographic and nutrition factors are also assessed to determine their contribution to the incidence of malnutrition.

Completed (September

]'he study is an assessment of current population, health and nutrition (PNH) status and needs used to form the basis of a comprehensive and integrated PHN plan for 1986-1990. Various indicators are used in order to identity current as well as potential bottlenecks to strategies and programs adopted to improve PHN in the country.

1985)

Given the community's resource program that involves commu,fity

Completed (July 1982 & March 1985)

constraints, the study looks h_to the feasibility participation.

and effectiveness

Completed

The paper

examines

how Philippine

(April 1985)

prioritized

women's

fuller integration

ill

up a health

The study contains an update on malnutrition in the Philippines and provides a framework of major pohcy issues, recommendations and other options pertaining to the alleviation of malnutrition among Filipino pre-school children_ Proceedings of the three major pohcy workshops/seminars on "Severe Malnutrition of Filipino Pre-School Children" are also cited. An easy reference to the numerous reading materials on malnutrition and development, prepared various policy consultation workshops of the UP-Policy Studies Program, is provided in the study.

of setting

..........

development

planning,

in development.

defined

to include

A review of previous

formal

for the participants

plans and legislated

plans brought

measures,

has

to the for e the govern-

SUPPLEMENT PIDS DEVELOPMENT RESEARCH NEWS I I

â&#x20AC;˘

III III

SEPTEMBER-OCTOBER 1985 I

Development

VI.

Labor and Employment Mobility

School of Econ.

The Impact of International Migration on the Skills of the Country

......

Philippines

Ministry of Lab or and Employment

Population Development Planning and Research, (PDPR), NEDA

Philippines

Virginia A. Teodosio

International

and Carolina nez

Research Centre (Canada) with MOLE - ILMS

of Origin: The

Philippine

Experience

Socio-economic

con-

sequences of Contract Labor Migration in the

J. Jime-

Development

Philippines

Labor Market/ Conditions

Migration and Productivity in the BadiamAlegria Project Site: PolicyImplications for Development Planning

Region VII

NEDA NROs

- EPRS/

Population Development Planning and Research/ NEDA

Re-integration of Returning Overseas Contract Workers: The Case of a Metro

Bgy. Vergara, Mandaluyong, Metro Manila

Stella P. Go

Economic and Social Commission for Asia a_d the Pacific

Effects of International Contract Labour

Manila, Laguna Batangas, lloilo & Antique

Stella Go, Pilaf Jimellez and Leticia Postrado

Economic and Social Commission for Asia and the Pacific

The Bataan

Manila Community

Mariveles,

Ma. Esther Manigque

Institute

Processing Zone: Employment Labor Relations and Working Conditions

Export

Bataan

and Amelita

and Manpower - MOLE

The Living and Working Conditions of Sugar Plantation Workers in

Negros and lloilo

Antonio A. Inocentes, Amelita M. King and Ruben D. Tortes

Institute of Labor and Manpower Studies

Philippines

MOLE - ILMS

UNDP-PIDS-ILMS

Prototype Manpowe_ Plan for Employment PromotJo_ and Income Generation in Palawan

Palawan

Institute of Labor and Manpower Studies - Ministry of Labor and Employment

International Labour Organization and ARTEP with the Institute of Labor and Manpower Studies

A Study of Off-Fa_'m Employment

Philippines

NEDA-EPRS

NEDA-BAIDS

Philippines

NEDA-Inter-agency Technical Committee/ EPRS

NEDA-EPRS

M. King

of Labor Studies

Negros and iloilo

Structural

Adjustments

and Employment in the Philippines

Labor Productivity

VIL Population Population Studies _

Ill

lil llll

Development

Policies

Social Development: Philippine Approach

The

II i

IIIIII

PIDS DEVELOPMENT RESEARCH NEWS | lillllll I I liB

SEPTEMBER-OCTOBER 1985 IIIllUIi |

ment's weak role in raising the status of women. The paper also tackles women's fested in women's organizations. Crisis situations-from past foreign domination pointed to have provided shaping their world.

heightened

opportunities

into the effects brought

for women

about

to assert more

The study provides a background on the history, problems and issues on contract migration, including information on the government's response to these problems. The response is taken to mean the establishment of the Philippine Overseas Employment Administration (POEA) and the Welfaxe Fund Administration (WFA). A profile of overseas workers is drawn, looking into workers' experiences, the conditions' of overseas employment and the terms thereof. Moreover, it also examines the effects of temporary migration on contract workers and their families, in terms of earnings, remittances, cash savings and investm, ents, skills development and utilization, as well as the personal adjustment required due to family separation.

Completed (October 1985)

The study identifies the migration patterns and trends prevailing in highland and lowland areas of the project site; draws profiles from the variables captured in the entire sample, and the relationship of these variables to the migration decision. Also, the impact of out-migration and circulation on farm productivity and income is discussed.

On-going

The study looks into the psycho-social

migration

workers on the various

Completed (March 1983)

of return

of contract

participation

The study looks closely market of the country.

dimension

outflow

active roles and greater

Completed (first draft 1985 )

and economic

by the increasing

role in their own development as manito the current national crisis-were pin-

in a Metro Manila community

skills

(Man-

daluyong). The aspect of re-integration of return migrants is examined by looking into the possible adjustment difficulties at the household and community level; the job and income expectations of migrants; and the skills acquired and/or developed overseas, and its utilization upon return. The use of remittances in investment and consumption expenditures, and other possible spill-over effects in the community is also studied. Completed

The study covers the economic, demographic and psychosocial effects of international contract labor at the community and household level. At the community level, physical changes are observed, as well as economic changes resulting from remittances. Socio-political changes associated with social mobility and changing leadership structures are also indicated. Also, the effects of migration on the skill shortage in the community is explored as it relates to probable short-term adjustmeats. In the household level, possible personal and familial difficulties experienced by household members during the period of the migrant's absence is given attention.

Completed (1983)

The study examines the working and living conditions of the employees in the Batasan Expoxt Processing Zone (BEPZ) through interviews with management and union representatives, rank-and-file workers and government officials. In addition, the terms and conditions of employment in the EPZA enterprises and on manpower requirements are explored. There is also an effort to determine patterns of labor relations and how labor-management conflicts axe resolved.

Completed (1977)

The study draws a picture of the living and working conditions of the sugar plantation 1977. Giving support to existing literat_e on the subject of sugar plantation workers

workers in Negros and Iloilo as of are the results of interviews with

several randomly selected workers in various sugar plantations located in eight milling districts of Negros Occidental, Negros Oriental and Iloilo_ The surveys revealed generally poor working and living conditions in Negros and Iloilo in varying degrees relative to the different aspects of life of the sugar workers. Ongoing (November1986)

The study is expected to provide baseline information and an assessment of the employment impact of past and existing special employment programs/projects, and smali- and medium-scale industries. Moreover, a few studies are included which identified sectors/industries which require special employment schemes. The paper explores some shortterm or special employment measures which is seen to facilitate and ha_ten labor deployment under an altered structure, including an analysis of the conditions and structures that will make such programs feasible. In the end, a set of policy recommendations hopes to achieve the combined objectives of structural adjustment, employment promotion and poverty alleviation.

Completed (first dr',fit Oct. 1984)

The project assesses the nanpower resources, employment and income problems and prospects in Palawan. The manpower plan is envisioned to provide basis for evolving a package of policies and strategies on income generation and employment promotion that are suitable to the unique sociological and eeoomic characteristics of the province.

Completed (November

The paper establishes the strong hnk between off-farm employment generation and agricultural development. This it achieves by confirming empirically what previous researches on the same subject has concluded - that development of non-farm activities is closely associated with agricultural development. The study establishes a negative relationship between o/T-farm employment and rural non-agricultural productivity. It appears that average rural non-agricultural productivity moves in the same direction as the sector's capital intensity. This implies that raising productivity in the rural areas, whose manpower quality is relatively low, would require an examination of capital intensities.

1984)

Comoletedi (December

The study is an attempt 1980) lUll

i II

to review the various

aspects

of social development

in the Philippines.

It begins with a look into

the various concepts and approaches to social development and then presents an inventory and general review of policies and programs contributing to social development. The organizational structure of the Social Development Comlnittee is In

........

SUPPLEMENT PIDS DEVELOPMENT RESEARCH NEWS iiii IIIII UlIII VIII. Resource

20 IIIIII I

SEPTEMBER-OCTOBER 1985 IIIII I i

Mobilization

Money, Banking Finance Commercial

and

International of Philippine Banks

Operations Commercial

Philippines

Ma_ Cyd Tuafio-Amador and Leah R_ Panganiban

Central Bank (international)

Philippines, Korea, Thailand, Indonesia, India

Prabhakar

Asian Development Bank

Banking Financial Markets and Institutions

A Regional Study of Informal Credit Markets

B. Ghate

and Bangladesh Government Assistance to Low-Income Groups with Inadequate Access to l_stitutional Credit

Foreign Exchange Markets

An Inquiry into 'the Origins of and Developments in the Parallel

National Region

Capital

NEDA-EPRS (inter-agency

Philippines

study)

Ma. Cyd Tuafio Amador

Agricultural Loan Fund with NEDAEPRS

Central Bank - international

Market for Foreign Currencies in the Philippines

Public

Alternative Exchange Rate Systems

Philippines

Ma_ Cyd TuafioAmador

Central Bank

Study on the Fimmcial Performance of the

Plfilippines

Economic Affairs, Office of the

Office of the Prime Minister

Finance

Public Enterprise

Philippine Sugar Commission (PHILSUCOM) and the National Sugar Trading Corporation. (NASUTRA) Policy Issues on the Coordination and Control of the Philippine Pubic Enterprises

IX.

Metro Manila, Region XI

Gabriel U. IglesJas

PIDS

University of the Philippines School of Econ.

Some Considerations in the Performance Evaluation of State-Operated Enterprises

-0-

Benjamin

E_ Diokno

A Model of Income and Income inequality in the Process of Growth

-0-

Manuel F. Montes

University of the Philippines School of Econ.

Poverty and Income Distribution Income Distribution

Prime Minister

Regional, Rural & Urban Development Upland Management

Rural and Urban

Economic Exchanges between Mangyans and Lowlanders: Implications for Upland Development

San Teodoro, Oriental Mindoro

Elena Javier and Pilaf Jimenez

International Development Research Centre (Canada) with the De La Salle Research Center

Groundwater Salinity Intrusion Study

Metro Manila, Cebu, Bulacan

National Environmental Protection

Asian Development Bank with NEDA - Projects

Pampanga, Capiz and Sorsogon

Council with the Ministry of Human Settlements

Economic

Planning

I!lllilll

llllllll iiiI I

Staff

I III

PIDS DEVELOPMENT RESEARCH NEWS II I I II IIIIII IIIIIIII examined, study. On-going (December

budget

outlays

21 I I

SEPTEMBER-OCTOBER 1985 _1 | IIIII

1II

for such. Recommendations

are made in accordance

with the general

findings

of the

The study presents a comprehensive account of international banking operations in the Philippines; in particular, the sottreing and utilization of foregin funds and portfolio management_ It also provides an analysis of the significance of international banking operations on the economy focusing on its role in macroecnomic adjustments adopted. economy.

1985)

Pipeline (First quarter

including

The study documents the size, structure, segmentation, interest rates, etc. of informal cre_lit markets, both rural and urban, and the interaction of these informal structures with the formal, credit markets. There is also a discussion on the impact of the informal markets on allocative efficiency, equity and savings.

1985)

On-going (March 1986)

This study aims to come up with a comprehensive report on government assistance to lowqncome groups engaged in agricultural activities who have inadequate access to institutional credit. In addition to identifying the number of low* income families, there is also an attempt to evaluate government policies and programs (e.g. monetary and fiscal) affecting these groups, including credit programs made available to them. The object of the study is to design programs ly assist low-income groups engaged in agriculture by improved access to institutional credit.

to direct-

Completed (April 1985)

The study traces the development of the blackmarket for foreign exchange and tries to explain the development in the market since 1949. The study also includes a historical account of tire exchange control regimes in the Philippines since 1949.

Completed (March 1984)

The study presents a matrix comparing various types and disadvantages, as they are applied to the Philippines.

Completed (December

The study provides background information on the duties and functions of PHILSUCOM and the NASURTRA. reviews the fmancial performance of both agencies with special emphasis given to liquidity and solvency. Policy mendations are advanced for the two agencies in order to ease their financial difficulties.

1984)

On-going (October 1985)

of exchange

rate a,rrangements,

theri

general

features,

advantages

It also recom-

The study examines the mechanisms, dynamics and process involved in controlling and coordinating Philippine public enterprises. Experiences of four (4) enterprises, namely: Philippine National Oil Company (PNOC); the National Power Corporation (NPC), Metropolitan Waterworks and Sewerage System (MWSS) and the Southern Philippine Development Authority (SPDA) are documented, incorporating policy issues and their relationships with a number of state control and coordination bodies. These concerns are related to investment and financing, planning, budgeting, auditing, personnel management

and pricing.

Completed

The paper describes a framework for evaluating the financial performance tinction made between commercial and service-oriented enterprises. In sumed to be concerned with the financial profitability of the enterprise; vision of service at reasonable cost-recovery levels. It is argued that the attributable to both exogenous market factors and constraints that axe of the objectives of any performance appraisal should be to identify these

Completed (August 1985)

The paper proposes a symbolic model that parameterizes some of the elements of Kuznets' Inverted-U hypothesis. The model incorporates the following important factors in the development process: savings rate, the capital-output iatio, the speed of labor absorption and the rate of growth of profits. The paper argues that every inverted-U path requires a fixed vector of these parameters, hence a change in any of these parameters displaces an economy to another inverted-U path. This result cautions against a mechanical understanding of the income-income inequality relationship in the development process. The paper identifies important parameters of the inverted-U process; namely, the investment eoefficsent, the trickle down coefficient and the concentration coefficient. The model also permits the analysis of the impact of different development

On-going

policies

on the Jnverted-U

with a short discussion

of the empirical

aspects.

Commodity and Labor exchanges between the Iraya Mangyan and the Tagalog is the locus of the study. As such, role functions and perceptions as well as the networks of interpersonal relationships are discussed in order to point out how the exchanges occur. The effects of to production and consumption, are vantages arising from the exchanges, commodity and labor exchanges, and

Completed (November

process

of state-operated enterprises (SOEs), with a disthe first case, .the sponsoring government is asin the second case, the concern is with the profinancial performance of the enterprise may be controllable through public policy, and that one barriers to profitability or cost-recovery.

the exchanges on the Iraya households' organization, decision and practices related included as part of the study. It appears also that economic and non-economic adincluding the problems encountered may have a possible bearing on the flow of the existing credit and marketing systems.

The study quantifies m monetary value, the economic losses due to saltwater instrusion resources. Using a methodology based on the experience in Bulacan, the study examines agriculture, industries and public water supply as these are affected by the intrusion.

1985)

IIlIIII

into the coastal groundwater the related, sectors of health,

IIIIII

SUPPLEMENT PIDS DEVELOPMENT RESEARCH NEWS Metro Cebu Industrial and Residential

XI.

Development Methods

22 Metro Cebu

SEPTEMBER-OCTOBER 1985 Victorina

P. Hermoso

Study

United Nations Fund for Population Activities thru NEDA with the University of San Carlos - Area Research/ Training Center

Participatory (Basic) Urban Services

Metro Manila, Cebu and Davao

Exaltation Ramos, Arlyne de los Santos, Stella Go, Leticia Postrado, and Socorro Reyes

International Development Research Centre (Canada) with De La Salle Research Center

Some Aspects of RuralUrban Welfare Differential

Philippines

Filologo Pante,

U.S.A.I.D. with NEDA-EPRS

Review of Social Services Delivery in the Rural Areas

Rural areas in the Philippines

NEDA-Social vices Staff

The Determinants of Industrial Location and Urban Residential Location: Metro Cebu

Region VII

Victorina

A Computable

Philippines

Ramon L. Clarete

Jr.

Ser-

NEDA-EPRS]SSS

Hermoso

NEDA-EPRS with NROs and the PDPR

Planning

and Approaches

General

Tariff Commission

Equilibrium Model of The Philippine Economy: Specification, Calibration and Use.

Monetary Policy and Economic Activity in a Low-lncome Country: An Empirical Investigation

with

the Philippine Institute for Development Studies

-0-

Dante B. Canlas

Uiniversity of the Philippines School of Economics

The New Structuralist Critique of the Monetarist Theory of Inflation: The Case of the Philippines

Philippines

Joseph Y. Lim

University of the Philippines School of Economics

The Philippine Economy: Economic Forecasts for 1983 and 1984

Philippines

J.M. Dowling Evelyn Go and C.N. CastiUo

Asian Development Bank

Socio-Economic Demographic Modelling in the Philippines

Plfilippines

Vicente

Population Development Planning and Research/ NEDA

B. Paqueo

Notes: aln eases where there appears normally

the funding

two (2) or more institutions

bStatus indicators are "completed,. .... on-going" lion, (if completed): or the expected date of completion eSome I

interesting

involved

in the research project,

this has been indicated.

The first institution

cited is

or _sPOnsoring agency.

artieles are included III II

or "'pipe-line. "Hence, the date that appears after the "'status" (if on-going); or date of launehing (if pipe-line).

in this listing beeause we feel that these provide informative II I I

indicator

insights on specific i llli

states the date ofcomple.

industries and/or llli llllill

topics.

PIDS DEVELOPMENT [II

RESEARCH

IIII

Completed (September

1985)

Completed

SEPTEMBER-OCTOBER

III

IIII

1985

lllllllII

The project attempts to fred the decision determinants of firms and households Cebu. Tile findings of the study serves as analytic guides to regional policymakers tial distribution of population and economic activities.

in Central Visayas to cluster in Metro in formulating policies related to spa-

The paper identifies and defines the nature, scope and magnitude of the basic urban services, (available to the low income areas) amenable to a cooperative system of management with emphasis on people-sustaining services and/or projects. Administrative structures and functions of the cooperative urban management system is also described with the object of developing

Completed (September

1984)

Completed (November

1984)

a model to strengthen

Completed

Completed Oanurary

study

assist urban

within and outside the community

presents planners.

The paper specifies 1984)

in the management

of basic urban

services.

The study examines the inaccessibility of social programs to disadvantaged groups, as evidenced by the continued prevalence of poor health, malnutrition, poor environmental conditions, unsafe drinking water, inadequate health and education facilities and the lack of economic oppotunity. The study concludes that the impact of social development policies

The 1985)

local participation

The study analyzes empirically the relative distributive effect of government expenditure, taxes and subsidies on rttralurban family income. Findings of the study have pointed out that although the agricultttral sector is lightly taxed, the interest rate structure (in addition to the cost of borrowing, total subsidy and its intensity, including tax incidence) is more in favor of non-agricultural activities. Furthermore, the gap in the net fiscal incidence, which has been consistently higher in the urban sector than in the rural sector, has narrowed down towards ].980.

on organizations,

(October

NEWS

the existing

spatial

was not substantial.

configuration

of population

and economic

This will serve as an input for future sketches of spatial scenario

and calibrates

a static seven-sector,

two-factor_

one-consumer

activities

in Metro Cebu in order

in Metro Cebu.

Cobb-Douglas

general equilibrium

model

of the Philippine economy. The sectors in the model include: a) the commercial crops; b) agricultural food sectors; c) other agricultural industries; d) industrial exports; e) industrial imports: 0 other industrial sectors and g) services. The factors considered in the model are labor and capital. In addition, the theoretical structure calls for a smaU open economy facing fixed world prices for its traded goods. The structure has enough flexibility to accomodate an arbitrary number of sectors, factors and consumers, and being Walraslan, it can be solved with a fixed point computer algorithm. The policies considered in the study that makes use of the calibrated model are trade related. However, the same model may be used also to assess the effects of policies on prices, resource

allocation,

consumption,

production,

and personal

income.

Completed (August 1985)

The paper is an empirical investigation of the output effects of some aspects of monetary policy. Using some parsimonious representations of output growth, there is evidence supporting the proposition that unanticipated monetary policy matters. Holding private credit constant, currency outside banks has negative output effects_ The econometric evidence is rationalized by invoking choice-theoretic based models of monetary economies that deliver propositions consistent with the evidence.

Completed (July 1985)

The paper attempts to give empirical support to the new structuralist theory which claims that in the short run, the monetarist cure for inflation may not work as easily as monetaries claim due to what the new structuralists term as the "working capital cost-lrUsh '' effect. The study uses a one-sector macro model to test the hypothesis of whether monetary and credit contraction (as espoused by monetarists to control inflation) will increase the cost of financing working capital needs, which has an immediate short-run stagflationary effect coming from the supply side of the economy. Using annual data from 1953 to 1980, the results give support to the claim that the working capital cost-push supply-side effect dominates the monetarist. Demand-side effect in the short run. It concludes that implemented fiscal austerity policies should not severely curtail the availability of credit and loans for the short-run financial needs of any developing economy.

Completed (June 1983)

The study looked into the prospects of the Philippine economy for 1983 and 1984. Barriers to economic recovery were identified even as the gross national product figures were predicted to register positive growth rates. The detailed macroeconomic analysis and forecast is divided into three main parts; one, the review of recent economic performance; the second years.

Completed (September

1985)

part discusses

some government

policies

and constraints;

and the last part details the macro

for the two

The study constructs a simple macro economic-demographic model that is empirically estimable from the existing and useful for immediate planning exercises. The model is expected to capture complicated economic-demographic teractions deemed relevant to policy analysis.

dThis compilation contains only a partial listing of some sixty institutions who were invited graphic annotation include abstracts to facilitate dissemination olin formation on the projects.

forecasts

to submit

a list of their research

projects;

data in-

Biblio-

PIDS DEVELOPMENT

RESEARCH

NEWS

PIDS PUBLICATIONS

SEPTEMBER-OCTOBER

AVAILABLE Price

1. 2. 3,

INDUSTRIAL PROMOTION POLICIES IN THE PHILIPPINES and Associates SURVEY OF PHILIPPINE DEVELOPMENT RESEARCH I SURVEY OF PHILIPPINE DEVELOPMENT RESEARCH II

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JohnPower

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DEVELOPMENT RESEARCH NEWS is a hi-monthly publication of the PHILIPPINE INSTITUTE FOR DEVELOPMENT STUDIES (PIDS). It highlights findings and recommendations culled from PIDS-sponsored researches or related studies done by other institutions. PIDS seminars, publications, on.going and forthcoming projects which are of interest to policymakers, planners, administrators, and researchers are also announced. PIDS is a non.stock, non-profit government research institution engaged in long-term policy-oriented research. This publication is part of the Institute's program to disseminate information in order to promote the utilization of research findings. The views and facts published here are those of the authors and do not necessarily reflect those of the Institute. Inquiries regarding any of the studies contained in this publication, or any of the PIDS papers, as well as suggestions to or comments on the DRN are welcome. Please address all related correspondence or inquiries to: RESEARCH INFORMATION DEPARTMENT (RID) PHILIPPINE INSTITUTE FOR DEVELOPMENT STUDIES (PIDS) ROOM 515, NEDA SA MAKATI BUILDING 106 AMORSOLO STREET, LEGASPI VILLAGE, MAKATI, METRO MANILA Entered as Second-Class Mail at the MIA Post Office on October 13, 1983. Private firms and individuals are charged for delivery and mailing services at an annual rate of P35.00 (local) or $5.00 (foreign). II

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