Saturday, October 8, 2011

Assessment of Paul Romer's Charter City




Charter Cities, modelled after Hong Kong or Shanghai, can foster development in third world countries, suggests eminent scientist Paul Romer. It is basically a neo-colonialism: a piece of land in a third world country is given to a first world country to create a charter city to establish the rule of law. That city then will have a secure legal system for investors and an access to third world cheap labor. People who will be in this charter cities will live out the tragedy of their existence in a place where wise political institutions largely suppresses crime, tyranny and war; where they are well poised to enrich themselves through voluntary cooperation and peaceful exchange; and where they have access to all the social and spiritual advantages of a civilized urban life.

We can say that Paul Romer’s charter city is indeed a great idea. We agree that the right set of rules will help success rather than vague and informal rules which are too easily bent by those who have the power and interest to do so. And it is quite easier to design an applicable set of rules over a small territory with a small population compared to an entire country. It sounds good on the surface but here's the problem. There is no true innovation here in terms of ways of living, just a new set of rules for living the same basic way. 

In this, Paul Romer recognizes the lack of progress and innovation in government. His ideas are attempts to move forward a critical institution that has fallen behind in development. And to this, we could say that Philippines can use this idea.

Now-a-days, the Philippines is facing the big problem of poverty among its people. And the government should find ways on how to solve this and give its people a better life and a better place to live in. Paul Romer’s charter city could be of help to solve this problem. The piece of land that will be controlled and enforced by an outside country may help in the economic improvement of the Philippines. And our country may have a city that will be as successful as or even more successful than Hongkong and it may be the way for the Philippines to be known to other countries and it may also help to increase the profit generated by our country.

  Another issue is that, some people who have the power and political influences that should be taken into consideration about this idea may not be in accordance with this proposal. And they may not support and engage themselves for developing it further. We cannot stop others from opposing this idea. As for all other proposals for economic development, we cannot prevent that there will always be some that will not be in favor and they will make ways for it not to be realized. This people might have different perspectives or they just want better ideas and they don’t think that this is already the best thing to do. So there should be other alternatives.

If this proposal would be favored, the right people should be chosen to make it a reality. One of the reasons why there is a vast poverty in the Philippine is corruption. So the government should make sure that the budget that will be allocated for this project will not be handled by corrupt people and that the Filipinos in general will be the ones that will truly benefit from this not those fat crocodiles only making themselves fatter through their positions.


Friday, September 23, 2011

Cesar Hidalgo: Diversification of Inputs

A native of Santiago de Chile, Hidalgo holds a PhD in physics from the University of Notre Dame and a bachelor's degree in physics from the Pontificia Universidad Catolica de Chile. Before joining MIT, César A. Hidalgo was an adjunct lecturer in public policy at Harvard's John F. Kennedy School of Government, and a research fellow at Harvard's Center for International Development. He works as an assistant professor at the MIT Media Lab, and faculty associate at Harvard University's Center for International Development. He took the unusual career path, being one of the two new assistant professors to join the Media Lab. He is also a graphic-art enthusiast and has published and exhibited artwork that uses data collected originally for scientific purposes. He holds a PhD in physics from the University of Notre Dame and a bachelor's degree in physics from the Pontificia Universidad Catolica de Chile. He considers as one of his heroes the 16th-century English statesman, philosopher, lawyer and essayist generally credited with inventing the scientific method, Francis Bacon. And it’s the breadth of Bacon’s intellectual appetite that Hidalgo finds inspiring.

Hidalgo's work focuses on improving the understanding of systems by using and developing concepts of complexity, evolution, and network science. His goal is to help improve understanding of the evolution of prosperity in order to help develop industrial policies that can help countries raise the living standards of their citizens. His areas of application include economic development, systems biology, and social systems.

Recently, in his PhD thesis, Hidalgo applied mathematical tools largely derived from statistical physics to problems in economics. Because of him, we can now visualize the differences between national economies in new ways. Hidalgo is a statistical physicist fascinated by the structure of networks, and along with the Harvard economist Ricardo Hausmann, he has been developing tools designed to study not just economic wealth but also economic structure and sophistication. Hidalgo and Hausmann think of economies as collections of "capabilities" that can be combined in different ways like an Erector set to produce different products. Because these capabilities cannot be easily identified and observed, Hausmann and Hidalgo track the silhouettes that the capabilities cast upon trade statistics. If a product is a significant part of a country's exports, it offers evidence that the country has certain kinds of related capabilities.

Hidalgo and Hausmann argue that the diversity of a country’s production capacity, and thus the true strength of its economy, depends on the diversity of both its outputs and its inputs. Two countries could export the same number of products — they could have the same diversity of outputs. And the country with more inputs, the researchers claim, will adapt better to a changing world economy.

On this matter, Hidalgo uses his mathematical tools. He assumes that products that require a lot of inputs are scarcer than those that don’t. More countries export lumber than export digital-signal-processing chips. By analyzing both the diversity of a country’s products and the number of other countries capable of producing the same products, Hidalgo is able to quantitatively assess the diversity of the country’s inputs.

Hidalgo, together with Hausmann have found that GDP correlates well with diversity of outputs, but it correlates much better with diversity of inputs. And the cases where the correlation breaks down could actually be more interesting than the cases where it holds, because they could indicate economies poised for growth.

Through the works of Hidalgo, we are able to understand the diversification of outputs and inputs better. From this, we can easily assess the almost impossible task of categorizing inputs. He was able to apply his knowledge, experience and expertise in statistical physics in solving economic problems. He was able to conclude that different countries will adapt to a changing world economy if they would learn how to increase and diversify their inputs, thus competing with different countries that produce the same products as theirs.

He was also able to find a correlation between GDP and diversity of outputs but he found out that GDP correlates more with the diversity of inputs. The more diversified the inputs are, the higher the GDP in the long run. In 1970, for instance, the Korean economy had much greater diversity of inputs, according to Hidalgo’s measure, than the Peruvian economy, but Peru had twice Korea’s GDP per capita. Over the next 30 years, the relative diversity of inputs in the two countries’ economies stayed more or less the same, but by 2003, Korea had four times Peru’s GDP per capita.
Cesar Hidalgo's contribution to economics which argues that the best predictor of a country’s future economic health is not the magnitude but the diversity of its production capacity. Because of this findings, a country can increase its adaptation capability in a complex and dynamic global economy. If such country would be able to adapt to the changes, they can easily follow whatever the trend in global economy is. Thus, a country can predict its economic health that will lead to the prosperity of that country.

The group affirms this study of Hidalgo. Different countries must learn how to be globally competitive. They must know how to diversify the inputs they use to produce their products. And if the greater the diversity of inputs, the higher the GDP will be in the long run. The higher the GDP the higher the economic growth of the country, that will make them, globally competitive. 
Sunday, August 28, 2011

Implications of US Economic Crisis in RP



United States of America is one of the largest powerful economies globally. And because of the current condition of US it greatly affects the other economies. Before we tackle the adverse effects of us economic crisis in RP let’s examine first the failure or the minimal success of traditional monetary policy measures against economic imbalances.

What is monetary policy?

     Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment. Monetary theory provides insight into how to craft optimal monetary policy. It is referred to as either being expansionary or contractionary, where an expansionary policy increases the total supply of money in the economy more rapidly than usual, and contractionary policy expands the money supply more slowly than usual or even shrinks it. Expansionary policy is traditionally used to try to combat unemployment in a recession by lowering interest rates in the hope that easy credit will entice businesses into expanding. Contractionary policy is intended to slow inflation in hopes of avoiding the resulting distortions and deterioration of asset values.
 
With the apparent success at delivering relatively low inflation globally, many central banks have turned their attention to the possibility of ensuring financial system stability. In spite of the benign inflationary environment, the regular occurrence of financial crises has created stresses in a wide variety of countries. The US sub-prime problem, so-called, is the latest such crisis while the Asian crisis of 1997-98 remains fresh in the minds of all policymakers. Not surprisingly, central banks have turned their attention to the dangers that lurk behind ‘financial imbalances’ world wide, and how monetary policy can contribute to mitigating these. Although seemingly a logical extension to the inflation control problem, efforts at containing financial crises must acknowledge the dearth of analytical approaches to the problem. We simply do not have anything approaching a consensus theory of financial system stability. Therefore, attempts to increase emphasis on financial system stability as an additional goal of central banks must not only face the question whether the existing toolkit of monetary policy is capable of delivering the desired outcome, even if we can agree on a theoretical framework, but whether the relationship between the central bank and the supervisory authorities is sufficiently well structured or defined to prevent crises from erupting in the future. For the time being at least, and until the analytical apparatus is capable of delivering useful predictions, central banks ought to “stick to their knitting.” (http://www.icrier.org/pdf/Issuespaper_Siklos.pdf)  
 
           Economic conditions in the United States have a significant impact on the rest of the world. Furthermore, the U.S. can influence economic conditions in other countries.
Like many other emerging markets, the Philippine economy slowed down considerably in 2008. Latest data show that GDP growth rate for the first three quarters of 2008 fell to 4.6 percent, compared to 7.5 percent in the same period in 2007. However, also like many other emerging markets, the slowdown was not a result of the global financial crisis. Rather, the deceleration in the Philippine economy was largely brought about by a surge in inflation triggered by the sharp rise in food and fuel prices and to a lesser extent the US recession.

Impact on Asset Markets
The financial turmoil that emerged in the aftermath of the Lehman Brothers debacle magnified tensions in the global interbank and credit markets. As a result there was a virtual freeze in liquidity in US and European financial markets which stopped and, in many cases, reversed capital flows to emerging and developing countries. In large part, the latter reflected sales of debt and equity securities by nonresidents, selective withdrawals of bank deposits held with domestic banks and a decline in inflows of foreign direct investment. (World Bank, 2008)
The immediate impact of the liquidity squeeze in international capital markets was a rise in the price of risk—as measured by bond spreads—a sharp drop in equity prices, and exchange rate volatility.
Stock market and exchange rate volatility do affect macroeconomic stability and this has implications for private investment. However, the investment rate in the Philippines have been sluggish for the past decade and there is not much room for further deterioration. In terms of international trade, prices of traded commodities are mostly set in the global market. Exchange rate movements, therefore, affect profitability of exporters rather than demand for their products. Profitability of exporters, however, has an impact on their investment and employment decisions. Exchange rate movements affect the propensity to import, the degree of protection of import-substituting industries, and the peso value of remittances from abroad.

Impact on the Financial Sector
The onset of the global financial crisis raised fears that many emerging markets will face a debacle similar to the 1997 financial crisis that hit East Asia. The initial impact on asset markets did put pressure on financial markets especially in economies with high foreign participation in local equity markets, banking systems that depend heavily on short-term foreign currency funding, and those running external current account deficits (ADB, 2008). In East Asia, Korea and Indonesia experienced severe foreign currency liquidity shortages but the situation has improved considerably in December, 2008.
 
Impact on the Real Sector
The critical issue is whether the economic slowdown will persist in the wake of the global financial crisis. This largely depends on the strength of various contending factors. On the one hand, food and fuel prices have come down sharply from their peaks earlier this year. The price of Brent Crude Oil, for example, has already fallen to US$44 per barrel5 from its peak of US$145. Inflation is therefore expected to be
much lower in 2009.
On the other hand, the synchronized recession in major economies and the global credit squeeze will adversely affect exports, foreign direct investment and domestic private investment. Ironically, resilience of the Philippine economy would be partly due to factors that limited its economic expansion during the past 3-4 decades. One, Philippine exports generally have low value added in terms of their contribution to GDP.6 Moreover, the share of Philippine exports to the US has fallen from a peak of 34 percent in 1998 to only 16 percent in 2008.

Impact on Employment
Critical to the prognosis in 2009 is the impact of the recession in major economies on employment of overseas Filipinos (OFWs). Remittances have been the lifeblood of the economy during the past decade. In 2007 alone, remittances—as reported in the balance-of-payments account— amounted to $13.3 billion or 9.4 percent of GDP. The Department of Labor and Employment (DOLE) identified the following OFWs who are vulnerable to displacement due to the global economic and financial crisis. One of which are the OFWs who work in US under temporary working visas.
These groups comprise only about 15 percent of the roughly 4 million OFWs. Preliminary data from the Philippine Overseas Employment Administration (POEA) indicate that during the first ten months of 2008 the number of Filipinos deployed abroad rose considerably by 25.5 percent to 1,115,199, from 888,339 a year ago. Data, however, indicate a slowdown in the growth of remittances to only 3.3 percent in October. This brought the cumulative ten-month growth to 15.5 percent, lower than the 16.2 percent average in the first half of 2008. For 2009, the BSP sees a sustained growth in overseas remittances, although at a slower pace of 6-10 percent. This will definitely have a negative impact on the real sector, particularly on personal consumption expenditures. The impact will likely be muted, however, given that a 10 percent growth rate for an item that is 10 percent of GDP would still be substantial. Employment in the domestic economy has been fairly steady. While the unemployment rate in 2008 increased as expected, it rose only to 6.8 percent from 6.3 percent in 2007. (Impact of the Global Financial and Economic Crisis on the Philippines: A Rapid Assessment, Josef T. Yap, January 12, 2009)


Sunday, August 21, 2011

Gender and Economic Development





People Centered Development


      What comes to mind when you hear the word development?


      Usually, when we think of development we are imagining of bustling cities, buildings, computers, cars, etc. We are focusing too much on the physical assets. But there is another paradigm of what is development, it's the People Centered Perspective" or "People Centered Development". This perspective is an approach to international development that focuses on improving local communities’ self-reliance, social justice, and participatory decision-making. It recognizes that economic growth does not inherently contribute to human development and calls for changes in social, political, and environmental values and practices. This development is focused on empowering the people and it has concern for the basic needs of the people concerned.

Development Indicators of the People Centered Development


1. Employment


        It means the people are productive they work efficiently.




2. Education and Training


        It means the people are knowledgeable. They are civilized, enlightened, literate, numerate and informed.


3. Nutrition


        People are well nourished. Eats enough food to survive.


4. Health


        Physically capable to do fruitful works.


5.  Fertility


        People are able to bear and rear children.


6. Migration


       People travel in search for opportunities.






Difference of Sex and Gender





What do we mean by "sex" and "gender"?

Sometimes it is hard to understand exactly what is meant by the term "gender", and how it differs from the closely related term "sex".
"Sex" refers to the biological and physiological characteristics that define men and women.
"Gender" refers to the socially constructed roles, behaviours, activities, and attributes that a given society considers appropriate for men and women.
To put it another way:
"Male" and "female" are sex categories, while "masculine" and "feminine" are gender categories. Aspects of sex will not vary substantially between different human societies, while aspects of gender may vary greatly.
Some examples of sex characteristics:

  • Women menstruate while men do not
  • Men have testicles while women do not
  • Women have developed breasts that are usually capable of lactating, while men have not
  • Men generally have more massive bones than women
     
    Some examples of gender characteristics:
      •     In the United States (and most other countries), women earn significantly less money than men for similar work
      •     In Viet Nam, many more men than women smoke, as female smoking has not traditionally been considered appropriate
      •     In Saudi Arabia men are allowed to drive cars while women are not
      •     In most of the world, women do more housework than men



      Sex
      • Biological
      • Physical attribution
      • Body contour and feature
      • Hormones, chromosomes and reproductive organs
      Gender
      • Social (church, media, government, school)
      • Social construct
      • Society and social interactions
      • Shaped concept of being male or female





      What is the role of women in economic development?



      1. To have participation in governance

               Women could be shareholders, officials in academe and political leaders.

      2. Women should be helping other women

               Women should eliminate crab mentality, they should seek to help other women, train them to be more skillful and knowledgeable. Women shouldn't be afraid of competition.

      3. Empowered women should empower others

               Women should share their knowledge and experience, it may improve your knowledge.



      LGBT Discrimination



      Anti- Discrimination Legislation in the Philippines



            The Philippines Congress is currently debating groundbreaking legislation which, if passed, would firmly establish the protection of Filipinos against the discrimination on the basis of sexual orientation and gender identity in basic areas of life, such as employment, education, public accommodation and health services, as enshrined in international standards. A similar version of this bill was already passed in the Congress. However, while the House of Representatives passed the measure, it failed in the Senate. Now is the time for the House to uphold its previous decision for the Senate to commit itself to the principles of universal human rights outlined by treaties of which the Philippines is already a signatory.


      Discrimination in the Philippines

            Members of the LGBT community in the Philippines continue to encounter discrimination in school, employment, public establishments and their own families. For example Mr. Rico a transgender who graduated as a Suma Cum Laude, is a professor in a university. But because of his sexual orientation and appearance, he was being discriminated by both his coworkers and students. Because of this, he was forced to resign and work as a showgirl in Japan. Mr. Rico could had been teaching, he would have taught many students and shared his knowledge but because of the eminent discrimination he resorted on being a showgirl. 

      International Human Rights Law



            Everyone, regardless of their sexual orientation, gender identity or expression, is guaranteed the fullest enjoyment of their civil, political, social, economic and cultural rights under international law. Lesbian, gay, bisexual, transgender individuals, like any other person, are all entitled to equality before the law. The U.N  Human Rights Committee has urged states not only to repeal laws criminalizing same-sexual conduct but also to enshrine prohibition of discrimination based on sexual orientation into their constitution or other fundamental laws.

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