Income and Happiness: A Philippine Context

This paper adds to the relatively scant developing country perspective in the economic literature on happiness by investigating the relationship between income and happiness in the context of Koronadal, a low-income city in Mindanao, Philippines. Subjective happiness and potential contributory factors to happiness (demographic, economic, and social capital variables) are elicited through a survey and analyzed using descriptive and regression analyses. The study provides empirical evidence for the “happy poor” image of the Filipinos, with its survey data revealing that despite high poverty incidence and generally low-income levels, people in Koronadal are pretty happy with a mean self-reported happiness score of 6.75 on a scale of 0–10. The study also lends some empirical support to the modified Easterlin hypothesis: an increase in income increases happiness marginally, but there exists a threshold level – a monthly income of about PHP 20,000 – beyond which further increase in income ceases to increase happiness. Further, survey data reveal that happier people are younger, female, possessing a mobile phone, living in houses with more bedrooms, with savings and no outstanding loans, and are members of credit cooperatives. In so far as these findings reveal some socially favorable economic and institutional conditions, they serve to provide inputs and directions to government officials and policymakers in terms of social programs formulation and implementation

Foreign direct investment(FDI) inflows to ASEAN member countries: Problems and prospects

FDI has played an important part in the industrialization and growth experience of ASEAN countries. The growth in Gross Domestic Product (GDP) of ASEAN as a whole is strongly correlated with inflows of FDIs in the region. The share of ASEAN in global FDI inflows is disproportionately larger than its share in global GDP. About 5% of total world FDI went to ASEAN member countries during the period 1980-2005 while the region accounted for less than 2% of world GDP. This reflects the perceived attractiveness of ASEAN member countries as FDI hosts. Global firms were initially attracted by favorable conditions for export production (e.g.: low costs of labor and raw materials, investment incentives) in ASEAN countries. The export-oriented FDIs in the 1980s increased incomes in the ASEAN countries and their market potential began to be recognized by the international business community. In the 1990s, both export- and domestic market-oriented FDIs flooded ASEAN countries. Though still having comparative advantage over other developing countries, ASEAN countries are finding it more and more difficult to lure foreign investors. Up to the midnineties, ASEAN was capturing about 8% of global FDIs. This share dropped to only about 3% from the late 1990s until mid-2000s. This is explained by a number of factors: the prolonged stagnation in ASEAN countries triggered by the Asian financial crisis, increasing competition from other developing countries and transitional economies, worldwide economic slow-down, and fundamental weaknesses of the ASEAN economies. As growth in ASEAN has been fuelled to a considerable extent by FDIs and in the face of the continuing severity in the competition for FDIs, what can ASEAN member countries individually and as a group do to stay on the growth track and remain a key FDI host region? This paper first looks at the trends and patterns of FDI flows to the whole of ASEAN, and then at the individual ASEAN countries’ experience. From the past performance of the individual countries and of the ASEAN as a whole, the prospects and problems are assessed and future trends are projected. The paper ends with some recommendations on specific courses of action

Benefits from Laguna Lake: Perspective of Small Fisher Households

Fishing is considered to be the most important among the many uses of Laguna Lake, the largest lake in the Philippines and second largest in Southeast Asia. Using primary data gathered through focus group discussions, key informant interviews, and a household survey together with secondary data on revenue and cost estimates for aquaculture and catch fisheries, this paper discusses the lake___s role in the economic life of two fishing communities located along the shoreline. The study, which uses a microscopic lens to look at issues from the perspective of small fisher households instead of from that of policymakers and non-government organizations, finds that households in these lakeshore communities are engaged primarily in open fishing, which has been threatened of late by poor water quality and the consequent proliferation of water hyacinths. Only the few well-off residents of these lakeshore communities are able to construct and operate small-scale fish cages while corporations and non-resident individuals own and operate large-scale fish pens. Moreover, while open fishing contributes more to fish production value and employment than does aquaculture, the latter generates more resource rent which accrues to the very few aquaculture capitalists from outside these communities. Some suggestions for redistributing the huge fishing resource rents to poor fishing households in these lakeshore communities are thus presented in this study. The need to address the issue of lake water quality and competing uses, with a view to sustainability and poverty alleviation, is also discussed

Estimating Residential Water Demand in a Relocation Area with Inadequate Piped Water System

This paper assesses household water demand and estimates a demand equation particularly for low-income households in the Philippines. The study uses survey data on the value and volume of household water purchases from different water providers in a government resettlement area. The paper provides empirical evidence on the impact of average water price on household water consumption, as well as the effects of household income and size on household water consumption. The study finds that households buying water from jetmatic pump wells and water tankers pay more than five times that of those served by the piped water system. This much higher cost of water from non-Water District sources could have constrained their water consumption to just about half that of the Water District customers. The estimated water demand equation reveals that demand for water significantly decreases with the average price of water but is only weakly responsive to price changes, with a price elasticity of –0.38. It is also found that water demand is not significantly affected by household income implying that it is not the households’ low income but the unavailability of efficient water providers that constrains consumption to a bare minimum. These findings confirm the high vulnerability of low-income households to inadequate and inefficient water providers, necessitating more prudent programming of the resettlement areas’ water supply system

Designing a Raw Water Fee Scheme for Groundwater Extraction in Cagayan de Oro, Philippines

Our earlier study (Palanca-Tan and Bautista 2003) looked into groundwater depletion in Cagayan de Oro City (CDO) and the viability of collecting a raw groundwater fee to control the excessive abstraction of groundwater and to generate revenues to finance watershed preservation activities. This current study is an action research project that endeavored to push the CDO government to legislate and implement a raw groundwater pricing scheme as a resource management tool. The project included a hydrological study that was done to estimate the safe yield of the CDO aquifer. The hydrological study also aimed to equip our research team with a better understanding and appreciation of the underlying procedures and data in the safe yield estimates and hence enable us to provide a clearer picture of the extent of the problem to local government officials, groundwater users, and the general public. Using the gradient method, we estimated the safe yield for the CDO aquifer to be in the range of 2.4-9.5 million m 3 per month. The project required updating the earlier’s study’s list of groundwater extractors and the rate of groundwater extraction. We identified almost 40 new deep well systems constructed for subdivisions, hotels and malls that have mushroomed since 2000. These, together with the increased rate of withdrawal of the Cagayan de Oro Water District (COWD), have raised groundwater extraction to 4.67 million m3 per month, 39% more than the 2000 estimate. Comparing this with the estimated safe yield of 2.4-9.5 million m3 per month, it appears that a large portion of the natural discharge, and possibly even more, is used for water production in the city. This may be causing drawdown below sea level and local salt water intrussion that may explain the low groundwater levels registered in the Macasandig well field. The policy advocacy component of the project entailed a series of multilevel consultations with different groups of stakeholders, namely: National Water Resources Board (NWRB), City Local Government units – both executive and legislative branches, Water District and private deep-well owners and operators, and the general public. As NWRB is the primary national government agency mandated for raw water pricing, its collaboration was sought right from the project conception stage. The project team with the participation of NWRB endeavored to push the CDO government to legislate and implement a raw groundwater pricing scheme as a resource management tool. To promote the acceptability of the proposed groundwater conservation strategy, a public information campaign was conducted from project conception, which included symposia and print media and video presentations. The enthusiastic support and cooperation of the Archdiocese of Cagayan de Oro greatly greatly helped the reserach team in reaching the different interest groups in the city. Consultation meetings were undertaken involving NWRB, other national government agencies such as the Department of Environment and Natural Resources (DENR), CDO local government units, groundwater extractors, and the CDO River Basin Management Council to come up with a workable design and implementation plan for the raw groundwater pricing policy. We recommend that NWRB, which has the legal mandate to impose raw water fee sby virtue of PD 424 and 1067, delegate this function to the CDO city government, which in turn may deputize the CDO River Basin Management Council, a multi-sectoral entity cochaired by the DENR Region X Director and the Archbishop of CDO. We had gone as far as bringing the City Council to draft an Ordinance for the Raw Groundwater Pricing Scheme. As of this writing, the first Public Hearing on the draft Ordinance had been held

Willingness to Pay of Urban Households for the Conservation of Natural Resources and Cultural Heritage in a Neighboring Rural Area: A CVM Study

Koronadal households benefit from Lake Sebu’s natural resources (lakes, waterfalls, rivers and springs, forest land, agricultural land) and cultural heritage (arts and handicrafts such as T’nalak weaving, brass casting, beadwork, and wood carving; music and dances; festivals; and beliefs and traditions of the T’boli indigenous tribe) in terms of recreation, good image and sense of pride, tourism income generation, the supply of high-quality tilapia, agricultural products supply, potential hydroelectric power source, biodiversity, and climate change mitigation. These benefits are integrated into a single estimate using the contingent valuation method. In the study, a sample of 524 Koronadal households was asked for their willingness to pay (WTP) or contribute to natural resources and cultural heritage conservation efforts in Lake Sebu in the form of a lumpsum monthly amount collected together with their electricity bill payment. The mean WTP per month is estimated to be Php 52.42 (USD 1.04) using the probit regression estimates (parametric mean) and Php 64.39 (USD 1.27) using the Turnbull formula (non-parametric mean), both less than 1% (0.26–0.33%) of average monthly household income. Multiplying the annualized WTP by the number of households in Koronadal, total potential annual contributions from Koronadal City would range from Php 29.2–35.7M, about 3% of the City Government’s 2019 total revenues of Php 932.6M (Koronadal City Government Budget Office). Even just a fraction of this potential collection can support essential conservation efforts in Lake Sebu, which – up to the present – have been inadequate due to financial constraints. Moreover, the results of the regression analysis reveal that households are more likely to support the conservation program if the amount of required contribution is smaller and household income is higher. Older and more educated respondents are, likewise, more likely to support the program

The 1997 Asian Financial Crisis and Foreign Direct Investment (FDI) Inflows to ASEAN Member Countries, 1995-2005

In the late 1990s, ASEAN countries started to find it more and more difficult to lure foreign investors. While ASEAN was capturing about 8% of foreign direct investments (FDI) until the mid-1990s, this share dropped to only about 3% from the late 1990s until mid-2000s. This paper traced the trends and patterns of FDI flows to ASEAN during the years 1995-2005, a period that included the Asian financial crisis that started in July 1997, the years immediately preceding the crisis and the recovery years. The study examined the effects of the crisis on FDI inflows to ASEAN countries and their response to the crisis. A cursory assessment of the strengths and weaknesses of the individual ASEAN countries as well as the opportunities and threats they faced during the period was also done. It was found that the declining interests of global firms in ASEAN was the result not only of the prolonged stagnation in ASEAN countries triggered by the Asian financial crisis, but also of fundamental weaknesses in the ASEAN economies and external factors such as the increasing competition from other developing countries and transitional economies. The study also yielded some insights on how particular circumstances and policies could mitigate or aggravate the impact of similar crises in the future

Economic Vulnerabilities of Fishing-Dependent Households around Laguna Lake, Philippines

The study characterizes the mainly subsistence fishing communities surrounding Laguna Lake and provides empirical evidence of the economic deprivation that they are experiencing using survey data. Following a multi-dimensional approach, the paper focuses on consumption expenditures as the prime indicator of economic well-being – together with assets ownership, financial behavior, and social engagements. Regression analyses are conducted to identify the factors underlying consumption and to determine how different forms of household capital (physical, financial, and social) and fishing activities affect the capacity to generate income or livelihood. The study finds that: 1) food consumption (mainly rice) accounts for half of the household’s total expenditures, is very income-inelastic, and is mainly determined by household size; 2) all consumption expenditures are income-inelastic and are therefore basic necessities, except for mobile phone load, the only luxury consumption expenditure for these low-income fishing households; (3) while derived income (sum of all expenditures and savings) is not significantly determined by any form of capital, it is significantly higher for households undertaking aquaculture; and (4) the conditional cash transfer of the government significantly contributes to household consumption as an income augmentation measure but does not significantly lower food shortage vulnerability of the household

Prospects and Problems of Expanding Trade with Japan: A Survey of Philippine Exporters

The paper looks at firm-level factors that affect Philippine exports to Japan with the main objective of recommending provisions for the proposed Japan-Philippines Economic Partnership Agreement (JPEPA) that will enable existing and prospective Philippine exporters to fully exploit the potential of the Japanese market. To this end, the study identifies Philippine products with export prospects in Japan and conducts a SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis of these production sectors. The inability of the Philippine agricultural, processed food and consumer manufactures to successfully tap into the growing import markets of Japan can be traced largely to low quality and price competitiveness arising from insufficient technical know-how, lack of economies of scale and credit facilities for small and medium enterprises (SMEs) that comprise roughly 90% of the exporters, certain distortionary government policies, and insufficient infrastructure and government support. Apart from these domestic factors, there is severe competition from China, Thailand, Indonesia and Vietnam, and there remains the protection and regulation of the Japanese markets. The complete opening of Japan’s agricultural and processed food sectors to the Philippines, import promotion programs particularly for Philippine made products, and SME-focused efficiency enhancement training programs and capital accumulation loan programs may, thus, be necessary if Japan is to assist the Philippines expand its exports. Further, the benefits that the Philippines can reap from the optimal position of its electronics and automotive parts exports in Japan may be enhanced if support industries develop in the Philippines which requires among other things Japanese assistance for human resources development programs

Foreign Direct Investment Flows To and From China

The study traces the growth of direct foreign investment (DFI) inflows in China, and its distribution by sector, receiving regions and source countries. It also looks into the trends and patterns of Chinese outward direct investments. Direct investment flows into China are shown to be significantly affected by China\u27s GDP growth rate, wage rate and exchange rate as well as the world\u27s GDP growth rate. Policy factors play a catalytic role. China\u27s overseas direct investment, likewise, appear to be influenced by home country (e.g.: Chinese government policies, Chinese competitive advantage) and host country (e.g., market considerations, cost and price factors, and receiving countries\u27 policies) variables. The study has also shown that the massive flows of inward DFIs have significantly contributed to China\u27s capital formation and export performance. Furthermore, the improved shares of China as well as the ASEAN-4 countries in the global supply of DFIs do not indicate a crowdingout effect. Two-way DFI flows between China and ASEAN countries, particularly Thailand and Malaysia, have become increasingly important since the early 1990s