Capital Flight and Economic Performance

Capital flight aggravates resource constraints and contributes to undermine long-term economic growth. Counterfactual calculations on the Philippines suggest that capital flight contributed to lower the quality of long-term economic growth. Sustained capital flight over three decades means that capital flight had a role for the Philippines to lose the opportunities to achieve economic takeoff. Unless decisive policy actions are taken up to address enduring capital flight and manage the macroeconomy more effectively, the Philippines remains caught in the perpetuity of crises, its economy hollowed-out, the people trapped in poverty, and once again, the country is frustrated from realizing a takeoff

Post crisis blues

Debates that emphasize rapid economic recovery from major crises can extinguish progressive views that examine fundamental issues for sound economic management of present-day capitalist systems, such as: the determination of appropriate modes of cooperation including the procedures for intervention during crises, the introduction of structural changes that enable domestic economies to pursue appropriate industrial policies as well as erect institutions that could withstand external shocks, and, more importantly, the pursuit of fundamental reforms in the international economic architecture to allow for the management of cross-border flows of resources as well as coordinated adjustments to economic imbalances. There remains a lot to be done to make present-day capitalist systems reach a balance between domestic and global goals and thereby allow them to enlarge economic welfare without compromising national sovereignty.1997 Asian Crisis; 2008 Global Crisis; post-crisis; economic policy

Forensic Accounting: Hidden balance of payments of the Philippines

An examination of the available data between 1990 and 2005 reveals that the balance of payments of the Philippines does not record large amounts of international transactions. Unrecorded international transactions for the 16-year period amount to US$ 192 billion (in 1995 prices). The results suggest a serious problem in the government’s macroeconomic management of the Philippines, and expose a weak or weakening capacity in the governance of international transactions.Balance of Payments; Capital Flight; Trade Misinvoicing; Other Unrecorded Transactions; Philippines

Do international remittances cause Dutch disease?

The diagnosis: Dutch disease caused by international remittances afflicts the middle income countries but not the upper income and low income countries. The middle income countries can inoculate their economies from getting the disease with robust macro and sectoral economy conditions. But if they get infected, and their condition is not managed well or the illness is treated, Dutch disease could cripple their economies.Dutch disease; international remittances; tradable sector; non-tradable sector

Unchained Melody: East Asia in Performance

Indonesia, Malaysia, South Korea, and Thailand continue to perform unsatisfactorily today, ten years after 1997 Asian Crisis. As of 2007, these crisis-affected economies have not fully recouped their losses from the lost opportunities from the Crisis. Unless economic performances return to past trends, another type of economic miracle story may be needed to reclaim their past economic standings. Unless GDP per capita expands faster than present trends, they will continue to face the costs of the lost opportunities. A positive combination of policies is needed: taking up the useful components of the past arrangements and putting in the missing instruments for sound macroeconomic management and international cooperation.Post-Asian Crisis Performance, Indonesia, Malaysia, South Korea, Thailand

Subjective well-being approach to the valuation of income inequality

The subjective well-being approach to valuation is applied to the valuation of income inequality. Results show that objective inequality is a bad in the industrialized economies but a good in the emerging economies. Too much objective inequality is a bad in both areas. Results also show that people in both areas consider income inequality as a good, thus suggesting that income disparities are viewed as incentives to work harder and take risks. Such findings on subjective inequality make sense if people have knowledge or even hope that opportunities for economic advancement are available despite the presence of objective inequality in their society. Ensuring that people get fair chances to opportunities is a reasonable first step if income inequality is yet not viewed as a problem. To draw out a demand for redistribution requires actions that are intended to transform the consciousness of the people.Subjective well-being; inequality; valuation

Do international remittances cause Dutch disease?

The diagnosis: Dutch disease caused by international remittances afflicts the middle income countries but not the upper income and low income countries. The middle income countries can inoculate their economies from getting the disease with robust macro and sectoral economy conditions. But if they get infected, and their condition is not managed well or the illness is not treated, Dutch disease could cripple their economies.Dutch disease; international remittances; tradable sector; non-tradable sector

Playful Dragon: Messing and missing trade

An examination of available data reveals large trade misinvoicing between the People’s Republic of China and identified trade partners. The analysis finds a net trade misinvoicing of US$287.6 billion between 2000 and 2005, while the full magnitude of unrecorded trade is estimated at US$ 1.4 trillion. Further analysis also finds that there is an accounted misinvoicing or missing trade of US$ 53.7 billion for the same period. China needs to have more effective management of its trade flows. At the same time, the international community needs to contribute to put up more effective governance mechanisms to address trade misinvoicing.International trade; trade misinvoicing; China

Is inflation targeting preferred by Filipinos?

Analysis of World Values Survey 2000 data for the Philippines finds that lower income Filipinos are more likely than the upper income ones to support inflation targeting. The same can be said of older, healthier, and employed Filipinos but not of the educated and financially satisfied ones. Given the profile of people who preferred inflation targeting, the shift from monetary targeting to inflation targeting is deemed a pro-poor policy shift. Further analyses find that, in 2000, at least 53.1% of Filipino households preferred inflation targeting; in other words, the preference of Filipino society in 2000 was in line with the preference of the Bangko Sentral ng Pilipinas for inflation targeting.Inflation targeting, central bank policy, Philippines, Filipino preference

Capital Flight and Economic Performance

Capital flight aggravates resource constraints and contributes to undermine long-term economic growth. Counterfactual calculations on the Philippines suggest that capital flight contributed to lower the quality of long-term economic growth. Sustained capital flight over three decades means that capital flight had a role for the Philippines to lose the opportunities to achieve economic takeoff. Unless decisive policy actions are taken up to address enduring capital flight and manage the macroeconomy more effectively, the Philippines remains caught in the perpetuity of crises, its economy hollowed-out, the people trapped in poverty, and once again, the country is frustrated from realizing a takeoff.Capital flight; economic growth; Philippines