Impacts of price and exchange rate policies on pesticide use in the Philippines

Pesticide prices can influence producer decisions to apply pesticides as opposed to nonchemical means of pest control. Those prices are are turn influenced by price and exchange rate policies. The effective rate of protection for nine pesticides commonly applied to vegetables in the Philippines was calculated to determine whether government policies are creating incentives or disincentives to adopt more integrated pest management methods. Calculations found that direct price policies, primarily through an import tariff, tax pesticide use while an overvalued exchange rate subsidizes pesticide use. The net effect is a 6 to 8% pesticide subsidy. This subsidy results in economic surplus gains to vegetable producers and consumers when negative externalities associated with pesticide use are not accounted for. However, recent analysis of human health effects of pesticide use on rice in the Philippines demonstrates that these externalities can be substantial.     

Remittances and Competitiveness: The Case of the Philippines

The paper looks at the impact of migration and workers’ remittances on the competitiveness of the home economy. It extends existing research that concentrated on the exchange rate effects of remittances, the so-called Dutch disease effect, by adding labor market effects. The results show that the labor market effects of emigration and remittances have a significant impact on competitiveness that goes beyond the traditional exchange rate effect.     

Increasing access to water services: a cost-recoverable pricing model

Pricing policies can serve as a low-cost and effective tool for increasing access to water and sanitation services among poor households while allowing the provider to recover costs. An empirical model is applied to contingent-valuation survey data for water services in Cebu, Philippines. Pricing policies that utilizes a low one-time connection fee and differentiates tariffs based on wealth results in a 3 to 9-fold increase in water services access by poor households over the base pricing policy. The results provide evidence that price-discrimination techniques can be important tools toward achieving greater coverage and financial solvency of important services.     

Social capital and soil conservation: evidence from the Philippines*

The formation of social capital is hypothesised to enhance collective efforts for soil conservation. The Landcare Program in the southern Philippines promotes simple conservation practices in upland environments by supporting community landcare groups and municipal landcare associations, thus augmenting social capital. A study was conducted in 2002–2003 to evaluate the Landcare Program, using a mix of quantitative and qualitative techniques. In the present paper, the relationship between social capital formation and adoption of soil conservation in the Municipality of Lantapan is investigated. It is concluded that the Landcare Program as a whole created a valuable stock of bridging social capital, rapidly accelerating the adoption of contour farming measures, but that on‐going support is needed to maintain this capital stock.     

The economic effects of foreign bank presence: Evidence from the Philippines

This study examines the economic effects of the liberalization of foreign bank entry in the Philippines from 1990 to 2006. The findings provide strong evidence on the dominance of competition effects from foreign bank presence which lead to the reduction in the profitability and overhead costs of domestic commercial banks. These findings, which reveal that both the actual market penetration and mere presence of foreign banks seem to exert competitive pressure to domestic banks, imply that foreign banks may serve as an effective competitive force, reducing the excess profits earned by domestic banks and compelling domestic banks to update their production technologies and techniques to improve their cost efficiency.From a policy perspective, the findings on competition effects of foreign banks in the domestic banking system justify the liberalization of foreign bank entry in the Philippines. The main findings demonstrate that the goal of banking liberalization in transforming domestic banks to be more competitive and efficient works considerably well in the case of the Philippines. Aside from the policy of easing the entry of foreign banks, bank-specific conditions can have significant impact on the performance of domestic banks. Therefore, a sustained improvement in the efficiency of domestic commercial banks requires not only liberalizing the entry of foreign banks, but also on continued strengthening of domestic prudential regulation and supervision on the commercial banking system.     

Technical Inefficiency and Production Risk in Rice Farming: Evidence from Central Luzon Philippines*

There have been many previous studies of technical inefficiency in rice production in the Philippines, but none has focused simultaneously on production risk and technical inefficiency at the farm level. Rice production is inherently risky because of the heterogeneous production environment. In this study, we analyze technical inefficiency in a rainfed lowland rice environment in Central Luzon using a stochastic frontier production function with a heteroskedastic error structure. An 8‐year panel dataset collected from 46 rainfed rice farmers was used to estimate flexible functional specifications. Over the whole period, the average technical efficiency was found to be 79 percent. Results indicate that there is a high degree of variability in technical efficiency estimates, which can be attributed to the instability of farming conditions in the rainfed lowland environment. Mean output was signifificantly influenced by area planted to rice, labor and the amount of fertilizer used. Consequently, these inputs were found to be risk‐increasing, whereas herbicide was found to be a risk‐reducing input.     

Nutrition and GNP: A comparison of problems in Thailand and the Philippines

The relationship between GNP and nutritional status between countries shows a high correlation. This study of two countries with the same GNP (Thailand and Philippines) investigated their use of equal resources and the impact on nutritional status. Malnutrition is more prevalent in the Philippines than Thailand despite an extensive national nutrition programme in the Philippines, better medical and educational services and safer water supplies. The most important underlying economic factor is not income distribution but rather the cost of living, particularly for basic needs. Finally, it is concluded that although GNP is closely related to nutritional status between countries, the longitudinal correlations within a country are much weaker.     

Land, landlords and sustainable livelihoods: The impact of agrarian reform on a coconut hacienda in the Philippines

Agrarian reform has been a key theme on the development agenda of many countries in the Global South for decades. Whilst such interventions are often pursued for political goals and in the interests of empowerment, there is often a mismatch between these goals and the actual outcomes achieved. Within this context, this study investigates the impacts of agrarian reform in Del Rosario, a former coconut hacienda in the Philippines. This is done in an attempt to explore whether agrarian reform has facilitated the creation of sustainable livelihoods among its beneficiaries, in particular, and in their agrarian reform community, in general. The impacts of reform are examined in relation to four themes - economic, social, demographic and environmental. Overall, the study concludes that agrarian reform has not brought about sustainable livelihoods in the former coconut hacienda. People's livelihoods, especially those derived from copra farming, remain at a subsistence level. At most, at an economic level agrarian reform has brought about improved access to land among its beneficiaries. Nevertheless, it has empowered the farmers by giving them greater freedom and has increased their sense of well-being, as well as enabling them to improve their families’ life prospects and strengthen social capital.     

Domestic and international impacts of the rice trade policy reform in the Philippines

Faced with high domestic rice prices that have fueled inflation above the 2018 target and penalized poor consumers the most, the government of the Philippines has decided to abandon the quantitative restrictions on imports and replace them with tariffs. This paper uses a global rice model based on a partial equilibrium framework to assess the possible impacts of this reform on imports, production, consumption and prices. In contrast with past similar studies, we address three key concerns (i) the heterogeneity in farm price across 16 regions in response to the combined effect of the tarriffication and the average historical trend in productivity increase at 1.5% between 2001 and 2018, (ii) the differentiation of imports by origin partly due to the different tariffs applied to countries within and beyond the Association of South East Asian Nations, and (iii) the effect on domestic prices in third countries. The simulation results suggest that the reform would increase imports by 2.47 million tons (20.7%) in 2019. We also find a large decline in farm prices and retail prices respectively by PhP 6.1/kg (30.1%) and PhP 7.6/kg (17.4%) in 2019 that explains an increase in rice consumption. We estimate the fall in total inflation at 1.2% in 2019 but less over time. Further, the large fall in farm prices in 2019 is shared quite evenly among regions in the short term but returns to pre-reform levels in the near term. Using a higher price elasticity of supply for one region obtained from panel data surveys, we show a more pronounced decline in production than the national average. Such differentiated results confirm the relevance of using a regionally disaggregated model to design more targeted policies. We also show a slight increase in world prices, which led to small increases in the domestic prices of South and Southeast Asian rice markets. While this reform is largely pro-poor consumers, policy makers would need to use the additional tariff revenue to help rice growers either increase their competitiveness and modernize their rice production or shift to other crops.     

Corporate financial distress: The case of publicly listed firms in an emerging market economy

Occurrences of financial distress (FD) are not readily obvious yet can span several periods. This paper examines episodes of FD using industry‐relative (IR) firm‐/ accounting‐, market‐ and macro‐level information. Mixed logit regressions reveal that firm‐ and market‐based measures, as well as macro‐level variables explain the likelihood of FD in 263 publicly listed non‐banking firms in the Philippines during the period 1995 to 2018. Rates of identification of firms in financial distressed states of close to 69 percent are obtained at a cutoff probability of 0.30 in the model with time‐varying intercept and slope. This study shows the importance of recognizing heterogeneous firm behavior. The ability to more accurately predict the probability of FD and to determine the financial health of firms can help financial institutions in allocating funds and policy makers in predicting crises episodes.