An explanation for this could be that certain country-specific variables that are important to growth, although to some extent captured in the regression by the initial GDP per capita variable, are not included in the weighted index. While the Hausman test may be used to test for endogeneity and confirm the use of a fixed effects model over a random effects model, it cannot estimate unbalanced data, such as in our data set. We only include a fixed effect for the time series dimension, while the level of initial per capita GDP captures the cross-sectional fixed effect, with the following specification: (Real GDP Per Capita Growth)i=ci+βXi+u, for country i = 1,2,…, n. Regression results broadly show that coefficients are significant and consistent with results in the growth literature (Table 2). In the literature, five-year averages are usually used to control for endogeneity (see for example, Barro and Sala-i-Martin, 1996, and Ide, 2011), as shown in Table 4.8 The results are broadly consistent with the annual data, except that fiscal balance as well as total trade and the current account balance turned insignificant. 1/Data unavailable for China, Egypt, Indonesia, Pakistan, Sri Lanka and Vietnam. In the context of the indicators identified, the Philippines has experienced a gradual relative decline, which is in stark contrast with its Asian counterparts that have high rankings that coincide with the recent resurgence in the region. Looking back at history, the Philippines experienced the longest colonial rule (333 years under Spain) compared to the averages of the emerging market groups, with potential implications for the quality of institutions and sense of national identity. Competitiveness, Technology and Innovation. However, the number of researchers, scientific and technical journal articles as well as patent applications has lagged other emerging markets substantially. 2/Data not available for Mongolia, Thailand, Argentina, Brazil, Chile, Colombia, Morocco, South Africa and Turkey. Country experiences show that a financial crisis is usually followed by a deep recession and a sharp current account reversal (see Laeven and Valencia, 2008, for details). Although a singular formula has not been credited as the reason behind Asia’s rise in recent years, a laundry list of the features of the so-called miracle stories are in the literature. With the advancement of Asia in terms of economy, influence and living conditions over the past half a century, much of the recent literature have recognized its potential to be an economic stronghold.2. The countries are ranked according to their cummulative growth rates during 1984-2008: The ‘top-performing’ group consists mostly of Asian economies. The top-performing group has significant results for the fiscal balance in percent of GDP, the number of patent applications, the number of crisis episodes, and population growth. In general, the weighted index provides a good fit and suggests that the Philippines did not have sustained periods of above-average improvements in economic fundamentals compared to its counterparts in the region. All rights reserved. Petrakos, et al. During 1965–1983, the Philippine economy performed broadly in line with the average, but was hit by political unrest,3 a string of natural disasters,4 and economic turmoil in 1984. 1/Data for China available 1993, India from 1999, the Philippines from 1986 and Vietnam from 1990. As far as we know, this is the first attempt to empirically estimate the determinants of slower growth in the Philippines, which include more recent macroeconomic data, novel methods such as index construction, and the use of patent applications to capture research and development. �gl8`���a�������O@�8�{���P`A��q�&�*�)4���;��@�Җ��̞���?�õ#���8j���8�ᆈ� ���D����Ց4�Q���� 6�ɱ�����J"U�Tv�(G�P'Uq�mXO��/��d�Y7V[+���n�!�Do�0Њ��#7�l�ⶵFLe����1g�ư~���-A�| XȢ���&u[���v��S���m�Wtn�@۸F�"���@��e��:����aeP緬�����w��}��dK�c�W]�k9|��C�M�m>Z[�o���&���i`"e қؿ\��N �A YapJosef T.Celia M.Reyes and Janet S.Cuenca2009 “Impact of the Global Financial and Economic Crisis on the Philippines,” Philippine Institute for Development Studies Discussion Paper Series No. A look at the agricultural component of merchandise exports shows a big drop for the Philippines in 1984–2005 relative to 1965–1983. 2/Data not available for China, India and Indonesia. Government expenditure in research and development in percent of GDP as well as paved roads in percent of total roads continue to be below the group averages and has declined further recently. Reverse causality—from growth to the current account—has been observed especially in the context of emerging markets. Ms. Tolo is Bank Officer at the Bangko Sentral ng Pilipinas (BSP) and was Research Associate in the IMF-Manila Office of the Resident Representative in 2010. The number of coups (successful as well as attempts) in 1984–2010 has been triple the average in other emerging markets, reflecting greater political uncertainty. Copyright © 2010-2019. While the coefficients from the regression specifications may seem like the logical choice as weights for the index, such calculations did not yield favorable results. Potential Determinants of Slower Growth, D. Political Stability and Reform Indicators. (1984). For example, China only has data for the current account balance and the number of patent applications beginning 1981 and 1985, respectively. Burnside and Dollar (2004) also found that a fiscal surplus policy has a large positive effect on growth. This is consistent with Madden and Bloxham (2001) who found a positive and significant relationship between growth and domestic research and development capital in developing countries. 2Papers and Proceedings of the Hundred and Second Annual Meeting of the American Economic Association. Some Perspectives from Growth Economics,” Discussion Paper No. (2007) likewise provide a comprehensive account of the different theories on the determinants of economic growth with references to related studies. While most of the literature has focused on agricultural productivity as the choice variable in growth regression models, this paper attempts to use instead agricultural exports in percent of merchandise exports to put emphasis on the developing countries’ considerable comparative advantage in agriculture.7. In fact, growth in the agriculture and industry sectors, as well as the manufacturing sub-sector, were lower than the ‘slower-growing’ group average for 1984–2008.