Reaction Paper on the Economics Video + Learnings

            What I have learned during the film viewing in econ was that there are different types of market as discussed by Mr. Timothy Taylor, the speaker. The different types of market are perfect competition where firms are small with identical products and all are price takers, Monopoly where there is only one seller, Oligopoly where firms are small but they have all or most of the revenue in the industry, and Monopolistic Competition where there are many sellers but have different or only similar products. Mr. Timothy also discussed about the antitrust enforcement and other methods that the government uses, particularly in the United States, to protect competition in the market and to protect the consumers against unfair pricing by firms especially the monopolistic ones.

            What I have learned in the film has made me more aware of what is happening in the economy. Everyday, different things are happening in the market but most of us do not notice it. Each and everyone of us is part of a big spectrum in the economy. We participate in it through our spending. Without people who participate in the market, be it monopoly or perfect competition, there would be no economy. Our demands as consumers determine the amount of supply that the producers would provide.

Since there are different types of market, there are also different ways pricing. The monopoly has the greatest power in controlling the price like in gasoline and the least is the perfectly competitive firms like in “sari-sari” stores but in every changes in the price, all types of firms are affected that is why the government has to create ways to control or maintain the fairness of the competition through antitrust enforcement. The government has to protect the welfare of the people through creating laws and through participating in the economy.

            If the government would just allow big companies to merge and become a monopoly, the people and smaller firms would suffer allot. So the government really has to weigh their decisions very well when it comes to this matter. If the government fails to make the right decision then people would create a strike and it would be very bad to the economy.

            In the Philippines, the biggest companies are the oil companies. Rumors has been spread that these firms are performing as a monopoly that is why when they rise the price of the gasoline, they do it simultaneously thus affecting the prices of other goods. The people were badly affected by it specially the less fortunate ones. The government said they had investigations about this matter but there were no proofs found if these were true. All I can say though is that true or not, the government still must control the price for the sake of the people and for the love of competition. :D

           

Reaction Paper for February: The Real February Issue

World Bank says Philippine poor do not feel economic gains

abs-cbnNEWS.com

Posted at 02/23/2011 4:29 PM | Updated as of 02/23/2011 10:48 PM

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Growth seen slowing down in 2011, 2012

MANILA, Philippines – Benefits of the country's economic growth over the years have failed to trickle down to over a third of the population who are poor, the World Bank said in a report released Wednesday.

The Philippine economy grew 7.3% in 2010, the highest in 34 years, aided by the recovery of exports and manufacturing, accommodative monetary and fiscal policies as well as election spending.

However, in its quarterly report entitled "Robust growth, Stubborn poverty", the World Bank said: "For all the macroeconomic resiliency and strength that the Philippine economy manifested in recent years, growth continues to bypass many of the poor."

The multilateral lender noted that implementation of government policies on social protection will be critical in addressing poverty in the next few years, with growth expected to continue.

Economic expansion is forecast to slow down to 5% in 2011, and 5.4% in 2012, in the absence of the government stimulus program and election spending.

But the World Bank said growth could be higher if the investment climate improves.

Trickle-down effect

Latest official poverty data confirmed a disconcerting lack of poverty reduction response to economic growth in the Philippines, the World Bank said.

From 2003 to 2009, an additional 3.3 million Filipinos became poor, pushing the total to 23.1 million. This increase nudged poverty incidence from 24.9% of the population in 2003 to 26.4% in 2006 and 26.5% in 2009.

From 2003 to 2006 and to 2009, average real gross domestic product (GDP) growth reached 5.4% and 4.3%, respectively.

"As these growth rates imply a significant increase in real GDP per capita, it transpires that the distribution of the gains from growth have eluded the bottom fourth of the Filipino population."

However, the World Bank cited a bright spot amid the disappointing poverty numbers: income distribution among the poor improved between 2006 and 2009 as the poverty gap declined.

The lender attributed this to the rapid expansion of the government's conditional cash transfer (CCT) program.

The CCT program operates in 80 provinces, covering 1 million households by end of 2010. For 2011, the program is budgeted to cover 2.3 million poor households, or about 60% of poor households compared with 26% of poor households last year.

"The recent scale-up in the 2011 budget bodes well for the fight against poverty," the World Bank said.

Economic growth drivers

Strong private investments and favorable consumer and business sentiments will help buoy economic growth this year.

The World Bank's 5% growth forecast is below the 7% to 8% target of the Philippine government for 2011.

“Strong private investment in the fourth quarter of 2010 and bullish business confidence are encouraging signs that the economy can attract investments needed to boost potential growth and generate more jobs," World Bank Country Director Bert Hofman said.

Exports are expected to remain strong on the back of a robust electronics industry.

On the supply side, the services sector will remain the main driver, followed by industrial production. Barring any major calamity, the agricultural sector would also contribute strongly to growth.

For 2012, GDP growth is expected to expand by 5.4% as investment accelerates, thanks partly to the implementation of the priority infrastructure programs of the Aquino administration under the Private-Public Partnership or PPP scheme.

Rising oil, food prices

The only factors that could weigh down on growth, however, are rising international oil and food prices.

"These shocks, the report said, could slow the economy down and raise inflation," the World Bank said.

Global oil prices have reached 2-year highs on political turmoil in the Middle East and North Africa. However, government authorities said this would have no immediate impact on local fuel prices as supply remains assured.

On food prices, the World Bank said: "Food prices are expected to rise moderately."

REACTION

            I was riding a jeepney and as it came to a stop a blind man assisted by his wife begged money from us. After a few meters and the traffic light turned red, kids went to our jeepney, and like the first, pleaded for money. When I passed San Pedro Street, I saw more blind men on the street requesting for alms. I also observed that plenty of individuals, even families with babies, sleep on the sidewalk covering themselves with cartons and plastics at night. These sights make me wonder that if we have been progressing, why are these individuals still on the street? Then I read this news and I think I found my answer.

The World Bank’s comment is good to hear that we have progressed economically but at the same time it is disappointing to hear that this growth was not fairly distributed. I then realized that still in the Philippines trend that the rich becomes richer and the poor all poorer is still the same. The number of squatters and homeless even here in Davao are increasing while rich people keep on increasing their properties.

Here is another danger, the increasing prices of oils and food in the global market especially now that there is a conflict between oil-producing countries Middle East and Africa. I cannot imagine how the less fortunate people could cope with that? Even the slightest increase in rice and oil already leads to so many harmful effects on my poor Filipino fellow. What then would happen to us? That is so hard to picture out.

But then on the bright side, I know that the Filipinos will always find a way to live and be happy. Despite the hardships in life, Filipinos have always been positive. Besides, our attraction for investments are strong now compared to the last one. Even the World Bank admits that. Then there are still projects coming our way that will help our economy improve better and help our GDP increase a little like PNoy’s PPP. Filipinos are optimistic so I feel confident that someday, my less fortunate people would improve their living. We can surpass it all.

I believe that what we have to do now is to prove to the World Bank that they are wrong. Easy to say but hard to do. Well, come what may, what matters most is that I am positive and may we all be positive that blessings would come to our country, the corruption would be solved so that the saying the rich become richer and poor become poorer would no longer exist in our beautiful paradise, home of the greats, Philippines. 

Reaction Paper for February

Japan's PM urges China to increase global role

EDITH M. LEDERER, Associated Press

01/30/2011 | 12:13 AM 

DAVOS, Switzerland — Japanese Prime Minister Naoto Kan challenged China on Saturday to assume global responsibilities appropriate to its new status as the world's second largest economic power.

China eclipsed Japan in the No. 2 spot last summer after three decades of very rapid growth. The World Bank and other analysts are already predicting that China could overtake the United States and become the world's biggest economy in the coming decade.

When Kan was asked after a speech at the World Economic Forum if he was worried about being eclipsed by China, he said it was "something that is welcoming," adding that China's economic growth will have a "positive impact" on his country economically and socially.

He also said China should have "greater responsibilities internationally" with such a large economy. "And I do hope that China recognizes this important responsibility that it bears and acts accordingly," the Japanese leader added.

China, one of five permanent U.N. Security Council members with veto power, has put aside its traditional reluctance to become involved in global affairs as well as a more active player on international issues.

Despite its opposition to sanctions in principal, China has supported four rounds of U.N. sanctions against Iran over its nuclear program. But Beijing has frustrated the U.S. and its Western allies by leveraging its role as a supplier of food and fuel to North Korea that has stemmed efforts to force Pyongyang to return to six-party talks on its nuclear program.

In his speech, Kan said "the world faces major changes that can be likened to a tectonic shift both in national security and in economic fields" — Asia is "the center of major tectonic changes," he said.

Against this background, he said, the Japan-U.S. alliance "is becoming even more important" and should continue to play a key role in fostering peace and prosperity in the Asia-Pacific region.

"For Japan, its relationship with China, which is expanding influence in Asia as it achieves remarkable economic growth, is extremely important," Kan added.

"Both Japan and China have important responsibilities to bear in the international community, and will need to enhance cooperation in a wide array of fields such as economy, regional stability, and global environment," he said.

Kan said he flew from Tokyo to Switzerland for one day to address the VIP gathering of leaders from business, politics, academia and other fields in Davos because the forum's themes of confronting the new global reality and promoting innovation and the green economy match his own perspective.

He said there is growing concern in Japan "that in the midst of its economic stagnation the minds of its people including the youth are becoming inward-looking."

"Opening the nation is needed through breaking out of this stifling atmosphere in people's minds and in economy," Kan said. "At the same time, forging new connections between individuals is needed so that the opening of the nation will not bring about rupture among people."

The prime minister said Japan's economy will remain open, and the country will continue to promote innovation to help preserve the environment which it is already doing with Japanese-produced hybrid vehicles that enjoy a 90 percent global market share and LED lights.

"Both have the potential to reduce CO2 emissions by around 40 percent compared to conventional products," he said.—AP

Reaction

            China is now number 2 in the world economy next to United States, but it is number 1 in pollution contribution in the whole world.

China has progressed because of its biggest industrial powers in the world. Yet these powers also demonstrate a direct link between them and environmental damage.

Today, public health is at great risk because of the pollution caused by industrial emissions. Safe drinking water is also scarce in China. In fact, a gray covering now wraps the skies of China. And, there are around 500 million people who suffer from drinking unsafe water.

The current Chinese government is having difficulty fighting this problem; authorities know that it will take decades before the damage caused by pollution will be undone.

            All of these make me agree with Japan telling China to be more responsible in their activities. I know it is not bad to progress as long as it does not harm the environment. I wonder if China really is proud of surpassing Japan because I think Japan even deserves more to be number 1 than US because their industrialization entails responsibility. It does not only think of their country but of the whole world. Their inventions and researches are not for their own sake but for all of the people.

            But then I realized, who am I to judge China when our country is also polluted? Who am I to accuse China of being irresponsible when I myself am? Yes China may be number 1 in pollution but when it comes to environmental changes, all of us have to be responsible like Japan. Blaming people or countries is not the answer. All we can do is to remind ourselves and others of our responsibility. We cannot change China if we will not change ourselves. This is a hard thing to do and it is just up to us.

            I hope not only China would improve their global role but also the other countries, like Philippines, as well. Also, I hope Japan would not only urge China but also the people not just in Japan,  in China but of all the whole world. Most of all, I hope all of us would convince ourselves to preserve the environment. :D