Monday, August 16, 2010

Reducing Poverty through Trade Liberalization

     Trade liberalization increases economic activity between countries. This liberalization is important in Export Promotion especially to developing countries with regards to increasing output. In order to facilitate liberalization it is vital that countries enter into trade agreements examples of which are EC, NAFTA, AFTA, and ACFTA. These regional trade block agreements facilitate a smoother trade between countries within the region. Philippines has been long part of trade agreements such as ASEAN Free Trade Area (AFTA), the ASEAN-China Free Trade Area (ACFTA), and the Japan-Philippines Economic Partnership Agreement (JPEPA), also the country is one of the original member countries of the World Trade Organization (WTO). Trade agreements involve reduction on tariff rates, elimination of quotas, elimination of non-tariff barriers and subsidies. In effect there is better bargaining leverage and improved investment among countries which then leads to higher outputs.  But the question is, do standards of living really increase when a country enters into a trade agreement?

    A potential benefit of a trade agreement is trade creation. Due to policies imposed, as mentioned earlier, cost of trade will definitely decrease. Each businessman would like to maximize his profit while minimizing cost, and thus a decrease in tariff rate will surely decrease the cost of trade. Because of this more and more businessman will engage into exchanging goods across borders. Consumer goods would then become cheaper making it more affordable and available to many.  Though there are economic costs related to trade agreements, it is outweighed by the benefits received by member countries which will be discussed later on.

       Trade creation which resulted from trade agreements provides employment and income to member countries. Through this many are able to provide for their families, also there is a decrease in inequality. Trade liberalization has the potential to lower imports and domestic prices which in turn raises domestic output and local consumption. It also improves national output along with the increase in wage rate. In this case though, industrial sector benefits more than the agricultural sector. Moreover, with the imposition of appropriate fiscal policy, majority of the household groups will benefit in the reduction of the cost of consumption. While on the other hand, the relatively poor and unskilled workers will be better off than before.

Todaro, M. & Smith, S. (2003) Economic development, 8th edition. Singapore: Pearson Education, Asia Pte Ltd.

Climate Change on the 20th Century: The Role We Play

Consumers play a very big role in carbon emission, either by increasing or decreasing the emission. The consumption of products with high carbon content will definitely lead to a higher emission. Golding (2009) explained that consumers of the present generation are very much concerned on climate change and the effects that go along with it. The awareness of consumers affects their consumption pattern of products, especially products which contribute to increasing carbon emission.  Consumers buy products which are familiar to them and this is referred to as branding. If a consumer buys a product that is familiar to him and with loyalty it is called branding.  The consumer does not care about the price as long as the product satisfies the customer’s utility. Way back then, customer’s utility depends on quality, but as he becomes aware on the effects of climate, utility now includes product being earth friendly. Consumers patronize products which do not contribute in increasing in carbon emission may it be through its consumption or production. From this, companies are pushed to produce products which are able to satisfy the utility of consumers. Consumers are empowered when it comes to mitigating climate change because of their consumption patterns, while companies innovate their products adapting to the changing needs of consumers.

Like consumers, producers play the same amount of role on climate change. Producers can either worsen or improve the current state of the environment. Producers of developed countries cover a wide range of market share internationally, meaning these producers supply number of countries all-over the world. Because of this, it is important to make sure that products sold are earth friendly and has low-carbon emission. As discussed earlier, consumers push companies to produce innovated and earth friendly products, and in response, companies find a way to develop new products using newly developed methods.

Producers respond to consumer preferences by stimulating their products. Stimulation of products takes in the form of new technologies and innovations. Innovations are developments and improvements on products; such improvements are mainly on decreasing carbon emission. Producers restructure their products, which means they entail additional  cost for research and development. But the cost of restructuring the product is outweighed by the benefits that the company receives due to larger market share than before.

The globalization of supply chains is often related to cross - borders transactions may it be by country or continent. The demand for product in one country pushes the demand for an increase in production, and thus, increasing the emission. Because of this, companies nowadays find solution on how to mitigate carbon emission especially when they are already incurring high carbon emission. These companies establish factories in developing countries which have low carbon emission. In this case, they are entering into carbon market economy, wherein low-carbon emitting countries accept transactions and manufactures products for high-emitting countries; in exchange, low-emitting countries get to provide jobs for its citizens. Job creation in return lowers unemployment and of course increases the number of households above the poverty line.

Producers also find ways to protect their businesses by establishing contingency plans, sustainable management practice, flood emergency plans and acquiring insurance. Through these security measures done by producers, they are able to maintain product quality when things come to worse. Also, they are able to protect their brands and while maintaining a good customer relationship.

Government agencies and organizations are regulatory bodies, these agencies and organizations have the authority to impose rules and measurements with justifications.  Sustainable Consumption Institute (n.d.) suggested that the government can significantly affect climate change through subsidies and tax incentives. Subsidies and tax incentives will stimulate producers and manufacturers to follow system and material restrictions.  Subsidies and tax incentives decrease the cost of production, and this will be beneficial for the producers if they want to maximize profit while minimizing costs.  A fee would be charged for each unit of carbon dioxide emitted. This strategy will encourage producers and manufacturers to produce low-carbon products and improve their system of production. This in turn would also decrease their costs of production. Preferential tax system like accelerated depreciation and tax credits also works in promoting a greener environment.

Government can also influence the emission of carbon by regulating the activities of a business. Upon registration of a business entity certain pre-operating requirements are needed to be passed in order to be able to start its operations. Through this, the government is able to detect pre-operating problems that in the long run, may heavily affect the business, consumers and especially the environment.

The government may also significantly affect climate change by requiring companies to conduct corporate social responsibility activities. It is very important to protect the area where the business is located. Also, it is important to protect citizens so as they will also protect the environment.

   Non-government organizations (NGOs) have played an influential role in international environmental policy-making as innovators, facilitators and advocates. The organizations are groups of people which have advocacies. These advocacies usually cover human rights, especially women and children, animal welfare and environmental protection. Because of this, increasing number of NGOs inclined in protecting the environment is being formed. They execute projects and conferences in line with their advocacies to increase the awareness of the society when it comes to the effects of climate change.

     These NGOs also mobilizes private funding. In order to execute their projects they pool in funds. These funds are used to launch “eco-lending”, eco-lending is a form of financing an institution to produce eco-products, in this way more earth friendly products are produced. Many producers manufacture and distribute products which are not earth friendly since materials for this type of products are more accessible especially when it comes to price. The eco-lending project allows entrepreneurs to redesign their products to become eco-friendly and at the same time still competitive.


________. (2008). G8 Action plan for climate change to enhance the engagement of private and public financial institutions. Retrieved from

Ellis, K., Lemma, A and Schramm, C. (2009). The private sector and climate change in developing countries.  Retrieved from


Golding, R. (2009). Climate Change and Energy: A consumer Issue. Retrieved from

Havas Media (2007). Largest global study of consumer response to climate change puts the onus on brands. Retrieved from

Sustainable Consumption Institute (n.d.). Consumer, business and climate change. Retrieved from

Attempt to Migrate: The Case of Oversupply of Filipino Nursing Graduates

The Philippines is considered rich in different kinds of resources, but it is recognized worldwide for its human resources, especially the high rating of Filipino nurses, with high demand in the United States and United Kingdom. According to the Association of Deans of Philippine Colleges of Nursing, the estimated monthly salaries of Filipino nurses in UK, nurses are paid an estimated USD 34,221.00 per month. In  USA, the monthly salary of nurses is estimated at USD 4,000.00 to USD 6,000.00. In Saudi Arabia, nurses receive USD 700.00 to USD 1,500.00 per month. These values are huge compared to how much nurses are paid in the Philippines, which is estimated at USD 180.00 to USD 220.00 per month.  These differences in wages show that there is a high return on investment in nursing skills abroad which in turn increases the demand for nursing education or courses by graduating high school students.
According to Tiongson (2008) as cited by Tullao, Conchada and Rivera (2009), the result in the rapid increase in demand for nursing education raised the number of schools that offer nursing courses from 40 in 1970s to 269 in 2005. Demand for nursing increased dramatically and made nursing a “go to” course for students who want a high paying profession. With the rise of schools that offer nursing courses, the Commission on Higher Education (CHED) regulated and implemented policies that would somehow assess or check on a school’s performance regarding their nursing program.
From the years 1998 to 2007, the number of nursing enrollees grew at a rapid and large rate while the number of nursing graduates respectively became lower. However, these nursing graduates are not guaranteed a job right away, either abroad or local. The new graduates need to take the licensure exam, in the country and abroad. Nurses also need to go through screenings and different requirements in order to go abroad or any work place they desire. Migration costs also become a factor when these new graduates consider working abroad. These students should consider different factors before taking up nursing programs and become more efficient in order to aid our economy.

Characteristics of Filipino Students

Nowadays, many High School Filipino students who are about to enter college choose Nursing as their course. The seemingly increase in demand abroad for nurses attracts these students to take this course because of the high returns in the form of high salary. Students can be characterized as risk takers. They consider Nursing as investment where in higher risk means higher return disregarding other factors.

Characteristics of Colleges and Universities offering Nursing course
Due to the increasing demand for nursing course, there is a push for the schools to supply the demand. Though some of the schools do not really offer a course in Nursing, it started to offer to absorb the demand for nursing education and also offering a course with high demand is a profit-generating activity.  Due to the fact that these schools opened to absorb the excess demand for nursing education, its performance is far from the performance of schools which originally offers nursing education.

The rapid increase in the number of nursing schools posed a great threat in the quality of nursing graduates due to low quality of instruction provided in these schools. As reported by Divinagracia (2003) as cited by Osteria (2006), the survey conducted among 2392 faculty members  in nursing schools showed a statistics that only having 48.4 percent of the surveyed faculty members have B.S in Nursing degree with M.A units and that only 22.3 percent have master’s degree in Nursing. Also, most of the nursing schools only have 15 faculty members or less. 

Policy implication

            The government should regulate the fly by night schools. The quality of nursing graduates is deteriorating due to inefficient education received by these students. Also, the government should be able to release gathered facts regarding the demand for nurses abroad. It is not enough that the government inform the public, asymmetry in information misleads the prospective nursing students. Hidden information such as tedious application and rigorous screening do not reach the aspiring nursing students making them more attractive in getting a nursing course even though the demand is slowly decreasing as well as the chance of being hired. The government should also give priority to other courses such as engineering and sciences. In order to implement this policy, the government should increase the cost of education of taking nursing by raising tax. The tax collected can then be used to subsidize other courses which also have demands abroad. 

Conchada, C., Rivera, J.P. and Tullao, T. (2009). The Labor Migration Industry for Health and      Educational Services: Regulatory and Governance Structures and Implications for National Development.

Globalization and Food Convenience on our own Households

In a world of globalization everything is moving fast.  Philippines being one of the developing countries is not an exception to this fast paced development of the twentieth century. Filipinos’ lifestyles are becoming more and more convenient. Most of us prefer having things done automatically may it be in our household or works. The progressive development in technology affected majority of our consumption which can be simply exemplified by the increase in demand for wireless communication devices over corded phones in our local homes.  Consumption is described as the utilization of economic goods in the satisfaction of wants or utility maximization, and through this household expenditure is generated. Household expenditure is characterized by our spending on two categories: food and non-food. Food expenditure includes food consumed at home and food consumed away from home. Food consumption or expenditure changes as price, income and accessibility to food changes. Consumer food habits, purchase behaviors and consumption pattern today have changed significantly. The demand for food consumed away from home increased dramatically over the years.  Favored food before are now rarely eaten and once only dreamed foods are now a reality. Many of us would like to eat at restaurants or fast food chains than in our own homes. According to a survey done by Euromonitor International (2007), Malaysians can afford to eat away from their homes almost every single day. Their choice of restaurant may vary from full-service restaurants to fast food outlets depending on their budget. It is common among students and dual income earning families to eat out. The reason behind this is that many of us give importance to working productively and avoiding the preparation of food at home since it includes more preparation and time, in simpler sense, many of us are very busy. The opportunity cost of eating outside is lower than eating at home. Other factors such as family size, expenditure on clothing, education, medical care, recreation, transportation and communication, utilities, taxes and other income should also be considered when determining when eating outside. There are also other factors that are being considered when eating outside such as taste, nutritional content, stress, mood, biases and human belief. But the latter mentioned factors are not easily observed therefore it cannot be easily included in the data when making an empirical analysis.

Utility maximization is one of the key topics when discussing consumers’ behavior and spending pattern. It is of great quest how to maximize utility given constraints such as time and income. The theory of consumer behavior states that a consumer will purchase goods that will maximize his or her utility given constraints. The higher the price of the good the lower the demand for that good since there is budget constraint and purchasing of which will decrease the utility of the purchaser or consumer. The model describes the behavior of an individual with relation to the demand, utility and price for a given good. To discuss it further, when an individual has income increase his consumption would also increase, this is called the income effect. An individual will derive its utility through an increase in his consumption considering he is non-satiated.  An increase in the utility would also occur if the individual would purchase goods which are now more expensive than the goods he was purchasing before, the good that he is now purchasing is called a normal good, which is the good that normally consumed after an occurrence of increase in an individual’s income. The good that is no longer consumed is called inferior good, since the individual has higher income meaning lesser constraint he is now able to go to the next level of utility foregoing his old consumption. From previous empirical studies it has shown that utility maximization is not only of consumption itself it has other factors such as time and convenience. 

Though the Income Effect states that an increase in income would mean an increase in consumption, according to the 1857 study of Ernest Engel, he concluded that the proportion of income spent on food declines as income increases, implying that “food is a necessity whose consumption rises less rapid than does income” (Nicholson,1992, p.134). As income increases the allocation for food would be smaller since there would be expenditures that will be prioritized more than food.

The Household Production Theory by Becker states that consumers maximize utility subject not only to the budget constraint but also time constraint. Furthermore, this model assumes that consumers demand not only the food product itself but also the associated benefit specifically convenience to save time in food preparation. (Becker, 1965).  By purchasing meal outside home the consumer is able to derive utility not only by the consumption of food but by the convenience he receives. According to Encarta Dictionary (North America), convenience is the quality of being or making things easy, useful, or the state of increasing comfort, availability of which increases utility since the consumer is able to eat in a faster pace without the need to spend longer time for the preparation.


Barton, Anton P. 1964. “Family Composition, Prices and Expenditure Patterns.” In Economic            Analysis for National Economic Planning, edited by Peter E. Hart, Gordon Mills, and John K.  Whitaker. London: Butterworth.
Becker G. S. A Theory of the Allocation of Time. Economic Journal, 75 (September),             1965. pp. 493-517.

Political Participation and Educational Attainment: How can we influence the society?

Pursuing higher education has an effect on political participation in the Philippines. Let us take the case of the May 2010 National Election, before the election a lot of people is thinking about the candidates whom they will vote. Though by observation many Filipinos are politically aware, this is a contrary to statistics of having small percent of registered voters as compared to the total population. Through participating in the elections, Filipinos would be given the chance to participate politically and vote for the candidate they think would be most suitable and effective for that position. There is high significance in choosing the right candidate as this could contribute to the betterment of their lives.  However, not everyone would take such opportunity to participate in the elections, so we can actually take note of and study how different people respond to different political activities (e.g., voting, joining political organizations and forums), particularly how political participation depends on one’s education attainment. After all, conventional wisdom holds that education plays the key role in determining political participation.

People’s participation in politics contributes to the development of society – when people participate, they get to speak for themselves and voice out their opinions. Check and balance exists as the power to decide and govern is not centralized upon one person or a single group of people. Education plays a vital role in an individual’s life and promotes active participation in various fields. Education allows a person to learn and develop necessary social and civic skills, making him or her more aware and concerned of his or her environment and driving him or her to actively engage in activities to address personal and communal needs and wants.

Education, being a powerful explanatory variable of political participation, provides theoretical implication as to why people with higher education are likely to participate more than their less-educated counterparts. It has been established that education positively affects political participation. Political participation does not only comprise voting, it also involves other political activities such as attending political events, staying informed about politics and working on campaigns (Putnam, 1995).  Educational attainment being the most potent predictor of an adult’s political participation was observed by Verba, Schlozman, and Burns in 2003. Education was observed as a mobilizing tool to participate socially and intellectually. However, despite the fact that there have been social and economic evidences that education is positively correlated to political participation, a literature gap exists as to how education really affects political participation. 

Education and Political Participation

Verba, Schlozman and Brady (1995) define political participation as “activity that has the intent or effect of influencing public action, either directly, by influencing the making of public policy, or indirectly, by influencing the selection of political decision makers” (as cited in Alesina & Giuliano, 2009). According to them, this definition includes voting, campaigning for a party or supporting party work through other means (e.g. policy development, membership drives), contacting policy-makers directly by writing or telephone, engaging in protest activities, getting involved in organizations that take a stand in politics, taking part in informal efforts to solve community problems, and serving in a voluntary capacity on local governing boards such as school or zoning boards. In short, political participation intends to either directly influence collectively binding decisions or indirectly control the selection of representatives making these decisions (Walter & Rosenberger, 2007), thus making it a valuable tool for reform and policy-making. What then determines the political participation of an individual? 

Conventional wisdom asserts that education is a very important, if not the most important; factor in determining the political involvement of an individual. In most empirical analyses (Shields & Goidel 1997; Verba, Schlozman, & Brady, 1996; Wolfinger & Rosenstone 1980), education is even the strongest predictor of political participation even when other socioeconomic factors are considered (as cited in Hillygus, 2005). The popular view of education which places schooling as a primary cause for political participation was aptly represented by Converse’s (1972) noting that ‘whether one is dealing with cognitive matters or motivational matters or question of actual behavior, such as engagement in any of a variety of political activities from party work to vote turnout itself, education is everywhere the universal solvent, and the relationship is always in the same direction’ (as cited in Kam & Palmer, 2008). Further, Converse believed that the educated citizen is attentive, knowledgeable, and participatory, and the uneducated citizen is not.

The conventional view of education places it as a primary cause for political participation. Education has become an indispensable variable in regression models tracing the predictors of political participation. The effects of education are mainly thought to be human-capital enhancing. Schooling provides individuals with proper skills, such as cognitive and interpersonal skills. These skills are necessary to understand and ascertain political issues and their importance and to be able to intermingle with other people in political forums. More importantly, schooling fosters among individuals a sense of civic duty. This attitude allows for a greater citizenry that is aware of its political environment and actively engages in political discourses and activities. Furthermore, education enhances political competence (Almond & Verba 1963/1989, 173), efficacy (Campbell et al. 1960/1980; Wolfinger & Rosenstone 1980), and interest (Wolfinger & Rosenstone 1980; as cited in Kam & Palmer, 2008).

In as much as education enhances cognitive and interpersonal skills, it also cultivates civic skills in an individual. The schooling environment helps shape a person’s civic orientation, which is important in political participation in that it largely influences an individual’s decision and interest in joining political activities. Civic orientation include interest in politics, discussions about political events, attentiveness to politics in media, trust in one’s own political competence, feelings of responsibility on part of political authorities, and trust in as well as satisfaction with democratic institutions and authorities (Walter & Rosenberger, 2008). These affective attitudes, in tandem with cognitive skills acquired in school, may very well initiate the desire to be politically active.

            In a complementary view, Nie, Junn, and Stehlik-Barry (1996) argue that educational attainment acts as a sorting mechanism that allows citizens to obtain higher prestige occupations, higher wealth, and greater involvement in voluntary organizations (as cited in Kam & Palmer, 2008). These three intervening indicators then place citizens in more or less economically, socially, and politically connected networks, which subsequently facilitate participation. People with higher education are presumed to have a larger income and better job status, thus making them more capable and more inclined to making donations to various political activities, organizations, and candidates (Walter & Roenberger, 2008). Moreover, these individuals with higher education, income, and job status are in a position where he or she can use resources and networks advantageously to get him or she involved in politics.  Education, under this view, has an indirect effect on political participation in the sense that since education is a determinant of an individual's future occupation, income, and status, the more the educated a person is, the greater the chance of him being involved in organized activities, such as politics.

In sum, the conventional view perceives education as a cause of political participation not only because it enhances human-capital but also because it affects the civic attitude, social position, network, and status of an individual.

Gender and Political Participation

            The increasing number of women in politics especially in the Philippines pushes other women to participate politically. Former president Corazon Aquino and current president Gloria Macapagal-Arroyo are considered once of the most powerful people in the society, given that they are the only elected women who became presidents of the Philippines. Men are geared towards on increasing their capabilities and making themselves more competitive. In this case there is an opportunity cost of politically participating and making themselves more marketable.

Income and Political Participation

Following the findings of Nie, Junn, and Stehlik-Barry (1996), and Rosenstone and Hansen (1993/2000), income and political participation are directly related. As the income of an individual increases, so will his or her political involvement. Higher income not only increases the resources available for participation and the opportunities to develop civic skills (necessary for political activity), it also place individuals in networks where they are more likely to be mobilized into politics. Wealthy people usually have higher social statuses which put them in strategic positions, allowing them greater access to politics. Taking advantage of their network of people by participating politically permits them not only to maintain their status but also to reap other benefits (e.g., influence on government policies which affect them) as well. This positive relationship between income and political participation, however, does not seem to be strongly evident in the Philippine setting. That is not to say that the rich do not participate at all, but what we are implying is that being a rich person in the Philippines does not always translate to higher political participation. Historically, the affluent Filipino classes have participated less than their underprivileged counterpart, the poor Filipinos. This trend may particularly be explained by the concepts of opportunity cost and welfare.


Kam, C. & Palmer, C. (2008). Reconsidering the Effects of Education on Political Participation. Journal of Politics. Retrieved on October 29, 2009, from

Verba, et al. (1995). Voice and Equality: Civic Voluntarism in American Politics. Cambridge, MA: Harvard University Press.

Walter, F. and S. Rosenberger. (2007). “Skilled voices? Reflections on political participation and education in Austria,” OECD Education Working Papers, No.11, OECD Publishing.  Retrieved November 21, 2009 from