An application of the balance of payments constrained growth model to the Philippine economy
Date
2017-02-22
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
This paper applied the balance-of-payments (BOP) constrained growth model to
analyze the economic growth of the Philippines using time series data from 1960-2015.
The researchers used the ordinary least square method to test the relationship between
actual growth rates and those predicted by Thirlwall‘s Law. Aside from using the first
generation model of Robert Thirlwall, a modified version was also used to incorporate
the impact of remittances of the overseas Filipino workers. The period under study was
also divided into subperiods based on the significant shifts toward trade liberalization.
Using data from the BOP and national income accounts, the results of the study indicate
that the Philippine economy is BOP-constrained for the entire period as well as for five
out of the ten subperiods. From a policy stand point, the results suggest that policies that
strengthen exports of goods and services, remittances and foreign direct investments
continue to be well advised for they relax the BOP constraint.
Description
Keywords
balance of payments, remittances, foreign direct investment