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Notes: Impact of Econ Lib and Implications to the Philippine Economy

September 13, 2011

Re-invent the wheel? NAH.

As certain quarters in the Philippines seek a gradualist approach to econ lib – such an approach creates an imperfect market that does not help at all.

*** This is a work in progress and contains a compilation of references and case studies on the impact of economic liberalization in countries such as Brazil, Poland, Chile. These countries took on the “shock therapy approach”.

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http://www.ide.go.jp/English/Publish/Download/Las/04.html

A Study on the Impact of Economic Liberalization in Brazil: 1995-2002

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The Politics of Economic Liberalization
http://pics3441.upmf-grenoble.fr/articles/sopo/Review%20-%20The%20Politics%20of%20Economic%20Liberalization.pdf

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The Economic Impacts of Air Service Liberalization

http://www.iata.org/whatwedo/Documents/economics/liberalization_air_transport_study_30may06.pdf

This study quantifies the economic impacts of changes in aviation policy and examines five case studies that validate the positive impacts of liberalization on economies. In addition, an economic model has been developed that can quantify the economic benefits associated with greater air service between virtually any two markets around the globe.

The study confirms that liberalizing air travel directly benefits economies by increasing GDP, employment, travel and tourism, and exports. Increasing air travel also leads to significant gains in the quality and quantity of direct service to various communities worldwide.

InterVISTAS-ga2 Consulting

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Democratization and Economic Liberalization in the Postcommunist World
http://cps.sagepub.com/content/40/3/254.short?rss=1&ssource=mfr

M. Steven Fish
University of California-Berkeley

Omar Choudhry
University of California-Berkeley

Abstract

How does economic liberalization affect political regime? Economic liberalization is widely regarded as inimical to democratization. The “Washington Consensus,” which generally endorses “shock therapy” and envisions a basic compatibility between economic liberalization and democratization, is widely disdained in social science. Many scholars hold that neoliberal economics depresses popular living standards and exacerbates socioeconomic inequalities, thereby compromising democratization. Focusing on the postcommunist region, this article tests this hypothesis. It examines the data that have been used to assess the relationship between economic liberalization and political democratization and presents analyses using more appropriate and differentiated techniques. The authors find that economic liberalization advances rather than undermines democratization. Using Engle-Granger analysis, they find that although economic liberalization has no discernible impact on democratization in the short term, democratization adjusts in the direction of a long-term equilibrium to which economic liberalization contributes substantially.

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An Examination of Economic Liberalization Impact on Foreign Direct Investment
in Selected Developing Countries
http://www.ipedr.net/vol1/9-B00013.pdf

IV. CONCLUSIONS
Capital is a driver of economic growth and development
in all theories of growth. Based on this, one of the most
important apprehensions is for policy makers to absorb
adequate capital for financing projects. Then, absorbing FDI
is not avoidable for developing countries because of their
saving resource shortage compared with the capital needs.
For this, they employ some economic reforms including
economic liberalization in order to create suitable ground for
FDI inflows.

The purpose of present paper is to examine economic
liberalization impact on FDI in selected developing
countries. For this, first we summarize some ideas about the
potential determinants of FDI when choosing a particular
host country. A review of the main hypothesis and the
relevant literature suggests that the degree of economic

freedom in the host country could be a crucial determinant of
FDI decisions. Next, we use pooled data and panel technique
for countries including Brazil, Mexico, China, India, Egypt,
Singapore, Malaysia, Thailand, Turkey and Iran during
1995-2005. Results verify the hypothesis of present research.
In other words, in case of more liberalizing economy, more
FDI is absorbed by the developing countries. This result is
not surprising since economic liberalization moves the
economy toward market economy and brings about optimum
utilization of resources.

Based on other results, inflation has a negative and
significant effect on the FDI of the developing countries.
This result is expectable regarding that inflation rate is
among indices indicating economic stability of a country and
its increase has negative effect on FDI flows in to the
country. Coefficient of market size is estimated near zero
that indicates that it is less important than the main
determinant factors such as economic liberalization and
infrastructures in absorbing FDI for the considered countries.
Also, infrastructures have an important role in absorbing
FDI. Specifically, infrastructures such as roads, ports and
information systems enhance FDI inflows, as it is expected.
Result about wage indicates no significance for its
coefficient. It seems that the mentioned variables are more
important determinants than wage in view of MNEs.
Results obtained from this study have several policy
implications for the future. Specifically, if developing
countries are attempting to attract FDI, it would be more
efficient to focus on economic liberalization and to develop
their infrastructure rather than just reducing wage. Also,
regarding negative and significant effect of inflation on FDI,
these countries should provide a stable environment to
facilitate inflow of foreign direct investment

APPROACHES

http://en.wikipedia.org/wiki/Shock_therapy_%28economics%29

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SHOCK THERAPY: WHAT WE CAN LEARN FROM POLAND

http://prospectjournal.ucsd.edu/index.php/2010/11/shock-therapy-what-we-can-learn-from-poland/

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EARLY BENEFICIARIES:

* Foreign retirees who are already in the Philippines

* Foreign Companies/Individuals that are already in the Philippines who were forced into joint ventures by the constitution.

* The huge pool of underemployed nurses and medical professionals that can be absorbed by a medical tourism industry.

* A huge pool of engineers that can be tapped for R&D BPO.

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