Johara Mae V. de Rama

Nursing Economics

Module 1: The Basic Concept of Economics and Nursing Economics

Guide questions:

1. How can you describe the economic condition of the country during the presidency of

Ferdinand Marcos, Corazon Aquino, Fidel Ramos, Gloria Arroyo, Joseph Estrada and

Benigno Simeon Aquino II? What are the salient effects of the economic conditions to

the practice of nursing profession?

THE FIRST MARCOS TERM (1965 – 1969)

In his first term Marcos tried to stabilize the financial position of the

government through an intensified tax collection. He also borrowed heavily

from international financing institutions to support a large-scale infrastructure

works projects were built. He improved agricultural production to make the

country self-sufficient in food, especially in rice.

Marcos also tried to strengthen the foreign relations of the

Philippines. He hosted a seven-nation summit conference on the crisis in

South Vietnam in October, 1966. In support for the U.S. military efforts in

South Vietnam, he agreed to send Filipino troops to that war zone.

THE SECOND TERM OF MARCOS (1969 – 1972)

To hasten the economic development, President Marcos implemented a number of economic

programs. These programs helped the country to enjoy the period of economic growth I the mid-1970's up

to the early 1980's.

The farmers were given technical and financial aid and other incentives such as "price support".

With the incentives given to the farmers, the country's agricultural sector grew. As a result, the Philippines

became self-sufficient in rice in 1976 and even became a rice exporter.

To help finance a number of economic development projects such as soil exploration, the

establishment of geothermal power plants, the Bataan Nuclear Plant, hydro-electric dams, the construction

of more roads, bridges, irrigation systems and other expensive infrastructure projects, the government

engaged in foreign borrowings.

Foreign capital was invited to invest in certain industrial projects. They were offered incentives

including tax exemption privileges and the privilege of bringing out their profits in foreign currencies. One of

the most important economic programs in the 1980's was the Kilusang Kabuhayan at Kaunlaran (KKK)..

The Gross National Product of the country (GNP) rose from P55 billion in 1972 to P193 billion in 1980.

Another major contributor to the economic growth of the country was the tourism industry. The

number of tourists visiting the Philippine rose to one million by 1980 from less than 200,000 in previous

years. A big portion of the tourist group was composed of Filipino balikbayans under the Ministry of

Tourism's Balikbayan Program which was launched in 1973.

Another major source of economic growth of the country was the remittances of overseas Filipino

workers. Thousands of Filipino workers found employment in the Middle East and in Singapore and

Hongkong. These overseas Filipino workers not only helped ease the country's unemployment problem but

also earned much-needed foreign exchange for the Philippines.

CORAZON AQUINO

In 1986 Corazon Aquino focused her presidential

campaign on the misdeeds of Marcos and his cronies. The

economic correctives that she proposed emphasized a central role

for private enterprise and the moral imperative of reaching out to

the poor and meeting their needs. Reducing unemployment,

encouraging small-scale enterprise, and developing the neglected

rural areas were the themes.

Aquino entered the presidency with a mandate to

undertake a new direction in economic policy. It soon became

clear that the plight of the people had been subordinated largely to the requirements of private enterprise

and the world economy. As the president noted in her state-of- the-nation address in June 1989, the poor

had not benefited from the economic recovery that had taken place since 1986. The gap between the rich

and poor had widened, and the proportion of malnourished preschool children had grown.

The most pressing problem in the Philippine international political economy at the time Aquino took

office was the country's US$28 billion external debt. It was also one of the most vexatious issues in her

administration. Large debt-service payments and moderate growth (on the order of 6.5 percent per year)

were thought to be incompatible. A two-year moratorium on debt servicing and selective repudiation of

loans where fraud or corruption could be shown were recommended. Business-oriented groups and their

representatives in the president's cabinet vehemently objected to taking unilateral action on the debt,

arguing that it was essential that the Philippines not break with its major creditors in the international

community. Ultimately, the president rejected repudiation; the Philippines would honor all its debts.

Economic successes, however, generated their own problems. The trade deficit rose rapidly, as

both consumers and investors attempted to regain what had been lost in the depressed atmosphere of the

1983-85 period. Although debt-service payments on external debt were declining as a proportion of the

country's exports, they remained above 25 percent. And the government budget deficit ballooned, hitting

5.2 percent of GNP in 1990.

The Aquino administration appeared to be unable to work with the Congress to enact an economic

package to overcome the country's economic difficulties.

FIDEL RAMOS

The Philippines was recovering from economical difficulties that arose from

the lack of foreign investors during the Aquino administration. Because of the

Coup attempts, foreign investors felt it was risky for them to invest in the

Philippines, thus, economy wasn’t booming. (Aquino Administration) During

the Ramos administration however, the Philippines took pleasure from

economic growth and stability. Though the Asian Financial Crisis of 1997

struck, the Philippines wasn’t as badly affected as other Asian Nations.

During this crisis, the Philippine Peso devaluated and dropped because of a

fiscal deficit. The people of the Phlippines needed to be empowered to think economically for the

betterment of the economy. Also, prior to Ramos’ policies and laws, the Philippines was experiencing

frequent brownouts lasting up to twelve hours due to old and ancient power plants.

JOSEPH ESTRADA

In 1998, the Philippine economy deteriorated again as a result of spill

over from the Asian financial crisis, although not as much as other Asian

nations, and a wave of natural disasters also dragged the economy down.

Growth fell to about -0.6% in 1998 from 5.2% in 1997, but recovered to 3.4%

by 1999 and to 4.0% by 2000. The inflation rate came down from 11 percent in

January 1999 to just a little over 3 percent by November of the same year. This

was in part due to the successful agricultural program Agrikulturang Maka-

MASA, through which it achieved an output growth of 6 percent, a record high

at the time. The peso was 44 to the dollar in 1998 and recovered by 38 to a

dollar the following year. The interest rates were 28% in 1998 and came down

to 14% by 1999. President Joseph Estrada attempted to resist protectionist measures, and efforts to

continue the reforms begun by the Ramos administration made significant progress.

He also established a socio-economic program called "Angat-Pinoy 2004" pointed out five things for the

economy:

The Gross National Product (GNP)to grow from 0.1 per cent in 1998 to 6-7 per cent in 2004.

Unemployment to decline from 10.1 per cent in 1998 to 6.7-8 per cent.

Inflation to slow down from 9.8 per cent in 1998 to 4-5 per cent.

The national government’s fiscal balance to improve from a deficit of 1.8 per cent of GNP in 1998 to a

surplus of 0.7 per cent of GNP.

Finally, export growth to remain strong at 14.5-15.1 per cent.

Alongside these objectives, the plan calls for nurturing a "responsive citizenry" and creating an environment

conducive to a better life for all.

However, a major bank failure in April 2000 and the impeachment and subsequent departure of

President Estrada in the beginning of 2001 led to another slower growth.

GLORIA ARROYO

The Arroyo administration will be remembered for lost ground on

important measures of development and progress in the face of economic

growth. Filipinos are worse off today than when President Gloria

Macapagal-Arroyo came to power nine years ago.

Unemployment is at record sustained highs, household real

income declined, poverty increased, inequality worsened, and Filipinos

were forced abroad in unprecedented numbers. Prospects have been

undermined by the steady erosion of domestic manufacturing and

agriculture, a rapidly deepening fiscal crisis, and defeatist international

trade and investment policies. In contrast, the profits of the country’s biggest corporations and the wealth of

its richest families have continued to improve substantially.

This disturbing divergence between the fortunes of a few and the welfare of the many is the most

troubling legacy that the Arroyo presidency leaves behind– and among the greatest challenges that the

incoming Aquino administration has to confront to deliver any real change.

The Arroyo administration plays up the economic growth over its term– touted as the best in over

30 years– as the gold standard of its performance. Official reported growth in gross domestic product

(GDP) during the Arroyo administration (2001-2009) averaged 4.5% annually compared to 3.9% under

Aquino (1986-1991), 3.8% under Ramos (1992-1997) and 2.4% under Estrada (1998-2000). The economy

expanded by 47.2% in real terms since 2001. The results however speak for themselves.

BENIGNO AQUINO III

Resilient and Fast-Growing Economy

The Philippines, one of the few countries that avoided a recession in 2009, grew 6.6% in 2012, the highest in Southeast Asia, at an average of 6% the last three years. Healthy economic growth is expected to be sustained with growth rates of 7-10% possible in the next 10 years. Better conditions in the global economy and economic outperformance in the Philippines’ key export markets in North Asia, which make up 36% of total exports, and ASEAN, at

16% of total exports, should pave the way for sustainable growth performance. The structure of the Philippine economy is similar to those of advanced economies, with consumption accounting for more than 70% of gross domestic product, a structure that investment-led economies are trying to emulate.

The Philippines’ recent investment grade status is a resounding vote of confidence affirming the Philippines’ strong economic and fiscal gains.

Salient effects of the economic conditions to the practice of nursing profession

Marcos invited nurses to be an integral part of the New Society's social reform efforts. In his opening address at the 1972 PNA convention, he acknowledged nurses’ economic duress and sought their patience while he tried to increase their salary levels.45 Concerned about ―the piracy of trained nurses‖ abroad and the waning supply of nurses in the country's rural communities, however, Marcos also called for increased nurse production and the implementation of a mandatory four-month service rotation in a rural area as a prerequisite to licensure.

Unlike Castrence and Castillejos, however, Marcos hailed nursing as the Philippines’ new ―international specialty‖ and nurse migrants as heroes whose remittance contributed to nation building, provided they adhere to four basic principles: maintaining their Filipino identity, returning home with new ideas and practices, participating in the dollar repatriation program, and joining the Balikbayan project, a public relations campaign designed to disseminate positive information about the Philippines around the globe.46 ―As members of the New Society,‖ Marcos told conference attendees, ―your role is not only to alleviate the suffering to the despondent, but to help build a strong society, strong men, strong women, and strong children.‖

Historical examinations of state–profession relationships can provide an instructive lens through which to view nurses’ migratory patterns and the local consequences and global implications of these patterns. Particularly relevant are the economic, social, and political factors that predicate nurse migration from developing to developed nations and the roles of local and global stakeholders in influencing migratory patterns and their consequences for nurses and the public in their care. The Philippines nurse case study, as a historical ―constant‖ in the phenomenon of nurse migration, illuminates the complex and shifting nature of nurses’ global mobility and how local ideologies and economic conditions, aggressive international recruitment, and persistent shortages of nurses in developed nations converged to create the nurse pipeline that prevails to date.

Although not generalizable to all countries exporting nurses abroad, the roots of nurse industrialization in the Philippines foreground a broader understanding of the role of the state in the management or mismanagement of nurse migration, the production of nurses for local and global economies, the assurance of a quality product for the marketplace, and the public health consequences that may occur. As other countries market their nurses for export abroad, they would be wise to heed the lessons learned.

2. Mindful of the functions of an economic system, what is the impact of money to the

product or service being produced?

Functions of an Economic System and the role of Money in Economy

Economic systems everywhere may perform similar functions. These functions may be

traditional or non-traditional. In whatever type of economy it is Money serves as an index of economic

growth. The various indicators of growth are national income, per capita income and economic

welfare. These are calculated and measured in money terms. Changes in the value of money or

prices also reflect the growth of an economy. Fall in the value of money (or rise in prices) means

that the economy is not progressing in real terms. On the other hand, a continuous rise in the value of

money (or fall in prices) reflects retardation of the economy. Somewhat stable prices imply a growing

economy. Thus money is an index of economic growth.

Money helps in solving the central problems of an economy; what to produce, for whom to

produce, how to produce and in what quantities. This is because on the basis of its functions money

facilitates the flow of goods and services among consumers, producers and the government.

Money is of vital importance to the operation of the national and international economy. Money

plays an important role in the daily life of a person whether he is a consumer, a producer, a

businessman, an academician, a politician or an administrator.

An individual need not be an economics to be actually aware that money plays an important

role in modern life; he need think only of his own experience. We study below the importance of

money in a modern economy.

Money is of vital importance to an economy due to its static and dynamic roles. Money serves

its functions and circles around the functions of economy. Its static role emerges from its static or

traditional functions. In its dynamic role, money plays an important part in the life of every citizen and

in the economic system as a whole.

Traditional Functions of Every Economic System

The traditional functions of every economic system include the following:

What not to produce. In deciding on what goods to produce, an economic system also decides in

what not to produce. For example, if the system wants to provide roads and recreational facilities, it

may have problems since it may lack enough resources to do so at the same time. It will be

necessary that it chooses between the two. It may for instance have to choose roads. An economic

system can consider a wide variety of goods than the other which is poorly endowed.

What method to use. Economic systems also function to decide on the particular technique to be

used in production. Here, the economic system decides what method of factor combination to be

employed in order to maximize the use of the scarce resources, by minimizing cost and increasing

productivity. The decision may involve whether to employ labor-intensive or capital-intensive methods

of production. In a free exchange economy, its choice will depend on relative factor endowment and

factor prices. In developing countries for instance, labor is more abundant and cheap. A labor-

intensive method may be preferred.

For whom to produce. Another problem the economic system is faced with is for whom to produce.

To get maximum use from the scarce resources, the commodity must be produced in an area where it

would be demanded and where costs will be minimized. The production unit may be sited near the

source of raw material or the market center depending on the nature of the product.

How to distribute the goods and services produced. In here we see that through an economic

system the humans and natural resources are distributed among different occupations according to

the economic needs of the society. Thus age group of working class must be determined in

accordance with composition of population. The people talent and aptitude should determine the

suitability of their profession to maximize utilization of resources. Distribution of resources also shows

cover the aspect of aggregate savings and aggregate investment on different sectors of the economy

with a view to achieve full employment in the short period possible.

Non-Traditional Functions of Every Economic System

Economists have realized the importance of economic growth and the attainment of full employment,

if the system must achieve the best use of its scarce resources. Attainments of full employment and high

economic growth have become the non-traditional functions.

Enduring economic growth. Economic systems must ensure economic growth. Owing to scarcity of

resources, the society must know whether its capacity to produce goods and services is expanding or

decreasing. Some major ways to promote economic growth include ensuring adequate rate of growth

of per capita income, improvement in technology through the adoption of superior techniques of

production, and better and more extensive education and training of the labor force and others.

Ensuring full employment. Society must also ensure full employment. It is the task of economic

systems to ensure that resources are not idle or unemployed, since resources are scarce. In the

market economy, full employment is achieved by stimulating demand.

In its static role, the importance of money lies in removing the difficulties of barter in the following

ways:

By serving as a medium of exchange, money removes the need for double coincidence of wants

and the inconveniences and difficulties associated with barter. The introduction of money as a

medium of exchange breaks up the single transactions of barter into separate transactions of sales

and purchases, thereby eliminating the double coincidence of wants. Instead о exchanging

commodities directly with commodities i.e. С ↔ С, commodities as С → M → C, where С refers

to commodities and M to money.

By acting as a unit of account, money becomes common measure of value. The use оf money as a

standard of value eliminates the necessity of quoting the price of apples in terms of oranges, the

price of oranges in terms of nuts, and so on. Money is the standard of measuring value and value

expressed in money is price. The price of different commodities is expressed in terms of so many

units of dollars, rupees, pounds, etc. depending on the nature of monetary unit in a country. The

measurement of the values of goods and services in the monetary unit facilitates the problem of

measuring the exchange values of goods in the market.

Money acts as a standard of deferred payments. Under barter, it was easy to take loans in goats or

grains but difficult to make repayments in such perishable articles in the future. Money has

simplified both taking and repayment of loans because the unit of account is durable. It also

overcomes the difficulty of indivisibility of commodities.

By acting as a store of value, money removes the problem of storing of commodities under barter.

Money being the most liquid asset can be kept for long periods without deterioration or wastage.

Under barter, it was difficult to transfer value in the form of animals, grains, etc. from one place to

another. Money removes this difficulty of barter by facilitating the transfer of value from one place

to another. A person can transfer his money through draft, bill of exchange, etc. and his assets by

selling them for cash at one place and buying them at another place.

In its dynamic role, money plays an important part in the daily life of a person whether he is a

consumer, a producer, a businessman, an academician, a politician or an administrator. Besides, it

influences the economy in a number of ways.

To the Consumer:

Money possesses much significance for the consumer. The consumer receives his income

in the form of money rather than in goods and services. With money in hands, he can get any

commodity and service he likes, in whatever equalizer of marginal utilities for the consumer. The

main aim of a consumer is to maximize his satisfaction by spending his limited income on different

goods which he wants to purchase.

Since prices of goods indicate their marginal utilities and are expressed in money, money

helps in equalizing the marginal utilities of goods. This is done by substituting goods with higher

utilities for others having lower utilities. Thus money enables a consumer to make a rational

distribution of his income on various commodities of his choice.

To the Producer:

Money is of equal importance to the producer. He keeps his account of the values of inputs

and outputs in money. The raw materials purchased, the wages paid to workers, the capital

borrowed, the rent paid, the expenses on advertisements, etc. are all expenses of production which

are entered in his account books. The sale of products in money terms are his sale proceeds.

The difference between the two gives him profit. Thus a producer easily calculates not only

his costs of production and receipts but also profit with the help of money. Further, money helps in

the general flow of goods and services from agricultural, industrial and tertiary sectors of the

economy because all these activities are performed in terms of money.

In Specialization and Divisions of Labor:

Money plays an important role in large scale specialization and division of labor in modern

production. Money helps the capitalist today wages to a large number of worker engaged in

specialized jobs on the basis of division of labor. Each worker is paid money wages in accordance

with the nature of work done by him. Thus money facilitates specialization and division of labor in

modern production.

These, in turn, help in the growth of industries. It is, in fact, through money that production

on a large scale is possible. All inputs like raw materials, labor, machinery, etc. are purchased with

money and all output is sold in exchange for money. It was rightly pointed out by Prof. Pigou, ―In the

modern world, industry is closely enfolded in a garment of money.‖

As the Basis of Credit:

The entire modern business is based on credit and credit is based on money. All monetary

transactions consist of cheques, drafts, bills of exchange etc. These are credit instruments which are

not money. It is the bank deposits that are money. Banks issue such credit instruments and create

credit. Credit creation, in turn, plays a major role in transferring funds from depositors to investors.

Thus credit expands investment on the basis of public saving lying in bank deposits and helps in

maintaining a circular flow of income within the economy.

As a Means to capital Formation:

By transforming savings into investment, money acts as a means to capital formation. Money

is a liquid asset which can be stored and storing of money implies savings, and savings are kept in

bank deposits to earn interest on them. Banks, in turn, lend these savings to businessmen for

investment in capital equipment, buying of raw materials, labour, etc. from different sources and

places. This makes capital mobile and leads to capital formation and economic growth.

In the Distribution and Calculation of Income:

The rewards to the various factors of production in a modern economy are paid in money. A

worker gets his wages, capitalist his interest, a landlord his rent, and an entrepreneur his profit. But all

are paid their rewards in money. An organiser is able to calculate the marginal productivity of each

factor in terms of money and pay it accordingly. For this, he equalises the marginal productivity of

each factor with its price. Its price is, in fact, its marginal productivity expressed in terms of money. As

payments are made to various factors of production in money, the calculation of national income

becomes easy.

In National and International Trade:

Money facilitates both national and international trade. The use of money as a medium of

exchange, as a store of value and as a transfer of value has made it possible to sell commodities not

only within a country but also internationally. To facilitate trade, money has helped in establishing

money and capital markets. There are banks, financial institutions, stock exchanges, produce

exchanges, international financial institutions, etc. which operate on the basis of the money economy

and they help in both national and international trade.

Further, trade relations among different countries have led to international cooperation. As a

result, the developed countries have been helping the growth of underdeveloped countries by giving

those loans and technical assistance. This has been made possible because the value of foreign aid

received and its repayment by the developing countries is measured in money.

To the Government:

Money is of immense importance to the government. Money facilitates the buying and

collection of taxes, fines, fees and prices of services rendered by the government to the people. It

simplifies the floating and management of public debt and government expenditure on development

and non-developmental activities. It would be impossible for modern governments to carry on their

functions without the use of money. Not only this, modern governments are welfare states which aim

at improving the standard of living of the people by removing poverty, inequalities and unemployment,

and achieving growth with stability. Money helps in achieving these goals of economic policy through

its various instruments

To the Society:

Money confers many social advantages. It is on the basis of money that the superstructure of

credit is built in the society which simplifies consumption, production, exchange and distribution. It

promotes national unity when people use the same currency in every nook and corner of the country. It

acts as a lubricant for the social life of the people, and oils the wheels of material progress. Money is at

the back of social prestige and political power.

3. Prepare a matrix on how the general economic resources of the country being utilized?

Explain the matrix.

Briefly, a social accounting matrix or SAM is an economy-wide data framework that

presents transactions and transfers among economic agents in the real economy. Broadly, it is the

matrix representation of the sequence of accounts of the system of national accounts. A financial

social accounting matrix (FSAM) focuses more on the financial sector and financial transactions of

the institutions. The elaboration of the financial accounts would allow for a more extensive analysis

of financial interrelationships among the different institutions of the economy and how these would,

in turn, impact the real sector.

The System of National Accounts (SNA) presents the economic activities taking place

within an economy and the interaction between the different economic agents in a comprehensive,

consistent and integrated set of accounts. Basic to the SNA is the identity that ―goods and services

produced in the economy must be consumed, used for capital production or exported while all

goods and services used within the economy must be produced in the economy or imported.‖ This

identity is explained in the SNA by the sequence of accounts that traces activities from production

to the generation of income and to the uses of these resources by the various economic

institutions. The sequence of accounts is usually represented in the traditional double entry

accounting format (or ―T-accounts‖). For analytical purposes, the sequence of accounts may be

represented as a square matrix—a social accounting matrix (SAM). Certain flows or accounts of

the SAM may be extended or disaggregated depending on focus of the study and, more often it is

the household sector that is elaborated. The present study focuses on the financial sector and the

financial transactions of institutions, and is, therefore, a financial SAM or FSAM.

The concept of a social accounting matrix, focusing on the real sector, may be represented

by the traditional circular flow model of the economy where there are producers, households,

government sector and the rest of the world (illustrated in Figure 1)

Productive activities make use of intermediate goods and factors of production obtained

from households through the factor markets. The goods produced are sold in the domestic

commodity markets, along with imported goods, or in the international market as export goods.

Goods are bought by households, government sector, investors and the rest of the world.

Households pay for commodities that allow for producers to generate value-added to pay for inputs

of production that will serve as income to households or taxes to the government sector.

The ―gross savings‖ of households, firms and government sectors—the difference between

income and expenditures—is the amount available for investments. This part (shown as the

enclosed part in the chart) is further elaborated in a financial SAM. Investments could be in the

form of physical investments or financial (portfolio) investments, and sources to fund investments

could also come, in addition to savings, from loans, bank deposits and other financial instruments.

To further add to the conceptual framework, Table 1 presents the condensed Philippine

financial SAM. Each cell represents a transaction among economic agents: corporations,

government, households and the rest of the world (ROW).The row entries refer to incoming flows

or resources and the column entries refer to outgoing flows or uses of funds. Thus, each cell is a

flow of funds from a column account to a row account. For example, consumption spending is a

flow of funds from households to the commodities markets. As an accounting framework, total

sources of funds (incoming flows) equals total uses (outgoing flows), or the corresponding row and

column sums must be equal; for instance, total household income (row sum) should equal total

household spending (column sum).

Mathematically, if ( is the index of rows and ( , the index of columns; is the expenditure of

account that becomes the income or receipt for account .

The equation (ensures the internal consistency of the

SAM.

Columns 7-9 (and corresponding rows) of Table 1 provide details on the various forms that

savings and investment could take with the capital and financial accounts. This corresponds to the

enclosed lower right portion in Figure 1. The relationship is represented

by that is, for the entire economy, a surplus in net savings can be used to accumulate (net)

financial assets and finance deficits. Also, savings-investment balances are accommodated by

either current accounts or capital accounts.

Thus, the FSAM, as a general equilibrium data framework, is a useful analytical basis for

constructing models that will examine transmission mechanisms between the real and financial

sectors of the economy.

Budget by Sector

The bulk of the budget will once again be devoted to Social Services—which will receive 34.8

percent of the National Budget—to continue the Administration’s focused campaign on poverty alleviation.

Economic Services will claim the second highest sectoral allocation, with 25.5 percent devoted to it for

2013.

Budget by Expense Class

Under the 2013 National Budget, Capital Outlays (CO) will increase by 15.7 percent to P380 billion

from this year’s level of P328.3 billion. Of this amount, Infrastructure and Other Capital Outlays will increase

by 17.5 percent to P296.7 billion from P252.4 billion in 2012. The increases will help boost the momentum

currently driving the transport, tourism and agriculture industries.

Meanwhile, Current Operating Expenditures (COE) account for P1.6 trillion of this Budget: an

increase of 9.2 percent from the current year’s P1.465 trillion, which accounts for the jump in Personal

Services (by 8.0 percent to P641.3 billion) to support the full implementation of the Salary Standardization

Law III , among others. Meanwhile, Maintenance and Other Operating Expenditures (MOOE) are up by

17.5 percent to P313.3 billion due to the expansion of social and economic programs. Interest Payments

are also up by 0.2 percent to P333.9 billion this year.

The budget for GOCCs posted a significant increase of 103.1 percent, bringing the total budget to

P44.3 billion. Of this, subsidies increased by more than 114.3 percent to P42.3 billion.

The LGU shares in the National Budget also rose by 9.7 percent to P318.1 billion due to improved

revenue collections in 2010, the base year for computing the Internal Revenue Allotment (IRA) of LGUs for

2013.

Budget by Region

The regional budgetary allocations increased by 28.5 percent to P990.4 billion, or 49.4 percent of

the total proposed Budget for 2013. In comparison, the P770.5 billion allocation for the regions in 2011 was

only 42.4 percent of the budget. In particular, budgetary allocations for Visayas and Mindanao grew by 21.8

percent and 22.1 percent year-on-year, respectively.

Budget by Department and Special Purpose fund

DEPARTMENTS

Congress of the Philippines

Office of the President

Office of the Vice-President

Department of Agrarian Reform

Department of Agriculture

Department of Budget and Management

Department of Education

State Universities and Colleges

Department of Energy

Department of Environment and Natural Resources

Department of Finance

Department of Foreign Affairs

Department of Health

Department of Interior and Local Government

Department of Justice

Department of Labor and Employment

Department of National Defense

Department of Public Works and Highways

Department of Science and Technology

Department of Social Welfare and Development

Department of Tourism

Department of Trade and Industry

Department of Transportation and Communications

National Economic Development Authority

Presidential Communications Operations Office

Other Executive Offices

Autonomous Region in Muslim Mindanao

Joint Legislative-Executive Councils

The Judiciary

Civil Service Commission

Commission on Audit

Commission on Elections

Office of the Ombudsman

Commission on Human Rights

Special Purpose Funds

Budgetary Support to Government Corporations

(BSGC)

Allocations to Local Government Units

Calamity Fund

Contingent Fund

Department of Education – School Building Program

P1,025 B

P9.8 B

P2.7 B

P420.5 M

P21.4 B

P63.7 B

P998.2 M

P249.2 B

P34.9 B

P4.3 B

P23.6 B

P30.8 B

P11.7 B

P40.9 B

P91.7 B

P10.8 B

P8 B

P80.6 B

P165.5 B

P10 B

P56.2 B

P2.9 B

P2.8 B

P32.7 B

P5 B

P1.3 B

P10.9 B

P13.9 B

P2.1 M

P17.7 B

P992.9 M

P8.1 B

P8.4 B

P1.7 B

P318.9 M

P980.7 B

P70.8 B

P319.8 B

P7.5 B

P1 B

P1 B

1 B

E-Government Fund

international Commitments Fund

Miscellaneous Personnel Benefits Fund (MPBF)

Pension and Gratuity Fund (PGF)

Priority Social and Economic Projects Fund (PSEPF)1

Priority Development Assistance Fund

Tax Expenditures Fund

Debt Service Fund-Interest Payment

P2.6 B

P70.1 B

P98.7 B

P22.4 B

P24.9 B

P26.9 B

P333.9 B

4. What are the specific contributions of economics to health policy of the country?

Better health is central to human happiness and well-being. It also makes an important contribution to economic progress, as healthy populations live longer, are more productive, and save more.

Many factors influence health status and a country's ability to provide quality health services for its people. Ministries of health are important actors, but so are other government departments, donor organizations, civil society groups and communities themselves. For example: investments in roads can improve access to health services; inflation targets can constrain health spending; and civil service reform can create opportunities - or limits - to hiring more health workers.

Economic downturns, whether or not brought by the global economic crisis, can adversely

affect the country’s health sector in three painful ways.

1. The resulting rise in unemployment and poverty increases households’ vulnerability to health shocks and is likely to lower their overall health status. Without savings and adequate social safeguards, unemployment and impoverishment following the economic slowdown results in lower food intake and poorer housing and sanitation conditions. For instance, the Social Weather Stations Survey in November-December 2008 found higher hunger among families of the unemployed (31.4 percent) compared to those of the employed. In the medium term, unemployment leads to sicker family members, especially the newly laid-off, their children, and the elderly. Little research has been done on this topic in the Philippines, but globally Kasl and Jones (2007) have reviewed the literature and concluded the following:

Unemployment has an adverse impact on health habits and behavioral risk factors of the laid-off worker, particularly on alcohol consumption. However, the effect of unemployment on cigarette smoking, physical exercise, and body weight is non-conclusive because of selection biases. Unemployment has a clear negative effect on mental health especially on symptoms of depression. Interestingly, becoming reemployed is also associated with a decrease in symptoms of depression. Job insecurity, downsizing, and underemployment also exact their toll on the affected worker. Loss of job security negatively affects self-reported health and psychological symptoms, particularly as this becomes a chronic situation of job insecurity. Studies of downsizing suggest broad negative effects on health and well-being, especially musculo-skeletal symptoms. Downsizing leads to profound changes in the work setting, which increase some of the work stressors and reduce social buffers.

Underemployed people exhibit poorer health and well-being compared to those who are adequately employed. Studies on lower self-esteem of underemployed workers have been hypothesized, but the results are not conclusive. The high rate of underemployment in the Philippines, especially in agricultural areas, should flag this health issue.

To the extent that the economic crisis results in more temporary (rather than permanent)

employment, then the crisis also tends to worsen the country’s overall health status. Review of developing countries’ experiences (Benach, Muntaner, and Santana, 2007) found that temporary employees fare worse in health than permanent employees; for instance, they suffer from a higher risk of occupational injuries. Temporary employees are exposed to more hazardous working conditions, work more often in painful and tiring positions, are more exposed to intense noise, perform more frequent repetitive movements, and have less freedom to choose when to take personal leave. More careful analytic techniques are, however, needed to sort out implicit statistical biases in these studies.

The acquisition of chronic conditions as a result of being laid off is particularly important for

health policy because of the high cost of managing these frequently irreversible diseases. A new U.S. study from the Harvard School of Public Health (Rabin, 2009) shows that workers who lost a job through no fault of their own were twice as likely to report developing a new ailment like high blood pressure, diabetes, or heart disease over the next year and a half, compared to people who were continuously employed. The risk was just as high for those who found new jobs quickly. This implies that for laidoff workers, chronic conditions are quickly acquired, but not as easily shed off, even though one finds employment quickly again.

Unemployment and underemployment also tend to generate adverse social pathologies at the

household level such as family dysfunctions including violence, family breakups, vagrancy, crime, and various forms of anti-social coping behavior among some of those affected by the economic crisis. These Philippine social phenomena, however, have rarely been empirically studied, despite a plethora of news accounts and informal anecdotes.

2. The resulting higher unemployment and poverty also reduces the ability of households to meet

the financing of their health service needs. As more workers get unemployed, they and their household members lose their employmentassociated health insurance coverage (whether PhilHealth or company-provided) or access to employer-provided workplace health services. Both leads to increased out-of-pocket (OOP) expenditures for health, which without savings, transfers, and other support from relatives or friends, or other forms of social safeguards, further increase household vulnerability. At worst, unemployed or underemployed workers and their families would delay or forego care-seeking in health facilities altogether, which has its own attendant problems.

3. Unless appropriate countercyclical fiscal measures are adopted, the economic slowdown reduces the ability of government to provide social services which are much-needed by an increasing number of vulnerable households. Domestic economic slowdown reduces tax revenues as reflected in the anemic Philippine tax collection for the first half of 2009. This could force the government to breach its budget deficit ceiling. Given the current leadership’s aversion to deficit financing, government financial support for social services may well remain stationary, if not decline.

Fortunately, over the past few years and in the run-up to the economic crisis, the health sector has enjoyed the generosity of the National Government: the DOH budget dramatically increased from around PhP7.0 billion in previous fiscal years to PhP9.5 billion in FY 06, to PhP11.4 billion in FY 07, PhP 19.0 billion in FY 08, and PhP 23.7 billion in FY 09. These large allocations could very well cushion the health sector from the expected higher demand for health services occasioned by the economic downturn.

Wide range of social safety net programs and social legislation exists with the potential

of easing the impact of the crisis, but their reach is limited and they are weakly enforced or coordinated

1. Social safety nets, though wide-ranging and varied, have limited scope and are often

uncoordinated. Although the Philippines is a middle-income economy, its social services including critical public assistance and social insurance programs, remain unable to provide adequate support to those who need it. While the country’s health and social protection programs are broad (see Table 1), their population coverage is far from universal and benefits are inadequate principally because of poor and fragmented funding.

2. A recent assessment (Manasan and Cuenca, 2007) of two social assistance schemes, the Food for School Program and the Tindahan Natin Program, show the continuing challenges of reaching the poorest municipalities due to the lack of reliable poverty measures, especially at the local level. As a result, considerable leakage and undercoverage of benefits ensue.

a. The Food for School Program (FSP) is a conditional food transfer program which provides a kilo of rice to families suffering from severe hunger through their children in day-care centers/preschools of the Department of Social Welfare and Development (DSWD) and Grade 1 schools of the Department of Education (DepEd).

b. The Tindahan Natin Program (TNP) is a targeted food price subsidy program which lowers the price of food items (rice and noodles) to eligible households in TNP outlets, effectively increasing the purchasing power of beneficiaries.

3. Social insurance programs have limited coverage and benefits. The Government Service Insurance System (GSIS) and the Social Security System (SSS) for private-sector employees, are one of the oldest social insurance programs in the region.

4. The mandatory Philippine health insurance program (PhilHealth) boasts of covering 81 percent of the (2005) population, but its benefits of financial protection is small.

5. Local government programs to reduce vulnerability, such as the LGU coverage of medically indigent under PhilHealth, though well-intended, are wracked with operational problems.

6. Labor standards and regulations, though comprehensive, are weakly enforced, possibly

lowering the health status of workers.

7. The country lacks a comprehensive disaster response program. About 20 typhoons visit the Philippines each year, causing flooding, landslides, and other storm-related disasters. The archipelago is also part of the ―Ring of Fire‖ volcanic and earthquake zone. Despite the country being located in a disaster-prone area, the reach of disaster relief programs is woefully inadequate and disaster response efforts are often uncoordinated.

5. With all the determinants of health in mind, what do you think is the one which greatly affect

the health status of our countrymen?

Many factors combine together to affect the health of individuals and communities. Whether people are healthy or not, is determined by their circumstances and environment. To a large extent, factors such as where we live, the state of our environment, genetics, our income and education level, and our relationships with friends and family all have considerable impacts on health, whereas the more commonly considered factors such as access and use of health care services often have less of an impact. The determinants of health include:

the social and economic environment, the physical environment, and the person’s individual characteristics and behaviours. The context of people’s lives determine their health, and so blaming individuals for having poor

health or crediting them for good health is inappropriate. Individuals are unlikely to be able to directly control many of the determinants of health. These determinants—or things that make people healthy or not—include the above factors, and many others:

Income and social status - higher income and social status are linked to better health. The

greater the gap between the richest and poorest people, the greater the differences in health. Education – low education levels are linked with poor health, more stress and lower self-

confidence. Physical environment – safe water and clean air, healthy workplaces, safe houses,

communities and roads all contribute to good health. Employment and working conditions – people in employment are healthier, particularly those who have more control over their working conditions

Social support networks – greater support from families, friends and communities is linked to better health. Culture - customs and traditions, and the beliefs of the family and community all affect health.

Genetics - inheritance plays a part in determining lifespan, healthiness and the likelihood of developing certain illnesses. Personal behaviour and coping skills – balanced eating, keeping active, smoking, drinking, and how we deal with life’s stresses and challenges all affect health.

Health services - access and use of services that prevent and treat disease influences health Gender - Men and women suffer from different types of diseases at different ages.

Personally, I think, of all the determinants stated above, it is Individual behavior that mainly affect the

health of our countrymen here in the Philippines. It plays a great role in health outcomes. For example, if an

individual quits smoking, his or her risk of developing heart disease is greatly reduced.

Many public health and health care interventions focus on changing individual behaviors such as

substance abuse, diet, and physical activity. Positive changes in individual behavior can reduce the rates of

chronic disease in this country.

Examples of individual behavior determinants of health include:

Diet

Physical activity

Alcohol, cigarette, and other drug use

Hand washing

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