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Vietnam and Private Enterprise case study

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Singapores state run enterprises and economic development

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Lesson 9

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Lesson 8

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Lesson 8

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Lesson 7

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Lesson 6

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Lesson 6

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A film on a program to alleviate poverty in the Philippines...see how this relates/coincides with what we have studied about Grameen bank etc.

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A film on a program to alleviate poverty in the Philippines...see how this relates/coincides with what we have studied about Grameen bank etc.

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Malaya Kang Mangarap - Conditional Cash Transfer in the Philippines

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A film commissioned by the World Bank exploring the history and current situation of the Conditional Cash Transfer Program in the Philippines. Director/DOP : Francisco Guerrero Producer: Clara Balaguer Writer: Meggy de Guzman Camera: Luis Liwanag Camera: Nana Buxani Prod Assts: Jake Espedido and Von Simbul Editor: Quiapost Manila

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Lesson 5

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The case to be analyzed is "Making Microfinance Work for the Poor: The Grameen Bank of Bangladesh" on page 763 in the text Economic Development E L E V E N T H  E D by Michael P. Todaro and Stephen C. Smith

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Lesson 4

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A history and short explanation of the Grameen bank which advocates the microfinancing "movement"

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The origin of Grameen Bank can be traced back to 1976 when Professor Muhammad Yunus, Head of the Rural Economics Program at the University of Chittagong, launched an action research project to examine the possibility of designing a credit delivery system to provide banking services targeted at the rural poor. The Grameen Bank Project (Grameen means "rural" or "village" in Bangla language) came into operation with the following objectives:

extend banking facilities to poor men and women;

eliminate the exploitation of the poor by money lenders;

create opportunities for self-employment for the vast multitude of unemployed people in rural Bangladesh;

bring the disadvantaged, mostly the women from the poorest households, within the fold of an organizational format which they can understand and manage by themselves; and

reverse the age-old vicious circle of "low income, low saving & low investment", into virtuous circle of "low income, injection of credit, investment, more income, more savings, more investment, more income".

The action research demonstrated its strength in Jobra (a village adjacent to Chittagong University) and some of the neighboring villages during 1976-1979. With the sponsorship of the central bank of the country and support of the nationalized commercial banks, the project was extended to Tangail district (a district north of Dhaka, the capital city of Bangladesh) in 1979. With the success in Tangail, the project was extended to several other districts in the country. In October 1983, the Grameen Bank Project was transformed into an independent bank by government legislation. Today Grameen Bank is owned by the rural poor whom it serves. Borrowers of the Bank own 90% of its shares, while the remaining 10% is owned by the government.

Muhammad Yunus earned a doctorate in economics from Vanderbilt University in the United States. He was inspired during the Bangladesh famine of 1974 to make a small loan of US$27 to a group of 42 families as start-up money so that they could make items for sale, without the burdens of high interest under predatory lending. Yunus believed that making such loans available to a larger population could stimulate businesses and reduce the widespread rural poverty in Bangladesh.

Yunus developed the principles of the Grameen Bank (literally, "Bank of the Villages" in Bengali) from his research and experience. He began to expand microcredit as a research project together with the Rural Economics Project at Bangladesh's University of Chittagong to test his method for providing credit and banking services to the rural poor. In 1976, the village of Jobra and other villages near the University of Chittagong became the first areas eligible for service from Grameen Bank.Proving successful, the Bank project, with support from Bangladesh Bank, was extended in 1979 to the Tangail District (to the north of the capital, Dhaka). The bank's success continued and its services were extended to other districts of Bangladesh.

By a Bangladeshi government ordinance on October 2, 1983, the project was authorized and established as an independent bank. Bankers Ron Grzywinski and Mary Houghton of ShoreBank, a community development bank in Chicago, helped Yunus with the official incorporation of the bank under a grant from the Ford Foundation. The bank's repayment rate suffered from the economic disruption following the 1998 flood in Bangladesh, but it recovered in the subsequent years. By the beginning of 2005, the bank had loaned over USD 4.7 billion and by the end of 2008, USD 7.6 billion to the poor.

The Bank continues to expand across the nation. By 2006, Grameen Bank branches numbered over 2,100. Its success has inspired similar projects in more than 40 countries around the world, including a World Bank initiative to finance Grameen-type schemes.

The bank has gained its funding from different sources, and the main contributors have shifted over time. In the initial years, donor agencies used to provide the bulk of capital at low rates. By the mid-1990s, the bank started to get most of its funding from the central bank of Bangladesh. More recently, Grameen has started bond sales as a source of finance. The bonds are implicitly subsidised, as they are guaranteed by the Government of Bangladesh, and still they are sold above the bank rate. In 2013, Bangladesh parliament passed 'Grameen Bank Act' which replaces the Grameen Bank Ordinance, 1983, authorizing the government to make rules for any aspect of the running of the bank.

The bank is also engaged in social business and entrepreunership fields. In 2009, the Grameen Creative Lab collaborated with the Yunus Centre to created the Global Social Business Summit. The meeting has become the main platform for social businesses worldwide to foster discussions, actions and collaborations to develop effective solutions to the most pressing problems plaguing the world

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The origin of Grameen Bank can be traced back to 1976 when Professor Muhammad Yunus, Head of the Rural Economics Program at the University of Chittagong, launched an action research project to examine the possibility of designing a credit delivery system to provide banking services targeted at the rural poor.

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Lesson 3

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Interesting article on innovative tax reform

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Interesting article on innovative tax reform

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Real tax reform requires bold and unconventional thinking.

The tax reform proposals currently being bandied about consist largely of modest reductions in both the individual and corporate income tax rates (e.g., from 32 percent to 25 percent) and a raise in the exemption for wage earners (up to, say, P1 million). A bolder, better approach is to just scrap taxes on income altogether and replace these with excise taxes based on the carbon emissions impact of specific goods and services. Simple arithmetic calculations can determine the appropriate carbon tax rates in order to make up for the loss in government revenue as a result of the elimination of income taxes.

Actually, it is inherently unfair to tax people simply because they earn an income. What this effectively does is penalize individuals and businesses for working hard and being successful at producing goods and services that the community wants. It is not consistent with an objective of providing economic incentives and moral encouragement to those who engage in activities that boost the economy and ultimately benefit the nation as a whole. Income taxes are thus inconsistent with the compelling goal of creating jobs for the many millions of unemployed and underemployed citizens.

Taxing carbon is far more logical than taxing income. A tax based on the carbon-emission consequences of the product or service consumed means taxing people based on the pollution they cause. Taxing products or services that cause the emission of carbon dioxide (and other noxious gases) in their production and use is a direct way of making the polluters themselves pay for the cost of cleaning up their mess. Indeed, it would be unfair to let someone dirty everyone's air and then make everyone else bear the cost.

Whatever the government now raises from income taxes can be just as well raised from an appropriate percentage tax based on the amount of carbon one's lifestyle causes to be emitted. In lieu of the government raising money by confiscating part of the income people generate through hard work, the government should raise revenues by penalizing people who pollute a shared environment and cause harm to everybody else. Not just fairness but also economic logic demand this.

A carbon tax means higher taxes on oil products, on products that use petroleum as raw material (like most plastics and synthetics), on coal, on natural gas, and on activities that generate polluting emissions. The tax can take the form of a sales or excise tax. Though there may be vehement objections to such a tax from the public-transport sector, the labor sector, and the consumer sector, it should be borne in mind that taxes on oil and oil-based products, by raising their prices, discourage their consumption and make the clean energy sources that global warming campaigners are trying to promote -like sun, wind and ocean wave-more attractive to the consuming public.

Putting a price on the amount of carbon one emits (or causes to be emitted) will-better than mandated limits and complicated cap-and-trade systems-direct consumers to less carbon-intensive products, and producers to less carbon-intensive methods of production.

A carbon tax is, in effect, a consumption tax. The usual argument against consumption taxes is that these are "regressive" because they penalize low-income groups proportionately more than high-income groups. This objection can be easily overcome by exempting food and other basic commodities-like generic medicine and essential health services-from any consumption taxes. Because low-income earners spend 60-70 percent of their income on food, the nonimposition of taxes on this item alone virtually frees this income segment from sharing any part of the cost of government.

Taxes on consumption-like sales taxes and value-added taxes-effectively penalize individuals and businesses for using up more of the nation's resources. The more one consumes, the more taxes one pays. This makes economic sense since consumption uses up resources that could be used elsewhere, by others, for alternative purposes. A price paid to the community-a tax-for the privilege of consuming more is thus founded on very reasonable grounds. Taxes on consumption logically make those who consume more of society's resources assume a greater share in the cost of managing the society.

Finally, it should not be overlooked that taxes on income-because they prescribe permissible deductions-are more complicated, more subject to the revenue collector's discretion, and therefore more susceptible to corruption. If hard-to-collect income taxes are scrapped altogether and the required government revenue is raised instead through easier-to-collect consumption taxes, a messy, susceptible-to-corruption system will be replaced with a simpler, less corruptible one.

Admittedly, it requires a small sense of adventure to adopt something that isn't being done anywhere else. It can only be hoped that those with the power to make this tax reform proposal happen will be of an innovative mind-set and evaluate this idea solely on its conceptual and practical logic.
Dr. René B. Azurin is a management professor, policy consultant, and author of several books on government and the economy.
For feedback, complaints, or inquiries, contact us.

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Real tax reform requires bold and unconventional thinking. The tax reform proposals currently being bandied about consist largely of modest reductions in both the individual and corporate income tax rates (e.g., from 32 percent to 25 percent) and a raise in the exemption for wage earners (up to, say, P1 million).

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The Industrial Revolution began in the 18th century, when agricultural societies became more industrialized and urban. The transcontinental railroad, the cotton gin, electricity and other inventions permanently changed society.

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Philippine Growth Statistics

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Philippines GDP Annual Growth Rate | 1982-2018 | Data | Chart | Calendar

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Philippines GDP growth for the fourth quarter of 2017 was revised down to 6.5 percent from an initial estimate of 6.6 percent. Major contributors to the downward revision were Trade and Repair of Motor Vehicles, Motorcycles, Personal and Household Goods, Financial Intermediation, and Other Services.

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Lesson 2

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One reason why valuation using economic principles is important

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If you haven't been paying attention, I don't blame you for at first not believing this. After all, companies go to great lengths to greenwash their image and present themselves as progressive and environmentally responsible, even while they turn your land to deserts and your oceans into dead zones. Unfortunately, as Mark Twain once famously said: "It's easier to fool people than to convince them that they have been fooled."

The truth is that our current system allows pretty much every corporation to externalize both environmental and social costs. In this article, we won't even be touching on social costs. If you don't know what cost externalization is, you can imagine it as making someone else pay part or all of your costs. For example, BP externalized the environmental costs of the Deepwater Horizon disaster by consuming all of the profits but making the government pay for anything beyond the most shoddy and superficial attempts at stopping the crisis.

A new report by Trucost on behalf of The Economics of Ecosystems and Biodiversity (TEEB) program sponsored by United Nations Environmental Program, examined the money earned by the biggest industries on this planet, and then contrasted them with 100 different types of environmental costs. To make this easier, they turned these 100 categories into 6: water use, land use, greenhouse gas emissions, waste pollution, land pollution, and water pollution.

The report found that when you took the externalized costs into effect, essentially NONE of the industries was actually making a profit. The huge profit margins being made by the world's most profitable industries (oil, meat, tobacco, mining, electronics) is being paid for against the future: we are trading long term sustainability for the benefit of shareholders. Sometimes the environmental costs vastly outweighed revenue, meaning that these industries would be constantly losing money had they actually been paying for the ecological damage and strain they were causing.

In terms of land and water use: almost no companies are actually paying a price remotely comparable for what they are actually taking away from the ecosystems. Consider that fact that Nestle pumps water out of drought-ridden California without limits for an unannounced but extremely low price, and turns around and sells this exact same water back to those affected by the resulting droughts for approximate $4 billion profit per year (based on 2012 data).

The even scarier fact in all this is that the indirect costs "downstream" from the industries are actually even greater. Here are the top 5 sectors passing along insane costs:

If you didn't notice yet: meat and coal are probably the largest offenders. If you look at table 2 again, you can see that cattle ranching in South America carries 18 times a higher environmental cost than all the revenue it brings in. Once you think about this, it is probably less surprising that 91% of Amazon rainforest destruction is fueled by increased animal agriculture.

How much money would these companies be losing if they were actually covering the environmental costs or paying to reduce their environmental impact? Well, the report also covers this:

So, now that it has become abundantly clear that our current regulatory system is corrupt/deficient, what do we do about it? Well, firstly we need to stop allowing companies to pretend that they are "environmentally responsible" when they are worse behaved than any child you have ever met. If someone came in and destroyed your kitchen to make you a piece of bread with butter, demanded money for it, and then bragged about being a "responsible cook," it wouldn't be any less ridiculous.

After we have stopped tolerating the bullshit, we need to seek and support actual solutions. We have to be willing to boycott and campaign against "cheap" products that are actually environmentally costly, as well as putting pressure onto governments to amend their regulations. Why should we expect companies to change if neither consumers or governments are forcing them?

To finish up, I will include what the Trucost report suggests for industries, investors, and governments. Please join in helping inform people about this situation, about these costs, and helping create more pressure to remove these "externalities."

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New UN report finds almost no industry profitable if environmental costs were included

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If you haven't been paying attention, I don't blame you for at first not believing this. After all, companies go to great lengths to greenwash their image and present themselves as progressive and environmentally responsible, even while they turn your land to deserts and your oceans into dead zones.