Determinants Of Philippine Trade: A Regression Analysis Of Trade And Its Factors From 1980

1686 words - 7 pages

Background of the Study

With the advent of Globalization, many economies and market particularly the Philippines have become participative in trading with other countries. Through Trade Liberalization in the world market, the Philippine market has opened more opportunities for its trade. However, same economies who participate in the trade area have “adopted inflation targeting” (Aron, J. & MuellBauer,J., 2007). Inflation is defined as In the same direction, it also affects the “influence of real exchange rate on growth” (Aron, J. & Muellbauer,J., 2002).
Furthermore, exchange rates can actually potentially influence Trade (Auboin,M. & Ruta, M. , 2011). Exchange rates are defined as the relative price of goods in different countries thus changes in exchange rates may communicate implications in the international trade (Bayoumi,T. 1996).
On the other hand, Increasing Gross Domestic Product will translate to increases in Trade since “one of the empirical determinants of bilateral trade between countries is the level of both countries” (Bayoumi,T. 1996). Moroever, increasing the output of a country, like the Philippines, may increase its level of output.
Thus, rooting for a better and efficient Philippine trade, pegging influences of GDP growth, real exchange rate, and inflation should be analyzed whether they are significant enough to determine Philippine Trade.

Statement of the Problem

As shown from the acquired data from the World Bank from years 1980 to 1981, the researcher would like to determine whether these promising factors identified such as Gross Domestic Product per Capita expressed in percentage annually, Exchange rate, and Inflation rate contain significance in the determining the effects on Philippine Trade
Objectives of the Study

The researcher aims to determine the factors that affect Philippine Trade. Using the Ordinary Least Squares Regression Analysis, different tests will be used to estimate relationship between the endogenous variable, the regressand and the three exogenous variables, the regressors, and determine the latter variables’ significance in the model.
Furthermore, since Trade is one of the important influences and illustrations of Globalization, the researcher needs to determine the factors that will be significant in affecting Philippine Trade.
Significance of the Study

An element of the integration of Globalization is International Trade wherein countries are given the privilege to trade in the global market given certain conditions and bounded on certain agreements, policies, laws that were made to suffice the satisfying benefits of each trade player (World Bank). The interdependence, interrelation, and integration of these players resulted to the development of trade liberalization.
Although the objectives of the study is to determine the factors that affect Philippine Trade, it is noteworthy that trade itself will help gauge Philippines’ participation in Globalization through the country’s...

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