Determinants of Philippine Trade: A Regression Analysis of Trade and its Factors from 1980

Research Background With the advent of globalization, many economies and markets, particularly the Philippines, have been involved in trade with other countries. Through the liberalization of trade in the global market, the Philippine market has opened up more opportunities for its trade. However, the same economy involved in the trade sector is "achieving the inflation target" (Aron, J. & Muell Bauer, J., 2007). Inflation is defined as facing in the same direction, which also affects "the impact of real exchange rate on growth" (Aron, J.

Because the country's trade balance is determined by net exports (exports - imports), it is affected by all factors that affect international trade. This includes factor grants and productivity, trade policy, exchange rates, foreign exchange reserves, inflation and demand. The important thing to note is that because the goods and services are included in imports and exports, the country's trade balance (also called commodity trade balance) and service trade are in equilibrium. If a country's exports are bigger than imports, it will become a trade surplus, and if that import is greater than exports that country will become a trade deficit.

Many attempts have been made to create economic excuses for the trade deficit. While some argue that the deficit in the trade balance is irrelevant, others argue that "trade balances are usually determined by macroeconomic factors." As long as the country complies with sound macroeconomic policies, please ignore it. These ideas of laissez-faction are wrong and are dangerous to our economic health. One of the main reasons for confusion is the use of simple correlation or economic identity, not a meaningful economic analysis of the causes of our trade problems. As shown below, the recent presidential economic report committed this mistake in several places. The report emphasizes the accounting relationship between savings and investment but does not fully explain the reasons for these variables.