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This paper seeks to analyze the factors affecting the growth of enterprises in the Philippines, as measured from the expansion of employment. The paper contributes to the literature in two ways. First, it attempts to provide a comprehensive background of the various policies and legislations that affect firms in the country. Second, using micro-level data of the firms in 2009, we correlate the observed growth of these firms with reported constraints in the business environment within which these firms operate, to investigate which ones are binding constraints. We find significant correlations between a subset of these indicators of business climates and the issues raised in previous literature, and the effects vary across firms of different sizes. Given the challenging global climate in the aftermath of the global financial crisis of 2008 and 2009, more than a third of these firms expanded their payroll and majority saw growth in real sales. Amidst a sea of subjective self-reported responses, we manage to find certain empirical regularities that withstand a battery of robustness checks. These correlations between a subset of indicators for business climates and the growth or expansion of firms may shed some light on future potential policies to assist these firms, as well as provide directions for further research.

This paper reviews the theoretical and empirical literature on the role of financial sector development, with a view to deepening understanding of the rationale of development assistance to the financial sector of developing countries. The review leads to the following broad conclusions: (i) there are convincing arguments that financial sector development plays a vital role in facilitating economic growth and poverty reduction, and these arguments are supported by overwhelming empirical evidence from both cross-country and countryspecific studies; (ii) there are however disagreements over how financial sector development should be sequenced in developing countries, particularly the relative importance of domestic banks and capital markets and, in developing the banking sector, the relative importance of large and small banks; (iii) while broadening the access to finance by microenterprises, small and medium-sized enterprises (SMEs), and vulnerable groups is recognized as critically important for poverty reduction, it is also widely believed that microfinance and SME credit programs need to be well designed and targeted to be effective. In particular, these programs need to be accompanied by other support services such as provision of training and capacity building, assistance in accessing markets and technologies, and addressing other market failures; and (iv) financial sector development and innovation will bring risks, and it is therefore essential to maintain sound macroeconomic management, put in place effective regulatory and supervisory mechanisms, and carry out structural reforms in developing the financial sector. The paper argues that these conclusions provide a strong justification for development assistance to target financial sector development as a priority area, and that, like any public sector intervention, such assistance should be designed to address market and nonmarket failures. The paper also highlights several areas where more research is urgently needed, in particular, how to sequence financial sector development, how to balance the need for financial innovation and that for economic and financial stability, and how to make microfinance and SME credit programs work better to reduce poverty.

This paper describes the severity of the declines of Asian exports during the recent global crisis and provides more detailed information on the hardest hit manufacturing and exporting industries. To do this, we use various sources of data, including Industrial Statistics of the United Nations Industrial Development Organization as well as the latest monthly unemployment and exports data available from official sources. We find severe declines of exports across most product categories, and that the worst-hit sectors often consist of larger, more productive firms relative to other manufacturing sectors. Some of these sectors also employ higher percentages of women workers in countries such as Indonesia and Malaysia. Nonetheless, although official unemployment rose across developing Asia, the level has yet to reach that of OECD countries. In further contrast to the jobless recovery facing some OECD countries, employment shows recent signs of stabilizing and even increasing. Finally, we conclude with a discussion on the recent upward trends in exports. While we see cautious optimism in the revival of exports, data indicates that Asian workers are not clearly out of the woods yet.

In most developing countries, income inequality tends to worsen during initial stages of growth, especially in urban areas. The People’s Republic of China (PRC) provides a sharp contrast where income inequality among urban households is lower than that among rural households. In terms of inclusive growth, the existence of income mobility over a longer period of time may mitigate the impacts of widening income inequality measured using crosssectional data. We explore several ways of measuring income mobility and found considerable income mobility in the PRC, with income mobility lower among rural households than among urban households. When incomes are averaged over 3 years and when adjustments are made for the size and composition of households, income inequality decreases. Social welfare functions are posited that allow for a trade-off between increases in income and increases in income inequality. These suggest strong increases in well-being for urban households in the PRC. In comparison, the corresponding changes in rural households are much smaller.

Though much has been written about annual income inequality in China, little research has been conducted on longer run measures of income inequality and on income mobility. This paper compares income mobility of urban individuals in China and the United States in the 1990s. The following questions are taken up. To what extent are measures of annual income inequality misleading indicators of long-run income inequality? How much income mobility was there in China in the first half of the 1990s and how did this compare with mobility in other countries? Have real income increases been greater for the poor or the rich? How important is the variation in permanent incomes in China and how has this changed?