Sharing a dose of economics

Philippine Schools Online, February 14, 2008

The youth of today need deeper understanding of all the fields that concern them to be able to build and face a brighter future.

Seeing the need to build further bridges for the promotion of a culture of peace among diversified ASEAN regions, the politically and religiously independent International Peace Foundation has facilitated more platforms for dialogue through series of events called “Bridges – Dialogues, Towards a Culture of Peace,” with Nobel Laureates from the fields of Peace, Physics, Chemistry, Medicine, and Economics.

Seeing economics in a different light

At the Yuchengco Auditorium of the De La Salle University-Manila, Professor Robert Mundell conducted the first of series of lectures. Known as the “Father of the Theory of Optimum Currency Areas,” the professor delivered a lecture entitled, “Economic Development by Fitting Globalization into the National Development Strategy,” to Economics students from various colleges and universities.

The lecture focused on literature of economics, capital inflows and adjustment, exchange rates, Asian policies, and the Euro-Dollar basket. “Debates in the literature of economics throughout the past two centuries have explained how unilateral transfers such as reparations or immigrant’s remittances get affected in the real terms by changes in trade balances,” he says.

Still according to him, many of the ASEAN countries have been faced with capital inflows leading to build up of reserves and speculation about exchange rate. “This is why they [countries] should focus on the advantages and disadvantages of flexible and fixed exchange rates in their overall economic set up.”

Professor Mundell is the recipient of the Nobel Prize in Economics in 1999. As one of the foremost experts in the field of international economics, he unwaveringly shared and taught what he has learned from his many years of understanding economic activity in a global perspective.

Co-presented by the Mapua Institute of Technology, the Mundell lecture indeed enlightened many Economics majors because he was able to explain the principles of economics in layman’s terms. Third year BS Economics student of Polytechnic University of the Philippines Domingo Miguel Huelar II says being an economics major says it is such a privilege to witness something like this. “It was enlightening and very informative.” He adds that since the lecture focused on economics, he was able to understand more about his course.

For fourth year AB Economics student of De La Salle University Manila Miguel Andre Mapa Achacoso, the lecture truly gave him deeper understanding about economics. “Professor Mundell was able to relate it to the Philippine situation which, we, the audience are aware of,” he says. The most interesting part of the lecture for him was the concept of balance of payments and the continuing debate about the fixed and flexible exchange rates. “It made me really think if the Philippines can already handle a fixed rate,” he says. Like Professor Mundell, Achacoso believes that a country needs a strong political will to be able to achieve that. “It’s not a question whether we should or we should not have an exchange rate,” he says. “The question if we have the political will to implement it,” he says.

As an Economics major, he thinks that having a fixed rate can help the country in the future. “I think it can be helpful to be predict in the fluctuations that will happen,” he says.

Mundell was a professor of economics to prestigious universities such as Columbia University in New York and the Graduate Institute of International Studies in Geneva, Switzerland, he was also an adviser to a number of international agencies and organizations, some of which were the United Nations, the IMF, the World Bank, the European Commission, the Federal Reserve Board, the US Treasury, and the Government of Canada. His numerous works on economic theory of international economics have significantly contributed to monetary activity around the world. He is considered the father of the theory of optimum currency areas.

Among his pioneering works were the theory of the monetary and fiscal policy mix, the theory of inflation and interest growth, and the monetary approach to the balance of payments. He is co-founder of supply?side economics. His preparation of one of the first plans for a common currency in Europe - the development of Euro, which is now being used in Europe - was also highly regarded.

“Bridges” aims to facilitate and strengthen dialogue and communication between societies in Southeast Asia as well as with people in other parts of the world. Washington SyCip, founder of the SGV Group and of the Asian Institute of Management is the Philippine honorary chairman of Bridges, while Jaime Augusto Zobel de Ayala, chair and CEO of the Ayala Corporation, is the program’s Philippine chairman.