Public Borrowing in the Philippines
Public Borrowing
Public borrowing defined
Public borrowing is money government borrows to fund public spending, the total amount of money that a country's central government has borrowed to fund its spending on public services and benefits.[1] Public debt - the total of the nation's debts: debts of local, state, and national governments; an indicator of how much public spending is financed by borrowing instead of taxation. [2]
Origin of Public Borrowing [4]
Mercantilist Period (1500-1750)
European economists between 1500 and 1750 are considered mercantilists. This is the era of merchant capital, dependent on connections between social and productive systems. [4] Mercantilism started it all, during this era colonies were established and mercantilist trade was a great tool used for the control and accumulation of gold and silver bullions [5], the idea of financing was born for this purpose.
Adam Smith
Adam Smith is one of the greatest critics of mercantilism. He was strong in emphasizing the disadvantages of borrowing and expostulated on the advantages of the balanced budget during the years of capitalism.
Keynesian Theory of Deficit Financing (1880’s-1940’s)
It was during the time of John Maynard Keynes that the idea of public borrowing was introduced during the Great Depression, mainly as a compensatory tool in times of economic stability.
“In order to keep people fully employed, governments have to run deficits when the economy is slowing.” Borrowing for capital generation purposes is necessary like setting up public enterprises which will contribute to a productive output. This is not applicable for Least Developed Countries (LDC) because first instabilities of LDC’s are of external origin like oil crisis, inflation, and recession in the industrialized countries; and second Keynes’ theories are based on the assumption of fully developed economies undergoing cyclical difficulties (In LDC’s productive capacity is not yet
Public borrowing defined
Public borrowing is money government borrows to fund public spending, the total amount of money that a country's central government has borrowed to fund its spending on public services and benefits.[1] Public debt - the total of the nation's debts: debts of local, state, and national governments; an indicator of how much public spending is financed by borrowing instead of taxation. [2]
Origin of Public Borrowing [4]
Mercantilist Period (1500-1750)
European economists between 1500 and 1750 are considered mercantilists. This is the era of merchant capital, dependent on connections between social and productive systems. [4] Mercantilism started it all, during this era colonies were established and mercantilist trade was a great tool used for the control and accumulation of gold and silver bullions [5], the idea of financing was born for this purpose.
Adam Smith
Adam Smith is one of the greatest critics of mercantilism. He was strong in emphasizing the disadvantages of borrowing and expostulated on the advantages of the balanced budget during the years of capitalism.
Keynesian Theory of Deficit Financing (1880’s-1940’s)
It was during the time of John Maynard Keynes that the idea of public borrowing was introduced during the Great Depression, mainly as a compensatory tool in times of economic stability.
“In order to keep people fully employed, governments have to run deficits when the economy is slowing.” Borrowing for capital generation purposes is necessary like setting up public enterprises which will contribute to a productive output. This is not applicable for Least Developed Countries (LDC) because first instabilities of LDC’s are of external origin like oil crisis, inflation, and recession in the industrialized countries; and second Keynes’ theories are based on the assumption of fully developed economies undergoing cyclical difficulties (In LDC’s productive capacity is not yet
References: 1. Qfinance.com 2. Thesaurus 3. Wikipedia 4. http://www.slideshare.net/KarenAlanSamonte/public-debt-philippines 5. Prof. De Vera’s PFA Slides 6. Theory and Practice of Public Administration in the Philippines (Avelino P. Tendero) 7. http://www.mb.com.ph/node/246360/palace- 8. http://grbusinessonline.com/wp/?p=1064 9. http://ph.politicalarena.com/home/noynoy 10. http://www.philstar.com/Article.aspx?articleId=786172&publicationSubCategoryId=66