PATH ANALYSIS APPROACH

ON FACTORS AFFECTING THE PHILIPPINE

GROSS NATIONAL PRODUCT
 
 
Talio gomez
BS Applied Mathematics
 Introduction
Background of the Study

Gross national product (GNP) is the total value of all the final products
and services turned out in a given period by the means of production
owned by a country's residents. I t is correlated to other economic
estimates the gross domestic product (GDP). GNP starts with GDP, adds
residents' investment income from overseas investments, and subtracts
foreign residents' investment income earned within a country (Barnier,
B., and Schmitt, K., (2022)).
 Introduction
Economies and investors are usually more concerned with GDP than
GNP . the first provides more accurate picture of a country’s economic
health , including in relation to economic indicators. (nasrudin.,2022).
The influence of GDP, population,and net export value on energy
comsumption a path analysis study.(Jing,.ling,.qiang,.and,xue,.(2017).
Gross national products is very important to measure the
welfare,standard of living, and income of the country. Suppose many
citizens ork or natinal companies operate abroad an dhave a significant
portion of the output . in that case GNP might be important indicator.
(nasrudin.,2022).
 Introduction
Any growths in real prices, and the export income derived should be as
momentary that affect the GDP. It was the countries that produce raw
commodities will potentially become poorer in the long run unless
action is taken to prevent commodity prices support GDP growth for
commodity importers (Kellard, (2020)).
The flow of population reflects the variations of GDP in the economy.
The variations of production of goods and services and consumption in
cities and municipalities, and in their respective host regions affect the
gross domestic product. The total population continues to increase
following a long-term trend while the overall GDP growth rate is
decreasing (NEDA, 2022).
 Introduction
Economies and investors are usually more concerned with
GDP than GNP . the first provides more accurate picture of a
country’s economic health , including in relation to economic
indicators. (nasrudin.,2022).

In this connection this study will investigate the factors that

influence the Philippine GNP such us; population,
unemployment rate and GDP using path analysis approach.
 Objective of the Study

The main objective of the study is to generate a model from the given
data using the path analysis.
Specifically, it sought to:

1. Determine the status of the variables namely; Population, GDP,

unemployment, and GNP in the Philippine.
2. Determine the observed and reproduced correlation on initial and
final model.
3. Summarize the causal effects of the model relation to the direct and
indirect effects of the factors that affect on GNP.
 Significance of the Study
This study is important for future plan not only for government agencies but also for non-
government organization.
Countrymen. This study is beneficial to the countrymen for this is a worldwide problem
that will give them an awareness on the problem of economic stability in the Philippines.
Policy makers. Provide policies needed for rational decision-making regarding poverty
experienced and provide strategies on the problem on economic stability and on the
increasing number of populations in the Philippines.
Local and national Government. The study will be a great help in the Local and National
agencies for the development plan and preparedness for the economy and the increasing
size of population in the Philippines.

Applied Mathematics Students. This study will be beneficial to the applied mathematics
students provide them an idea on how to do research using
Applied Mathematics concept to the real-world phenomena.
Policy makers. Provide policies with information needed for effective
decision-making for proper way in taking care of migratory birds.

Local and national Government. The study will be a great help in the
Local and National agencies for the development plan and
preparedness for the efficient government programs in dealing
migratory birds.
Applied Mathematics Students. This study will be beneficial
to the applied mathematics students provide them an idea on
how to do research using Applied Mathematics concept to the
real-world phenomena.

Future Researchers and Readers. The study will help the

future researchers acquire more knowledge and future
research in the future.
Scope and Delimitation of the Study
The research study will focused on determining which path of
population, Gross domestic products and unemployment that has
strongest relational effect to the Gross national products. It is limited to
the use of Path analysis in analyzing the data. The study is limited also
to the population, GDP, unemployment of the Philippines as the
independent variables. Moreover, it is limited on the year 1991 to 2020.
CONCEPTUAL

GDP
(X2)

𝜷𝟐 , 𝟒
 

GNP
𝜺𝟏 POPULATION
(X1)
(X4)

𝜷𝟏 , 𝟑
UNEMPLOYMENT
(X3)
 – Path coefficient influence of population towards GDP.
– Path coefficient influence of population towards unemployment.
– Path coefficient influence of population towards GNP.
– Path coefficient influence of GDP towards unemployment.
– Path coefficient influence of GDP towards GNP.
– Path coefficient influence of unemployment towards GNP.
 
In this study, the model is specified by the following path equations:
X1 (1)

X2 (2)

X3 X 1 X 2 (3)

X4 X1 X 2 X 3 (4)

 
Where:
X1 = population X2 = GDP
X3 = unemployment X4 = GNP
The diagram assumes all the three variables have a direct and indirect
impact on the dependent variable. Were, GNP would be the dependent
variable , on the other hand the GDP, Population and unemployment
become independent variables . However, these three independent
variables can also have an effect on each other. Therefore, output path
diagrams can constructed after performing correlation and regression
analysis.
 REVIEW OF RELATED
LITERATURE
Gross Domestic Product (GDP)
Last 2020, the Philippines’ gross domestic product (GDP) decreases to
9.6% collapse in economic performance in the post-war period and
decreasing unfavorably in ASEAN.
The global pandemic marginally affected the remittances from more
than ten million Filipino migrants and overseas workers (down 0.8%),
which historically support domestic consumption and anchor economic
growth (Trade, 2021).
 REVIEW OF RELATED
LITERATURE
Population
The concentration of economic development in relatively few urban
areas and rapid population growth throughout the country are other
factors contributing to urban sprawl. Compared with other countries in
the region, the Philippines is experiencing rapid population growth.
In addition to fleeing to urban commercial centers, many people leave
the country for work. An average of 2,500 Filipinos leave the country
every day for work abroad, and the Philippines is second only to Mexico
as an exporter of labor. An estimated 10 percent of the country’s
population, or nearly 8 million people, are overseas Filipino workers
distributed in 182 countries, according to POPCOM.
 REVIEW OF RELATED
LITERATURE
Gross national product
In the case of the US, net factor income is fairly close to zero. US
companies have significant investment overseas and so gain dividends
coming into US, but there are also many foreign companies investing in
the US, which then repatriate profit outside the US. In the 2000s, GNP
was slightly higher which suggest it was receiving more dividends than
going out. But, the net factor income is low and the gap between GNP
and GDP is correspondingly low. (Tejvan,P,.2005).
The Concept of Path Analysis
Path analysis is a statistical technique that allows users to investigate
patterns of effect within a system of variables. It is one of several types
of the general linear model that examine the impact of a set of
predictor variables on multiple dependent variables. Path analysis is
similar to multiple regression in that the effect of multiple predictors on
a criterion variable can be assessed. It differs from multiple regression,
however, in that two or more criterion variables can be examined at the
same time. Path analysis was invented by Sewall Wright as he
developed his shifting balance theory (SBT) of population genetics. He
needed a technique that could be used to track effects of forces on
changes (Allen, M., (2017)).  
Assumption and Limitations of Path Analysis
1. The independent variables are fixed (i.e., the same values of the IVs would have to be used in
the study were to be replicated).
2. The independent variables are measured without error.
3. The relationship between the independent variables and the dependent variable is linear (in
other words, the regression of the DV on the combination of IVs is linear).
4. The mean of the residuals for each observation on the dependent variable over many
replications is zero.
5. Errors associated with any single observation on the dependent variable are independent of
(i.e., not correlated with) errors associated with any other observation on the dependent
variable.
6. The errors are not correlated with the independent variables.
7. The variance of the residuals across all values of the independent variables is constant (i.e.,
homoscedasticity of the variance of the residuals).
8. The errors are normally distributed.
 METHODOLOGY
Research design
• The study adopted an ex-post-facto research design as cited by Madu and researchers only attempt to link
some already existing variables as causative agents. At the commencement of this study, the researchers
find that the subjects are already assigned to or classified into various levels of the variables whose
influences are being investigated. This design is appropriate because the researchers did not manipulate
independent variables. Instead, the influences of the independent variables on dependent variable were
determined.
 
• Ex-post-facto design is appropriate to use in this research study where the researchers were seek variables
to establish and manipulate the cause-effect relationship. Variables are selected based in Population and
unemployment rate as caused by GDP and effect to GNP supported by published research that showed the
causal relation of the selected variable. But, researchers have no control to coefficient value as a result of
the data gathering so, therefore, researchers cannot manipulate the result of data gathering.
Data gathering procedure
The researcher of this study used secondary data obtained from the available online websites:
The corresponding data will be obtained from any available sources online that were collected in the
year 1991 to 2020.

https://data.worldbank.org/country/PH for the data in Philippine GDP that contains data set on the
Philippines Gross domestic rate from the year 1991 to
2020,https://www.macrotrends.net/countries/PHL/philippines/gnp-gross-national-
product'>Philippines GNP 1964-2022</a>2022-02-15 contains data set on the Gross National
Products from year 1991 to 2020,
https://www.macrotrends.net/countries/PHL/philippines/unemployment-rate contain the data sets of
percentage on labor force without job from age 18 to 59 in the year 1991 to 2020.
Statistical Treatment
The study used Path Analysis as the statistical treatment. According to the SAGE research methods
datasets (2018), Path analysis is a statistical technique that allows users to investigate patterns of
effect within a system of variables. It is one of several types of the general linear model that examine the
impact of a set of predictor variables on multiple dependent variables.
Path analysis is similar to multiple regression in that the effect of multiple predictors on a criterion
variable can be assessed. It differs from multiple regression, however, in that two or more criterion
variables can be examined at the same time.
 RESULTS
Title Researcher Adviser
Distributions of the Product and Ratio of Francis Caoile Marvin G. Pizon
Two Independent Exponential and Lindley
Random Variables
Measures of Dependence of Combination of Jeric Morata Marvin G. Pizon
Exponential and Rational Function Based
on Rushendorf Method
Measures of Dependence of Exponential Lowie Chucas Marvin G. Pizon
Distibution Based on Rushendorf Method
Effect COVID-19 Transmision: The Case of Swisszen Talimodao Marvin G. Pizon
Bivariate Copula
Bivariate Copula on the Effect of Carbon Darwin Ybañ ez Marvin G. Pizon
Emissions to the Energy Consumption and
Population Growth of the Philippines
Population Growth and its effect on the Melen Ballerta Marvin G. Pizon
Birth Rate and Mortality Rate using
Bivariate Copula
DISCUSSION AND CONCLUSION
Recent growth rates in the Philippine economy have ranged from 3 percent per year to 5.7 percent –
the average growth rate of this from 1999 to 2005 is 4.6 percent. This is the growth of the GNP, a
measure of total national income, not of GDP, or a measure of total output produced in the country.
The annual GDP growth rate during the same period is lower, 4.2 percent. (The significance of this
discrepancy is explained in detail later, below.) Philippine economic growth has been on the modest
side compared to that of high growth East Asian economies. During their rate of sustained growth in
recent decades, these latter countries have achieved annual growth rates of real output ranging from
7 percent to 10 percent per annum of real output and income growth during their periods of sustained
growth. The Philippines is literally surrounded by these countries – in the north, Japan (the earliest of
the achievers during the 1950s to the 1970s), South Korea, Taiwan, Hong Kong, Singapore and
Malaysia. Today, China is repeating the early “economic miracles” of these countries but on a larger
scale. Indonesia had done very well four four decades but it performance was reversed by a lost
momentum after recent political and economic crises. Philippine economic performance has been
characterized by recurrence of booms and busts that are sharp around average rate of economic
growth. As soon as macroeconomic fundamentals had gathered momentum to reach a particular
environment of encouraging growth, imbalances come back in the form of balance of payments and
difficulties on the fiscal front. In part, this problem of recurring imbalances is due to lack of timely
action related to the required economic remedies. Such policy actions are often painful and therefore
difficult to push in the political front.
The remedies are often in the form of adjusting macroeconomic policies such as dealing with tax reform and
expenditure cuts. But often the problems that jolt the economic performance arises from some structural
inflexibility that makes the economy very sensitive to political jolts of a domestic origin or from external economic
events. Such weakness in flexibility helps to disturb investment confidence. There is another feature that
characterizes the Philippine growth experience with that of the immediate neighbors. Population growth in the
Philippines continues to be high at around 2 percent per year and has hardly changed much in rate of growth in
recent years. This means that per capita growth of income and of output is lower because the high population
growth absorbs much of the growth of the economy if only to maintain consumption per capita. In comparison,
the East Asian high performers have experienced a halving of their rates of population growth from highs of close
to 2 per cent per year during the 1960s toward 1 percent per year by this decade. The rate of economic growth of
output and of productivity in an economy depends on the technical relations with the rate of growth of the inputs
of capital, labor, and other economic resources that enter the production process. A productive and efficient
economy displays a high rate of economic growth that helps to eradicate a high level of unemployment. In these
relations, the quality of the inputs (amount of knowledge, skills, and learning by experience of the labor force)
builds up. It is not surprising that rising incomes and the savings derived from falling birth rates induce a higher
investment in education, nutrition, and family welfare. They improve the efficiency of labor even as the economy
and as the rise of inputs help to accelerate the growth of output.
On the goods side, the gradual evolution of the economy’s trade and industrial policy forced a restructuring of the
industrial sector. This liberalization of the economy was accompanied by the enlarging role of ASEAN economic
cooperation through the preferential trade agreement that arose and, more importantly, the country’s accession to the
principles of world trading rules in the World Trade Organization. The protectionist policies on the goods side held
back for decades the growth of competitive industries in international and domestic trade. As important to the
outcome of the process of economic growth in the Philippines are policies affecting the markets of the factors of
production. This refers to the set of policies affecting the employment and attraction of the use of capital, labor, land,
and natural resources. A major cause of the underperformance of the Philippine economy is related to the rigidities of
the factor markets. As a result, labor and capital have not played as important a role in bringing the economy to
toward a higher level of growth as found among the East Asian neighbors. On the labor side, the welfare-oriented
approach toward labor introduced labor market rigidities that made it difficult for firms to hire labor. Legislated
minimum wages were aggressively set higher than market realities, often guided by welfare considerations using
urban-based living standards and often in response to populist tendencies to follow labor welfare standards of
advanced industrial nations. This prematurely raised unit labor costs of labor and introduced antagonistic labor-
management relations that were not present in other neighboring countries. This rendered employment creation
more difficult for the government. Regional minimum wage setting was introduced during the 1990s that helped to
factor in regional competition as a factor in setting minimum wages. Despite this effort, oft and on the new policy gets
threatened with each new demand for wage revisions. Such an approach to labor policy would have had benign
effects, or at worse, less harmful if the policy toward the attraction of foreign capital were more aggressive and had
yielded more than just seemingly good results.
On the capital side, however, the restrictions to foreign capital continued in critical sectors that were identified as far back in
1935 when the political constitution was framed. Even as the country’s investment policies flourished and became more open
gradually as a result of the liberalization of many aspects of economic policy, the main restrictions of the constitutional
provisions continue to remain in effect with respect to foreign capital in specific sectors including public utilities and natural
resources. Foreign capital was essentially the “free” economic resource, for it is not hampered by the limitation of domestic
capital faced in the midst of economic opportunities. Attracting capital to flow in more freely would have enhanced the rate of
investment and the possibilities of technological growth. Incidentally, this was the pattern of policies in many of the high
performing countries of East Asia, including even in countries where they tried to have capital controls for some other reasons.
It is widely recognized in the Philippines today that foreign direct investment – its greater participation in the provision of public
utilities – and in the exploitation of natural resources would greatly improve the economy’s domestic infrastructure and export
earning capacity. Some of the actions that permit the participation of foreign direct investment could therefore be undertaken
through indirect mechanisms. This was achieved for instance through the layering of corporate structures that avoided direct
conflict with the constitutional restrictions in these sectors. Others would be through service contract arrangements with state
entities that therefore fulfill the equity requirements concerning citizenship without any doubt. In a recent decision, the
Supreme Court helped to make it constitutional to allow fully owned foreign owned companies to engage in mining exploitation
under the framework of service contract arrangement with the government. The amendment of the basic document regarding
these provisions would be needed to remove the threat of legal challenges that cause delays, discouragement and often
uncertainty in the outcome. The learning process in the Philippines toward promoting a liberal foreign investment policy climate
was slow for decades because of the restrictions from the constitutional framework and the hang-ups that these restrictions
have imparted on the policy milieu. The restrictive posture of investment policies from the constitutional framework had an
overwhelming influence on the nation’s attitude toward the role of foreign capital. Initially, the policies applied mainly in public
utilities and natural resources exploitation. But these gradually expanded into many areas of industry and commerce during the
period of economic restrictions that permeated government policy for a long time. The infectious pattern of these policies
enabled the growth of a highly protective industrial and trade regime that dominated economic policies for many decades.
End Notes Here.