Belt Auction

How is the passage below Economics related? Why?

"World Bank offers PPP financing options" Recognizing the Philippines Public-Private Partnership (PPP) expansion’s potential to resolve the country’s challenges including infrastructure development and poverty reduction, the World Bank has identified a variety of financing options and strategies that the government can avail of to propel such initiative. Bert Hofman, World Bank Country Director, said public-private participation in infrastructure development not only fills a critical financing gap for the government, but also improves the delivery of services. “PPP has clear linkages to the country’s competitiveness and prospects for sustained growth,” Hofman said, after citing business leaders’ sentiments that the overall quality of infrastructure service delivery in the Philippines remains a concern and has emerged as a key impediment to the country’s economic competitiveness. “We are prepared to work with the government in some important areas for accelerating the PPP program,” Hofman said at the conference organized by the government as a forum with the private sector and development partners in evaluating investment opportunities, profiles of PPP projects, as well as policy, regulatory, and legal issues concerning the infrastructure sector. Hofman added that the World Bank welcomes the government's plans presented at the conference, with emphasis on transparency and competitive processes in project selection and bidding. "It's encouraging to see that the government is putting considerable resources into bringing bankable projects to the market," he said. The conference is a follow-up to President Aquino’s recent executive order that created a PPP Center of the Philippines. The new agency is expected to spur the implementation of PPP programs by seeking ways to accelerate the financing, construction, and operation of key infrastructure projects. Hofman listed a number of World Bank financing products and services that the Philippines could tap to accelerate PPP projects. For instance, while the bank offers 30-year loans to middle-income countries with repayment schedules that address specific needs of projects, such loans can also be blended with private finance to cut amortization costs and ease pressures to shore up tariffs to make projects viable. “The use of such hybrid schemes is becoming more and more common in an effort to reduce the total cost of financing for poor communities,” Hofman said.

Public Comments

1. It is related to Economics because the PPP Policy is based on Economic Theory. There are Four Schools in the field of Economics each of which advocate different approaches to a nation's economy. These schools are: (1) Marxism; (2) Keynesianism; (3) The Chicago School of Economics; (4) The Austrian School. The PPP Policy is, evidently, of Keynesian origin. In a nutshell, Keynesians believe that nations prosper via government intervention in the attempt to boost what Keynes calls "aggregate demand". This is evidenced in the Keynesian formula: "C + I + G = Y". Where C=consumption,I=private investment ,G=government spending, Y=GDP. Theoretically, Keynesianism has been refuted. Following Keynesian policies does not lead to prosperity. Instead, it leads to what is known as "stagflation". Stagflation means that both the inflation rate and unemployment are high.