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CHAPTER I THE PROBLEM Introduction The primary forests in the Philippines are being destroyed due to both logging and agricultural expansion, most significantly decreasing the Philippines natural and ecological resources. This kind of deforestation is leading to a variety of global changes, as well as numerous local changes. One of the examples would be the government under late President Ferdinand Marcos, who had close ties to the major logging companies and allowed the massive deforestation of the forest to boost and simulate the countrys economy through exporting forest products. Deforestation in the Philippines is attributed to two major things: increasing agriculture and illegal logging. Deforestation in this case is considered a two-step process: conversion of primary to secondary forests by logging and then removal of secondary forests by the expansion of agriculture, mainly small subsistence cultivation. Interestingly enough, our countrys population growth is not a driving force contributing behind deforestation in the Philippines. As of 1990, the countrys population was 62.4 million, with a 2.6 percent growth rate. There are close to 7 million farmers populating the uplands who need to make a living at the expense of the forests and our natural resources. However, rural population growth has an effect on agricultural expansion, thus having an indirect effect on deforestation. So in general, the large-scale logging followed

by the agriculture in the 1970-1990 periods was the major process by which deforestation occurred in the Philippines and continued through the years (Ted Case Study, 2000). One of the countrys natural capital which is forest, has been conventionally viewed as free and tangible instrument for economic use. Accordingly, the post-colonial state mostly allocated public forestlands for resource extraction and not purposely for conservation. Some political administration liberally granted permits for logging and tree plantation. Since 1950s, increasing portion of forestland were mostly release for logging purposes and by the 1990s the government had granted a total of 10.2 million hectares or about 68 percent of the Philippine territory to timber license agreement holders Moreover, state incentives also increased the production and export of natural resources and the establishment of the resource-processing industries. In the forestry sector, these cuts, zero export taxes, low forest charges, and high protective tariffs to shelter and suffice the local processing industry. For the other resource sector, inclusion of low permit fees or taxes, subsidized in the form of state infrastructure, price support, stabilization of funds, tax amnesty encourage resource extraction and export. Thus, incentives in the forestry industry came in the form of state inaction or the nonenforcement of existing policies and penalties. Provided the following incentives; inclusion of high economic rents available in the sector, and the failure of the state to require reinvestment to the resource stock, the production of forestry along with fishery and mineral commodities at an unsustainable rate during the post war decades, eventually depleting the resources. In the forestry sector, about 172,000 hectares of primary growth forest was lost annually from 1950s to early 1970s. In addition to that, the much-reduced stock henceforth prevented timber

production and export from proceeding at the same rate. It contracted by 4.4 percent in the 1970s, by 7 percent in the 1980s and by 21.7 percent in the 1990s. In the early 1960s, the average contribution of forestry to economy was significant 15 percent Gross Value Added (Bautista, 1990). If the forest utilization for wood production been planted with a sustainable resource management system in place, the sector would have benefit from it and could have continued contributing positive value added. Excessive and illegal logging initiated a historical process of forest land conversion and eventually a major loss of the countrys forest cover. Comprising about 70 percent of the countrys 30 million hectares in the year 1901 was reduced to 5.39 million hectares by 1997 (Bautista, 2003). This process of deforestation usually involved the conversion of the old-growth forest and also residual forest, mostly contributing to the expansion of unproductive reproduction brush, grasslands and farm (Bautista 2003). The history of logging in the Philippines had limited the replanting activities of timber licenses, and the absence of new tenure and management system in the cancelled logged-over concession areas have rendered most forestlands to become an open-access resources vulnerable to illegal cutting, lowland migration, swidden farming, forest fires and soil depleting activities. Furthermore, these conditions have added to the forest land degradation, the formulation of deep gullies, soil erosions, excavations, landslides and sedimentation that have in turn contributed to the massive ecological destruction and expanded flood plains and damaged farms on both sides of rivers (Umehara, 2002).

Background of the study Forestry is an industry that can help the countrys economic growth, but on the other hand has its downfall because it contributes to the widespread deforestation that can cause massive ecological destruction. Government initiatives should be implemented in order to regulate or eradicate illegal logging. According to the study of the Philippine Master Plan for development, the forest cover decreased from 17 million hectares in 1934 to 6.7 million hectares in 1990 (DENR/FMB, 1991). Official forestry statistics are mainly based on projections from the first national forest inventory in 1969 and the second inventory in 1989. In addition to the projections, the Philippines currently have 5.4 million hectares of forest in 2000. Various sources showed different rates of deforestation in the Philippines. The Philippine Master Plan for Forest Development estimated forest cover reduction of about 100,000 hectares per annum (DENR/FMB, 1991) while other assessments ranged between 50,000 and 70,000 hectares per annum while Forestry and Agriculture Organization provided a figure of 89,000 hectares per annum (FAO, 2000; 2003). Therefore, lower figures reflect the assumptions that since the natural forest are now relatively inaccessible; the forest conversion rate has slowed compared to the rates of the 1950s and 1970s (Acosta, 2005). However, the study sought to examine the industry of forestry and its contribution to the economy. How our economy can still benefit from it, even though it affects our countrys natural resources and add up to the deforestation rate and the slash and burn agriculture.

Statement of the problem General Problem This paper is to examine the determinants and effects of the determinants and the contribution of Gross Value Added in Forestry to the Philippine Economy covering the period 1986-2010. Specific Problems This paper sought to provide answer to the following questions: 1. What has been the behavior of the following variables from 1986-2010? a. Gross Value Added in Forestry b. Lumber Exports c. Lumber Imports d. Gross Domestic Product 2. Is there a significant relationship between Gross Value Added in Forestry and each of the following variables? a. Lumber Exports b. Lumber Imports c. Gross Domestic Product 3. Is there a significant effect between Gross Value Added of Forestry in Lumber and each of the following variables? a. Lumber Exports b. Lumber Imports c. Gross Domestic Product

4. Is Gross Value Added in Forestry a stable function of the following variables? a. Lumber Exports b. Lumber Imports c. Gross Domestic Product 5. Is the economic model correctly specified?

Objectives of the Study General Objective The primarily objective of this paper was to examine the effects of the determinants and the contribution of Gross Value Added in Forestry to the Philippine Economy covering the period of 1986-2010. Specific Objectives 1. To know the behavior of the following variables from 1986-2010: a. Gross Value Added in Forestry b. Lumber Exports c. Lumber Imports d. Gross Domestic Product 2. To know and provide empirical evidence on the significant relationship between Gross Value Added in Forestry and its explanatory variables. 3. To know the impact of the different explanatory variables individually and collectively on Gross Value Added in Forestry. 4. To determine whether Gross Value added in Forestry is a stable function of the following variables:

a. Lumber Exports b. Lumber Imports c. Gross Domestic Product 5. To determine whether the model is correctly specified.

Statement of the Hypotheses This study attempted to either accept or refute the following null hypotheses; 1. The following variables have nosignificant relationship with Gross Value Added in Forestry: a. Gross Domestic Product b. Lumber Export c. Lumber Import 2. The following variables have nosignificant effect with Gross Value Added in Forestry: a. Gross Domestic Product b. Lumber Export c. Lumber Import 3. That the model is not correctly specified. 4. That there is no structural stability between two periods (1986-1997 and 1997-2010) in the model.

Scope and limitation The study is focused on the contribution of Gross Value Added in forestry to Gross Domestic Product from 1986-2010.

Moreover, this study tried to relate the lumber industry to some of important variable that is significant in this study. These are Lumber Import, Lumber Export and Gross Domestic Product from the year 1986-2010. The coverage of this study is in the Philippine setting. The basis of the data and study provided were gathered in both life and non life sector in the year 1986-2010. Gross Value Added is the Gross Domestic product plus Subsidies minus Taxes. The data used were annual data from different government agencies.

Significance of the study The study on the analysis on Gross Value Added in Forestry and its contribution to the Philippine economy can serve as a guide for; Government They may use this study as a tool to identify the significant contribution of the lumber industry to the economy. This may also help them to formulate regulations or policies to protect forestry which are already neglected and not properly utilized. Private Sector This would help those people who are willing to engage or invest in this kind of industry. They may need to know the pros and cons and whatever it is needed to gain success in this kind of industry. Students This research may also help students to be more aware about the industry and its importance to the economy. To get a clear view of the industry and how does it affect different sectors as well as other industries.

Future Researchers This research may serve as a guide for them to consider every decision that they have to come up with. They can assume and think of different strategies that can help them in accordance to the factors affecting the Gross Value Added in Forestry. They can formulate different hypothesis or theories but still stick to the original importance of the study.

Theoretical framework The core basis behind the development of this study was primarily on the premise that the Lumber export, Lumber import and Gross Domestic Product can affect the Gross Value Added in Forestry. In explaining further the relationship between Gross Value Added in Forestry and Lumber import and export the researchers have decided to include the theory of Opportunity Cost, The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action (Investopedia). If we import lumber products, this will be beneficial to the foreign countries that we import their local product, thus, our country will not usually earn profit from it. Therefore, this will not help boost our countrys Gross Value Added in forestry. This will be the total opposite when we export our local lumber products abroad. It will be beneficial to our country and we will earn more profit from it. Hence, this will help increase our Gross Value Added in Forestry. Furthermore, to fully understand the relationship of Gross Value Added in Forestry to Gross Domestic Product the researchers decided to include the reason that

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some forestlands are being converted into commercial lands, thus, our forest reserves decreases. Therefore, Gross Domestic Product will have a negative effect on Gross Value Added in Forestry because of conversion of forestland into commercial lands (Ted Case Study, 2000). The theories mentioned above were primarily chosen because it serves as the main foundation of this study. Given facts guided the researchers for a better understanding of the effects and relationship of the explanatory variables to Gross Value Added in Lumber. Furthermore, in order to prove the findings of this study, theories were needed to yield a better result and understanding.

Conceptual Framework INPUTS PROCESS OUTPUT

The figure shows the individual relationship of Gross Domestic Product, Lumber Import and Lumber export to Gross Value Added in Forestry. Gross Value Added at basic prices corresponds to the value of output less the value of intermediate consumption (Investopedia). Lumber import is basically buying lumber products abroad while Lumber

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export is selling lumber products outside our country. Gross Domestic Productis the market value of all final goods and services made within the borders of a country in a year. Therefore taken correctively the above relationship maybe summarized in single functional statement to wit: - + GVA = f (GDP, LI, LE)

Therefore, to fit or in simple notations and to show the purpose of the study the following symbols will be substituted:

GVA = Gross Value Added in Forestry GDP = Gross Domestic Product LI = Lumber Import LE = Lumber Import

Definition of terms There are variables that were used in the study which for some reasons need some explanation in order for the researcher and reader to understand them. Gross Domestic Product is the market value of all final goods and services made within the borders of a country in a year (Investopedia). Gross Value Added is the difference between the gross value of goods and services produced during the period and recorded at the moment they are produced regardless of whether there is change of ownership (Investopedia).

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Imports are goods or services brought into one country from another (Investopedia). Export is a function of international trade whereby goods produced in one country are shipped to another country for future sale or trade (Investopedia).

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CHAPTER II REVIEW OF RELATED LITERATURE AND STUDIES Presented below are the related literatures both foreign and local that are significant to the study of researchers in assessing knowledge and gaining useful information that are related to the gross value added in forestry, some of its factors and policy implementations.

Foreign Studies Various materials related to the study have been reviewed by the researchers including foreign and local studies and literatures; whereas, according to International Trade Centre, International Trade Forum,value added wood exports have a bright future. Producer countries of the International Tropical Timber Organization (ITTO) as a totaled value of processed wood products fewer than 4.2 billion US dollars in 1996-1997, the highest points recorded in commercial trade statistics so far. There was a 17 percent drop to 3.5 billion US dollars in the following years and was believed that exports were stabilized in most countries, despite the lack of comprehensive data for the year 1999. The Philippines appeared to be the only Asian major producer where during the economic downturn the exports growth continued unabated. It was largely due to its continued success in the United States, which absorbed growing amounts of Philippine furniture in the late 1990s. Apparently, the Philippines hadincreased in import volumes of designing furniture collections with local companies and American hardwoods to

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manufacture furniture in order to meet the medium-and high-end market demand in the United States. Outside Asia, Brazil has made its impressive entry into the global market for further-processed wood products. Its successful macroeconomic and currency stabilization program in the mid-1990s make its hit in top of Philippines and is closing up on Thailand. Another positive factor was their free trade area with some countries like Argentina, Paraguay and Uruguay. Moreover, the devaluation of their real domestic currency has helped exporters win new market shares. Other countries exports are small, while the region as a whole accounts for 16 percent of the producers exports. (International Trade Forum, 2001) Furthermore, according to U.S. Lumber Coalition, there were independent studies, including Canadian studies, showing the cost of manufacturing lumber in the United States is lower than or comparable to the cost in Canada. The Canadian industries only real advantage over US industry is the Canadas access to taxpayer subsidized Canadian timber, which results to lower production costs of Canadian. In addition, providing unfair subsidies, Canadian provinces designed other policies designated to maximize production and jobs in Canadian industry domestic processing mandates, minimum harvest requirements and restrictions on log export resulting to initially high levels of lumber production and timber harvests even when there is an oversupply in the market. (U.S. Lumber Coalition, 1989) An analysis of Chinese Customs data indicates that China imported a total of 120 million cubic meters (RWE) of forest products in 2004. The dramatic impact this surge in imports is having on forests and livelihoods in supplying countries has brought much

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attention, and some critique, to Chinas public policies and forest industry. Much less attention has been paid to Chinas exports and its role in supplying global demand for lower cost forest products. (World Forestry, 2001) Another study, according to Shaun Driver, government involvement in the industry is frequent and intense which makes an economic analysis of the topic difficult. The intervention is also prompted on the side of the United States by Canadas significant market share for processed lumber in the United States. Each governments move was correspondingly matched by the other and the market is yet to be placed in an environment where it can operate on its own. (Saskatchewan Economics Journal, 1987)

Local Studies After reviewing different foreign studies, the researchers also gathered local study that gives insight for the paper. Thus, according to Argawal, Cashore and Shepherd, Economic Contributions of Forests, forests provide substantial levels of employment. This has a positive effect to the GDP. More than 13 million people are employed in forest sector activities in the formal sector and another 40 to 60 million people may be employed in the informal sector. (Economic Contributions of Forests, 2012) According to book Philippine Economy: Development, Policies and Challenges, Gross Value Added in Forestry reflects the unsustainability of the past forest management policies. Their real term has declined by as much as 22 percent in 1990s. In recent years, forestrys contribution to Gross Value Added has fell to just 1 percent from its 15 percent share of Gross Value Added in the early 1960s. (Philippine Economy: Development, Policies and Challenges, 2003 A.M. Balisacan)

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Foreign Literature According to U.S. Lumber Coalition the softwood lumber industry in United States is under severe strain from unfairly traded imports of lumber from Canada. Thus, the lumber industry of United States is highly competitive and rated among the most efficient lumber industries in the world. The American wood products and forestry industries are critical elements of the United States manufacturing base and state economies. Sawmills and wood preservation industry of United States can create an employment of over 80, 000 across America which represents $3 billion annuity payroll of income which supports the economies of thousands of communities nationwide. (U.S. Lumber Coalition, 1986) Another article was about the Chinas export of lumber which grows slowly. Exports actually dropped in 1998, largely due to the logging ban which decreased the domestic timber supply. Exports increased after 1999 and then flattened from 2000 to 2004. The Chinese government encourages re-exports of lumber from Russia. (World Forestry, 2006)

Local Literature According to Philippine Wood Producers Association, sited from the article of Hermosa, The Economy, Business World, price hike for wood products will dampen consumption as buyers may choose substitutes such as plaster-boards and other synthetic goods. Domestic demand for wood products waned in May and June as the construction industry put off or has scaled down projects. Philippine wood exports to the United States

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and Japan also declined in the first half as their economies weakened and the peso strengthened. It also noted that their members are preparing for the inevitable lowering of tariffs on imported wood products by re-tooling plants and exploring innovative wood products to become more competitive. (Philippine Wood Producers Association, 2008) In addition, log exports had fallen to 5 percent from its all-time high record of 8.7 million cubic meters in 1969 which generates forest exchange earnings to over 300 million US dollar. Logs and lumbers were also the best single export earner in the Philippines that delivered 33 percent of the total exports. (Logging the Rainforest: and History of Good Intentions, 1987 Van Den)

Synthesis The various articles and studies related to the topic of the researchers gave a lot of information and knowledge about the gross value added in forestry. These materials were all relevant to this paper entitled Analysis on the Determinants of Gross Value Added in Forestry and its Contribution to the Philippine Economy, 1986-2010. These foreign studies and literatures guided the researchers in preparing this paper and assessing the facts that might be needed. These studies presented various discussions such as the studies made by International Trade Centre: International Trade Forum in 2001. The first study presented an analysis about the performance of wood exports. It stated reasons why Philippines were the only Asian major producer whose exports continually rise during an economic downturn and the increasing volume of hardwood import due to high market demand in United States. It also stated some economy

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stabilization strategy of other countries, like free trade area with some nearby countries and devaluation of their real domestic currency, which makes an impressive entry in the global market. Moreover, the second study was from U.S. Lumber Coalition 1989, stated the cost of manufacturing lumber products between United States and Canada. Wherein, the Canadas access to subsidized taxpayers results to lower production cost of their lumber. The third study is an analysis from Chinese customs, which stated the effect to Chinas economy as their import in forestry exceeds the countrys export in 2004 and paid less attention on its role in supplying global demand for lower cost forest products. In the fourth study from Shaun Driver, 1987 stated that government intervention can affect a lot the forestry industry, such as higher tariffs and implementing log ban. However, the first local study among researchers according to Argawal, Cashore, and Shepherd 2012, has done research about the effect of Gross value added in the economy, such as forestry can provide substantial level of employment. Making over a millions of people employed in the formal and informal sector of the forestry activities. Moreover, in the second study, The Philippine Economy: Development, Policies, and Challenges 2003, stated that the forestrys contribution to Gross Value Added has fell over the years. The first literature by the U.S. Lumber Coalition 1986, stated that lumber industry in United States is highly competitive and an efficient lumber industries in the world. In addition, wood industry can create more employment and supports thousands of economies nationwide. The second literature was by the Chinas export, it is stated that the Chinas export dropped due to the logging ban wherein the government is encouraged to re-exports lumber from Russia.

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The first local literature by the article of Jessica Anne Hermosa 2008, sourced by the Philippine Wood Producers Association stated the effect to the demand in wood products if price hike occurred. It is also stated the impact of exchange rate to the wood exports. In addition, it is stated that their members were preparing for innovations in such policies to be more competitive in the global market. In second literature by Van den 1987, stated the huge downfall of log and may result to a decrease in lumber exports earnings wherein it contributed a large share in the total export.

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CHAPTER III RESEARCH METHODOLOGY Research Design The researcher made use of quantitative method as a general approach in view of the fact that the study deals with the effect of the Gross Value Added in Forestry from year 1986-2010 given some economic indicators. Secondary data were utilized in this study. The data gathered were summarized, cross-tabulated and presented in tabular and graphical forms. On its statistical treatment, a multiple regression model is used to determine the factors that could affect the Gross Value Added in Forestry. This includes Lumber Imports, Lumber Exports and Gross Domestic Product. The computer software Eviews (Econometric Views 7.0) was utilized.

Sources of Data The researchers used secondary data gathered from different government agencies such as National Statistics Office (NSO), and National Statistics Coordination Board (NSCB). Extensive research in the National Library, UP Library, Ninoy Aquino Library Learning and Resource Center was done. The researchers also gathered information over the internet to obtain studies, reports, documents and data relevant studies.

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Statistical Treatment The data have been summarized, organized and analyzed using tables and graphs. Furthermore, computations of the needed statistics will be facilitated using Econometric Views 7.0 (E-views 7.0) for the rest of the tests. 1. Measure of Correlation The test of the correlation will be employed to examine if there is a relationship exist between its Service Sector and its individual repressors. The formula is: = If r lies between -1 to 1: If it is 1 the fitted regression will explain 100% of the variation in Y. If it is 0, model does not explain any variation in Y. GVA = +

GVA = Gross Value Added in Forestry LE = Lumber Export LI = Lumber Import GDP = Gross Domestic Product Bi= regression coefficients (i = 0,1,2,3) = random error term

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2. Test of the individual significance of the regression To determine whether the variables used in the model are significant or not to the electricity consumption, the researchers used t-test at the 0.01 level of significance, defined by the formula. To get the t-values the actual estimator is divided by its standard error. If the value of the t-statistics exceeds the vertical value o the t distribution at 1% level of significance with n K degrees o freedom, we accept thatB1 and B2are statistically significant. 3. Test of the overall significance of the regression To check whether the hypothesis is accepted or rejected, the researchers considered F-test at the 0.01 level of significance. It is obtained by getting the ratio of the explained and unexplained variance.

4. Test of Goodness Fit (R2) To test how well the estimated regression line fits the actual line of value, the researchers will use the coefficient of determination, R2. The value of this tells the extent of the total variation in Y explained by the explanatory variables used in the regression.

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Moreover, the adjusted coefficient of determination R2 is used mainly when there is the inclusion or more independent variables as degrees of freedom is reduced.

Adjusted

Durbin-Watson test used to know if there is no correlation among error terms. This is a test of null hypothesis that there was no first order autoregressive correlation. The equation is: If the computed d is greater than the upper critical value of d, reject Ho. That is, there is a significant positive autocorrelation. If the estimated du<d<4-du, reject Ho. That is, there is statistically significant evidence of no autocorrelation. 5. Test of Structural Stability of Parameters Chow Test was used to the estimated relationships for different line periods. + + 1stestimated eq. 2nd estimated eq.

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CHAPTER IV PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA This chapter provides the presentation and analysis of the behavior of each variables used in the study. In addition, interpretations of the test results were also presented together with the summaries of the discussion of the dependent variables and each of its factors.

Presentation and Analysis of Data Gross Value Added for Forestry The Philippines forestry sector ranked as one of the 11 poorest among 89 countries in the world because the countrys forests were largely deforested in the 1970s and converted into agricultural areas in the late 1970s and 1980s. Through this, the gross value added of forestry also affected.(Impacts and Effectiveness of Logging Bans in Natural Forests: Philippines, 2003 Van Den) Gross Value Added (GVA) is a measure in economics of the value of goods and services produced in an area, industry or sector of an economy. Additionally, it is the value of output less the value of intermediate consumption.(Investopedia) Prior to its formulation, mining, logging, fisheries, and agriculture, Gross Value Added for Forestry has contributed almost P15 billion to the countrys Gross Value Added for almost 2 decades. Meanwhile, the GVA and percentage share of Forestry in the GNP has been declining since the 70s.(MPFD, 1990).

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The trend of Gross Value Added for Forestry seems unstable for the 25 period. Hence, the researchers provided table and graph of Gross Value Added for Forestry and included some explanations and analysis to its behavior. Presented below is the table and graph of Gross Value Added of Forestry covering the year 1986-2010.

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Table 1 Gross Value Added in Forestry 1986-2010 (In million Pesos) Year GVA Growth Rate 1986 9,874 1987 10,907 10.46 1988 13,121 20.298 1989 11,141 (15.09) 1990 8,907 (20.05) 1991 6,541 (26.56) 1992 6,763 3.39 1993 5,570 (17.64) 1994 4,770 (14.36) 1995 2,746 (42.43) 1996 4,665 69.88 1997 2,741 (41.24) 1998 2,847 3.86 1999 3,325 16.78 2000 5,206 56.57 2001 2,741 (47.35) 2002 1,758 (35.86) 2003 2,123 20.76 2004 4,330 103.95 2005 4,537 4.78 2006 5,126 12.98 2007 4,155 (18.94) 2008 3,574 (13.98) 2009 3,758 5.149 2010 2,435 (35.2) Average 5,346 0.006 Source: Forest Management Bureau

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14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 -2,000 GVA Growth Rate

Figure 1 Gross Value Added in Forestry 1986-2010 (In million Pesos) Primarily, the Gross Value Added of Forestry behaved with instability from year 1986 to 2010. The unstable behavior of Gross Value Added was brought by the various economic events which expectedly affected the Philippines. The Philippiness Forest sector were abundant in 1950s and a major source of export revenue in the 1960s and 1970s not until the large deforestation that happened in 1970s. (Guiang, 2000) Notice that 1988 provided the highest gross value added of forestry which is 13, 121 while 2002 captured the lowest amount of 1, 758 in million pesos. However, it declined in 1990s brought upon by the unsustainability of past forest management policies which definitely affect the gross value added. It was clearly seen that 1990 posted a total Gross Value Added of 8,907, then decreased to 6, 541 in 1991. It then showed a near difference during 1992 which is 6,763 and fall down to 5,570 in 1993. On

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the following years, it continued to decline reflecting different economic crisis like the Asian Financial Crisis happened in 1997, though the Philippines is less severely affected, still it contributed to the declining gross value added of forestry in the Philippines.(Philippine economy: Development, Policies and Challenges, 2003 A.M. Balisacan). In fact, 1997 Gross Value Added posted a lower amount of 2,741 million pesos and by 1998; it then slightly increased to 2,847 million pesos. The forestry sector in the Philippines became a net importer of log as of 2000s coming from being the major log exporter in the 1960s. (PFS, 2000).It thus affected the Gross Value Added of 2002 which is 1,758 million pesos that recorded as the lowest gross value added over the 25 year period. Accordingly, 2004 and 2005 showed a near amount of gross value added which are 4,330 and 4, 537 million pesos. As of 2006, the gross value added of forestry increased to 5,126 million pesos because of the increased economic conditions in the Philippines. But then, it declined in 2007 which posted total Gross Value Added of 4,155 million pesos; also decreased occurred in 2008 due to the Philippine Financial Crunch, thus, it posted total gross value added of 3, 574 million pesos. (The Philippine economy: Development, Policies and Challenges, 2003 A.M. Balisacan) and 2010 continue to decrease posting total GVA of 3, 758 and 2, 435 million pesos. Lastly, the total average of gross value added of forestry amounted to 5,346 million pesos; while total average of growth rate is 0.006.

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Exports of Lumber Traditional wood products like log, lumber, veneer and plywood are still being traded outof the country. Lumber is being defined as timber sawed into boards and other structural members of specified length.(Investopedia) Exports of lumber in the Philippines forestry sector captured the sixth position covering total amount of US$175 million which then followed by plywood. Furthermore, the export of lumber has been increasing during late 1990s and then it exceeded the total imports of it. (PFS 2001) The ban on the lumber export should be lifted and allow the export of lumber manufactured from imported logs. This is also to recover foreign exchange used in the importation of logs, generate employment and stabilize the lumber industry sector(DENR) Accordingly, the exports of lumber in the Philippines posted an unstable behavior. Thus, the researchers provided below the table and graph of exports of lumber including their reasons of fluctuations.

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Table 2 Lumber Export (Thousand Cubic Meter) Lumber Growth Year export Rate 1986 495 1987 645 30.3 1988 629 (2.48) 1989 438 (30.36) 1990 77 (82.42) 1991 58 (24.67) 1992 56 (3.44) 1993 80 42.85 1994 37 (53.75) 1995 84 127.02 1996 145 72.61 1997 141 (2.76) 1998 41 (70.92) 1999 69 68.29 2000 120 73.91 2001 105 (12.5) 2002 91 (13.33) 2003 119 30.76 2004 124 4.2 2005 130 4.83 2006 184 41.53 2007 208 13.04 2008 215 3.36 2009 293 38.6 2010 377 28.66 198 11.805 Average Source: Forest Management Bureau

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700 600 500 400 300 200 100 0 -100 -200 Lumber export Growth Rate

Figure 2 Lumber Export (Thousand Cubic Meter)

In the table and graph presented, it was clearly seen that the total volume of lumber export is at its highest peak of 645 thousand cubic meters during 1987 while 1998 posted the lowest volume of 41 thousand cubic meters. On the other hand, the total average of lumber export is 198 thousand cubic meters and total average growth is 11.805. There were twenty-three species of locally produced lumber traded in the country in 2011: 70%naturally grown and 30% planted. (PFS,2000) Exports of lumber as started in 1986 posted a total volume of 495 thousand cubic meters then it increased in 1987 at 645 and 629 thousand cubic meters during 1988 which shows a near difference. However, it clearly decreased to 438 thousand cubic meters at year 1989. In 1990, the Philippines exported more lumber that it imported thus the

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volume exported is 77 thousand cubic meters. Meanwhile, the contribution to the total Philippine export of logs and lumber has declined from 25 percent in 1969 to less than 1 percent in 1992. Reforestation programs have met with only limited success and some officials believe a timber shortage could occur within the next decade. And because lumber is a part of timber, exporting lumber was being affected also. (Philippine Economy: Development, Policies and Challenges, 2003 A.M. Balisacan)

However, from 1995 onwards the country has been a net importer of lumber and the difference between the values of imports to exports ranged from USD 59.35 million in 2000 to USD 138.78 million in 1996. (PFS, 2000) In addition, a total volume of lumber exports of 145 and 141 thousand cubic meters have been recorded as of 1996-1997 which is due to the sustainability of past forest management policies. The export of lumber during the 10 year period has been increasing from 0.077 million cu m in 1990 to 0.120 million cu m in 2000. As of 2002, the total volume of lumber exports decreased to 91 thousand cubic meters, but then increased to 119 thousand cubic meters in 2003 due to the increasing lumber production of plantation grown species whose export is encouraged by government.(PFS, 2011) The increasing behavior of lumber exports continues as of 2004 to 2007, whereas it yielded total volume of 124, 130, 184 and 208 thousand cubic meters. In 2009, it decreased by small value which resulted to 215 thousand cubic meters and at the last year, it gain 377 thousand cubic meters of lumber exports.

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Imports of Lumber Imports or imported goods are goods being purchased from outside the country. (Investopedia)The Philippines import industry of lumber has no significant imports being made before 1990. But then, the researchers decided to include the lumber imports because it thus contributes to the gross value added of forestry. (PFS, 2000) Thus, therefore, a table and graph of Lumber imports have been provided by the researchers together with its reasons behind its fluctuations. Notice that below the table provided, the total average of lumber imports is 231343.92 thousand cubic meters while its average growth rate is 122.1797083 thousand cubic meters.

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Table 3 Lumber Import (Thousand Cubic Meter) Lumber Growth Year import Rate 1986 317 1987 528 67.5 1988 2,513 375.94 1989 12,557 399.68 1990 3,741 (70.2) 1991 9,974 166.613 1992 43,278 987.07 1993 462,941 969.69 1994 298,363 (35.55) 1995 378,531 26.86 1996 567,426 49.9 1997 411,657 (27.45) 1998 296,147 (28.05) 1999 381,235 28.73 2000 358,514 (5.96) 2001 370,809 3.43 2002 401,986 8.41 2003 338,064 (15.9) 2004 246,685 (27.03) 2005 362,509 46.95 2006 261,193 (27.95) 2007 174,456 (33.21) 2008 134,846 (22.7) 2009 128,754 (4.52) 2010 136,574 100.06 122.179 Average 231343.92 Source: Forest Management Bureau

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600000 500000 400000 300000 200000 100000 0 -100000

Lumber import Growth Rate

Figure 3 Lumber Import (Thousand Cubic Meter) The imports of lumber in the Philippines have been in its lowest period during 1986 to 1992 because there has no significant imports made during those years. But then, as of 1993, it increased to 462,941 thousand cubic meters followed by a decreased in 1994 which is 298,363 thousand cubic meters. Accordingly, it continue to rise as of 1995 which is 378,531 thousand cubic meters and 567,426 thousand cubic meters in 1996 which recorded as the highest volume in 25-year period. As of 1997, the world economy had experienced financial crisis which expectedly affects the international transactions of the Philippines in other countries. Thus, the volume of lumber imports at this year is lower which is 411,657 thousand cubic meters which continue to decreased in 1998 of 296,147 reflecting the recovery period of the

36

different countries brought by the crisis. (Assessing the Softwood Lumber Trade Dispute.). The reported imports of lumber in 2001 were 370,809 thousand cubic meters which valued at US$86.27 million. Likewise, import of lumber climbed to 401,986 thousand cubic meters in 2002. Furthermore, year 2003 to 2006 posted a very unstable behavior whereas it presented total volumes of 338,064, 246,685, 362,509 and 261,193 thousand cubic meters. However, it continued to be unstable on the proceeding years, capturing 136,574 in 2010 and 128,754 thousand cubic meters in 2009. Gross Domestic Product Gross Domestic Product is the market value of all final goods and services made within the borders of a country in a year. (Investopedia) As it is being shown in the chart below, Gross Domestic Product is having a stable growth from the year 1986-2010. Notice that below the table provided, the total average of Gross Domestic Product is 3,354,758 million pesos while its average growth rate is11.695 percent. And this reasons occurred by the following reasons;

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Table 4 Gross Domestic Product (in Million pesos) Year GDP 1986 608,887 1987 682,764 12.13 1988 799,182 17.05 1989 925,444 15.8 1990 1,077,237 16.4 1991 1,248,011 15.85 1992 1,351,559 8.3 1993 1,474,457 9.09 1994 1,692,932 14.82 1995 1,905,951 12.58 1996 2,171,922 13.97 1997 2,426,743 11.73 1998 2,665,060 9.82 1999 2,976,905 11.7 2000 3,354,727 12.69 2001 3,631,474 9.14 2002 3,963,873 9.15 2003 4,316,402 8.89 2004 4,871,555 12.86 2005 5,444,039 11.75 2006 6,031,164 10.78 2007 6,647,338 10.22 2008 7,409,371 11.46 2009 7,678,917 3.64 2010 8,513,037 10.86 3,354,758 11.695 Average Source: National Statistics Coordination Board Growth Rate

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9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 GDP Growth Rate

Figure 4 Gross Domestic Product (in million pesos) In 1980s where Philippines is still in the recovery since the debt crisis that has better prospects of sustained growth. The recent recovery has been characterized by the rapid growth of exports, imports and investment, more modest expansion of consumption, and a reduction in the public sector account deficit. Meanwhile, the economy has not yet realized its full potential, despite the country's abundant natural resources, and skilled, low-cost workforce, and the growth has been lagging behind the other countries of the region.(PIDS) During the 1990s, the Philippine Government introduced a new range of reforms designed to spur growth and attract foreign investment. As a result, the Philippines saw a period of economic expansion, although the Asian financial crisis in 1997 slowed growth once again.(Philippines, pdf) Throughout 1998, Philippine economy remained in a sorry state

39 after the global crisis hit our country extraordinarily. Towards year 2000, the pace of Gross Domestic Product growth forecast to continue. While in 2004, Gross Domestic Product increases, it did not reflect the underlying strength of the economy but it only shows a pattern of growth that is tied with the countrys presidential election cycle. A high degree of spending by candidates and by the government that is politically motivated tends to prop up income and output is being occurred during this period. In 2008, the growth rate of the GDP had declined because of the global credit crisis, bringing its expectations into line with financial markets.(Senate Economic Planning Office, 2000)

Hence, the high growth rate in 2010 was not typical, and that was another presidential election period.(Philippines, pdf) As it is shown in the graph, on the average, it has the highest Gross Domestic Product.

Presentation and Analysis of Statistical Results The Estimated Regression Model After carefully applying the regression on Gross Value Added in Forestry, Lumber import, lumber export and Gross Domestic Product, the following regression results were gathered and shown in the table:

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Table 5 Summary of Regression Results

GVA=7614.864+7.426054LE-0.006732LI-0.000651GDP t-value (4.147697) (-3.617896) (-6.004484)

R2= 0.855142 Adjusted R2= 0.834484 d = 1.532134

F-ratio = 41.32326

Critical F-value (3, 22) = 4.82*0.01 Critical t-value (25) = 2.88*0.01

dl = 1.123du= 1.6544-du = 2.346

The results show that for every 1 peso increase in the export of lumber, on average, the gross value added for lumber industry increases by 7,426,054 pesos remaining other factors constant. In addition, for every 1 peso increase in import of lumber, on average, the gross value added for lumber industry decreases by 6,732 pesos remaining other factors constant. Furthermore, for every 1 peso increase in gross domestic product, on average, the gross value added for lumber industry decreases by 651 pesos remaining other factors constant. Lastly, the value of the intercept 7614.864 means that if the values of export in lumber, import in lumber and gross domestic product were fixed at zero, the gross value added would be 7,614,864 pesos. The computed t-value of export in lumber, 4.147697 is greater than the critical tvalue of 2.8. However, the computed t-ratio of export in lumber shows that it has significant effect on gross value added for lumber industry and rejects hypothesis 2 which states,

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That there is no significant effect between gross value added for lumber industry, export in lumber, import in lumber and gross domestic product. The goodness of fit (R2) 0.855, 82.37 percent of the total variation of the gross value added for lumber industry is explained by the export in lumber, import in lumber and gross domestic product. Through estimated durbin watson d statistics, it seems that there is no problem of first-order serial correlation in the equation. The result shows that du<d<4-du, 1.654<1.532<2.346. In other words, the computed d statistics is greater than its critical d value of 1.654 and less than 4 less its critical d value of 1.654 which is 2.346. Table 6 Correlation Results GVA GVA LE LI GDP 1.000 0.692 -0.696 -0.595 LE 0.692 1.000 -0.589 -0.090 LI -0.696 -0.589 1.000 0.140 GDP -0.595 -0.090 0.140 1.000

The corresponding pattern on gross value added for lumber industry in the table shows a linear association of gross value added for lumber industry with respect to export in lumber, import in lumber and gross domestic product. The result shows that based on the correlation coefficients the hypothesis 1, That there is no significant relationship between gross value added for lumber industry, export in lumber, import in lumber and gross domestic product is rejected.

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Table 7

VARIABLES

VIF

TOL

LE LI GDP

1.532 1.550 1.020

0.652 6.46 0.980

The table clearly shows that exports in lumber, import in lumber and gross domestic product are not collinear with each other. Since, the computed VIF of all the regressors is greater than 1 but do not exceed 10. Also, it reveals that the range of the tolerance (TOL) of the explanatory variables is from 0.95 to 0.992 which is not close to 0 but rather near to 1, which also means that the regressors are not collinear with each other and reject the number 1 hypothesis which states, That there is no significant relationship between gross value added for lumber industry, export in lumber, import in lumber and gross domestic product.

Table 8 Chow Breakpoint Test 1998 F-statistics 1.066921 Probability 0.4031

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The behavior of gross value added for lumber industry in relation to export in lumber, import in lumber and gross domestic product for 1987 1998 was similar to the behavior of 1998 2010. In addition, the F-value of .4031 does not exceed its critical Fvalue of 4.47. Therefore, gross value added for lumber industry is a stable function of export in lumber, import in lumber and gross domestic product. The researchers have chosen year 1998 due to the existence of some economic problems which may affect the stability of the model for the years 1987 to 2010. Table 9 Ramsey RESET Test F-statistics 0.692389 Probability 0.4152

The result of the Ramsey RESET Test in table indicates that the economic model of the study is correctly specified, for a reason that the computed F-value of 0.692389 is less than its critical F-value of 4.47. It also gave satisfactory results for the other traditional test criteria. The model therefore is suitable for forecasting and policy formulation as well and rejects the hypothesis number 3 which states that, The model is not correctly specified. Table 10 Normality Test Jarque-Bera 2.033434 Probability 0.361781

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The results of the Normality Test shows that the value of Jarque-Bera 2.033 yields a p-value of 0.362and it exceeds its chosen level of significance that shows the regression residual is normally distributed. Table 11 White-Heteroskedasticity Test F-statistics 2.692208 Probability 0.0435

The computed F-value of 2.692is less than its critical value of 4.47. It clearly shows that there is no heteroskedasticity is detected in the model.

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CHAPTER V SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS This chapter includes summarized findings that can easily identify the behavior of each variable used in the study and furthermore the analysis of the results obtained from the regression analysis. Conclusions are also discussed in this chapter that helps to answer each problems stated from the previous chapters, hence, recommendation will be followed next. Summary and Findings 1.The Gross Value Added for Forestry in the Philippines, on the average had been 5,346,000 million for the 24-year period. The growth rate on the average, had been -0.006 percent. Average volume of lumber export had been 198 per thousand cubic meters with an average growth rate of 11.805. Furthermore, the average lumber import per thousand Cubic meters had been 231343.92 from the year 1986-2010. The average growth rate of lumber import had been 122.179 percent. Finally, the Gross Domestic Product on the average had been 3,332,838 million pesos having an average growth rate of 11.695 percent. 2.For the periods 1991 to 1992, given one million peso decrease on the Gross Domestic Product, on average, the Gross Value Added in Forestry increase by 6 percent, holding other factors constant. If Lumber export increases by one

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cubic meter, on average, Gross Value Added in forestry will increase by 11.805 cubic meters, holding other factors constant. However, given a one cubic meter decrease in interest rate, Gross Value Added in Forestry will increase by 122.179 cubic meters, remaining other factors constant. 3.The result of the regression implies that Lumber export, Lumber import and Gross Domestic Product have a significant effect on Gross Value Added in Forestry. Since, the computed t-value of 4.147697, -3.617896 and -6.004484 are greater than the critical value of 4.82 at 1 percent level of significance and 25 degrees of freedom. 4.The calculated coefficient of multiple determinations which shows the goodness of fit (R2), 0.855, 82.37 percent of the total variation of the gross value added for lumber industry is explained by the export in lumber, import in lumber and gross domestic product. 5.For 25 observations and 3 explanatory variables at 1 percent level of significance, it shows that du<d<4-du, 1.654<1.532<2.346have no problem with the first-order serial correlation. 6.The multicollinearity test using the VIF and TOL indicates that Lumber export, Lumber import and Gross Domestic Product are not collinear with each other since the computed VIF of all the regressors is greater than 1 but do not exceed 10and the range of the tolerance (TOL) of the explanatory variables is from 0.95 to 0.992 which is not close to 0 but rather near to 1, which also means that the regressors are not collinear.

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7.The Chow Breakpoint Test result indicates that the behavior of Gross Value Added in Forestry in relation to Lumber export, Lumber import and Gross Domestic Product for 19861998 was similar to the behavior of 19982010. The F-value of 0.4031does not exceeds its critical F-value of 4.47 at 1 percent level of significance with 3 and 25 degrees of freedom. It also shows that Gross Value Added in Forestry is a stable function of Lumber export, Lumber import and Gross Domestic Product. 8.Ramsey RESET Test was employed to prove if the economic model of the study is correctly specified. The computed F-value of 0.692 is less than its critical Fvalue of 4.47 at 1 percent level of significance. The model therefore is suitable for forecasting and policy formulation as well. 9.Normality Test results determine the validation of the parameter estimates. The regression residuals were tested for normality using the Jarque-Bera test. The JB yield a coefficient of 2.033 yields a p-value of 0.361. The result shows that the p-value exceeds the chosen level of significance which is at 1 percent, that indicates the regression residual is normally distributed. 10.Lastly, the White-heteroskedasticity Test result indicates that there is no heteroskedasticity detected in the model. The computed F-value of 2.033434is less than its critical value of 4.47 and the p-value of 0.0435 is higher than the level of significance which is at 1 percent.

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Conclusions Based from the gathered facts and figures and carefully interpreted regressed results, the following conclusion hereby states that: 1. The researchers have enough evidences and supporting details to claim that Gross Domestic Product, Lumber Import and Lumber Export have significant effects on Gross Value Added in Forestry as they explain further the variation of the dependent variable. 2. There is a significant effect between Gross Value Added in Forestry in Lumber Export, Lumber Import and Gross Domestic Product explained by the result of the regression. 3. The model is correctly specified explained by the results of the Ramsey RESET Test. 4. There is structural stability between two periods (1986-1998 and 1998-2010) in the model explained by the results of Chow Breakpoint Test. Recommendations Based from the findings, gathered data and conclusions, the researchers hereby recommend the following: 1. Based on the results obtained from the study it simply shows that Gross Domestic Product indirectly affects our Gross Value Added in Forestry. Therefore, the researchers recommend specifically to the private sectors to minimize the conversion of forest lands into commercial lands. Ina addition to that, The Department of Environment and Natural Resources should impose

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strict rules on giving out permits that allows them to convert forestlands into commercial lands. 2. Moreover, we can say that the Lumber Import is indirectly related with the Gross Value Added in Forestry. On the other side, the Department of Environment and Natural Resources should launch campaign that shows encouragement in patronizing our own forestry products rather than importing. As we go further, we recommend that our local buyers should also focus more on patronizing our own local forest products. Therefore, the local lumber producers should think of strategies on improving their lumber products to gain more profit and control the importing of foreign forest product. 3. The recommendation goes to the government since the Lumber export has a positive effect on Gross Value Added in Forestry. As reported, from the year 2013-2013, the ongoing rate of duty of forest products is at 3%. And the forecasted rate for the year 2014-2015 would be still at 3%, therefore, the Department of Trade and Industry should implement a higher rate of duty of forest products. Aside from being beneficial and gaining profit at the same time, this will also help in the conservation of our forestry and natural resources. In addition to that, the Department of Environment and Natural Resources should think of ways to protect our natural resources like imposing Total Log Ban on areas where massive deforestation is an ongoing issue while

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contributing to our economic growth and maintaining the lumber export growth. 4. For future researchers, this will serve as guide about pros and cons when it comes to the forestry industry. Furthermore, the researchers get an insight about how the import and export industry plays a big part on the countrys economic growth. In the other hand, the research would recommend to look for other economic variables aside from Gross Domestic Product, Lumber export and Lumber import as indicator of Gross Value Added in Forestry.

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BIBLIOGRAPHY

Literatures and Articles Acosta Romeo T. October (2005).Impact of incentives on the development of forest plantation resources in the Philippines. Balisacan, Arsenio M. (2003). Philippine Economy: Development, Policies and Challenges. Bautista, G.M. (1990). The Forestry Crisis in the Philippines: Natures, Causes, and Issues. The Developing Economies 28, no. 1. Japan: Institute of Developing Economies. Bautista, G.M. (2003). The Requirements for the Institution of an Environmental User Fee System in a Watershed Context. Paper presented during the workshop on Governance of Watersheds: Challenges and Constraints. 19-20 June 2003. DENR/FMB. (1991). Philippine master plan for forest development. Quezon City, Department of Environment and Natural Resources. FAO. (2000). Global forest resources assessment. Rome, Food and Agriculture Organization of the United Nations. FAO. (2003). State of the worlds forests. Rome, Food and Agriculture Organization of the United Nations. Senate Economic Planning Office, (2000). TED Case Study. (2000). Philippine Deforestation. Umehara, H. and G.M. Bautista, eds. Forthcoming. (2000). Communities at the Margins: Reflections on Philippine Economic, Environmental and Social Changes. Ateneo de Manila Press.

PDF 03v5Assessing_The_Softwood_Lumber_Trade_Dispute.pdf Economic_Contributions_of_Forests_draft22dec.pdf Environmental and Natural Resources Accounting (Philippine forest resources) PDF MPFD, 1990.pdf

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Philippines,pdf Philippine Forestry Statistics. 2011.pdf Philippine Forestry Statistics. 2000.pdf Philippine Forestry Statistics. 2001.pdf wfi.worldforestry.org/media/posters/DaisukeTajima_Poster.pdf

Links http://www.denr.gov.ph http://www.econdb .pids.gov.ph http://www.forestry.denr.gov.ph/statbook.htm http://www.forestry.denr.gov.ph http://www.forestry.denr.gov.ph/statbook1990.htm http://www.forestry.denr.gov.ph/statbook1991.htm http://www.forestry.denr.gov.ph/statbook2010.htm http://www.forestry.denr.gov.ph/statbook2000.htm http://www.investopedia.com http://www.nscb.gov.ph http://www.pwpa.org.ph/pwpa_search.php http://www.tradeforum.org/Faster-growing-Trees-Value-Added-Products http://www.uslumbercoalition.org/general.cfm?page=31

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Appendices

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Appendix A Data Worksheet Year 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Gross Value Lumber Lumber Added Export Import 9,874 495 317 10,907 645 528 13,121 629 2,513 11,141 438 12,557 8,907 77 3,741 6,541 58 9,974 6,763 56 43,278 5,570 80 462,941 4,770 37 298,363 2,746 84 378,531 4,665 145 567,426 2,741 141 411,657 2,847 41 296,147 3,325 69 381,235 5,206 120 358,514 2,741 105 370,809 1,758 91 401,986 2,123 119 338,064 4,330 124 246,685 4,537 130 362,509 5,126 184 261,193 4,155 208 174,456 3,574 215 134,846 3,758 293 128,754 2,435 377 136,574 Sources: Forest Management Bureau Gross Domestic Product 608,887 682,764 799,182 925,444 1,077,237 1,248,011 1,351,559 1,474,457 1,692,932 1,905,951 2,171,922 2,426,743 2,665,060 2,976,905 3,354,727 3,631,474 3,963,873 4,316,402 4,871,555 5,444,039 6,031,164 6,647,338 7,409,371 7,678,917 8,513,037

National Statistics Coordination Board

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Appendix B Basic Regression Results

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Apendix C Covariance Analysis

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Apendix D Normality Test

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Appendix E White-Heteroskedasticity Test

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Apendix F Ramsey RESET Test

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Apendix G Variance Inflation Factors

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Appendix H Chow Breakpoint Test