Towards a new model of the Philippine political economy, Part II

Posted: March 28, 2015 in Uncategorized

bong mendoza's blog

The formal economic sector

The formal sector is best defined (operationally) as the one where receipts, as evidence of economic activity or transactions, are issued.  In instances where an economic obligation is to be performed in the future, a written contract is executed.  Transactions in this sector are voluntary exchanges[1] and transfers.[2] These transactions can occur between economic actors within a specific national economic territory or could involve domestic economic actors and economic actors located outside the national territory (i.e., the rest of the world, or ROTW).  In this sector, legal goods and services are the objects of economic transactions.  The legality of specific goods and services is determined exclusively by the state through its penal code and other laws.

This sector accounts for a country’s gross national product (GNP), leading one to conclude that it consists of reported or measured economic activity and that all unmeasured or…

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