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Globalization is “an increasing interaction across national boundaries that affects many aspects of life: economic, social, cultural, and political”. Globalization has affected the Philippine economy in many ways. It opened the market to foreign trade and increased both capital flows and financial integration. It promoted greater labor mobility (labor migration) and lessen the impact of inflation. As with the economy, globalization also affected politics. Nations group together into regional blocs, and are given powers to make decisions that have a significant impact on one another. Their goal is to agree on rules and policies for peace and prosperity of the common good and to lessen conflicts among member nations. Along with the positive effects, globalization has also brought negative consequences to the Philippine economy. Despite increasing economic growth, there is still inequality in the redistribution of wealth. Poverty is still unresolved. International migration continues, as unemployment is still commonly given as the reason why Filipinos continue to search for work abroad. Politically, policies that are made are not properly implemented. There are times when member states take on a different view on policies and hence no consensus will be arrived on. Also, there is the threat of multinational collaboration with politicians in the guise of the common good.
The government, through its policies and programs, has done a lot towards the country’s active and continuing participation in globalization. Yet it seems that these efforts are not enough.
Looking back, after the evasion of the protectionism regime in the 1980s, trade openness increased in the Philippines. This improved the competitiveness and efficiency of domestic industries and resulted in better allocation of goods and resources and enabled the country to start participating in regional trade such as AFTA, APEC, and WTO. Trade openness increased the country’s GDP from 88.1% in the 1990s to 101% in the 2000s. It also improved the sector of Information and Communication Technology, which helped in the rapid growth of ICT- BPO services in the country. The Philippines established itself as one of two major BPO Centers in Asia, together with India. Based on the statistics from the IT-BPO sector, these services accomplished a 50% annual growth from 2006 to 2008. The growth remained doubled until 2016. This helped ease the unemployment rate as more Filipinos joined the ICT-BPO services. The total trade of the Philippines rose, achieving a GDP of 101.4% in 2010. It helped eliminate the offset in the weak global demand that happened during the 2007-2008 Global Financial Crisis. Trade openness also made the economy less sensitive to inflation. Because of strong competition, an increase in trade and flow of investments, and the presence of products that are more diversified and less different from that found in other countries, prices of commodities, were less sensitive to local demands, and businessmen were constrained from increasing the cost of goods.
Globalization also increased capital flows to the Philippine economy (financial openness). According to Guinigondo (2019), the capital and investment flow increased from 3.1% (1990) to 3.4% (2000) to 6% (2010). The factors that contributed to the increase in the flow of investments include the 9 waves of foreign exchange liberalization reforms undertaken by the BSP and the liberalization of foreign bank entry in 2014. Likewise, the Philippines is a major contender for foreign investments. In the ASEAN Region, it accounts for 16.5% of the total population –the second-largest population in the region. Likewise in 2018, it was recorded as the second-fastest growing economy in South East Asia (after Vietnam). Remittances from OFWs further increased capital flows. Skilled and professional Filipinos saw an opportunity for international migration in the 1970s because of more liberal immigration policies, the emergence of the gulf region as a destination for temporary migrants during the oil crisis in 1973, and the rise of newly industrialized countries in East and Southeast Asia in the 1980s. The OFW remittances raised investment, labor productivity, and economic growth. It also supported the economy, especially during the 2007-2008 Global Financial Crisis.
Although globalization opened the Philippine trade, increased its capital, and increased international migration, there are downsides. Because of the unresolved problem of unemployment, Filipinos continue to seek employment opportunities in other countries that were perceived to offer higher salaries and compensation and better benefits. It has also resulted in brain drain in which the labor sector is deprived of its brightest talents. Philippine nurses are being exported to all the corners of the world but during this COVID- 19 pandemic, the nation finds itself shorthanded. Also, while increased remittances also increased the standard of living and may ‘buy’ happiness, it cannot completely relieve the emotional and psychological pains brought by the separation of family members.
Another challenge of increasing globalization is the sad plight of the micro, small, and medium enterprises (MSMEs). Industries that are less able to compete and workers whose skills have become less relevant are badly affected. According to Sibal, they are the losers in the globalization process. Examples of MSMEs in the Philippines are the categories in agriculture (producers of vegetables, palay, corn, and poultry), sunset industries (industries that are no longer profitable and are phasing out), and garment apparel (labor-intensive firms). This is depressing because ninety-nine percent of Filipino Firms belong to the small-medium enterprise, but their output accounts for only 35% of the GDP. In other countries like Japan and Korea, MSMEs output is 50% of the GDP. Does this mean that the government is not doing more and that the small firms are not getting much? These firms need help to upgrade their technologies and improve production efficiency and productivity to be able to compete. Recently, the budget for DTI was cut by approximately ₱800 Million, from P20.955 billion 2020 budget to at most ₱20.162 billion for 2021. This will surely have a huge negative impact on the MSMEs.
The most important challenge of globalization in the Philippines is poverty alleviation and income inequality. According to the Asian Development Bank, there is a slow and uneven decline in the number of households who are living below the poverty line in the past 4 decades, and poverty reduction has been much slower than in China, Indonesia, Thailand, and Vietnam. Indeed, economic growth (through increased trade openness and financial openness) contributed to less income inequality. OFW remittances, however, contribute to higher income inequality because wealth is only distributed to the families of the OFW’s who are receiving the remittance. Economic growth without redistribution of wealth and opportunities will not benefit the poor. The per capita income of South Korea and the Philippines was similar in the early 1960s; but because power and wealth remained in a few hands in the Philippines, it remained a developing country, while South Korea joined the ranks of developed countries.
Political globalization allowed nations to work together towards achieving peace, and prosperity and is used as a platform for consensus, advocacies, and development goals. As an example, the bilateral ties between the Philippines and Vietnam as members of ASEAN were elevated to that of a Strategic Partnership and bilateral relations were growing in different aspects, including in ‘political, trade and investment, fisheries, marine, and oceanic affairs, defense and security cooperation, among others.” This improvement in the foreign relations between these two countries is something worth noting, given the minimal interaction in the past. Other than the ASEAN, the APEC (Asia-Pacific Economic Cooperation) also helped the country in resolving the issues in the uprise tension between China and several nations, including Japan, Malaysia, and Vietnam.
Yet, consensus is not synonymous with unanimity. In the United Nations, for example, there are 200 member states but only 5 can veto. In the ASEAN, only the heads of the Secretariat and the secretary-general can veto. The 10 members of the ASEAN have different systems (political, socio-cultural, and economic), different perceptions, and analyses of threats and there are instances when they have different positions on certain issues. Because of this, sometimes they cannot arrive at a consensus on controversial topics.
One of the challenges of globalization in politics is the threat of the vested interest of big corporations collaborating with politicians. Legalism is defined as a philosophy wherein humans believe that they are more inclined to do wrong than the right because of self-interest. This refers to acts of politicians in which they keep adding laws and regulations without identifying which ones are productive and crucial to development. They legalize these acts to cover up their interest. As a result, it made “too much or too little” of a difference to promote growth, said John Nye, a Professor of Economics and History at George Mason University. For example, the Philippine government had a pessimistic attitude and therefore took no effort to stop the militarization of China in the West Philippine Sea. As a result, the militarization of waterways and the creation of artificial islands by the Chinese government begin to develop in the West Philippine Sea, and our local fishermen lost a primary fishing ground for livelihood. A political outrage was heard throughout the country, suggesting the initiation of stronger actions to contain the threat China could bring, which could harm the external security of the country as well as its maritime rights and trade, and economy. It seems that there is no substantial move from the present government to revert the present situation in favor of the Philippines.
In a dynamic world, globalization created opportunities and posed challenges to the Philippine Economy. Opportunities increased financial openness and trade openness in goods as well as labor migration. However, as poverty and inequality persist, nations must unite together as a bloc to have opportunities to make decisions and policies that have a real impact on the common good without the war of ideas. The government should prioritize the need to alleviate these problems through the implementation and execution of policies and laws that will benefit the majority of the people. Also, the citizens of the country need to be and innovative in dealing with these issues so that they won’t rely on the government most of the time.
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