Globalization and the Philippines

Introduction

When one hears the term globalization we think vast trade routes, political systems that are ever changing, and culture either being enhanced of destroyed. Many developing countries have experienced the effects of globalization in one form or another and the Philippines is no exception. Focusing on the years from 1980’s to 2011 and onwards to now, the Philippines has experience some major changes in its economy all due to globalization.

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The Philippines has had a rich history with colonization coming from the west as well as from their northern neighbors such as China and Malaysia. Globalization within the past ten to fifteen years has drastically shaped its economy and culture.

Having a history in which power throughout the years has exchanged many hands, Philippines has taken many years to perfect its political systems. One could almost say that it has yet to be “perfected” because of the multiple aspects of governance it tries to take on. Another factor that plays into the Philippine political system is corruption, which unfortunately for many developing countries is the case when no solid government is in place. The state of the Philippine government shapes the ways in which trade, finance, and the environment are affected.

Joining the World Trade Organization or better known as the ‘WTO’ in 1995, Philippines has experienced changes in its agriculture economy shifting towards industrial and exportation production. This is due in part to new trade agreements and an increase of open markets after the Marcos Administration. In addition, Philippines receives foreign aid as it is regarded as a developing country. A top way this aid comes in is through foreign direct investments with its main partner, the US. This aid has been used to fund developmental projects such as infrastructure, roads and buildings. Trying to compete with its Asian counterparts, the Philippines over the last ten years has been pushing to industrialize.

With the pressure to industrialize, the land traditionally allotted for agriculture is also facing disparities when seeing the movement towards industrialization over all the islands. Not only is the economy and culture changing rapidly, the environment too is taking a toll. Globalization has been a huge factor in the way the Philippines has been shaped over the last ten years and although industrialization is supposed to have positive impact on developing countries, the negative impacts can also be seen throughout the islands and by the people.

Political Institutions

In most third world countries as well as developing countries, the postcolonial period saw a rise in state-centric approaches of governance, due to the absence of private capital and lack of advanced market. “More importantly, the scope and role of the state expanded considerably as a result of government’s nation-building developmental agenda in these countries irrespective of their ideological identities based on capitalist or socialist inclinations.” (Haque). In the late 1990’s to the early 2000’s and onward the Philippine government has taken on a system comparable to the US. The Philippines has a three-part judiciary system in which there is a legislative, executive, and judicial branch with the president being the head of state and government. This benefits the average Filipino because they can vote and voice their opinion. However, like most developing countries, the Philippines has fallen to corruption which has created distrust between the government and its people. Moving onto the three main functions: minimal, intermediate and activist, the Philippine government aims to employ these parts when structuring their economy as seen in the chart above (Patalinghug pg. 10). Seeing the list of responsibilities that their government has taken on Patalinghug critiques, “that although the government has moved on from basic services to things such as the regulation of markets, it has yet to provide programs that alleviate the conditions of the economically poor.” (pg. 10) He notes that with the many capabilities of their government thus far, the economically poor are not accounted for.

With their system of government as of now, those who are in high positions of power such as those already in government, military positions, figure heads and those with above average income, the programs in place only benefit and protects them. Those who are considered economically poor are sadly at the short end of the stick. Unfortunately, the government continues to develop industrialized areas of the Philippines such as Manila and Cavite, in efforts to push industrialization. Much of the Philippine islands are provinces that are neglected and left in shams. The economically poor are neglected which entails that those coming from the province for example, do not have the same educational opportunities as those from industrialized areas, with those coming from provinces stopping education at the age of 16 to work in agriculture. Patalinghug states, “These inadequacies seem to indicate that the Philippines is a state with weak capability due to its inability to adequately provide functions that are characteristics of a state with minimal capacity.” (pg. 11) In response to his analysis, I think that the overall globalization of the Philippine government has had a negative impact. Their government has yet to put in place programs to help the poor and regulate funding for projects in the provinces. Specifically, during the Marcos Administration in the years of 1980 to 1985, financial openness was at a low because of the existence of monopolies in the market which reduced investment and led to extensive borrowing (Deluna pg. 14). This exemplifies how the instability of the government then has led to the decrease of their economy now.

Finance/Aid

In terms of financial aid, the Philippines is not shy when it comes to being upfront about foreign aid with the US being one of its biggest benefactors. In the year 2010 alone, trade between the US and Philippines was estimated to be roughly around $15.4 billion (Deluna pg. 13). The amount of aid received is a direct result of the increasing external debt that Philippines has built up. In addition to this, the GDP of country has had a trend of being in decline. The aid, agreed upon by the Philippine government and its beneficiaries, has been used to jump start or enhance rice production, inland fish farming and industrial crops. A lot of this aid in the recent years has been used to improve rice technology, for example, machinery used in harvesting or water irrigation systems. Experimenting with rice production in the Philippines is beneficial to its Asian neighbors, countries such as Brunei (Jennings). By sharing their knowledge when it comes to agriculture, this is how the Philippines offers its aid. In 2014 as an effort to create ties with Papua New Guinea, Filipinos migrated to PNG to aid in the need for more labor as their economy was slowly depleting. The work of Filipinos of course does not come without a cost, their aid to PNG would be reimbursed by remittances sent back to the Philippines. Although the Philippines cannot contribute aid in terms of actual money, it can give aid by its labor force.

Another investor and giver of aid is China. In recent agreements, China has awarded the Philippines $169 billion in aid to be put towards the building of railways and infrastructure by 2022 (Jennings). This has excited the economy because it bigger countries such as China are beginning to invest in the Philippines and sees potential that it will bring back its spent revenue. I think that the overall benefit of financial aid from multiple countries has benefited the Filipino economy especially those who lived in industrializes areas because it has created a new workforce. It has given the people a chance to work out of the country for higher pay than they would receive at home. However, this method of employment hurts those who are not able to travel out of the country or who do not possess skills used in the industrialized age. Overall, the benefits of financial aid may take some time to show, but for now the country can withstand some instability for long term stability.

Trade

Another area in which the Philippines has been revolutionizing is the trade market and this area has not been lacking within the last ten years. Since signing the AOA the Philippine government has pushed the importation of goods. Although the importation of goods is generally good, it has created a dependency on other countries such as China, Malaysia, and Indonesia being there top trading partners. In the 1980’s the Philippines fully supported trade openness in hopes to boost foreign markets and free trade agreements. The desired outcome of this was to obtain funds while having the opportunity to invest in others (Deluna). While the trade market is flourishing, the impact of trade has affected the labor force in the most negative way. As mentioned by Orbeta in his paper, the term “de-industrialization” has been going around for the past couple years. Orbeta states that while the market is flourishing, “the cheap imports from low wage economies flood highly developed economic markets”. This results in destroying the population of people who work low skilled jobs.

The overall lasting effects of trade openness has been detrimental to the economy. Trade openness has since benefited those working with MNC’s, those who possess high skill jobs, and those who live within the more industrialized parts of the islands. One could almost say that a small population of those living the Philippines who are pushing for more nontraditional ways of living are the only ones benefiting. Those who are hurt are those who work low skilled jobs, such as people in agriculture. As the land allotted for rice fields and other agricultural resources are diminishing, culture and tools of trade are being lost. Those who work low skilled jobs possess the knowledge of sustaining their natural resources, skills such as knowning when to plant and when to harvest are being lost which adds to the countries dependency on other countries for goods that otherwise would be locally produced. The globalization for the areas of trade in the Philippine economy has proved to hold both pros and cons. Pros being that the trade openness has created a security and alliance with the world’s leading countries. The alliance with said countries has secured the Philippines inflow of foreign aid to ensure the building of developmental projects. Cons to trade openness is that lowskilled laborers are affected the most because of unemployment and job displacement. Not only is a majority of the local workforce being targeted by industrialization, but there is also a compromise of culture because the knowledge of years of farming and living sustainable through the land has swiftly been coming to an end.

Environment

The Philippine islands are a lush collection of tropical forests and islands that are abundant in exotic fruit and rice fields. But over the last couple years with efforts to push into the 21st century the Philippine’s agricultural economy and lush environment has taken a toll. Starting with the 2000’s the Philippines signed a new trade agreement called the AOA (Agreement on Agriculture) that would result in the reduction of agricultural subsidies to the north which would improve market access to countries that export agricultural products (Lim). This agreement would have benefited the Philippine economy, however since choosing to industrialize this agreement does not benefit the agriculture sector because developing countries, like the Philippines has little to no domestic product to export because of industrialization. The conversion of agricultural land to exporting zones, industrial centers and real estate has led to a loss of agricultural resources and loss of the country’s best soil. Industrialization has also caused desertification in some areas as well as soil erosion. Thus, five million hectares in land that was once used for rice farming has now gone down to 1.9 million hectares.

With land becoming scarce, the government has pushed the imports of goods that could be produced locally, thus resulting in an increase in unemployment (Lim). Since land has become scarce for traditional agricultural resources, the Philippine farming sector has shifted its production from resources such as rice and corn to more appealable/sellable goods such as mangoes, cassava, asparagus etc. This shift has not come without a cost. More and more farmers in the provinces and commercialized farming sectors have begun to use pesticides and fertilizers with chemical unknown to locals. Although using such things has produced better products, the health of the workers come at a great risk. Per Lim, in area of Mindanao ambulances are on standby when pesticides are sprayed because they are that harmful to people. A commonly used pesticide in banana production is MOCAP.

Again, the use of such pesticides has shown harm to the land through soil erosion and desertification indicating that such chemical is too harsh to be used on products that are distributed and consumed. I believe that the intentions of the AOA and the Philippine government were good, but ultimately has failed its people. Since the Philippine economy and its revenue stems from agriculture, it was a mistake to commercial that much land in such a short time. The commercialization and industrialization of farm land misplaces farmers and those who work low skilled labor jobs in the agricultural sector. It has also created an economy dependent on importing because they can no longer produce those good locally leading to an increase in debt among the people. I think that the overall impact of globalization in regards to the environment and the health of the people has done more harm than good.

Conclusion

To conclude the findings of the report, the Philippines has been seeing multiple changes in its economy. The government is finding its footing and assessing whether the responsibilities they set out for themselves are a right fit for the people. As of recent the public has made it known that they believe their government has been spread too thin because of the lack of active programs in place to help much of the economically poor. In addition to this, the openness of the trade market has added to the countries increasing unemployment rate because of the industrialization of the agriculture sector. Although the commercialization of agriculture has allowed the country to compete with its Asian neighbors, trade openness has created an unwanted dependency on imported goods. Looking to the positive aspects of trade within the economy, trade openness has created an alliance and security with the world’s leading countries almost ensuring that the interest in the Philippine economy will never falter. Much of what the Philippines offers is cheap labor and abundance of it at that, as well as land open to commercialization and exportation. Because of the industrialization of specifically the agriculture sector in the county the environment and health of the people have been in question. Commercializing farm land and the use of harsh pesticides has led to soil erosion and desertification resulting in the decrease of products for export. Even more, the health of Filipinos who do work in commercialized sectors of food production are at high risk for multiple health risks.

Overall, the Philippines is a thriving economy. Creating new ties and fixing alliances, new employment opportunities as well as allowing those who work in low skilled jobs to level up and learn new skills of the trade. While the globalization of the Philippine’s has drastically uprooted the culture and people, I think that globalization has offered new opportunities for the individual as well as the state to grow. I believe that the Philippines is in its baby steps of globalization, and although within the past ten years the economy has flourished, more improvement needs to be done in the governance of the country. I think that the Philippines has all the tools and support to fully globalize and industrialize, however the political systems in place need to be stronger and more coherent with the goals of the public. I trust that within the next upcoming twenty to thirty years, with the right governance, aid and support, Philippines will be competing with their neighbors at equal or even better rates. The will of the Philippine people will overcome their adversities and learning curves and over time will be a force to be reckoned with.

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