Professional Documents
Culture Documents
Looking at Both Sides of The Effects of Globalization in The Philippines
Looking at Both Sides of The Effects of Globalization in The Philippines
Mendoza
GED105_A1
Ever since the start of globalization, the Philippines has undeniably willingly
opened its doors to the global trade of products and services. As years go by, the
openness of the Philippines to open trade caused the country's GDP to improve by 13%
in a decade. It looked like globalization is a good thing for the Philippines' economy as
a whole, right? Well, what if I told you that some of the recurring problems in the country
(poverty and income inequality) became worse? I know, it's unbelievable. But I am here
to present to you some hard evidence as to why globalization as a whole did not really
benefit our country's economy (and political problems in that matter) by a large margin.
domestic product throughout the 1990s and 2000s (GDP). The country's efforts that
aims to make more transparent trade policies in the 1980s aided this development.
electrical materials, allowing companies to better control their yield (Dudley, 2017). The
Philippines has proved worthy of becoming Asia's two major BPO industry centers,
along with India. Because the Philippines' continues to be transparent to globalization,
overall commerce grew to 101.4 percent of GDP in the 2010. Globalization appears to
be helpful to the economy and employment generation in the country. Trade openness
and foreign portfolio movements have resulted in higher per capita GDP growth in the
overall economic growth. OF remittances have helped the Philippine economy to rise in
both normal and disastrous situations in the past, and this will go on (Ang et al., 2009).
While the previous events point to the Philippines' sustained trade, migration,
growing vulnerability to migrant returns and volatility spillovers from other countries'
stock markets. On the other hand, the country's participation in global trade, finance,
and migration has yielded real results, such as low and stable inflation, a low
economic inequality has been a subject of worry for a long time. According to tentative
by 0.04 units for every 1 unit increase in the trade-to-GDP ratio. On the contrary, OF
remittances raise income inequality by 3.3 units for every 1 unit increase in the ratio of
OF remittances to GDP, according to the Gini coefficient. Estimates also show that
trade openness has no meaningful impact on poverty which is contradicting the fact that
OF remittances can help remediate poverty. While greater growth rates have been
found to reduce poverty (Dollar et al., 2013), poverty may worsen if GDP growth is
accompanied by an increase in inequality. Growth and changes in inequality, according
demonstrates that, over time, changes in distribution can lead to considerable changes
in poverty, and that, in some situations, these changes can even balance out the gains
of growth. This was backed by a study conducted in the Philippines by Reyes and
Tabuga (2011). They discovered that while growth is vital in reducing poverty, income
redistribution is also essential. This implies that the type of economic expansion is
required. Even if globalization has no direct impact on poverty, its effects on economic
country's total capital flows grew from 3.1 percent of GDP in the 1990s to 3.4 percent in
the 2000s (Tetangco, 2005). In the 2010s, total capital flows climbed to 4.6 percent of
GDP. This could be attributed in part to the BSP's nine rounds of foreign exchange
was another key initiative boosting financial transparency in 2014. Even though the 4.6
percent average ratio of capital flows to GDP between 2010 and the first three quarters
of 2017, it would imply that the government has more room to work on. The growing
exposure of the economy's external debts to portfolio and direct investments shows
international investors' search for yield and increasing confidence in the country's
investment contributed to the increase of GDP from 9.6 percent (1999) to 23.5 percent
(2017).
Globalization increases economic sensitivity to destabilizing external influences
inadequate regulation may undermine financial stability unless proper safeguards are in
place (BIS, 2017c). A rapid shift in market expectations, according to a 2015 IMF
assessment, could expose the Philippines to a rate hike, badly hurting the economy.
Furthermore, global factors have a major impact on the country's local currency
government bond yields, according to the IMF. Meanwhile, given to its high level of
globalization policies are taken into consideration, and the US adopts deglobalization
policies that result in a 1% reduction in US GDP growth. In that case, the first year's real
GDP growth rate will be 0.06 percentage points lower, and the second year's growth
On the political side, the BSP has tried reforms to address further the problems
raise its Federal Funds rate, a one-percentage-point increase would have no effect on
Philippine economic growth in the first year but would result in a 0.02 percentage-point
loss in the second. The Philippine inflation rate, on the other hand, is predicted to rise
by 0.02 percentage points in the first year and 0.11 percentage points the year after. As
it tries to integrate more fully with the global economy and attract foreign investment, the
and standards. Critical reform efforts aimed at the bureaucracy, judiciary, and other
political institutions have been propelled into the public governance framework as a
corruption activities, efforts to open up the domestic economy and make local
and responsive political system, the Philippines must shed its conventional political
Amidst these problems, the BSP has been actively involved in programs to
promote financial inclusion, ensuring that the vast majority of the population has access
to adequate financial goods and services. In 2008, the BSP established the Credit
Surety Fund Program (CSF), which has helped micro, small, and medium-sized firms
(MSMEs) expand their operations. As of December 2017, the country had 51 operating
CSFs, with loans totaling PHP 4.6 billion granted. The BSP also proceeded with the
have also been pushed by the BSP. In the third quarter of 2017, 164 banks had
microfinance operations, serving over 1.8 million clients with a loan portfolio totaling
PHP 14.8 billion. In 2013, non-bank agents (such as pawnshops, grocery stores, and
drug stores) were given permission to perform electronic money (e-money) activities like
highlighting the importance of technology in enabling fund transfers and expanding the
the end of December 2010. A countrywide Economic and Financial Learning Program
aims to teach OFs and their families about the significance of saving money from
We have seen both sides of the effects of globalization; the good and the bad.
The Philippines, in its journey towards integrating itself into the global economy, has
been given access to easier trade through ease of communication and transport and
reduced costs in transportation, more OFs in almost all nations around the world
higher growth rates in the economy result in the worsening of poverty. On the other
hand, BSP is on the verge of further understanding the effects of globalization in the
country and would continue to implement reforms to help businesses of any size in the