Globalization and Its Impacts in Term Paper

  • Length: 10 pages
  • Sources: 10
  • Subject: Economics
  • Type: Term Paper
  • Paper: #44857572

Excerpt from Term Paper :

No efforts have been made to create a strong consumer base in the Philippines itself by improving the lot of the Filipino workers (Bello 3). Had a local market been created and some protections afforded to Filipino workers, development may well have proceeded in a more positive direction as the nation would have been better able to take advantage of those aspects of globalization that offered true benefits, rather than sinking all economic hopes into the long shot that the small nation could compete with nations like India and China as a source of cheap labor. Despite this reality, economic reform in the Philippines has consistently focused on re-creating the nation as an export economy, specifically in the it industry. It probably seemed like a natural extension of economic development in the 1980s and 1990s when the Philippines was attempting to embrace globalization. Globalization offered a way to integrate with the world economy, and the it industry was one of the most in-demand industries in the world. Thus, by the mid-1980s, the Philippines was already trying to capitalize on this fact by focusing on manufacturing semiconductors, a tack the country has relentlessly pursued ever since. Unfortunately, semiconductor manufacturing is a low-value it industry and has done little to improve the Filipino economy (Austria, "Assessing" 1). Low-value technology, like semiconductor manufacturing, doesn't create a product that consumers are willing to pay highly for. These stand in contrast to high-value it products, such as computers or cell phones, which combine many cheaply manufactured parts but are sold at incredibly higher prices. Instead of encouraging the development of a value added it industry, the pursuit of semiconductor manufacturing has only created low wage factory jobs in the Philippines.

This incredible focus on the manufacture of semiconductors has, to some degree, enabled the growth of manufacturing in the Philippines. However, this growth has not translated into economic development or social improvements for the nation as a whole. What's more, the high degree of focus on this one aspect of the it industry makes the nation highly dependent on the success of semiconductors and the whims of the market (Austria, "Competitiveness" 2). Without a diversity of production, without a local consumer market, and with a political bureaucracy intent only on its own self-serving interests, it seems likely that the it/semiconductor focus will undermine the long-term development of the nation. Because semiconductor manufacture does not require skilled laborers, it offers no incentive to make social reforms and improvements throughout the Philippines that would spur on further development. Investments in education, for example, would have the end result of producing a population that is better able to compete globally and improve the fortunes of the nation as a whole. But since market liberalization has been centered on low-value it manufacturing, there has been little incentive to make such social investments. Combined with a lack of political support, low R&D investment, the lack of worker education, and institutional bottlenecks, conditions have been created in the Philippines that actually hurt development instead of encouraging it (Austria, "Competitiveness" 4-5).

Without question, the reforms that have been made to the economy since the 1980s have made it possible for the Philippines to enter into the global economy. However, those reforms have not helped the Philippines to compete effectively in that market and are only managing to exasperate the problems that were already extant in the country. The complete lack of growth in manufacturing, the low skill focus of the it industry, and the lack of strategic focus between the international market and the domestic economy demonstrate that the reforms that were enacted have not produced the end results that were originally desired (Austria, "The Philippines" 41). The primary goal of the state -- and arguably of any state -- especially in the developing world must be to strengthen social institutions such as education, labor standards, worker participation, and rule of law. In doing this, the developing nation can create a solid domestic foundation upon which international development and economic growth can occur. Up until this point, this stratagem has not been extensively followed in the Philippines (Lanzona 1). The case of the Philippines highlights the importance of creating these domestic policies that will strengthen institutions, bureaucratic efficiency, and competitiveness prior to entering into regional or global economies (Austria, "Liberalization" 2).

In the final analysis, it is apparent that the Philippines requires extensive political, bureaucratic, and social reforms in order to strengthen the state and enhance its capacity to take advantage of the opportunities inherent in globalization (Banlaoi 214). At issue is the reality that globalization benefits most those nations that already have robust, well-developed economies and stable political environments. In other words, globalization provides the most benefits to the developed world, though it can be an engine for economic growth in the developing world. The problem is that in the developing world it is just as likely that globalization will be used as a method to exploit cheap labor and unstable governments to the benefit of profit margins in the developed nations of the world. Thus, a developing nation such as the Philippines needs to be especially careful in entering into the global marketplace and embracing trade liberalization without first enacting domestic policies that protect itself from exploitation.

Probably the most appropriate response for many developing nations, and the Philippines in particular, is to apply selective liberalization instead of completely embracing free market policies. Selective liberalization would allow the government -- if stabilized and governed by rule of law -- to strategically open some of the nation's stronger industries to international competition and global markets, while careful protecting those fledgling industries that are not yet able to compete effectively on a global scale. This tactic would also permit the Filipino worker to be protected from exploitation and give the government the chance to enact social reforms that could enhance the economic development of the nation without depending on the whims of globalization. Free trade is a powerful ideal, but it must be preceded by steady, sustainable development so that the Philippines enters the global marketplace as a strong force in the region. The unfortunate reality is that the Philippines cannot compete with the larger economic powers in the world such as the United States, Europe, or China (Bello 4). Until that is possible in the future, it is more important that the country ease itself into the global market rather than jumping in without first preparing and strengthening the domestic scene.

The Philippines, in an effort to capitalize on globalization, began a program of extensive economic liberalization more than twenty years ago that has thus far netted no positive results. For the nation, embracing globalization has been an utter failure. Institutional, infrastructural, social, bureaucratic, and economic weaknesses have combined to make the nation too unstable to compete globally and simultaneously unable to protect its local economy from foreign exploitation. Until these deficiencies are corrected and improvements made to the strength and efficiency of national and social institutions, it is unlikely that globalization will be anything but a bane for the Philippines.

Works Cited

Austria, Myrna S. "Assessing the Competitiveness of the Philippine it Industry." The Philippines Institute for Development Studies. Jan. 2000. 2 Dec. 2007

Austria, Myrna S. "Competitiveness of the Philippine it Industry: What Lies Ahead." Philippine Institute for Development Studies. Feb. 2000. 2 Dec. 2007

Austria, Myrna S. "Liberalization and Regional Integration: The Philippines' Strategy to Global Competitiveness." The Philippines Institute for Development Studies. Apr. 2001. 2 Dec. 2007

Austria, Myrna S. "The Philippines in the Global Trading Environment: Looking Back and the Road Ahead." Philippine Institute for Development Studies. Nov. 2002. 2 Dec. 2007

Banlaoi, Rommel C. "Globalization and Nation-Building in the Philippines: State Predicaments in Managing Society in the Midst of Diversity." Chapter 16 in Growth & Governance in Asia. Ed. Yoichiro Sato. Honolulu: Asia-Pacific Center for Security Studies, 2004. 203-214.

Bello, Walden. "Can the Philippines Handle Globalization?" Focus on the Global South -- Philippines. 17 Feb. 2005. 2 Dec. 2007

International Economic Environment and the Philippine Economy." Policy Notes. Philippine Institute for Development Studies. Aug. 1998. 2 Dec. 2007

Lanzona, Leonardo a. (ed.). The Filipino Worker in a Global Economy. Philippines: The Philippine Institute for Development Studies, 2001.

Patalinghug, Epictetus. "Globalization and State Capacity: The Philippines." Philippine Institute for Development Studies. Dec. 2003. 2 Dec. 2007

Tillah, Mirshariff. "Globalization, Redemocratization and the Philippine Bureaucracy." Philippine Institute for Development Studies. Apr. 2005. 2 Dec. 2007

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