The economic globalization in Philippine is not an effort made by magic. Although the fact remains that the rate at which Philippines now escapes some of her own challenges may never stop to astound the world’s economists and political analysts, it is not news that this really causes a great concern and so must be checked; hence, the essence of this article.
What Globalization Means.
Globalization refers to an open flow of information, technology, and goods among countries and consumers. This openness occurs through various relationships, from business, geopolitics, and technology to travel, culture, and media. Officially, globalization is the process by which businesses or other organizations develop international influence or start operating on an international scale.
Globalization has its own values and advantages which makes it deserve the necessity of political interest as a sociopolitical innovation.
Advantages of Globalization to a Nation
1. It helps with higher standards of living across the world
2. It creates the strong tendency for the spread of technology and innovation
3. It provides the access to new languages, horizons, and cultures
4. It economically reduces costs of production
5. It opens up access new markets, new economic ideas, and discovery of new talents
Economic Globalization
Meanwhile, economic globalization means a skyrocketing increase in the international market capacity of Philippines in the world’s international trade center. It can also refer to the increasing interdependence of world economies as a result of the growing scale of cross-border trade of commodities and services, flow of international capital and wide and rapid spread of technologies.
The Philippine economy, like that of most other EMEs, has become increasingly integrated with the global economy. This is evident in the general increase in trade in goods and labor migration. There is also greater integration in finance, although at a relatively moderate pace. Empirical estimates, by contrast, show that globalization has positively affected the country’s economic growth and employment, substantial evidence for its impact on inequality and poverty has yet to be found, as preliminary estimates show mixed results.
What variables are responsible for these mixed results above. They are succinctly outlined below for you to see, read, digest, and understand the economic globalization in Philippines and how it has been.
The Economic Globalization in Philippines.
Government’s Influence in Philippines
Governments can keep the global economy growing strongly by continuing good policies and by acting to contain key risks in energy and financial markets. They can also increase support for globalization and help their own poorest citizens by taking steps to address inequality. In several of these areas the Philippines is leading the way. The government and central bank have steadfastly pursued sound macroeconomic policies, and leaders in the Philippines are acting with imagination and innovation to improve the position of the Philippines’ poorest citizens.
In November 2005, the Philippines government extended VAT to energy products previously exempted, and in January 2006 it raised the VAT rate on all taxable products, including energy, from 10 percent to 12 percent. Because most energy is consumed by wealthier people, and because the government used part of the proceeds from VAT reform to reduce excises on kerosene and to increase spending on infrastructure and social services, the effect on the poor was offset.
The distributional effects could have been improved further if more of the compensation had been devoted to transfers targeted to poor villagers, such as those who benefit from the government’s KALAHI program. But it remains a successful and impressive reform.
The Global Economic Challenges in 2020
The Philippines’ gross domestic product (GDP) contracted by 9.6% in 2020 – its worst economic performance in the post-war period and the biggest contraction in ASEAN. Before the COVID-19 crisis, the Philippine economy was one of the world’s best performers, with an average growth rate of 6.6% from 2012 to 2019.
A series of unforeseen events caused an abrupt halt to the Philippines’ strong growth momentum in early 2020. The Philippine economy carried its strong growth momentum from the second half of 2019 into early 2020 thanks to positive consumer confidence, robust macroeconomic fundamentals, and an improvement in the external sector.
However, the eruption of Taal Volcano in early January, the spread of the Coronavirus Disease 2019 (COVID-19) outbreak in the region, and the rise of COVID-19 infection cases in the Philippines in March, forced the economy to a near halt in the latter part of March due to severe disruptions in manufacturing, agriculture, tourism and hospitality, construction, and trade.
The economy contracted by 0.2 percent year-on-year in the first quarter of 2020, the first contraction in over two decades, and was a sharp reversal from the 5.7 percent growth over the same period in 2019. Leading indicators that track economic activity in real time suggest that the contraction would be even more severe in the second quarter as most regions of the country entered an enhanced community quarantine in mid-March.
Subsequently (apart from pandemic of the new virus and the political struggle to curtail its spread), there are other economic challenges debarring economic globalization in Philippines. Some of these are:
Global Expansion Problems
It is difficult for businesses or the government enterprises to keep up with different and ever-changing labor laws in new countries. When expanding into new countries, companies must be aware of how to navigate new legal systems in order to avoid disruptions of any legal sort.
Increasing Tariffs and Export Fees of other Countries
Philippines currently faces the challenge of increasing tariffs and export fees. Many companies and public ventures that are looking to sell products abroad, getting those items overseas are expensive, and this depends on the type of market on international scale.
Compliance Challenges
Managing overseas payroll and maintaining compliance with changing employment and tax laws can be extremely challenging. This management task gets even more difficult if you’re trying to manage operations in multiple markets. This is constantly confronted by the government in its effort to improve the economic globalization in Philippines.
The Economic Revamping from 2021-till Date
Several multilateral organizations and think tanks already downgraded their 2021 economic forecasts for the Philippines, anticipating that the country to be a laggard in Asia due to a slow-rolling COVID-19 mass vaccination campaign and relatively limited fiscal response. To their surprise, the Philippine economy grew by 11.8 percent in the second quarter of 2021, exiting a five-quarter pandemic-induced recession.
Reflecting challenges in easing mobility restrictions and fully reopening the economy, the government reduced its GDP growth target to 6% to 7% for the full year, from the previous 6.5% to 7.5%. With the government targeting a 70% COIVID immunization rate by year’s end, officials remain hopeful of a gradual economic recovery in the second half of the year and a return to pre-pandemic economic growth rates by late-2022.
Prospects for a strong rebound in the second half of 2021 will be moderated by Metro Manila’s return to the highest quarantine level in August to stem the spread of the COVID-19 Delta variant.
In conclusion notwithstanding, there is a common agreement that the Philippines still has solid macroeconomic fundamentals, characterized by manageable external debt, a healthy public balance sheet, and a huge foreign currency buffer, which can sufficiently support the country’s post-pandemic economic recovery.
