The Politics of Globalization

Philippines
Ever since it was granted independence by the United States in 1946, the Philippines has been keeping special relations with its former colonizer, especially in foreign policy and the economy.  In the succeeding years, it has opened its doors to other countries, oftentimes at the approval of its powerful close ally.  Many Filipino nationalists had perceived such relationship as merely a continuation of US dominance over the country, although in an indirect manner.  This resulted into patriotic demonstrations that occurred in late 60s until the early 70s.  In fact, the local communist insurgency had fed on the growing anti-US sentiment at that time, as well as the popular opposition to the Marcos dictatorship, whom they had considered as lackey to American interests.

When Fidel Ramos took over the presidency in 1992, he promised to lead the country into the status of a newly industrialized country or NIC.  Inspired by the successes of South Korea, Singapore, and Taiwan, the goal was to achieve a more robust manufacturing sector that would boost exports while refocusing agriculture toward meeting the demands of the international market.  The term globalization became synonymous with Philippines 2000, the governments widely publicized program aimed to make the country an NIC by turn of the millennium. (Zaide)  The targets were not achieved according to its timeframe.  Nevertheless, the succeeding administrations of Estrada and Arroyo, despite differences in politics, never departed from the basic premise of making Philippine economy more globalized than ever.

However, there have been growing criticisms from both the academe and the grassroots sector in Philippine society because of the effects brought about the governments economic policies.  Instead of greater revenues expected from bigger export volumes, the country continues to suffer annual trade deficits.  According to its National Statistical Coordination Board, the deficits never went below 4 billion USD since 2002.  In 2008, its Central Bank stated that the deficit was 8.2 billion USD.  The economy continued to stagger and the grassroots sectors were, consequently, the most affected.  The current rate of poverty incidence has increased. Unemployment has risen.  According to IBON, a private economic think-tank in the Philippines, the number of unemployed Filipinos in 2008 has amounted to 4.1 million.  Of those employed, only 17.9 million are receiving regular wages and salaries. (IBON Facts and Figures)

Philippine economy can be best described as import dependent and export-oriented, characteristics that have been upheld by every national government since 1946.  These have also been the main factors in the manner that the government has been handling foreign policy, especially in regards to trade.  Essentially, its foreign policy may fall under the category of liberalism.  However, so-called efforts at leveling the playing field for domestic and foreign businesses have actually resulted into depriving local production of protection from dumping of imported products.  The governments objective is to make the economy buoyant by relying on exports while making the country even more dependent imported finished consumer and basic products.  Therefore, it may seem to advocate liberalism but, in fact, practices dependency theory. Dependency theory explains that when a less-developed country concentrates on export production according to the demands of powerful foreign economies, unequal trade relations occur.  (Baran)  As a consequence, only foreign big businesses and the wealthy and powerful few of such country are benefited in the process.

The Philippines remains to be a country that produces and exports cheap raw and semi-manufactured products.  It does have so-called industrial centers in a number of cities and special economic zones, which are mostly populated by foreign firms.  However, almost all these are into manufacturing for export with 100 percent repatriation of profits by the multinational corporations.  Therefore, there is virtually no transfer of capital from a one big economy to a developing one.  In fact, whatever value is added to a product due to Filipino labor is extracted out of the country.  Since export-oriented manufacturing totally relies on the demand of the big foreign markets, any instance of economic crisis in client countries is certainly disastrous to the millions of Filipino workers.  An example of this was when Intel Corporation suffered losses due to the global financial crisis. One of its measures to maintain liquidity was to close down its plant in the Philippines and terminated its workers.  (Alave)

The dependence of Philippine economy is not based on the subjective will of the people.  Ever since the end of World War II, the International Monetary Fund and the World Bank have imposed conditions for every loan that the Philippine government requested. These conditions were supposed to ensure that the country could repay the loans.  However, the countrys foreign loans continued to balloon. The conditions, in fact, were prescriptions for the economy, which made it even more geared towards export production of cheap agricultural and semi-manufactured goods while importing high-value finish products.  Annually, the IMF sends teams to study how faithful the country is in implementing the economic prescriptions.  (Villegas)  If it is found unsatisfactory, it may not be able to have its requested loan packages granted. The net results of the prescription have always been trade deficits. This prompted the government to seek for more loans in order to recover from the losses.

Currently, the Philippines is an active member of the World Trade Organization and Asia-Pacific Economic Cooperation. Its inclusion in both multilateral economic organizations has further cemented its economys involvement in globalization.  At a glance, the action may seem to be advantageous for the country since it means the expansion of its export market.  However, the countrys agricultural and manufacturing sector continues to be in the decline.  Currently, the only sector that continues to provide limited employment is service, particularly tourism and business process outsourcing.  The government persists in its role in pushing for privatization, deregulation and trade liberalization despite the negative effects these have brought about on the people.  The hyperglobalist view of how private entities become key players in globalization does not apply to the Philippines. (McGovern)

Due to its role in global trade as just one of the many providers of low value raw materials and semi-manufactured products, the conditions of Philippine economy does not have any significant impact on the world economy.  Instead, whenever there is a breakout of financial crisis in key economic powers such as the US, Japan, and Western Europe, the economy of the Philippines is hit hard.  In the world economic map, the country is located on the peripheries of the powerful members of the Group of 8 nations.  In fact, Metro Manila, its capital and largest metropolitan area, never made it to the top thirty of the Global City Index although it did become a candidate in the Beta World Cities category of the 2008 list.  (GCI)  The Failed States Index in 2009 considered the country to be in danger and ranked it 53.  It scored 7.6 in uneven development and 6 in economic decline. (FSI)  What is interesting to note is that the Philippines used to be ranked 57 in the FSI in 2007.  Despite the current Arroyo administrations promise to make the lives of Filipinos better, poverty incidence continued to rise and the gap between the rich and poor also widened.

In the World is Spiky report, Metro Manila only showed growth in terms of population.  It barely shows any economic activity that has a significant effect on the world economy.  However, it did not register at all in more strategic areas, such as scientific development and technological development. (The World is Spiky)  This data only proves the fact that the Philippines may have some level of technology useful for production but these are foreign-owned.  There is no transfer of technology occurring as Japan, US, South Korea, China, and the countries in Western Europe continue to control the countrys technological development.  However, the economic activity seen in Metro Manila and other key cities are often due to domestic commerce and the existence of multinational corporations concentrating in electronic parts manufacturing, garments, and business process outsourcing.

In this age of non-polarity, the Philippines has also opened its doors to other countries for foreign trade.  In fact, it now has developed much stronger economic ties with China and the rest of its Asian neighbors.  It was impossible for the countrys foreign policy to include a number of Asian countries for diplomacy until the eighties, without the approval of the US.  However, since the Aquino government took over after the Marcos dictatorship was deposed, a more sovereign foreign policy was developed.  In fact, due to popular pressure, the Aquino government, through the Senate, decided to close down the two huge US military bases in Subic and Clark.

However, even as this happened, the government also instituted laws and economic policies that virtually allowed without limit the entry of foreign consumer goods.  Unlike before, however, these applies to all foreign goods, without the bias given to those of the US and Japan.  The competition that occurred among such products proved advantageous to the Filipinos.  They were provided with choices and prices that are more competitive.  However, the disadvantage was also quite significant.  Many local producers have to close shop in the face of tough foreign competition, laying off millions of workers as a result.  What would have been the only genuinely capitalist sector of Filipino industrialists was gradually erased from existence.  Instead of going completely bankrupt, many of them turned to trading, facilitating the entry of foreign products and reselling it in the domestic market.

Because of globalizations adverse effects on Philippine society, there is a strong protest movement led by the Left against privatization, liberalization and deregulation. Its most regular target of attack is the frequent increase of fuel prices.  Although the government has allowed the entry of other players in the oil industry, the countrys energy is still dominated by the Shell, Caltex, and Petron, all of which are controlled by foreign oil monopolies.  Many Filipinos have considered oil price increases as a proof of how globalization has only strengthen foreign control of the economy.

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