Advanatges and Disadvantages of Globalization in the Phil. Economy-economics Thesis

ADVANATGES AND DISADVANTAGES OF GLOBALIZATION ON THE PHILIPPINE ECONOMY

 __________________________________________________  A Term Paper  Presented to: ANTHONY R. VILLANUEVA

Economics Teacher   ____________________________________________________ 

As a requirement for the Fourth Quarter in Economics subject  _______________________________________________ 

Presented by: Adrian R. Ocampo

IV-I  _______________________________________________  March 2011

STATEMENT OF PROBLEM

The researcher wanted answers to the following questions: 1. What is globalization? What are its concepts? What are its characteristics? How globalization did takes place? 2. What are the elements of globalization? 3. What are the types of globalization? 4. What are the agencies responsible for the globalization of the econo my? 5. What are the effects of globalization in the world economy? What are the advantages and disadvantages of globalization? 6. What is globalization according to Filipino economists? What are its advantages and disadvantages in the Philippine economy? INTRODUCTION

In the world nowadays, our economy has been undergoing a major change in the face of the world economy. Our country has since been economically developed after several economic crises, and political, social and religious events through the test of time, and our economy during the colonial times up to the time of Marcos(except During WWII), our country has been one of the countries to have an advanced economy. But during and after the Martial Law era, our economy had been slipped th

up and succumbing it to economic collapse. Now, from the 20 century, our economy had been improving. Why? It is because of GLOBALIZATION. Globalization has been one of the reasons why our country had been economically recovered and developing, and most producers produce more goods and most consumers had been consuming more goods. Moreover, globalization also takes place with the development in technology and the growing business corporations and economic trade  partners, and this had contributed a lot to globalization. Nowadays, globalization didn¶t take its place in the Philippines, but also in many countries as well.  Now, I¶ll ask you a question. Have you ever gotten a chance to shop in a mall? What do you notice every time you enter one? Imported products in almost all brands are available in our very own malls. Almost all known establishments are found here. It¶s also noticeable that people are increasingly getting fond of communicating via modern technology. These are made possible by the ever -growing

number of huge telecommunications companies in the country. It is even easier to contact people abroad than to reach our relatives and friends in the far -flung provinces. Because of these new technologies in communication, we¶re able to know in an instant the events taking place in the other side of the world through cable TV. Was it not through this that we immediately learned about the 9/11 event? Things were changing too fast, and a lot of them. Meanwhile, a lot of changes can be observed in the countryside: rice fields turned into subdivisions, golf parks, theme parks, and even cities. The rest of farmlands are reserved for the growth of fruits and flowers. But, what is more surprising is the massive importing of food for local consumption. There had been a lot of changes taking place not only in our country, but in the whole world, and this has   been noticeable since the µ80s, and it persists up to nowadays. These might be an offshoot of  GLOBALIZATION. According to Chua and Gonzales (2005), although man has the capability to live on its own, man cannot remove the need to communicate with others in order to love and to be with. So, it is then when from being independent to become interdependent. It means that man has the capability to decide on what one must do, that has some consideration on the needs of others. Sometimes, if what we did in a small way can be as a whole. If this happens to an individual, there is a big possibility that it might happen to the society and to all mankind. This might be the reason why the present civilization might communicate with others, and this might be a reason to set up the concept GLOBALIZATION. During the 20th century, during the time when modern technology was invented that help communicate with others globally, we cannot deny the truth that we must be ready in order to succeed in the Globalization period. But, what does globalization mean? When, where and how did it start? What are the elements and types of globalization? What are the effects of globalization in the world economy, and in our  country? What are its advantages and disadvantages of globalization in the world economy, and in our  economy? We will find out, as we go on. OBJECTIVES

The objectives for this term paper are t he following: 1. To define globalization and the concepts related to globalization, its characteristics and history; 2. To understand and analyze what are the elements of globalization, and its concepts, with its types; 3. To know, understand and analyze what are the effects of globalization in the global economy;

4. To know and analyze what are the advantages and disadvantages of globalization in the world economy; and 5. To know what is the globalization in our country, and its advantag es and disadvantages.

BODY AND DISCUSSION a. What is globalization?

According to Nuevo et.al.(2007), globalization implies the restricting or setting of a new global economic order. There is a need of the global economy to be restricted in order to respond to the economic crisis that is faced by capitalist countries of the whole capitalist countries as a whole. The capitalist system is in a serious crisis and it needs GLOBALIZATION in order to alleviate its problems. Moreover, globalization has a lot of meanings. For those who go with globalization, it is both a natural and inevitable   phenomenon in history. There¶s no other way in the global economic system but for countries to be more integrated. On the other hand, those who criticize (or against) globalization believe that this is but an intensification of  the burden of poverty in Third World countries. Moreover, this isn¶t a natural phenomenon and therefore, there are some other ways. According to Wikipedia (2011), globalization is being seen as the process by which regional economies, societies, and cultures that have been joined by a global network of political ideas through communication, transportation and trade; it is mostly connected to the term economic globalization, which is the integration of national economies into the international economy by trade, foreign trade investment, capital flows, the migration of people, the modernization of technology, and military  presence. Also, according to the United Nations Economic and Social Commission for Western Asia (UN-ESCWA), they stated that it is a widely-used term that can be defined in many ways« if in economics, it has something to do with the reduction and removal of barriers between national borders in order to facilitate the flow of goods, capital, services and labor, although considerable barriers remain to the flow of labor.

According to Tom Palmer of the Cato Institute, globalization is considered as the e limination or  diminution of state-enforced restrictions on exchanges across borders and the increasingly integrated and complex global system of production and exchange that has emerged as a result. According to Thomas Friedman, globalization is the impact of the flattening of the world, and argues that globalized trade, outsourcing, supply-chaining, and political forces have changed the world permanently, for   better and worse. Moreover, he, he argued that the pace of globalization is rapid and will continue to have an impact on business organization and practice. According to Herman Daly, he argues the terms globalization and internationalization which is   being used interchangeably but there¶s a significant formal difference. The term internationalization refers to the importance of international trade, relations, treaties, etc. owing to the (hypothetical) immobility of labor and capital between or among nations. Finally, Takis Fotopoulos states that globalization is the result of systematic trends manifesting the market economy¶s grow-or -die dynamic, following the rapid expansion of transnational corporations.   Now, we will try to solve the following arguments that support globalization and critically analyze the truth behind these: A. According to Nuevo et. al. (2005), the only way out of the global recession is through the strict implementation of a ³free market´. Theoretically, price equilibrium can be attained if the dynamics of the forces of supply and demand will be left out on their own that is without government intervention; in this way, all

of those involved in the market

will

the

producers, the middlemen and the

consumers. But, this only

hides the fact that there¶s no such

thing as free market. The

truth is, the global economy has

already been dominated and

monopolized

transnational

and banks (TNCs and TNBs). The

benefit,

mostly

corporations

by

a

few

 bottom-line is that ³free competition´ is only between these TNCs and financial institutions. The integration of poor economies in this kind of competition would only mean the further marginalization of workers and farmers, and consequently, cause t he downfall of local production. B. Globalization itself is the technological revolution which has brought people and countries closer towards a ³global village´. According to globalization advocates, there will be more opportunities and benefits from the advances of technology. One of its achievements is what we call ³the information superhighway´, which is when everyone can supposedly participate, by digital

communication system and

the Internet. But actually, it is

wrong

equate

globalization with technological

revolution. Although it is a

major factor that speeds up the

 

to

process of globalization, it

essence some

of

important these

globalization.

points

supposedly

doesn¶t

necessarily

reflect

Nevertheless, we can still raise

on

who

compromises the ³majority´, who

benefits

from

these

to

answer

technologies. It

is

also

the

question of ³who has access to

technologies?´

although it¶s pretty obvious that

the information superhighway is limited to those who can afford the equipment as well as the cost of   being connected. INDUSTRIALIZED COUNTRIES(1

st

UNDERDEVELOPED and

2

nd

COUNTRIES(3

rd

World)

World) RATIO OF PERSON USING

1.6:1

288.5:1

2.7:1

596.8:1

TELEPHONE RATIO OF PERSON USING COMPUTER 

According to studies, about 80% of the people around the world have no access to these advance technologies, such as computers, telephone, satellite technology and many more. Based on the table, the industrialized nations are more developed and have wider access to advanced technology; while in the underdeveloped countries have less developed and has less access to advanced technology. But what matters more than the question of access is the issue of who controls and gains from these technologies. The truth is, only a few huge corporations own and control the latest technology. Today, intellectual property rights (IPR ) is strictly being implemented. It means that anyone who wants to access/benefit from these new innovations would have to pay for the patent rights first. a good example is the Microsoft Company, which is owned by Bill Gates, one of the world¶s richest  people. Anyone who wants to install a Windows- based program in their computer would have to buy it first from Microsoft or from any of its authorized distributors. With this, the income and profits of  giant corporations owning and controlling the technology will be secured.

the

C. Globalization holds the promise of industrialization and economic development. It banners the successes of the so-

called ³tiger countries of Asia´ or 

the

countries (NICs) of Asia (e.g.

newly-industrialized

South

Korea,

Taiwan,

Singapore, Malaysia, Hong Kong,

etc.).

The

economic

experience of these countries on

foreign trade, investments

and exports has resulted to their 

industrialization

development.

and

At

first

glance,

advocates of globalization

would seem right. Isn¶t that these

 NICs

proofs of globalization s success?

are

considered

But if we will analyze closely, the existence of NICs wouldn¶t necessarily mean success of the logic of  globalization. Any economic development of the NICs could be attributed to speculative capital and its role in export reprocessing of products for the transnational companies. In fact, there isn¶t a single industrial based in these so-called NICs. There¶s no industrialization that took place in these countries. Their ³development´ is just only a product of the global capitalist system; which is a reason why global economic crisis happened, t hat made these countries were immediately and severely affected. b. What are the characteristics of globalization?

According to Stief (2010), the idea of globalization can simplified by identifying what are the main characteristics of globalization. These are the following: a) Improved Technology in Transportation and Telecommunications

What makes globalization possible is the ever -increasing capacity for and efficiency of  how people and things move and communicate. For the past many years, people across the globe didn¶t have the ability to communicate and couldn¶t interact without difficulty.   Nowadays, new gadgets born from advanced technology, such as telephones, cell  phones, computer, and Internet can help a person send a call of a message, fax or show live video conference call can be easily be used to connect people. Moreover, anyone with enough budget can travel to other places and be in another part of the world in a matter of time, by the means of transportation. In other words, the ³friction of distance´ is lessened and the world begins to become small. b) Movement of People and Capital

A general increase in awareness, opportunity and transportation technology has allowed for people to move about the world in search of a new ho me, a new job, or to migrate to others in case of danger. Most migration takes place within or between developing

countries, possibly because of lower standards of living and lower wages pushes individuals to place with a greater chance for economic success. Moreover, capital (money) is being moved globally with the ease of electronic transference and a rise in   perceived investment opportunities. Developing countries are a popular place for  investors to place their capital because o f the enormous room for growth. c) Diffusion of Knowledge

The term diffusion simply means to spread out, and that is exactly what any new found knowledge does. When a new invention or way of doing something pops up, it doesn¶t stay secret for long. A good example of this is the appearance of automotive farming machines in Southeast Asia, an area long home to manual agricultural labor. Based on this, the diffusion of knowledge has something to do with the advancement of  information by education (e.g giving lectures that are related with academics and technology) and by Internet (e.g easy and accessible electronic information). d) Non-Government Organizations (NGOs) and Multinational Corporations