Essay
Economy circumscribes activities relative to commerce, consumption, distribution, management, manufacture, production, and trade which were intertwined upon business, community, country, government, households, and individual allotment while simultaneously directing the societal progression or retrogression of the conformity. Receptive understanding towards economy is mainly perceived as a conundrum among its modificative permutation tendencies depending on human relations, regulations, and resources which consecutively influences the respective aspects relative to economy. Hence, appropriateness of economy is deemed and considered as a relevant subject matter worldwide.
The book “Global Inequality: A New Approach for the Age of Globalization” by Branko Milanovic describes global inequality as the income inequality occurring globally wherein the economic income gaps between the top, the median, and the bottom of global income distribution exists in enormous percentages based from the historical and societal economic changes of the entire world. Global inequality causes an ideological concept wherein the world consists of exploiting and exploiting occurrences resulting into the sequential perception wherein ‘the rich get richer while the poor tries to catch up’. The global inequality can be explained by two theories: by the dependency theory and by the world-system theory.
A constituent quintessence dwelled in Southeastern Asia serving as a conduit for Western Pacific Ocean and surrounding bodies of water belonging to their respective territories. Dubbed as the Pearl of the Oriental Seas, a historic title befitting for its pulchritudinous geography and abundant resources. A nation composed of convoluted history, splendiferous cultures, and an intricate knit-woven community – the Republic of the Philippines, a country possessing a progressive economy continuously attempting to provide and to thrive. The economic growth within Philippines depends heavily on the; intrinsic natural topography and exceptional commerce competence of service sectors; subsistence transport passageways for trading beyond the encompassed borders and bodies of water; extraordinary destinations for international travels increasing tourism capital and popularity; advantageous topographical placement in Southeastern Asia where environment is capable of producing immense quantity of geothermal energy and natural mineral deposits; and the capacity of the local industry to manufacture a bountiful amount of miscellaneous wares, electronic commodities, luxury goods, agrarian and fishery necessities, and other type of derivative merchandise productions.
Economic trade within the Philippines began way back from the implemented barter system of Filipino ancestors where methodological trading of goods was prospectively exchanged to the appraised equivalent number of services or products. This simplistic system was diminished and remodeled when the Philippines have undergone colonization and occupation from three countries; Spain, Japan, and the United States of America respectively. Colonialism, as defined by Oxford Dictionary, is the action of setting, establishing control over a domain of another and sometimes, even exploiting the conquered domain for material and economic gains. It elucidates the subjugation of a whole domain belonging to another, compromised of its people, governmental hierarchy, and resources. However, being ensnared by foreign entities revolutionized the economy of the Philippines. Eventually, the country regained its rightful freedom although an approximate portion of toxic and colonized mentality have remained nested within the community of the country. Currently, the Philippines is facing an indirect ensnarement and subjugated situation known as neocolonialism – where indirect control is implemented through economic or cultural dependence and implicitly perceived.
Neocolonialism is the modern form of colonialism. Former colonizers of the Philippines, specifically the United States of America, have a continuous relationship towards the country and were even deemed as somewhat exploiting in frequent times where agreements are created corresponding to politics, industries, and economy. According to Stephen Shalom, American neocolonialism in the Philippines is described as conscious and pragmatic though mechanisms of neocolonial control could not be fully dispensed due to residual remains of colonial mentality. Cultivation of neocolonialism was derived from imposing control over neocolonial territories which are basically the target markets of massive imports from great powers that further hurts the own economic domain of the subjugated country. Through neocolonialism, continuation of imposed practices during the colonial era were contrived and initiated the dependency theory.
Economic neocolonialism emphasized the damaging attributes leased upon absolute economic control over a domain whilst the dependency theory reiterates inequality upon the societal standard of being underdeveloped and developed. Raul Prebisch and his colleagues developed the dependency theory consequent to economic growth and development of countries does not necessarily precede economic growth and development of other countries. Additionally, Moore Lappé and Joseph Collins indicated countries considered as rich by societal standards are massively unequal to underdeveloped countries. Concepts of inequality were further described for certain underdeveloped countries being heavily dependent and reliant onto well-off wealthy countries to pursue the ‘full-fledged develop country standards’ dictated by wealthy countries. It also explicitly implies the wealth gained by countries considered as great powers were accumulated to the expense of neocolonial underdeveloped countries.
Dependency theory is mainly observed on neoliberal globalization which entails the reduction of state influence and intervention at economic activities that reforms policies and damages local industries. According to Shyam Sundar, discourses and perspectives regarding neoliberalism heavily influences the policies, production, and progression of institutions which results in exertion of considerable pressure to the insubstantial state. Neoliberalism argues the market as the only exclusive solution for quandaries regarding consumption, demand, employment, and price rates. Additionally, neoliberalism seeks to liberate the rightful entrepreneurial and freedom skills alongside an institutional framework designed to mainly characterize private property rights, free market, and free trade which are considered to be harmful towards the economic circumstances of the local domain. Effects of neoliberal globalization are segmented into economic liberalization, deregulation, privatization, labor export, and international division of labor.
Economic liberalization transpires to overwhelm the local market with international imported products by opening the local market to foreign countries which consequently influence the retrogression of local economic business, dwindling local government and restrictions, employment decreasing rate, poverty increasing rate, damaging locally produced commodities, and causing the transnational elites to control the flow of the local market. The study of International Labor Organization (ILO) describes liberalization as a factor which mainly contributes to economic losses and industrial disruption such as reduction of tariff, removal of protection for local industries, surge of foreign imports and commodities, etc. For instance, the Agricultural Foreign Trade Statistics of the Philippines stated the agricultural imported commodities within the country during the year of 2015 has increased by 14.6% which evoked an additional of roughly $1.43 billion dollars procured. On the grounds of annual import proliferation, countless local farmers demand to repeal Rice Liberalization Law for the 33% decrease of local farmgate rice prices in February 2019 since foreign farmgate rice products overwhelmed the market with its demand, price, and supply. Consequently, the quantitative restrictions of the Philippine government have been replaced with import policies responsible for shifting and reducing implications of rice imports to agriculture, general welfare, nutrition, and economy.
Deregulation is the method of immediate reversal of local government policies and indirect governing of those policies by a foreign domain. Additionally, Derthick & Quirk denoted deregulation as something which overlooks the economic reality and subjected prospects due to pervasive disillusionment of neoliberal policies set in stone. Economic deregulation constitutes foreign countries acquiring indirect power over the local government policies relative to local economic business by regulating neoliberal policies. Philippine Institute for Development Studies (PIDS) stated deregulation as concepts of government lifting control and making foreign market forces work in the industry, it entails the deregulation circumstances of the local oil industry which covers removal of government restrictions towards the subject matter. According to deregulation occurring within the country, the oil industry was deregulated to stabilize and provide reasonable product prices, encourage foreign investments and competition, and remove cross product subsidies. However, continuous increase in prices of petroleum still exponentially happened which eventually had led to the depreciating value of Philippine Peso.
Privatization is a major conditional policy directed by the World Bank (WB) and International Monetary Fund (IMF) to either partial or total transfer of local property responsibilities from the government to private sectors and domains. Furthermore, privatization is considered as the product of both liberalization and deregulation, wherein local underdeveloped countries are reciprocating privatized commodities for maintaining local funds to regulate intrinsic public utilities which would induce public services inaccessible to local community since market, price, and subsidies are regulated by private sectors and not by the local government. For instance the privatization of Metropolitan Waterworks and Sewerage System (MWSS), implemented by the Philippine local government through creating alleged propagandas of Metropolitan Manila suffering from severe water crisis to engage with private sectors, had led to a public outrage. Though it lasted for less than five years – the profit-seeking activities of the private sectors, the lack of accountability, deregulated and unreasonable prices, inadequate facilitation of service, and restrictions on water access had engraved destructive consequences to the MWSS consumers, especially the poorer portion of the population in Manila.
Labor exports is an economic activity wherein a domestic domain would supply contracts and commodities of a laborer in a certain occupation to provide servitude in endeavors needed by foreign enterprises or private sectors. According to Kevin O’Neil, securing access to labor exports from the Philippines was the beginning of labor migration wherein the government prioritizes bilateral and regional labor trading systems as a bolster for employment strategy in labor economics. Thus, Dovelyn Mendoza justifies the labor exports as an advantageous approach for becoming a major source at foreign exchange inflows. However, the local government does not particularly prioritize benefits for workers, additional salary and wages, and produce job creations which led to workers, needed in sectors and occupations critical for development of the country, leaving for better opportunities found overseas. According to Hugo, the Philippines have lost a great number of scientist graduates, managerial staff, technical laborers, administrative workers, and professionals through emigration to the USA in 1992. The aftermath would include an increased rate of unemployment in local industries since local industries lack abilities to compete in a foreign domain hindering the substantial elements needed to develop the country.
International division of labor showcases the specialization of workers in conducting separate tasks to organize and improve work efficiency. Similar to Adam Smith’s analogy of a pin factory; it entails a singular competent worker could only produce thirty pins a day while several workers dividing tasks into multiple operations could produce approximately fifty thousands of pins a day. The concept conveys provision of mutual benefits and activities in accordance to the area of expertise of a specialized worker which unfortunately creates hierarchical inequalities between the developed and the developing countries. According to Anette Robert, several large firms have exploited developing countries by setting up subsidiaries or consigning contracts resulting in neglection of disadvantageous economic complications. There are plenty of foreign owned businesses operating in the Philippines; e-commerce businesses such as Shopee, Lazada, Amazon, etc.; fast-food restaurants such as McDonald’s, Kentucky Fried Chicken, Burger King, etc.; and approximately most automobile transportation companies found in the Philippines are subsidiaries of foreign companies. These foreign companies usually utilize local workers for flexible and cheap labor resulting in the advent of local industries.
The book “Inequality and Globalization: How the Rich Get Richer as the Poor Catch Up” by Francois Bourguignon predicts the association of developing countries with developed countries will eventually result in economic global inequality. Manufacturing companies in the developed countries recognize additional profit by economic liberalization, deregulation, privatization, labor exports, and international division of labor disregarding the possible depreciatory effects when afflicted to the economic circumstances of the developing countries. Andre Frank and Amir Samin postulated the delinking of the local economy towards the foreign sectors regulating it, as a probable solution for extricating developing countries to the disadvantages brought by dependency. Overall, dependency displayed by the ‘developing’ towards the ‘developed’ is determinately within the scope of underdevelopment theory – developing countries relegated to the harsh world economy would not develop as long as their respective economic circumstances were restrained by the developed countries.
If dependency theory is observed in entailing the reduction of state influence and intervention at economic activities asserted from developed countries to local peripheries resulting to reformed policies and damaged local industries, then world system theory is observed through the economic standing of an individual or isolated territory through the total world system to further scrutinize the inequality which is created by the world system itself. Information dissemination of global inequality through world system theory is discerned through the economic standing of an individual country which must be contemplated from the position of the total world system and not from the individual or isolated occurrences. However, the dependency theory and the world system theory share a similar aspect in their respective ideological concepts, both theories assume the economic development of an individual country is relative to its dependent and exploited relationship with other countries.
World system theory is heavily influenced by the total world system. Fernand Braudel interpreted the total world system as an expression applicable to the whole world, where structure of economy is observed from a global standpoint. Total world system includes thorough dissemination geographical zone for conquests and settlements, systematic division of labor or expertise, international exchange and trade of commodities, and flow of capital and labor of the respective territories alongside the analyzation of economic performance conducted by individual countries around the world. Economic performance over the past millennium is rationalized by three interactive processes: settlement or population, international trade and capital movements, and technological or institutional innovations.
Moving on, the Republic of the Philippines is considered as a developing country by the International Monetary Fund (IMF) wherein economic maturity of gross domestic product (GDP) per capita is low; territories have agriculture as the primary industry; less developed industrial commerce; low Human Development Index (HDI) relative to other countries; and seeks to be advanced or be ‘on par’ with the already considered as developed countries. Philippines is recognized mainly by the World Bank Group as not meeting the economic standard for a developed country while reiterating the minimal growth of economic dynamism belonging to the country. According to Asian Development Bank, the ‘developing country’ status of the Philippines were mainly due to low to moderate growth of economic expansion for the past 40 years which creates an incessant course of inequality resulting in an upsurge of poverty percentage. Therefore, the Philippines is among the list of 150 developing countries considered by the IMF’s World Economic Outlook Database – a conclusive statement relative to the world system theory developed by Immanuel Wallerstein.
Immanuel Wallerstein rationalized world system theory as an approach to the historical and societal changes of the world entailing the existence of the world economic system wherein countries are either exploiting or exploited. According to the world system theory, economic nations are categorized into three types – the core, the semi-periphery, and the periphery. The core nations are equivalent to developed countries which profoundly dominate economic relationships. The periphery nations are equivalent to underdeveloped countries which incorporate dominated economic relationships. While the semi-periphery nations , equivalent to developing countries, possess dominated relationships towards the core and dominating relationships towards the periphery. The Republic of the Philippines is considered as a semi-periphery nation wherein it offers high profit consumption goods to the core nations while being offered cheap labor and raw materials by the periphery nations.
The average economic growth of Philippines during the period 2000-2009 is around 4.5% which increased capably into 6.4% during 2010-2019 period portraying the country to be economically sound resulting in being globally recognized as a competitive workforce. The Philippines provides economical raw materials. According to the World Outlook Database of 2020, the primary exported commodities of the Philippines include agriculture goods, petroleum, raw materials of electronic products, raw materials of garments, and other present natural resources – mainly traded into the core nations such as the United States, China, Japan, Singapore, Netherlands, and more.
The Philippines also provides cheap labor to the core nations. For instance, employment of migrant Overseas Filipino Workers (OFWs) are generally observable in major destinations such as North America, Middle East, and in some European Countries wherein OFWs offer cheap labor by temporarily residing in the core territories in exchange of providing a better life for their respective families. Commission on Higher Education (CHED) reported that Philippines colleges produce approximately 20,000 of Bachelor of Science in Nursing (BSN) graduates annually. According to the chart of Estimated Number of Employed Filipino Nurses by Work Setting during 2003, approximately 84.75% of BSN graduates have internationally migrated for pull factors such as higher income, better benefits, more options during working hours, and higher opportunities for economic stability – leaving a measly 15.25% of domestic BSN graduates resulting in a massive shortage of workers and decrease of workforce quality in health service department.
The book “World-system Analysis: An Introduction” by Immanuel Wallerstein summarizes the characteristics and importance of world-system as a reference in discussions for globalization. The world is an integrated system, it emphasizes the world-system as a whole rather than nation-states whenever considering the historical and societal changes in the economy. Framework bodies of knowledge are presented in the analysis of the total world system instead of distinctive and individual mechanisms. This birthed the idea wherein the world-system possesses a stratified structure of inequality which is mainly based on institutionalized exploitations of the core nations towards the semi-periphery and the periphery nations. World system theory depicts the whole system has developed, developing, and underdeveloped components referred to the structured world-system relationship.
Global inequality is depicted in dependency theory wherein observation of entailing the reduction of state influence and intervention at economic activities asserted from developed countries to local peripheries resulting in reformed policies and damaged local industries. Global inequality is also depicted in the world system theory wherein observation of the economic standing of an individual or isolated territory through the total world system to further scrutinize the inequality which is created by the world system itself. Global inequality is the income inequality occurring globally wherein the economic income gaps between the top, the median, and the bottom of global income distribution exist in enormous percentages based from the historical and societal economic changes of the entire world. Global inequality causes an ideological concept wherein the world consists of exploiting and exploiting occurrences resulting into the sequential perception wherein ‘the rich get richer while the poor tries to catch up’.
