ECONOMIC GLOBALIZATION AND

LOCAL DEVELOPMENT

Denise June CastorJunelyn Pagaran

Community Development 127(Development Administration and Ethical

Considerations in Development Work)

Refers to a world in which societies, cultures, polities and economies have, in some sense, come closer together.

The intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa , (Giddens, 1990) .

Globalization

Refers 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.

Economic Globalization

Participative process to address and solve a diversity of socio-economic, cultural and environmental problems with the aim of producing sustainable development and improve the quality of life of the population.

Local Development

Global Inequalities and Development

Disparities

Source: Pew Research Center analysis of data from World Bank PovcalNet database (Center for Global Development version available on the Harvard Dataverse Network) and the Luxembourg Income Study Database, August 2015

Source: Credit Suisse Research Institute, Global Wealth Report 2015, October 2015

Source: Credit Suisse Research Institute, Global Wealth Report 2015, October 2015

Source: UBS, Ultra Wealth Report, 2014

Source: IPS analysis of Forbes’ 2016 Billionaire list and IMF 2016 Gross Domestic Product Projections

Source: Capgemini and RBC Wealth Management, World Wealth Report, 2015

Policies and Programs

Done by means of amending or abolishing the laws regarding restriction or limitation of import product

Liberalization

Trade liberalization leads to: Lower price cost margins Causes more efficient firms to expand Less efficient firms to either contract or exit,

thus, inducing additional efficiency gains.

Time Line Policy Regime Policy Description

1950s-1970s Import Substitution Phase

Restrictive Investment Policy

-Protectionist measures such as high tariffs, import quotas and other non-tariffs barriers.-Restricted foreign ownership to 40% in non-pioneer industries; 100% eligibility for foreign investment subject to Board of Investment approval.-Complicated investment incentive system.

1980s-1990s Unilateral Trade Liberalization Period

Investment Liberalization

-Trade Reform Program (TRP) I: reduced tariff range from 70-100% to 0-50%-TRP II: reduced tariff range to 3-30%-TRP III: further tariff changes towards a 5% uniform tariff-1987 Omnibus Investment Code (Board of Investments)-1991 Foreign Investment Act-

Time Linej Policy Regime Policy Description

Multilateral/Regional Trade Liberalization

-GATT-WTO (1995)-AFTA-CEPT (1993)

2000s Trade Facilitation

Regionalism/Bilateralism through Free Trade Agreements

-Customs reforms (since mid-1990s)-Revised Kyoto Convention (2009)-National Single Window (2010)-China-ASEAN (2004); ASEAN-Japan (2008); ASEAN-Korea (2006); ASEAN-Australia New Zealand; ASEAN-India-Japan Philippines Economic Partnership Agreement (2007)-ASEAN+3, ASEAN+6 Talks

Process where all government own corporations are privatized and maintained by the private sector.

Targets: Banks, Telecommunication, Power Company

Privatization

- National Power Corporation (electricity supply)

-MERALCO -PAL - PLDT

-government removes or reduces the

restrictions in a particular industry to improve business operations and increase competition

DEREGULATION

 enacted by the Tenth Congress in 1998, government does not interfere with the pricing, export and importation of oil products, nor the establishment of retail outlets (gasoline stations); storage depots; ocean-receiving facilities; and refineries.

Oil Deregulation Law (Republic Act No. 8479)

-The program intends to provide the public with adequate, safe, efcient, reliable,and reasonably-priced infrastructure and development facilities while affordingthe private sector a level playing feld, reasonable returns and appropriate sharingof risks.

- example: NAIA Expressway Project NLEX and SLEX Connector Road Automatic Fare Collection System

PUBLIC-PRIVATE PARTNERSHIP

Philippines in the Era of

Globalization

International organization established to supervise and liberalize world trade.

The Philippines became a member of the WTO on 01 January 1995.

The WTO is the successor to the General Agreement on Tariffs and Trade(GATT), which was created in 1947 in the expectation that it would soon be replaced by a specialized agency of the United Nations (UN) to be called the International Trade Organization (ITO).

World Trade Organization (WTO)

- International financial institution that provides loans  to developing countries for capital programs.

-It comprises two institutions:  

International Bank for Reconstruction and Development (IBRD)

International Development Association (IDA).

World Bank

1945- A partnership is born The Philippines becomes one of the first members of

International Bank for Reconstruction and Development.

1957- Boosting Energy The World Bank signs its first loan for a $21M power

project. The construction of the Binga Hydroelectric Power Plant helps keep up with the growing energy demand by generating more power supply in the island of Luzon.

Philippines and the World Bank

1960- Taking up the Plight of the Poorest The Philippines becomes a member of the International

Development Association, The WB Group’s fund for the poorest developing countries.

1962- Spurring Private Sector Growth The International Finance Corporation of the World Bank

Group sets up the Private Development Corporation of the Philippines to finance large-scale industry projects.

Philippines and the WB

1976- Hosting the Annual Meetings The Annual Meetings open in Manila and focus on getting more

support from developed nations to help boost the growth of developing countries. One year later, IFC establishes its country office in the Philippines.

 1986- People Power The World Bank establishes a resident mission in Manla, in the

same year that Filipinos troop to the EDSA highway in a peaceful people power revolution that ushered a new government.

Philippines and the WB

1994- Expanding the Partnership The Philippines becomes a member of the

Multilateral Investment Guarantee Agency (MIGA), which promotes foreign direct investment in developing countires by providing political risk insurance and credit enhancement to investors.

Philippines and the WB

1997- An Evolving Country Assistance Strategy Economic growth is sustained for the fourth consecutive year

with significant poverty reduction and job creation. The Bank’s Country Assistance Strategy is reassessed from

economic recovery in the 1980s to poverty alleviation and to help the country deal with the effects of the 1997-98 Asian Financial crisis.

The Bank also expanded its engagement with civil society through projects and consultations.

Philippines and the WB

1998- Peace-Building in Mindanao The WBG begins helping conflict-affected

communities. Socio-economic infrastructure projects were provided through the Special Zone of Peace and Development Social Fund. This was later followed by other projects.

Philippines and the WB

2002-Building Knowledge Knowledge for Development Centers are established

in partnership with academic institutions across the country. The KDC provide the public with access to the Bank’s collection of knowledge and data and a venue for secession of development issues.  

Helping the Poor Help Themselves

Philippines and the WB

2005- Facilitating a More Inclusive Dialogue From holding donor-driven Consultative Group Meetings

based in Paris, the Philippine government host the first country-led Philippines Development Forum in Davao City.

It broadens participation in the country’s development dialogue by including more representative from civil society, the academe, the private sector and members of legislature.

Philippines and the WB

2007- Supporting Energy Sector Reforms Improving power supply in Luzon, Magat is the first

hydroelectric power plant to be privatized under the Electric Power Industry Reform Act of 2001 and the first merchant power plant to be financed in East Asia.

With the help of foreign and local investors and IFC, the project enhances the availability of competitive power from a renewable source.

Philippines and the WB

2008- Responding to the Global Food Crisis Under the Bank’s Global Food Response Program,

$200M in budget support are approved to help the government protect poor households from rising food and fuel prices.

Additional assistance was provided in 2010 to help the country recover from Ondoy and Pepeng.

Philippines and the WB

2009- Investing in Social ProtectionA conditional Cash Transfer Program gets Bank support,

using a national households targeting system.

As part of the social welfare and development reform agenda, families receive cash subsidies if their children stay in school and get regular health check-ups and pregnant mothers gets proper prenatal and postnatal care.

Philippines and the WB

2011- Providing Innovative Financing for Disaster Recovery The Philippines gains immediate access to $500M

following tropical storm Sendong. The Disaster Risk Management Development Loan

featured an innovative option which allowed the government to draw the funds when a national state of calamity was declared by the President.

Philippines and the WB

2013-2014- Supporting Reconstruction after Yolanda The WBG provides quick response in the wake of typhoon

through a package of financial and technical support.

$500M in budget support help fill the government’s financing gaps while the National Community Driven Development Project provides poor communities-including those affected by the typhoon-with basic social services.

Philippines and the WB

2014- Moving Forward The country partnership strategy for 2015-2018

supports the government’s plan to promote inclusive economic growth that creates more and better jobs and reduces poverty.

The new strategy supports the WBG’s goals of ending extreme poverty and boosting shared prosperity.

Philippines and the WB

Philippine Total Gross External Debt

Advantages and Disadvantages of

Economic Globalization

1. Increase job opportunities and possible higher salaries.

2. Can lead to economic growth and higher standard of living.

3. The reliance of countries to each other has led to better chances of international peace.

4. It has paved the way for cultural awareness and understanding through the help of technology.

ADVANTAGES

1. Depletion of natural resources because of the increasing demand for raw materials.

2. Violation of human rights as many countries can exploit human labor outsourced from developing countries.

3. Globalization is a method for more powerful countries to colonize less developed ones.

DISADVANTAGES