The Philippines' Problems And Possible Policies - Essay Example

The Philippines' Problems And Possible Policies Economics focuses on both the micro and macro levels. The study zeroes in on the macro economic levels of the Philippines. The study looks at the micro aspects of the Philippines. The Philippines’ economic prospects are favorably encouraging. 1. Problems: The Philippines has some key difficulties to face. First, the economic issues include the Philippines’ lagging behind its Southeast Asian neighbors in terms of per capita GDP growth. With the nation’s geometrically increasing population is hampered by its ballooning country debt. In terms of macroeconomic data, the Real Gross Domestic Product (GDP) of the Philippines were (PHP billions) P6,563 for 2008, P6,826 for 2009, P6,889 for 2010, and P7,221 for 2011. This means that the country’s Real Gross Domestic Product growth rate was 6.4 percent for 2008, 4.0 percent for 2009, 0.93 percent for 2010, and 4.8 percent for 2011. In addition, the country’s inflation rate was 4.73 percent for 2008, -0.354 percent for 2009, 10.65 percent for 2010, and 3.9 percent for 2011. (Reference: http://www.countrywatch.com/country_profile.aspx?vcountry=137) Further, Robert Babe (37) emphasized "Economists, after all, are inclined to limit their professional attention to those human interactions or exchanges mediated by money, barter being a notable but minor exception. Discursive Acts, in contrast, focuses on non-monetized, verbal, symbolic interactions, thereby calling attention to a bifurcation of the field of human interaction -- into the realms of the "economic" and the "no economic" (or what I will term here the "purely communicator")." The quote clearly shows that the economy of, including the Philippine human relations, is grounded on economic factors, which includes gross domestic product. To resolve the inflation issue of the Philippines, Don Paarlberg (159) states “A small group of economists, chiefly libertarians, propose taking the monetary system out of the hands of government and leaving it to private enterprise. Theoretically, the market would discipline the supply of money to keep its value at a stable level. This proposal has won acclaim from only a few. "Money cannot manage itself," said Bagehot, a nineteenth-century economist”. The government has the power to reduce the inflation rate by increasing the supply of money into the economy. More money will reduce the inflation rate. Inflation is the increase in the prices of goods and commodities. Microeconomics also states that a decline in the demand for the products will reduce the demand and price of the product. Second, the ethnic issues include a major portion of the country's population wallowing in poverty. Only a small percentage of the ethnic population is living in rich levels. The Philippines' ethical structure is 92 percent, Christian Malay, 4 percent Muslim Malay, 3 percent other ethnic groups, and 1% Chinese ethnic group. The economy is run by a majority of Christian Malays. Third, the political issues include a democracy that is filled with many contradicting forces. The government is beset by allocating its scarce financial resources. The democratic government is patterned on the United States political government. Elections are made for the President, Vice President, Senators, Congressmen, Mayors, Governors, and other political leaders for a fixed term. With the democratic government, some persons use goons to force the people to elect the goon leaders as the elected government officials. Likewise, the democratic political system allows any person to use the money to buy votes from the people. Some of the poor residents accept the tradition of accepting money for their votes. 2. Projections: There are many positive prospects for this country and its economy. First, the country’s being a former colony of the United States gives it the American educational and societal advantage. The Filipinos can apply for jobs in other countries where the main language is English. Many Philippine residents work abroad to bring international currencies back to the Philippine economy. With the setting of Call centers in the Philippines, the country is able to compete with India in terms of bringing economic gains into the country, Philippines. In addition, the increase in the population increases the number of people entering the labor force.In addition, the population increase increases the quantity of Philippine citizens setting up factories and stores. With the population increase, gross domestic product increases. With the increase in the gross domestic product output, more people can afford to buy more of the inflated goods sold in the Philippine market system. In terms of what is developing under a pessimistic scenario, there are many positive acts to alleviate the effects of pessimistic scenario. Alvaro Encino (17) insists “according to the rational expectations school, money does not affect real variables both in the long- and short-run. Thus, changes in the money supply alter the general price level directly, leaving unchanged real variables such as employment, output and the real wage rate.” Monetarists clearly show that the Philippine economic picture allows for diverse ways to cushion the ill effects of unemployment and inflation. The Philippines’ long-run real equilibrium is not significantly influenced by monetary fluctuations. To resolve the need to buy the same or more quantity of the inflated goods, the Philippine resident can work in order to generate more cash. With more cash, the Philippine economy’s residents will have more purchasing power to buy the goods having higher purchasing prices. In addition, the factories can produce more goods in order to increase the nation’s gross domestic production goals. To achieve such goals, the factories must hire more factory workers. With the increase in factory workers, more people will have more money to buy goods, including the goods affected by inflation prices. In terms of what developing under an optimistic scenario, the Philippines’ economic environment will run faster. The factories will produce more goods to supply the increasing needs of the people. With the Gross Domestic Product increase, the unemployment rate will decrease. With more workers able to buy the inflated goods, more stores and factories will open up to fill the increasing product demands. Michael Evans (163) opines "A small business, which is generally defined as 500 or fewer employees, almost by definition, does not have this access to capital markets. It may borrow money from a bank or from personal sources, but tapping the capital markets in the way that large firms do is totally out of the question." The quote clearly shows that new factories can be built or set up by either investments or loans. The Philippine population can choose to either set up new factories or to apply as workers in the new factories. With the setting up of the new factories, the Philippines' economic output is brighter. With the increase in purchasing power, more inflation –tainted products are sold or bought. 3. Policy recommendations: There are some recommendations to deal with the country’s problems. First, the government should increase the money supply. To accomplish the supply quest, the government can instruct the central bank to lower the Philippine banks’ loan interest rates. With the lower interest rates, the borrowers will have more money funneled into setting up more factories. With more factories, the country’s gross domestic product statistics will improve. With more factories, more workers are needed. With the hiring of more workers, the unemployment rate will decrease. With the lower unemployment rate, more workers will increase the demand for inflation –tainted products. In addition, the government can lower the taxes. With the lower taxes, the business people will have more money to buy raw materials and pay more workers. With more raw materials, the factories' gross domestic product picture will increase. With the increase in the nation's gross domestic product, Philippine's economic wheel will run faster and faster at supersonic fashion. In terms of inflation, it is highly recommended that "It is widely agreed that inflation, in modern economies, is more the result of governmental action than a natural disaster imposed on an unwilling species by forces beyond human control. Governments choose to let inflation persist, or accelerate because they believe that the consequences of preventing, or stopping, it would be worse (Lindberg 78).” The Philippine government should not go so far as the colonial American revolutionaries. The revolutionaries compelled the creditors forcibly accept paper money at par under the government threat of physical punishment. Likewise, the researcher recommends that the government should enthusiastically jump into an economic world of inflation when the alternative choice is to wallow in the harsh economic effects of depression. Further, the Philippine government should use a firmer hand in managing the Philippine economy. The government can set up economic (business) policies that increase production in major Philippine sectors. The major natural resources sectors include timber, nickel, petroleum, gold, copper, and salt. With the Philippines’ declining financial deficits, tapering public debt and public services ratio, the government is on the right economic recovery track in setting up a huge budget for construction of infrastructure programs. With more roads, the farmers have more access delivering their farm products to the city markets. With more farm sales, the economic life of the farmer is enhanced (ref: http://www.economywatch.com/economic-statistics/country/Philippines/). With the government giving its full safeguarding support to over five million Philippine overseas contract workers, more Philippine citizens are encouraged to apply for work in other countries. With more remittances, the Philippine economy will rise up from its current economic stature. The government should also increase its spending. With more spending on health services, more health workers will flock the factories. With more education spending, more citizens can enjoy the benefits of free education. With more peacekeeping budgeting, the peace will continue to prevail. With peace, more factories can continue to manufacture and sell its goods. With peace and order, more citizens will bravely travel to the factories and offices to work. With peace and order, more citizens will buy goods from the nearby store, grocery, or restaurant. Walter Barndt (75) insists “Organizations don't make decisions; people make decisions. And insofar as it is important to know what clients and competitors are ‘going to do,’ is critical.” The economic meaning of the quote states that the organizations’ leaders can make or break the Philippine economy. According to the above scrutiny, the subject of economics includes scrutinizing both the micro and macro levels. The economic problems of Philippines can be favorably resolved. The micro and macro economic picture should be resolved with the help of the Philippine government. Vividly, the Philippines’ economic prospects are positively encouraging. Works Cited PRINT: Babe, Robert. Communication and the Transformation of Economics. Boulder: Westview Press, 1995. Barndt, Walter. User -directed Competitive Intelligence. Westport: Quorum Books Press, 1994. Cencini, Alvaro. Inflation and Unemployment. New York: Routledge Press, 1996. Evans, Michael. The Truth about Supply -Side Economics. New York: Basic Books Press, 1983. Lindberg, Leon. The Politics of Inflation and Economic Stagnation. Washington : Brookings Institution Press, 1985. Paarlberg, Don. An Analysis and History of Inflation. Westport: Praeger Press, 1993. WEBSITES: Countrywatch, retrieved April 8, 2012 from Economywatch, retrieved April 8, 212 from Read More