No efforts have been made to create a strong consumer base in the Philippines itself by improving the lot of the Filipino workers (Bello 3). Had a local market been created and some protections afforded to Filipino workers, development may well have proceeded in a more positive direction as the nation would have been better able to take advantage of those aspects of globalization that offered true benefits, rather than sinking all economic hopes into the long shot that the small nation could compete with nations like India and China as a source of cheap labor. Despite this reality, economic reform in the Philippines has consistently focused on re-creating the nation as an export economy, specifically in the it industry. It probably seemed like a natural extension of economic development in the 1980s and 1990s when the Philippines was attempting to embrace globalization. Globalization offered a way to integrate with the world economy, and the it industry was one of the most in-demand industries in the world. Thus, by the mid-1980s, the Philippines was already trying to capitalize on this fact by focusing on manufacturing semiconductors, a tack the country has relentlessly pursued ever since. Unfortunately, semiconductor manufacturing is a low-value it industry and has done little to improve the Filipino economy (Austria, "Assessing" 1). Low-value technology, like semiconductor manufacturing, doesn't create a product that consumers are willing to pay highly for. These stand in contrast to high-value it products, such as computers or cell phones, which combine many cheaply manufactured parts but are sold at incredibly higher prices. Instead of encouraging the development of a value added it industry, the pursuit of semiconductor manufacturing has only created low wage factory jobs in the Philippines.
This incredible focus on the manufacture of semiconductors has, to some degree, enabled the growth of manufacturing in the Philippines. However, this growth has not translated into economic development or social improvements for the nation as a whole. What's more, the high degree of focus on this one aspect of the it industry makes the nation highly dependent on the success of semiconductors and the whims of the market (Austria, "Competitiveness" 2). Without a diversity of production, without a local consumer market, and with a political bureaucracy intent only on its own self-serving interests, it seems likely that the it/semiconductor focus will undermine the long-term development of the nation. Because semiconductor manufacture does not require skilled laborers, it offers no incentive to make social reforms and improvements throughout the Philippines that would spur on further development. Investments in education, for example, would have the end result of producing a population that is better able to compete globally and improve the fortunes of the nation as a whole. But since market liberalization has been centered on low-value it manufacturing, there has been little incentive to make such social investments. Combined with a lack of political support, low R&D investment, the lack of worker education, and institutional bottlenecks, conditions have been created in the Philippines that actually hurt development instead of encouraging it (Austria, "Competitiveness" 4-5).
Without question, the reforms that have been made to the economy since the 1980s have made it possible for the Philippines to enter into the global economy. However, those reforms have not helped the Philippines to compete effectively in that market and are only managing to exasperate the problems that were already extant in the country. The complete lack of growth in manufacturing, the low skill focus of the it industry, and the lack of strategic focus between the international market and the domestic economy demonstrate that the reforms that were enacted have not produced the end results that were originally desired (Austria, "The Philippines" 41). The primary goal of the state -- and arguably of any state -- especially in the developing world must be to strengthen social institutions such as education, labor standards, worker participation, and rule of law. In doing this, the developing nation can create a solid domestic foundation upon which international development and economic growth can occur. Up until this point, this stratagem has not been extensively followed in the Philippines (Lanzona 1). The case of the Philippines highlights the importance of creating these domestic policies that will strengthen institutions, bureaucratic efficiency, and competitiveness prior to entering into regional or global economies (Austria, "Liberalization" 2).
In the final analysis, it is apparent that the Philippines requires extensive political, bureaucratic, and social reforms in order to strengthen the state and enhance its capacity to take advantage of the opportunities inherent in globalization (Banlaoi 214). At issue...
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