Several years ago, the Philippine government arbitrarily signed up and consigned our economy to free unregulated trade through the General Agreement on Tariff and Trade (GATT) and membership in the World Trade Organization (WTO). Despite protests from various sectors, our legislators gave in to the pressures of globalization. First, we were compelled by our distorted sense of loyalty and dependence on US coupled with our serious lack of patriotism. Second, about 90% of all countries at that time have committed to globalization with the remaining 10%, included were China and Taiwan, holding on to their communist economic philosophies. If the Philippines did not join the WTO, we would have been isolated from the rest of the world since the GATT clearly provided that open trade will transpire exclusively among signatories of the agreement. Filipino households would not have been exposed and benefitted by a variety of goods and services we are now enjoying due to globalization.
In support to the legislative decision, the executive established programs and policies that propped up industries at the expense of agricultural sector to be able to keep up with the stiff competition in the international market. Through these years, our globalization policies have unfailingly integrated our economy with the worldwide financial system. In the process, our internal capacities for self-sustenance have diminished and our already frail protectionist economic structures have effectively crumbled down.
Now, after more than two decades, our foreign trade doubled and about 84% of our exports go to just 10 countries. The US in particular is the largest buyer of our garments and furniture receiving 80% of total garments exports and 60% of total furniture exports. Foreign direct investments accounted for 55.8% of total investments in 2008, 2/3 of which comes from US, Japan and European Union, all in economic turmoil. About 9.2 million Filipinos working in over 190 countries remit approximately US$14.5 billion, 52% of which come from US or via US-based banks. US hosts 3 million or 1/3 of all overseas Filipino workers who are unfortunately working in sectors of the US economy which are already reeling from the financial crisis.
The global financial crisis is like a highly communicable disease that originated from US, just as the severe acute respiratory syndrome or SARS virus started in China. In the latter, the virus developed when human beings shared their dwellings, things and food with animals while in the former, the crisis began when market forces operated beyond the limits of Adam Smith’s theory of “invisible hand,” which contended that people participate in the economy primarily motivated by self-interest and eventually lead toward the common good. Smith did not imagine the scope and extent of human greed, especially in the context of capitalism’s private property and free enterprise. People in US, business firms and households alike, especially financial institutions (commercial and mortgage banks, investment banks, insurance companies, securities houses and the like) completely ignored ethics and let their greed come into play. This kind of virus is probably worse than China’s SARS and is now rapidly spreading all over the world like a plague. Even if the Philippines is on the other side of the globe, there is an air duct that effectively connects us with US, and the airborne virus has crossed our borders much faster and hit us much harder than America’s neighbors.