The Duterte government argues that the protections for the economy\nin the 1987 Constitution are outdated, and that removing them will increase\nforeign direct investment (FDI) and improve competitiveness. This is however\noblivious to the reality of growing protectionism worldwide amid slowing\ngrowth, trade and investment. Adverse global economic conditions undermine the\narguments for economic charter change even more.<\/p>\n\n\n\n
The House of Representatives (HOR) Committee on Constitutional\nAmendments has started hearings on changes to the 1987 Constitution. Among\nothers, these include proposals to relax so-called restrictive economic\nprovisions covering foreign ownership of land and foreign investments in\nnatural resources, public utilities, education, mass media and advertising, and\nstrategic enterprises. Proponents are recycling the same outdated arguments\nthat they have been using for decades.<\/p>\n\n\n\n
Protracted global crisis<\/strong><\/p>\n\n\n\n Yet the argument against liberalization is only becoming stronger\ntoday amid deteriorating global economic conditions. The International Monetary\nFund (IMF) sees global growth continuing to slow from 3.8% in 2017 and 3.6% in\n2018 to just 3.2% in 2019. The United Nations Department of Social and Economic\nAffairs (UNDESA) meanwhile sees world trade likewise slowing from 5.3% growth\nin 2017, to 3.6% in 2018, and a projected 3.3% in 2019. Projections have been\nadjusted downward as the year progressed and more downward revisions are likely\neven for the years to come.<\/p>\n\n\n\n Foreign investment is slowing drastically, according to the United\nNations Conference on Trade and Development (UNCTAD). Global annual foreign\ninvestment inflows have been falling for three straight years from US$2.03\ntrillion in 2015 to just US$1.3 trillion in 2018. Measured as a share of global\ngross domestic product (GDP), foreign investment inflows are already at their\nlowest in 15 years. <\/p>\n\n\n\n Slowing global growth, trade and investment means that the supposed\nopportunities from liberalization have become even more constrained than ever. Other\ncountries have realized this and are focusing more and more on strengthening\ndomestic economies than persisting with globalization. This includes the\nadvanced capitalist countries whose growth, according to UNDESA, is steadily\nweakening from 2.3% in 2017 and 2.2% in 2018 to just 1.8% in 2019 and the same\nin 2020. The Philippines is in an even weaker position for not having decent\nagricultural and industrial capacity to begin with.<\/p>\n\n\n\n Growing protectionism<\/strong><\/p>\n\n\n\n The main trend in global economic policies is towards\nprotectionism rather than liberalization. UNCTAD notes that 187 liberalizing\ninternational investment agreements were effectively terminated in the period\n2010-2018 compared to just 96 in 2000-2009 and only 25 in the decade before\nthat. UNCTAD also notes that the share of restrictive investment measures in\nall changes to national investment policies is rising steeply \u2013 from just being\n3% in 2000 to 34% in 2018. This clearly indicates lessening investment\nliberalization and growing restrictions.<\/p>\n\n\n\n Monitoring both trade and investment measures, Global Trade Alert\n(GTA) observes even more widespread protectionism. GTA has monitored 14,911\nprotectionist measures implemented worldwide since 2009 versus just 5,192\nliberalizing measures. This includes over 8,000 measures by the G20 group of\nadvanced capitalist countries especially in the European Union (EU), United\nStates (US), India, Russia, and China.<\/p>\n\n\n\n Particularly visible is the US\u2019s \u2018America First\u2019 approach and\nresulting trade and technology war with China. This involves not just higher\ntariffs but also restrictions on investment. China remains one of the most\nState-managed economies in the world and is responding in kind. There is also\nthe United Kingdom (UK) in the middle of its Brexit process and withdrawal from\nthe EU.<\/p>\n\n\n\n Prioritizing national development<\/strong><\/p>\n\n\n\n The usual arguments by critics of the 1987 Constitution\u2019s economic\nprovisions have always been weak. Economic history clearly shows that every\ndeveloped economy was protectionist and strictly regulated foreign investment\nin their respective periods of economic take-off. This includes countries as\nvaried as long-standing capitalist powers US, UK, Germany, and Japan, erstwhile\nSocialist countries China and Russia, and newly industrialized countries South\nKorea and Taiwan. There is on the other hand no evidence of any country\nachieving economic take-off without protectionism.<\/p>\n\n\n\n The policy question is not how to attract foreign investment at\nall costs. Rather, it is asking what needs to be done for foreign capital to\ngenuinely contribute to the country\u2019s long-term economic development. The gains\nfrom foreign investors are grossly exaggerated. Amid worsening global economic\nconditions and without a clear policy framework to regulate FDI, further investment\nliberalization will be detrimental to the national economy.<\/p>\n\n\n\n Pro-liberalization advocates are misguided or wrong if they\u2019re still looking to foreign investors and economies to boost the local economy. This was unlikely before and is impossible now. Our economic managers should instead focus on raising wages and rural incomes, protecting and supporting domestic agriculture, and building Filipino industry.<\/p>\n\n\n\n Photo from www.ispionline.it<\/em><\/p>","protected":false},"excerpt":{"rendered":" BY SONNY AFRICA<\/p>\n The policy question is not how to attract foreign investment at all costs. Rather, it is asking what needs to be done for foreign capital to genuinely contribute to the country\u2019s long-term economic development.<\/p>","protected":false},"author":13,"featured_media":8593,"comment_status":"open","ping_status":"open","sticky":false,"template":"single-withbanner.php","format":"standard","meta":{"_acf_changed":false,"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":"","_expiration-date-status":"saved","_expiration-date":0,"_expiration-date-type":"","_expiration-date-categories":[],"_expiration-date-options":[]},"categories":[2048,3],"tags":[356,355,347,1203,96,475,1463,116,2047,822],"acf":[],"_links":{"self":[{"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/posts\/8592"}],"collection":[{"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/users\/13"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/comments?post=8592"}],"version-history":[{"count":2,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/posts\/8592\/revisions"}],"predecessor-version":[{"id":9275,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/posts\/8592\/revisions\/9275"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/media\/8593"}],"wp:attachment":[{"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/media?parent=8592"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/categories?post=8592"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/tags?post=8592"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}