Leyson N. San Juan

Econ112-A

Based on the handouts given, my observations revolve around 3

interesting implications that I have realized: 1. On-the-ground problems are

getting worse despite the technical growth in Philippine economy 2. that

the Philippine GDP majorly results to temporary benefits 3. that the

Philippine GDP indicates a low utilization of resources potential for gaining a

comparative advantage in the world. As can be observed, the above

observations are too general to be sufficiently understood right away so the

following paragraphs will try to justify these claims.

The handouts are full of numbers, seriously. Trying to memorize each

digit encoded would have only given me much of a headache. Thus, the

vantage point that I took is, not to reiterate anymore the digits given but, to

tell the story behind those digits and how such story creates an impact to an

individual’s life such as mine.

Let me start with my understanding of the GDP. The gross domestic

product is the yardstick of a country’s economy. It is the indicator as to

whether such country is experiencing an economic growth or recession. The

GDP measures the total amount of services and final goods made within the

boundaries of, say, the Philippine archipelago. The GDP is greatly affected by

Personal Consumption Expenditures, Government Purchases, Gross Domestic

Private Investment and Net Exports. It shows the economic efficiency of all

the markets and all sectors within the country. Needless to say, the GDP has

a direct effect to the quality of living of the citizens. For 1st world countries,

which lead the economic arena in terms of GDP, most of them have minimal

problems of poverty, lack of education or deficiency of healthcare services as

compared to third world countries like Zimbabwe, Indonesia, India and the

Philippines where majority of its citizens are below the poverty line. In these

third world countries, which have a relatively low GDP, millions of people

starve every day. Millions of children are being forced to work, instead of

going to school, in order to secure food on the table for their families at the

end of each day. Therefore, the quality of life in a country depends much on

its GDP.

From 1 474 457 Million pesos in 1993, nominal GDP increased to 6 648

245 in 2007. Furthermore, real GDP increased from 734, 156 Million pesos in

1993 (1985 base year) to 1 368 641 in 2007. As can be seen, undeniably

there is a gigantic increase in both real and nominal GDP of the Philippines

from 1993 to 2007. But does the increase in the GDP manifest a tangible

positive change on the ground? Can regular individuals ,“the common tao”,

feel the effects of what is supposed to be an economic growth? No. In fact,

from the 1993 until now, statistics shows that more and more Filipinos dive

below the poverty line as the years went by. Each day, more Filipinos starve

to death despite such a growth. Despite a technical growth in the GDP as

proven by the digits, the Philippines has earned an unfortunate reputation as

one of the poorest of the Third World countries. This is quite inconsistent

with Economics theories, right? Why do people get poorer even if the digits

say that the economy gets better? I think the problem extends to the

unstoppable boom of the country’s population and its serious issues of

corruption. As much as there is an arithmetic increase in the GDP, there is

sky-rocketing, geometric increase in the number of people the government

needs to support. This is where the idea of GDP per capita comes in. If we

compare the information given by the handouts to the growth of the

population in the Philippines, clearly the latter outmatches the former. This

means that the additional economic growth is insufficient to cater the

primary necessities of its additional citizens. The benefits by the increase in

the economy, now, have to be shared to more number of people lessening

the individual benefits that one gets. The second reason as to why tangible

benefits are not seen to trickle down the grassroots might probably be

corruption. The Philippines is also crowned as the second most corrupt

country in Asia. This means that funds allocated by the government to

supposedly develop certain sectors of society most likely do not end up there

but on the bank accounts of the politicians handling such funds. Therefore,

unless the issue of corruption and population boom in the Philippines is

properly addressed, even a miraculously tremendous growth in the GDP

would mean little because either more people have to share the benefits or

the benefits just end up solely for bigoted individuals.

Secondly, as can be seen in graph, Philippine GDP relies much (49.1 %)

on the service sector and very minimal (18.4%) on the Agriculture, fishery

and forestry sector. I find this very peculiar because the service sector has

the least tangible effect to a country in terms of economic growth. Call

centers is part of the service sector and the Philippines is known for this in

the world. In fact, the call center industry is getting bigger and bigger in the

Philippines where even nurses, teachers and even doctors leave their jobs

just to become call center agents because low salaries. The frustrating part

of call centers and other service centers is that it does not make lasting and

tangible improvements to a nation. Unlike if the country is focused on the

industrial sectors like Japan, bridges and buildings are built, the quality of

products are increased within the country. What’s more depressing is that

call centers in the Philippines encourage underemployment and such centers

are usually for foreign companies. This means that our human resources are

the ones being used but it’s the marketability of the foreign companies that

is tangibly improved. Furthermore, we can see in the graph that net factor

income from abroad is a substantial part of the GNP. We export our

specialized citizens abroad. Remittances may be sent to the Philippines, but

the actual benefits like the improvement of lives and health by our nurses

are made for other citizens. If we take a look at Filipino engineers in Ireland,

even if money is remitted to the Philippines, the actual improvements of

technology and industry is being made apparent in those countries at the

expense of Filipino talent and skill.

Lastly, the graph of GDP by industrial origin shows that the economy

utilizes a very minimal amount of agriculture, fishery and forestry for its

GDP. We fail to realize that we are an agricultural country and our greatest

potential lies in agricultural resources. The Philippines is poor country sitting

on a mountain of gold. What happens right now is that our lumber and other

resources are being exported to the other parts of the world for further

processing and the Filipinos end up buying the end products at a higher cost.

We export lumber to France and end up buying wooden, high quality

furniture from the same country even if the initial resources used were ours.

We allow other countries to exploit our own resources instead of maximizing

and utilizing these resources for our own benefit. The agricultural, fishery

and forestry is the sector we are naturally rich with and other countries envy

us for this. I think it’s about time we use the resources in which we have the

highest potential in order to gain a comparative advantage in the economic

world.