NISCE, Alyssa Angela R.

11510196
No. 1 ECONTWO K32

Since the year 2000, the Initiative for ASEAN Integration was established with the objective of
narrowing the development gap between its original members, Singapore, Malaysia, Thailand, Indonesia,
Philippines and Brunei and its newer members, Cambodia, Laos, Myanmar, and Vietnam. However, the
Philippines only recently upgraded to the K-12 system, an educational system which aims to strengthen
the curriculum by increasing the amount of years for basic education (Masa, 2014). This may be good in
the global competitive market since it puts the Philippines in a synchronized position with the academic
calendar of the Philippine universities with most ASEAN, European, and American academic partners
and promotes partnerships but this also creates a category of low-skilled workers that have not gone
through the educational system.
Last 2015, the ASEAN Economic Community (AEC) was created with the belief that integration
would result to a freer flow of goods, services, investment, and skilled labor. Many economists deemed
that the Philippines should not be part of the race to promote integration of our economies, since the
country somehow seems unprepared to meet the competitive challenges, for instance, lack of education
due to poverty since it has the highest proportion of children out of school amounting to about 11.4%.
However, if we want to empower individuals, we must maximize our opportunities which includes a
wider door for job markets in the region and not wait until our skills and education are at par with the rest
of the ASEAN nations which subjects the people to an indefinite time to improve. What we need is
governmental participation in making a structural transformation involving the movement of workers
from lower productivity to higher productivity activities and sector of the economy to make it more
investment and industry-led (Valente, 2014).
Our workforce can be as competitive as others in finding jobs in other ASEAN countries and jobs
loss should not be a problem since according to the AEC, a net gain of 3.1 Million jobs will occur from
2015 to 2025 (Valente, 2014). However, the lack of relevant skills can limit the expansion of productive
sectors and hold down productivity growth. We must reconstruct or improve our system of education in
the country and ensure that there is universal access to basic education.
Filipino workers are highly favored, trusted and in-demand abroad because foreign employers
deem communication skills as important, and they realize that with Filipino employees, they won’t have
any real trouble understanding each other. Also, since we have an advantage in terms of the number of
workers fluent in English, and lower wages compared to other ASEAN countries, it is more likely that
there will be a net outflow in our favor but there must be recognition of professional standards and that
our curriculum are in consonance with ASEAN-wide requirements.
With regards to lesser developed ASEAN countries such as Cambodia, Lao PDR, and Vietnam,
the AEC assures that they will benefit in the integration because of their extensive agricultural and
aquatic farms and resources which are basically the top sectors in the integration, and their relatively
inexpensive, and educated/skilled labor. (Masa, 2014) What the Philippines needs to address is poverty
reduction through education for all which the government should provide if it wants to be part of the
nations who are providing skilled workers that qualify in the global competitive market.
Adding 2 years to the educational system of the Philippines is basically just for formality’s sake
to make us at par with the global market but does not necessarily mean that the Philippines only produces
low-skilled workers.  In fact, according to the Philippine Statistical Authority, managers and supervisors
comprise 3.5% of OFWs; “professionals” about 11.6%; “Technicians and associate professionals” 7.6%,
as well as “plant and machine operators,” 11.7% which are all included in the 34.4% of all OFWs (Sicat,
2016). Also, poverty rates steadily decrease as years of education increase. What we need is a joined
effort of both the people and the government in the expansion of the economy to create more jobs and
livelihood opportunities, and contributes meaningfully to poverty reduction which would entail lead to
inclusive growth.
NISCE, Alyssa Angela R. 11510196
No. 3 ECONTWO K32

According to the ASEAN Economic Community (AEC), in any trading endeavor, the gainers will
always be those who have the most capital, technical know-how, and those who have the infrastructures
to dominate the field. Philippine investments in infrastructure constitute only 2% of GDP compared to
about 5% in neighboring countries. In the Philippines, although the gain of 33 places in the overall
ranking since 2010 is the biggest gain amongst all countries driven by improvements in economic
fundamentals, institutions and corruption, the infrastructure rankings for the Philippines remains poor
(91st), with airport and seaport infrastructure ranking particularly low (International Labor Organization,
2015).
It is a general known fact that investing on infrastructure ensures long-run economic growth not
only for the Philippines but to all countries who want continuous growth. Focusing on infrastructure is
what countries like the U.S. and Japan did to achieve their status as the largest economies in the world.
Infrastructure plays a key role in implementing trade, especially since recent trade liberalization in Asia
has resulted in significant tariff reductions. We must focus on public transportation including airports,
railway transit systems, highways and etc. to improve the trend of growth of our GDP and also promote
macro-economic stability.
The Philippines is significantly underinvesting in physical infrastructure, with an infrastructure
budget consistently below 3% of GDP. Spending on public infrastructure for education and health is also
inadequate at slightly over 4% of GDP. Inadequate funding for infrastructure by the government gave the
Philippines a weak global competitiveness rating for the country’s overall infrastructure as well as the
continued listing of poor infrastructure as a major weakness in its investment climate (Arangkada
Philippines, 2016). If the government neglects the value of allocating funds for infrastructure, this will
cost a major deficit in terms of continuous GDP growth trend in the long-run. What we can do to improve
our policies to increase the amount of both social and economic infrastructure is through the investment
in infrastructure projects such as roads water systems and the like since there is a multiplier effect
wherein an increase in spending produces an increase in national income and consumption greater than
the initial amount spent.
However, infrastructure also affects economic output in two ways, directly, considering the sector
contribution to GDP formation and as an additional input in the production process of other sectors and
indirectly, by increasing total factor productivity through reduction of transaction and other costs, thus
allowing a more efficient use of conventional productive inputs. In the United States, public infrastructure
spending as a share of GDP had decreased over time; this is despite the World Economic Forum’s Global
Competitiveness Report 2014-2015 ranking the U.S. 16th in quality of overall infrastructure and 15th in
quality of its rail system and 16th in quality of its roads. Also, during the recession and slow recovery, US
federal officials had put in place fiscal measures, which included increased government spending in
infrastructural projects, to boost economic growth and lower unemployment. Though the federal highway
grants to states appeared to boost economic activity, the effects were mostly visible for the short and
medium term only (Schwab, 2015).
In conclusion, it is not necessarily always that infrastructure development contributes to long-run
economic growth. The Philippines should definitely invest more on infrastructure but at the same time
improve on poverty reduction and the quality of education. Long-term economic growth can not be
proclaimed to be driven solely by spending on infrastructure always. The driving force of economic
growth is actually technical progress and long run infrastructure levels simply follow income levels.
References:

Arangkada Philippines. (2016). Infrastructure. Retrieved April 01, 2017, from

http://www.investphilippines.info/arangkada/seven-winners/infrastructure/

Masa, P. L. (2014, September 12). The ASEAN integration and its impact on Labor. Retrieved April 01,
2017, from http://www.masa.ph/index.php?option=com_content&view=article&id=286%3Athe-asean-
integration-and-its-impact-on-labor

International Labor Organization. (2015, May). Philippine employment trends 2015. Retrieved April 1,
2017, from http://library.pcw.gov.ph/sites/default/files/pet%202015%20ilo.pdf

Sicat, G. P. (2016, February 10). OFWs: Who they are, where they work, and what they do. Retrieved
April 01, 2017, from http://www.philstar.com/business/2016/02/10/1551398/ofws-who-they-are-where-
they-work-and-what-they-do

Schwab, K. (2015). The global competitiveness report 2014–2015. Retrieved April 1, 2017, from
http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2014-15.pdf

Valente, T. C. (2013, October 26). Asean integration in 2015 and its implications on labor. Retrieved
April 03, 2017, from http://www.manilatimes.net/asean-integration-in-2015-and-its-implications-on-
labor/47994/