Go, Shienna H.

BSBAFM 1-3

FINAL REQUIREMENT

Alternatives to Globalization in the Philippines: Local Globalization and Geoarbitrage

Globalization is a phenomenon that has been around for centuries, if not millennia.

Today, many countries are feeling its effects more than ever because of the advances in

technology and the internet. Despite this, it seems as though some people have become

disillusioned with globalization and have sought out alternate ways to live their lives or at least

cushion themselves from its effects. This essay is going to explore a few of these alternatives to

globalization in the Philippines that I have rummaged through.

One alternative to globalization, or rather one way to cushion oneself from its effects, is

through the use of technology. The Philippines is known for being a country that is very much

entrenched in technology. Unfortunately, this isn't always necessarily a good thing. As a nation

with a vast majority of its population living in low-income households, the Philippines has been

going through a difficult phase in recent years due to its problematic economy. It is one of the

developing countries in Southeast Asia, struggling to improve the economic stability and

standard of life for its citizens, which have been worsened by issues such as slow internet,

overpopulation, and traffic congestion. However, some efforts are being made to change this

situation for the better. One of these is the localization movement, which has been ongoing for

decades and includes both individuals and companies. Individuals include those who make their
own products from scratch in order to avoid globalization's negative effects. Companies are

involved as well, by starting outsourcing of assembly processes such as the manufacturing of

electronic devices to suppliers in developing countries such as the Philippines.

The Localization Movement has been making slow but steady headway since the early

2000s and is growing stronger at present. Through their efforts, local entrepreneurs have been

able to produce high-quality products that are much cheaper than their foreign counterparts. This,

in turn, has created a niche market for Filipino-made products and a service which has helped

keep the economy stable and booming. The Localization Movement also encourages

entrepreneurs in developing countries to make their own products and services instead of

outsourcing them to other countries due to their poor economic conditions. Another factor that

has been helping the local economy is the growth of e-commerce in the Philippines. It has played

a big role in increasing the local economy because most Filipino consumers have been able to

find and buy goods and services at a lower cost than before.

Furthermore, the "Global Localization" movement has gained popularity in recent

decades. In this movement, people seek to slow globalization down by buying locally produced

goods. They focus their time and money locally instead of internationally and try to find ways to

protect themselves from the more devastating effects of globalization (like those caused by large

multinational corporations). An example of a business that may be part of this movement is a

local restaurant or bar that serves locally made products instead of international food and beer.

The same idea holds true for companies that produce widgets locally instead of importing them

from overseas. Theoretically, if one were to use this idea on a larger scale, it is possible to

completely negate the effects of globalization in a place (or even a nation).

 Ever since the term "globalization" became a household word, there have been a myriad

of reactions and discussions related to its pros and cons. And while it is undeniable that

globalization has opened up countless opportunities for Filipinos, including the ability to foster

relations with other countries more easily than before, it also entails many challenges.

One of these challenges is economic stability, as globalization has seen an influx of

workers from other countries into the Philippines who take away jobs from Filipinos. Moreover,

the loss of agricultural produce in the country due to globalization has been another threat to

Filipinos. In order to address these problems, there have been many movements fighting for

"localization" or for "nationalization" of certain industries to prevent the unnecessary

outsourcing of jobs abroad, among others. More recently, comes the movement that emphasizes

the importance of "alternatives to globalization". This movement implies that while globalization

is something that cannot be avoided, Filipinos have to find ways to develop and sustain the

country without sacrificing local products and other cultures. This movement gained significant

popularity in the Philippines during the administration of President Gloria Macapagal-Arroyo,

who was known to be very much in favor of localization. This is not surprising because Arroyo

herself experienced firsthand how globalization affected her country.

The problems of globalization have been addressed in many scholarly works and public

discussions. There are different stances among these publications, but the common theme is that

globalizing economies tend to encourage the exacerbation of social problems. Some argue that

this phenomenon can be avoided by cultural autonomy or some other types of alternative, while

still others argue that globalization is inevitable and practical options should be sought to address

its negative externalities. On the other hand, a substantial amount of empirical evidence shows

that globalization can simultaneously contribute to economic prosperity, social welfare, and
environmental sustainability. One reason is that global trade increases the level of wealth or

overall income in poor countries by creating profits for those who own capital but operate in

them and reducing the prices of vital goods such as food or shelter. Conversely, it decreases their

prices relative to those of rich countries, which can help to increase their living standards

substantially without developing advanced technologies.

Moreover, increasing levels of worldwide economic interdependence reduce the

international differences in prices and other economic indicators that raise the living standards of

poor countries through competitive pricing. Overall, there has been a surge in the production of

scholarly works that test and evaluate every single aspect of globalization. However, they tend to

be fragmented, scattered, and inconclusive because most have not tried to integrate the various

dimensions in productive ways.

Lastly, an alternative is called "Geoarbitrage". This is when one moves to a place with

lower taxes and/or higher subsidies than the average place in their home country. The idea

behind it is that if you are able to find a place with lower taxes and/or subsidies, you will be able

to create more value for yourself (and potentially for others). An example of this kind of

arbitrage would be moving from America to the Philippines. Because the Philippines has lower

taxes and higher subsidies, one would theoretically be able to create more value in their lives by

living in the Philippines. If they could do so well there, then perhaps they could do even better in

another country.
 In countries like the Philippines, globalization has had a negative effect, leading to

unemployment, poverty, and migration. It is therefore only logical that a balance must be

reached so globalization can thrive in the country while addressing its impacts.

That's where geoarbitrage comes in. "Geoarbitrage refers to "the re-localization of

production and trade processes without necessarily changing physical location. It follows the

same principles as arbitrage, namely, taking advantage of price differences in different markets

to make a profit, but instead of buying and reselling goods, it relies on the difference in costs to

make money. We can also use a three-dimensional definition that is more relevant to this paper:

"the re-localization (without necessarily changing physical location) of production processes

combined with moving demand closer to production so that transportation costs are minimal." In

the Philippines, geoarbitrage is accomplished by re-locating production to foreign countries

while adapting the market to local conditions. "

The Philippines enjoys a very strategic location. Being in the center of Southeast Asia

means having multiple markets close at hand and it is relatively cheap to ship products to other

countries. Importing goods is also more expensive than exporting them, which allows local

industries to compete with foreign products that are usually cheaper because they have been

shipped a long distance.

Geoarbitrage can be highly beneficial for small and medium-sized enterprises. The

different costs of operating in other countries will provide cheap products at affordable price

points. For example, when a product is produced abroad, the transportation costs to ship it to the

Philippines will be more expensive than the actual production process. In this case, a business
would have more profit knowing they did not buy and resell the product but simply

manufactured it without having to pay exorbitant shipping costs.

As you know, the Philippine economy has been suffering for the longest time now. One

of the reasons why this is happening is because of geoarbitrage, or "the capture (and near

permanent retention) of welfare-enhancing economic activity by a small subset of individuals."

To summarize, one part of the problem is that transnational corporations, mostly from countries

like China and Japan, are exploiting their labor force in foreign countries. Countries like ours are

becoming dependent on them to provide cheap goods, which eventually lowers our economy.

For example, the government is promoting this by, for example, building a bridge to

connect Luzon with Bicol. In my opinion and that of other economists, this is a bad idea because

it will more likely damage our economy than help it. Our government should come up with new

ways to deal with geoarbitrage, not just resort to protectionism and industrial promotion (like in

the times of Marcos). We need a different form of economic growth that will help us improve

our economy while also letting us keep our dignity as Filipinos.

The Philippines can be a model for other countries to react to the problem of

geoarbitrage. Below are some alternatives to globalization, which is also known as

"Globalization at a Glance."

(1) "Socialization of Capital" (Capitalism) where the government takes ownership of all capital

flows and enforces socializing of capital and wealth to benefit the majority in society.

(2) "Socialization of Production" (Planning Capitalism) where the government takes control over

the economic value of production and decides what is produced and distributed. The government

has full authority to decide how much to produce and distribute. This will provide more labor-
intensive industries (and fewer capital-intensive ones), which would provide more natural

benefits to our people.

--- Lastly, here are some propositions that I have gathered.

Proposition #1: Lower taxes and/or increased subsidies create more value for the typical tax

payer due to less government interference in the market or lower costs of living. Proponents of

geoarbitrage also claim that geoarbitrage results in greater wealth and independence for the

typical tax payer.

Proposition #2: Geoarbitrage is a better way of creating wealth than globalization. Globalization

is often detrimental to the average taxpayer.Proponents of geoarbitrage claim that geoarbitrage is

a better way of creating wealth than globalization. Globalization is often detrimental to the

average taxpayer.

Proposition 3: Geoarbitrage will ultimately create more value for the typical tax payer than

conventional globalisation. Proponents of globalization claim that it will lead to more

opportunities for fewer people (through technological advancement and increased productivity).

Proponents of geoarbitrage claim that it will lead to more value for the typical taxpayer and that

it will lead to more opportunities for those who cannot utilize their talents in a conventional

manner (because they are not skilled enough or lack the resources to do so). I believe that

geoarbitrage holds more promise than globalization.

This can be used as an alternative to globalization. Geoarbitrage is essentially a way to

free up capital for those who do not have the resources to gain the skills and make the money

necessary to be successful in the conventional globalisation system. Geoarbitrage is essentially a

way of freeing up capital for those who are not able to use their talents effectively or not able to

set themselves apart from others.

We have gone through the two major alternatives to globalization: local globalization and

geoarbitrage. We have seen how they both help benefit the economy in different ways. There are

pros and cons to each of these strategies, but there is no doubt that they are effective in their own

way. Local globalization is very important because it helps build an economy that has more

diversity than what can be found outside of it. Geoarbitrage is very important because it helps

with the export of goods, which is essential in any economy. Both of these strategies are

effective and can help lead to a successful economy. These are both great alternatives to

globalization, especially since they can be used together. These two strategies can help to

improve the economy because local industries and businesses can be built around them. This will

help the Philippines in many ways, so it is very important that this third way of globalization be

used as well.
 References

Diwa C Guinigundo2. (2018): “The globalisation experience and its challenges for the Philippine

economy1”, no 2018-12 Retrieved from https://www.bis.org/publ/bppdf/bispap100_q.pdf

Abrigo, M and D Desierto (2011): “Contagious migration: evidence from the Philippines”,

Philippine Institute for Development Studies, Discussion Paper Series, no 2011-18.

Aldaba, R (2011): “Globalization, competition, and international production networks: policy

directions for the Philippine automotive industry”, Philippine Institute for Development

Studies, Policy Notes, no 2011-13, June.

Dudley, W (2017): “Benefits and challenges for globalization”, remarks for the Bombay Stock

Exchange, 11 May.

Roldan, M (2010): “Globalization and glocalization: experiences in the local Philippine context”,

Philippine Institute for Development Studies, Discussion Paper Series, no 2010-21,

October.