TCW MIDTERM EXPOSITORY ESSAY April 11,

2022

4. Discuss how the world’s economy is being threatened by Russia’s invasion of the Ukraine.
- The conflict between Russia and Ukraine will affect the global economy via three main channels: Financial
sanctions, commodities prices and supply-chain disruptions. Russia’s invasion of Ukraine carries huge risks for a world
economy that’s yet to fully recover from pandemic shock. There are 3 possible scenario that may happen: first, a swift end
to fighting prevents a further upward spiral in commodity markets, keeping U.S and European economic recoveries just
about on track. Central bankers would have to adjust their plans, not scrap them. Second scenario, a prolonged conflict,
tougher Western response and disruptions to Russia’s oil and gas exports would deliver a bigger energy shock and a major
blow to global markets. Third scenario, the worst-case outcome would see Europe’s gas supply cut-off, triggering a
recession, while the U.S would see significantly tighter financial conditions. However, some economists say that the
direct impacts of lower trade with Russia, economic sanctions levied on Moscow by the US and EU, and financial
contagion are likely to be outweighed by the indirect consequences from the effect on business and consumer confidence
and commodity markets. These repercussions could range from relatively limited to extremely serious. If energy prices
continued to soar, it could easily tip the global economy into a second recession in three years. Neil Shearing, chief
economist at Capital Economics, noted that, while there was a sell-off in equities, bond yields declined and credits spreads
have not widened much, suggesting the market reaction was orderly and not indicative yet of expectations of a wider war
across Europe. Some of the global impacts are: Oil prices will remain above US$100b as long as conflict rages in
Ukraine; Gas Prices will rise by at least 50% this year, on top of a fivefold rise last year; Russia is also a major producer
of several base metals (aluminum, titanium, palladium and nickel), all which will register price jumps; and Prices of
agricultural commodities (wheat, maize, barley and rapeseed) will soar.

5. Do you think the Philippines is harmed as other countries transfer their activities to us through
outsourcing? Explain.
- Outsourcing is a practice in the business world where a certain company hires a party outside the company to do
or perform services and make or create goods which normally should be done within the company. Companies do
outsource to cut down labor costs particularly the salaries of its personnel. More so, outsourcing is done in order for the
company to focus on the core aspects of the business and delegate less critical outside the organization. So, do the
Philippines is harmed as other countries transfer their activities through outsourcing? The answer is no. Our country is not
harmed but actually benefits from it. When a certain company in other countries involves itself in an outsourcing,
normally, it brings harm locally than any other countries outside; and given that the Philippines has outsourcing
companies, this means that the act of companies involving in outsourcing opens up works for the Filipinos. Therefore, the
Philippines benefits from it.

6. Does the position of rich countries as giants in the economic chain threaten the status of less developed
countries in the global market? Explain.
 - After reading some articles, I think it’s 50-50. Yes, it may threaten the status of the less developed countries
because the title itself of being a developed country is a high status compared to the very living or the normal system and
progression from other countries who were not yet or not developed. A developed country has full access to its resource
and has a greater chance of sustaining their living and individual advancements that are great advantages and a great help
to the very thought of progressing the human system and their government itself. Developed countries have high GDP per
capita and less population compared to underdeveloped countries and this allows them to also have a full hold of their
resources and to equally distribute them to their own citizens and sustain their level of living and thus makes them ahead
of the others and much more independent. The rich countries (mostly from European Countries) acts as a threat in the
global market against the less developed countries for it has more hold of their income and has a more stable mortality and
birth rate which is the most problem around the less developed countries. This affects their performance in the global
market for having other situations to focus on thus, makes their position in the global market fragile and in need of much
more recognition and power unlike the European countries. But also, rich countries may not be a threat to less developed
countries as it may seem to others. The multiple interdependencies that exist between industrialized and developing
nations help to limit the risk of overwhelming. These massive economies allow the less developed countries to benefit
from the rich countries’ technological achievements. A process of technical innovation diffusion is continually under
progress. Less developed countries gain from economies of scale as well as the avoidance of having to engage in the
potentially dangerous production of new technologies. Exports to bigger nations can assist smaller, less developed
countries since these countries have massive markets for products and services, particularly consumer goods.

7. What do you think is the impact of urbanization and the rise of global city on the agricultural sector?
Explain.
- The influence of urbanization is seen in terms of the declining share of agriculture in the national economy and a
minimal reduction in employment in the agricultural sector. Urbanization has resulted in decreases in the area and
fragmentation of farm parcels as well as in the conversion of agricultural lands to use. The process of urbanization
resulted in substantial land conversion, which in turn, led to a drastic decrease in crop production areas and changed the
agricultural landscape of the Metropolitan Manila Area. It also placed pressure on urban fringes, making land use
conversion inevitable in cities. Finding points to the need for associated policies to preserve agricultural lands and sustain
domestic food production, and promote urban agriculture to create and preserve the green and open spaces in the cities.
Since urban areas provide the advantage of higher productivity, the resource shifting from rural to urban sector leads to a
higher economic growth of the country through increasing rate of urbanization. In this phase of development, demand and
supply side economics play an important role.