Economy of the Philippines Essay

The Economy of the Philippines is the 43rd largest in the world, according to 2011 World Bank statistics and it is also one of the emerging markets in the world.[24] According to the CIA Factbook, the estimated 2011 GDP (purchasing power parity) was 391.1 billion.[5] Goldman Sachs estimates that by the year 2050, it will be the 14th largest economy in the world, Goldman Sachs also included the Philippines in its list of the Next Eleven economies. HSBC projects the Philippine economy to become the 16th largest economy in the world, 5th largest economy in Asia and the largest economy in the South East Asian region by 2050.[25] Primary exports include semiconductors and electronic products, transport equipment, garments, copper products, petroleum products, coconut oil, and fruits. Major trading partners include the United States, Japan, China, Singapore, South Korea, the Netherlands, Hong Kong, Germany, Taiwan, and Thailand. As a newly industrialized country, the Philippine economy has been transitioning from one based on agriculture to one based more on services and manufacturing. The Philippines is one of the Tiger Cub Economies in Southeast Asia together with Indonesia, Malaysia and Thailand. Contents| Macroeconomic trends See also: Economy of Asia, Economic history of the Philippines (1973–1986), Post-EDSA macroeconomic history of the Philippines, and Economic Crisis and Response in the Philippines The Philippine economy has been growing steadily over decades and the International Monetary Fund in 2011 reported it as the 45th largest economy in the world. However its growth has been behind that of many of its Asian neighbors, the so-called Asian Tigers, nor is it a part of the Group of 20 nations. Instead it is often grouped in a second tier of emerging markets or of newly industrialized countries. Depending upon the analyst, this second tier can go by the name the Next Eleven or the Tiger Cub Economies. It has not suffered from the downturn in the world economy that began in 2007. A chart of selected statistics showing trends in the gross domestic product of the Philippines using data taken from the International Monetary Fund. Composition by sector As a newly industrialized country, the Philippines is still an economy with a large agricultural sector; however, services have come to dominate the economy.[citation needed] Much of the industrial sector is based on processing and assembly operations in the manufacturing of electronics and other high-tech components, usually from foreign multinational corporations. Filipinos who go aboard to work–-known as Overseas Filipino Workers or OFWs—are a significant contributor to the economy but are not reflected in the below sectoral discussion of the domestic economy. [edit] Agriculture The agriculture sector makes up 12% of the GDP and employs 33% of the workforce. The type of activity ranges from small subsistence farming and fishing to large commercial ventures with significant export focus, such as major multinational corporations like Dole Food Company and Del Monte Foods. The Philippines is the world’s largest producer of coconuts producing 19,500,000 tonnes in 2009. Coconut production in the Philippines is generally concentrated in medium-sized farms.[30] By 1995, the production of coconut in the Philippines had experienced a 6.5% annual growth and later surpassed Indonesia in total output in the world.[31] The Philippines is also the world’s largest producer of pineapples, with 2,198 thousand metric tons.[32] Rice Production in the Philippines is important to the food supply in the country and economy. The country is the 8th largest rice producer in the world, accounting for 2.8% of global rice production.[33] However, the country is also the w orld’s largest rice importer in 2010.[34] Rice is the most important food crop, a staple food in most of the country. It is produced extensively in Luzon, the Western Visayas, Southern Mindanao, and Central Mindanao. Shipbuilding and repair The Philippines is a major player in the global shipbuilding industry with shipyards in Subic, Cebu, General Santos City and Batangas.[35][36] It became the fourth largest shipbuilding nation in 2010.[37][38] Subic-made cargo vessels are now exported to countries where shipping operators are based. South Korea’s Hanjin started production in Subic in 2007 of the 20 ships ordered by German and Greek shipping operators.[39] The country’s shipyards are now building ships like bulk carriers, container ships and big passenger ferries. General Santos’ shipyard is mainly for ship repair and maintenance.[40] Being surrounded by waters, the country has abundant natural deep-sea ports ideal for development as production, construction and repair sites. On top of the current operating shipyards, two additional shipyards in Misamis Oriental and Cagayan province are being expanded to support future locators. It has a vast manpower pool of 60,000 certified welders that comprise the bulk of workers in shipbuilding. In the ship repair sector, the Navotas complex in Metro Manila is expected to accommodate 96 vessels for repair.[41] Â  Automotive The ABS used in Mercedes-Benz, BMW, and Volvo cars are made in the Philippines. Ford,[42] Toyota,[43] Mitsubishi, Nissan and Honda are the most prominent automakers manufacturing cars in the country.[citation needed] Kia and Suzuki produce small cars in the country. Isuzu also produces SUVs in the country. Honda and Suzuki produce motorcycles in the country. A 2003 Canadian market research report predicted that further investments in this sector were expected to grow in the following years. Toyota sells the most vehicles in the country.[44] By 2011, China’s Chery Automobile company is going to build their assembly plant in Laguna, that will serve and export cars to other countries in the region if monthly sales would reach 1,000 units.[45] Â  Aerospace Aerospace products in the Philippines are mainly for the export market and include manufacturing parts for aircraft built by both Boeing and Airbus. British company MOOG, is the biggest aerospace manufacturer with base in Baguio in the Cordillera region. The company produces aircraft actuators in their manufacturing facility. Another British company British Aerospace is to open manufacturing facility in southern Philippines for the manufacture of galleys used in aircraft cabin.[46] In 2011, the total export output of aerospace products in the Philippines reached US $3 billion.[47] Electronics Intel has been in the Philippines for 28 years as a major producer of products, including the Pentium 4 processor. A Texas Instruments plant in Baguio has been operating for 20 years and is the largest producer of DSP chips in the world.[48] Texas Instruments’ Baguio plant produces all the chips used in Nokia cell phones and 80% of chips used in Ericsson cell phones in the world.[49] Until 2005, Toshiba laptops were produced in Santa Rosa, Laguna. Presently the Philippine plant’s focus is in the production of hard disk drives. Printer manufacturer Lexmark has a factory in Mactan in the Cebu region. Â  Mining and extraction The country is rich with mineral and geothermal energy resources. In 2003, it produced 1931 MW of electricity from geothermal sources (27% of total electricity production), second only to the United States,[50] and a recent discovery of natural gas reserves in the Malampaya oil fields off the island of Palawan is already being used to generate electricity in three gas-powered plants. Philippine gold, nickel, copper and chromite deposits are among the largest in the world. Other important minerals include silver, coal, gypsum, and sulphur. Significant deposits of clay, limestone, marble, silica, and phosphate exist. About 60% of total mining production are accounted for by non-metallic minerals, which contributed substantially to the industry’s steady output growth between 1993 and 1998, with the value of production growing 58%. In 1999, however, mineral production declined 16% to $793 million.[citation needed] Mineral exports have generally slowed since 1996. Led by copper cathodes, Philippine mineral exports amounted to $650 million in 2000, barely up from 1999 levels. Low metal prices, high production costs, lack of investment in infrastructure, and a challenge to the new mining law have contributed to the mining industry’s overall decline.[citation needed] The industry rebounded starting in late 2004 when the Supreme Court upheld the constitutionality of an important law permitting foreign ownership of Philippines mining companies.[citation needed] However, the DENR has yet to approve the revised Department Administrative Order (DAO) that will provide the Implementing Rules and Regulations of the Financial and Technical Assistance Agreement (FTAA), the specific part of the 1994 Mining Act that allows 100% foreign ownership of Philippines mines.[citation needed] Offshoring and outsourcing According to an IBM Global Location Trends Annual Report, as of December 2010[update] the Philippines has surpassed India as the world leader in business process outsourcing.[51][52] The majority of the top ten BPO firms of the United States operate in the Philippines.[citation needed] Total jobs in the industry grew to 100,000 and total revenues were placed at $960 million for 2005. In 2012, BPO sector employment ballooned to over 700,000 people and is contributing to a growing middle class. BPO facilities are located mainly in Metro Manila and Cebu City although other regional areas such as Baguio, Bacolod, Cagayan de Oro, Clark Freeport Zone, Dagupan, Davao City, Legazpi, Dumaguete, Lipa, Iloilo City, and CamSur are now being promoted and developed for BPO operations. Call centers began in the Philippines as plain providers of email response and managing services and is now a major source of employment. Call center services include customer relations, ranging from travel services, technical support, education, customer care, financial services, online business to customer support, and online business to business support. Business process outsourcing (BPO) is regarded as one of the fastest growing industries in the world. The Philippines is also considered as location of choice due to its less expensive operational and labor costs and high proficiency in spoken English and highly educated labor pool. In 2011, the business process outsourcing industry in the Philippines generated 700 thousand jobs[53] and some US$11 billion in revenue,[54] 24 percent higher than 2010. By 2016, the industry is projected to reach US$27.4 billion in revenue with employment generation to almost double at 1.3 million workers.[55]