Pre-discussion

Money is not everything, but money is something very important. Beyond the basic
needs, money helps us achieve our life’s goals and supports — the things we care
about most deeply — family, education, health care, charity, adventure and fun. It helps
us get some of life’s intangibles — freedom or independence, the opportunity to make
the most of our skills and talents, the ability to choose our own course in life, financial
security. With money, much good can be done and much unnecessary suffering
avoided or eliminated. When we talk about money everyone could give different
definitions. Money is what everyone needs. Money spends for living , we buy goods and
services when we have money. It may also be spend for expenditures, leisure and
personal wants. The big use of money is for our economy.

How to earn money? You may answer that we should work to earn money,
having a business is also one of the answers. Different businesses are all around the
world , local and foreign business contributes a big help. Dollars, we need dollars to buy
goods and services outside the country. We also need dollars for spending and buying
what the country needs. How to earn it? What are the top international exports of goods
in the country? That is what we will be able to know in this topic

Specific objectives

At the end of this lesson, the students will be able to:

a. Define export and import

b. Know the importance of export and import in the economy
c. Identify the different sources and importance of dollars in the economy
What is export?

Exports are goods or merchandise that we sell to other countries to earn dollars.
These dollars that we earn will later be used to buy goods we need from abroad. The
faster the growth of exports, the more goods and services we can purchase from
abroad. In the recent years, earning from exports have constituted about 50 percent of
total dollar receipts of the country.

Balance of Trade (2003-2011)

Year Total Trade Exports Imports Balance of Trade (Unfavorable)

2011 108,186.00 48,042 60,144.00 (12,120.00)

2010 106,430.00 51,498.00 54,933.00 (3,435.00)

2009 81,527.00 38,436.00 43,092.00 (4,656.00)

2008 105,824.00 49,078.00 56,746.00 (7,669.00)

2007 105,980.00 50,466.00 55,514.00 (5,048.00)

2006 99,183.79 47,410.12 51,773.68 (4,363.57)

2005 88,672 41,254.68 47,418.18 (6,163.50)

2004 83,719.73 39,680.52 44,039.21 (4,358.69

2003 76,701.72 36,231.21 40,470.51 (4,239.30)

Source: National Statistical Coordination Board (NSCB)

 Other Sources of Dollars

1. Dollar from gold

We have several gold mines in the country. With the attractive prices of gold in
the world market, income from the sales of gold has also helped in our balance of
payments problem.

From the $15 million annual average in the sixties, gold exports hit a record high
of % 103 million in 1973, when the Central Bank allowed the sale of gold in the world’s
free market. This action was precipitated by the historical world price breakaway in mid-
1972 from the pegged official prices of $35 per ounce prevailing for almost forty years.

But the costs have been going up as well. Thus, in early 1977, the Central Bank
started to provide a subsidy to marginal gold producers in order to encourage product-
ion. The response was good, and luckily production managed to reach high levels in
1980, when average prices ranged around $620 per ounce. In mid-March 2005, prices
have been hovering over $430 per ounce.

2. Dollar for invisibles

Import and export deal with trading of goods or commodities. There are non-
commodity items like foreign government expenditures, transportation and
insurance, travel, foreign investments and foreign loans, and other services that
have accounted for. Accounts of this nature are called “invisibles”. The term is used
to distinguish them from the “visible” goods like import and export of commodities.

Among the items under the invisibles category would be the amount of dollars
spent by tourists in the Philippines, dollar remitted by Filipino worker from abroad,
amounts spent by shipping vessels flying the Philippine flag and carrying cargo,
dividends sent by Filipino firms operating abroad like the construction companies
working in Saudi Arabia or the beer factories owned by San Miguel in Hong Kong
and Spain.
What is import?

Imports are the dollar we earn through exports and other sources used mainly to
import goods and services we need. Most of our imports are composed of industrial and
manufactured items.

A big chunk of our impost payments is composed of electronics, mineral fuels,

lubricant, and related materials (Figure 81). Machinery and oil products are essential
elements for the growth of our industries.

Figure 81

Philippine Top Import in May 2012 and 2013

(F.B.O. Value in Million US Dollar)

Dollars for Invisible Payments

If we earn dollar from invisible, we also spend dollars for invisible payments. We
have to pay the expenses of the Philippines government abroad and dollars are used to
finance its expenses. Filipinos also go abroad to travel or to study and again dollars are
used to finance their expenses. We have to pay our loans. Some Filipino businessmen
invest in Indonesia, Saudi Arabia, or in other countries. They use dollar for investment.
 Foreign exchange rate can also affect the rate of dollars. According to Kofi
Bofah ,foreign exchange identifies the process of converting domestic currency into
international banknotes at particular exchange rates. These transactions present
distinct ramifications for the global economy. Foreign exchange rates affect
international trade, capital flows and political sentiment. Further, you should work to
understand the economic risks associated with foreign exchange and globalization,
prior to coordinating financial decisions.

Summary

We earn and spend everyday. We give and we take. The same goes with our
economy. Philippine money has different transactions anywhere. We have different
sources where we can earn money. It may came from our natural resources because
we have blessed with it and it may also came from overseas Filipino workers and from
foreign investments and loans. Exports are goods or merchandise that we sell to other
countries to earn dollars. We earn dollars from gold and from invisibles. Imports are the
dollar we earn through exports and other sources used mainly to import goods and
services we need. We also spend dollars for invisibles because we also need to pay our
loans.
Evaluation

Answer the following question

1. Why do we have to earn dollars?

- We need to earn dollars to buy foreign goods and services. We also need
dollars to pay our international loans because we have so much debts to
be paid of. Dollars is used for payments internationally and Philippine
peso is used locally.

2. How exporting and importing internationally helps in the country?

- Import and export helps grow the economy by earning dollars through it.
Philippines has so many natural resources like fuel and gold so this
greatly helps the economy. Export and import activities help generate and
support economic growth in the localities or countries where they
transpire.

Define the following terms:

1. Exports- Exports are goods or merchandise that we sell to other countries to earn

dollars.

2.”Invisible”- invisible are non-commodity items like foreign government expenditures,

transportation and insurance, travel, foreign investments and foreign loans, and other

services that have accounted for

3. Imports- Imports are the dollar we earn through exports and other sources used

mainly to import goods and services we need.

References

https://www.google.com/amp/s/www.thehindu.com/opinion/open-page/Money-is-

important-but-how-much-do-you-need/article16837896.ece/amp/

https://bizfluent.com/about-6518774-foreign-exchange-affects-economy.html