Lopez, Unice G.

Contemporary World
BSECE 2-1 Mr. Louie C. Montemar
Self-Test #2

Write a short paper that addresses the contemporary condition of the Philippines by applying
both the dependency theory and the world system theory. By doing so, students must apply the
theories discussed in this module to shed light on the present circumstance of the country’s
economy. Students are advised to use newspaper articles to try and make sense of the
Philippine’s position in the world economy.

According to dependency theory, the causes of backwardness and underdevelopment

are traced to our country's increasing integration into the vicious cycle of foreign money,
technology, and markets, which builds on the core premises of imperialist theory. As stated by
Mr. Randolf S. David in his paper, "Philippine Underdevelopment and Dependency Theory," he
noted that some of the social realities we now confront are seeing multinational companies'
increasing and inexorable dominance over our national economy. 

This means that way back in 1980, we are still experiencing the same problem until the
present. Oil, medicines, food, and manufacturing are all dominated by transnational companies
(TNCs). Whether TNCs have benefited Filipinos through the jobs. In a paper published by
Leonora Pedroso, she stated that TNCs remain powerful because of the government's export-
oriented strategy adopted since the 1970s. To attract investors, they keep the policy that
discriminates against labor. And when viewed in her study, TNCs contribute little to the social
development of the Filipinos. Agri-based TNCs have deprived farmers living in Bukidnon. She
also quoted, "any government that claims to be democratic must adhere to its raison d'etre: of
the people, for the people, by the people." Since the government seemed only wanting foreign
investors to invest in the country. 

"No effective international rules or regulations govern multinationals. Many of them have
greater power and wealth than some of the countries where they operate. The decisions of a
multinational may affect (sic) the economy, the foreign policy and the political and social life of a
country, and the daily lives of workers and consumers. Their power makes it possible for them
to avoid labor unrest or improvement in wages and working conditions. A multinational can
close a plant and move its operations to a country where workers can be paid less and where
governments will ensure a more docile labor force. Because multinationals have factories in
many different countries, they can allocate production processes in such a way that a strike or
the closing of one factory will not harm their operations" (Karl 1983: 25). Philippines has been
stagnant and unprogressive because of the Dependency Theory.

Immanuel Wallerstein created a theoretical framework to analyze the historical

processes involved in the emergence of the modern world in his book The Modern World
System: Capitalist Agriculture and the Origins of the European World Economy in the Sixteenth
Century. Following the collapse of the feudal order, the modern world system of capitalism
arose. The subject of inequality defines the difference between the Third World and the West in
Immanuel Wallerstein's work. Inequality can only be completely remedied by a reform of the
world-system itself, which includes dealing with the mechanisms of the international division of
labor. Capitalism, according to Wallerstein, de-territorialized significant state borders. "The
tactics of contemporary capitalism and the technologies of modern science, which are partly
connected as we know," he said, "allowed this world-economy to flourish, create, and grow
without the creation of a unified governmental framework." Wallerstein also discussed how
capitalism continues to thrive in the contemporary world economy in his book The Modern
World System: Capitalist Agriculture and the Origins of the European World Economy in the
Sixteenth Century. Nikolai Kondratiev devised the Kondratieff Cycle, which he utilized as a
model. 

For the past three to four decades, capitalism has ruled civilizations. This kind of
liberal capitalism was based on a belief in free markets, deregulation, and minimal government
across most of the Western world. Even non-Western economists, such as those in the
Philippines, have accepted this idea, according to an article written by Elfren S. Cruz,”
Capitalism in Crisis.” “The setup of liberal capitalism has the consequence of simultaneously
deepening inequality and screening that inequality behind the veil of merit...the wealthiest today
can claim that their standing derives from the virtue of their work, obscuring the advantages they
have gained from a system and from social trends that make economic mobility harder and
harder,” writes Branko of the London School of Economics,” Cruz quoted from his article.

Truly as it is, the rich become richer, and the poor get poorer. Not because rich people
know investing or vice versa. Poor people often buy their family their needs or their salary are
just enough, in the minimum wage, just enough to buy food for the family. They turned to elect
persons who claimed to remedy the unfairness of income disparity when communism proved
unsuccessful in distributing wealth. These politicians, often known as populists, echoed the
plausible argument that the elite was responsible for all the inequity. The argument was that
capitalism was nothing more than a vehicle for benefiting a select few at the cost of the masses.

REFERENCES:
CRUZ, ELFREN S. (2020) – CAPITALISM IN CRISIS Retrieved July 30, 2021 from The
Philippine Star Capitalism in crisis | Philstar.com

The Philippine Peso—Us Dollar Exchange Rate: the Impact of Strengthening Currency. (2021,
July 29). Retrieved from https://phdessay.com/the-philippine-peso-us-dollar-exchange-rate-the-
impact-of-strengthening-currency/

DAVID, R. (1980). PHILIPPINE UNDERDEVELOPMENT AND DEPENDENCY THEORY. Philippine

Sociological Review, 28(1/4), 81-87. Retrieved July 29, 2021, from
http://www.jstor.org/stable/23892107
Why is PH lagging behind in Covid-19 vaccination? Senators ask | Inquirer News

PEDROSO, L. (1998). THE SOCIAL DEVELOPMENT IMPACT OF TNC’S IN THE

PHILIPPINES. Philippine Journal of Public Administration, Vol. XLII, Nos. 3 & 4 (July.
October1998), Retrieved July 29, 2021 from 09_The Social Development Impact of TNCs in the
Phils..pdf (pssc.org.ph)