A. To what extent can the government/central bank influence the macro-economy?

One cannot discount the influence of the central bank on a nation’s economy. I have read it once
that if the nation’s economy were a human body, then its heart would be the central bank. And just as the
heart works to pump life-giving blood throughout the body, the central bank pumps money into the
economy to keep it healthy and growing.

Described as the "lender of last resort," the central bank is responsible for providing a nation's
economy with funds when commercial banks cannot cover a supply shortage. If there wasn’t a central
bank, a country's banking system would fall.

A central bank’s role is to provide their countries' currencies with price stability by controlling
inflation. It also acts as the regulatory authority of a country's monetary policy as well as being the sole
provider and printer of notes and coins in circulation. The money that we spend or get paid was printed by
the central bank.

It is also autonomous from government fiscal policy and therefore uninfluenced by the political
concerns of any regime. It has proven that the central bank can best function in these capacities by
remaining independent. A central bank should also be completely stripped of any commercial banking
interests.

Now, how does the central bank influence the macro-economy?

The central bank is accountable for price stability. It controls the level of inflation by regulating
money supplies through monetary policy.by absorbing extra funds which directly affects the level of
inflation or performs open market transactions that either inject the market with liquidity.

In order to upsurge the amount of money in circulation and reduce the interest rate (cost) for
borrowing, the central bank can buy government bonds, bills, or other government-issued notes. This
buying can, however, also lead to higher inflation. When it needs to absorb money to reduce inflation, the
central bank will sell government bonds on the open market, which increases the interest rate and
discourages borrowing. Open market operations are the key means by which a central bank controls
inflation, money supply, and prices.
 In our country, The Banko Sentral ng Pilipinas is mandated to maintain price stability conducive
to balanced and sustainable economic growth. It also aims to promote and preserve monetary stability and
the convertibility of the national currency as well provide policy directions in the areas of money, banking
and credit.

Central banks work hard to ensure that a nation's economy remains healthy. One way central
banks accomplish this aim is by controlling the amount of money circulating in the economy. Their tools
include influencing interest rates, setting reserve requirements, and employing open market operation
tactics, among other approaches. Having the right quantity of money in circulation is crucial to ensuring a
stable and sustainable economy. A central bank’s influence on a country’s economy is indeed vast.

B. Does Globalization help or hinder developing countries?

There is a good and bad side to everything. And that would also include globalization.
Some praise it while others view it as a leading cause of job loss and other ills. I have listed its
pros and cons.

1. Globalization broadens access to goods and services.

Globalization makes more goods and services available to more people, with most
imports retailing at lower prices. If you’re buying a product that comes from abroad, you’re
benefiting from globalization to some extent. Business owners also benefit by having access to a
bigger market for their goods and services.

2. Globalization can lift people out of poverty.

Although debated, globalization has increased job opportunities in capital-scarce, labor-

rich countries. With the continuing operations of foreign investors and their respective businesses
and the need for a local labor force, globalization has opened its doors to more employment
opportunities.
 3. Globalization increases cultural awareness.

Globalization has increased cross-cultural understanding and sharing. With a globalized

society, people are exposed to the culture, attitudes and values of people in other countries, which
in turn inspires artists, strengthen ties between nations and dampen xenophobia.

4. Information and technology spread more easily with globalization.

Information and technology can also grow in a globalized society. With the advent of
newest innovations (ex: mobile banking), a highly developed country can most likely spread
its technological advanced to underdeveloped countries. A clear example of this is mobile
banking in Kenya.

Let us now move on to the negatives or cons of Globalization.

1. Workers in developed countries may lose out to workers in countries with cheaper labor.

There is an imbalance here. While globalization increases the returns to capital in rich
countries like the U.S. it also decreases the returns to labor in those same countries. In other
words, low-skill jobs in the U.S. can disappear as a result of globalization (though technology
plays a big role in this change, too). The result may be a decrease in the inequality between
countries but an increase in the inequality within countries.

2. Globalization has failed to deliver desired gains in labor rights, human rights and
environmental protection.

Globalization can be an opportunity to spread values and practices like environmentalism

and labor rights throughout the world. In practice, that spread has been slow and imperfect. For
example, rather than exporting the labor protections it abides by in the U.S., a company might
follow lower standards in, say, Bangladesh.

Some argue that globalization has caused a “race to the bottom” in which companies
actively seek the countries with the weakest labor and environmental protections and the lowest
wages. And while globalization has increased the flow of goods, services and capital, there are
still plenty of tax havens, meaning that much of the value added by globalization is not captured
and redistributed by governments.
3. Globalization may contribute to cultural homogeneity.

Globalization might lead to more cultural homogeneity if people’s tastes converge. As a

result of a direct influence of another country. People might lose precious cultural practices and
languages with some even worrying that globalization could also create a monoculture.

4. Globalization puts more power in the hands of multinational corporations.

Globalization has also been criticized as empowering multinational corporations at the

expense of governments and citizens. This results to the reduction of state sovereignty and its
citizens’ ability to hold their leaders accountable for conditions in their countries. It’s another reason
that labor and environmental protections are harder to enforce than many critics of globalization
would like. Multinational corporations may also lobby for favorable provisions in trade agreements.

Conclusion: Supporters and opponents of globalization generally agree that the phenomenon
has created winners and losers. Supporters argue that the benefits outweigh the drawbacks, while
critics want to either improve the conditions of global trade or, in some cases, roll back globalization.

Globalization is indeed a double-edged sword.