Tayaban, Denlee Mae P.

BSTM 3-1D

Instruction: Write a short paper (1,000 words min) 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.

The Philippines, an archipelagic nation in Southeast Asia, has a complex and evolving
economic landscape influenced by its historical, political, and social contexts. To understand
the contemporary condition of the Philippines, we can apply two critical theories: Dependency
Theory and World-Systems Theory. These frameworks provide insight into how the Philippines
fits into the global economic structure and the dynamics that perpetuate its current economic
status. Dependency Theory posits that developing countries are in a dependent position
relative to developed countries, resulting in economic structures that perpetuate inequality.
This theory suggests that the resources flow from the periphery (developing nations) to the
core (developed nations), enriching the latter at the expense of the former. The Philippines'
historical experience as a former colony of Spain and later the United States has shaped its
dependent economic structures.
Today, the Philippines continues to grapple with issues stemming from its dependent
economic status. The country relies heavily on remittances from Overseas Filipino Workers
(OFWs), which constitute a significant portion of its GDP. This reliance underscores the lack
of sufficient local employment opportunities and the dependence on external sources of
income. The manufacturing and export sectors, while growing, are predominantly controlled
by foreign companies, limiting the benefits to the local economy. The Philippine government
has encouraged foreign direct investment (FDI) to spur economic growth, but this often results
in profits being repatriated rather than reinvested locally, reinforcing dependency.
World-Systems Theory, developed by Immanuel Wallerstein, expands on Dependency
Theory by framing the world economy as a complex system divided into the core, semi-
periphery, and periphery. The core consists of developed nations with advanced industries
and high levels of capital accumulation. The semi-periphery includes nations that are
industrializing and have characteristics of both core and periphery. The periphery consists of
developing nations that provide raw materials and labor to the core and semi-periphery.
The Philippines occupies a position in the semi-periphery of the world system. It has a
mix of both developing and developed economic features. The country has a burgeoning
service sector, especially in business process outsourcing (BPO), which aligns with
characteristics of the semi-periphery. However, it also has significant agrarian and informal
sectors typical of the periphery. The semi-peripheral status allows for some level of economic
development and industrialization, but the benefits are unevenly distributed. Urban areas like
Metro Manila experience rapid growth and modernization, while rural areas remain
underdeveloped, leading to regional disparities.
The Philippines’ integration into the global economy is facilitated through trade
agreements, FDI, and participation in international organizations. However, these
engagements often come with conditions that favor the core nations. For instance, trade
liberalization policies have opened local markets to foreign goods, sometimes at the expense
of local industries. The agricultural sector, in particular, has suffered due to competition from
imported products, leading to reduced local production and increased dependency on imports.
Recent newspaper articles shed light on the Philippines’ position in the world economy
and the challenges it faces. For instance, the COVID-19 pandemic significantly impacted the
Philippine economy, exposing its vulnerabilities. The reliance on OFW remittances was
highlighted as many workers lost jobs or faced reduced income, affecting millions of Filipino
families reliant on this source of revenue. Articles also discuss the rise of the BPO sector,
which has become a critical component of the economy. The sector's growth exemplifies the
semi-peripheral nature of the Philippines, providing services to core nations while benefiting
from lower labor costs compared to developed countries. Furthermore, the impact of natural
disasters, such as typhoons, on the agricultural sector is frequently covered in the news.
These events exacerbate the struggles of rural areas, demonstrating the ongoing challenges
in achieving balanced regional development.
The COVID-19 pandemic has exacerbated existing economic vulnerabilities. The
reliance on remittances faced challenges as many OFWs lost their jobs. The pandemic also
disrupted global supply chains, affecting the electronics and manufacturing sectors. According
to a 2022 report by the World Bank, the Philippine economy contracted by 9.5% in 2020, the
sharpest decline since World War II. The Philippines has also seen a rise in public debt, partly
due to borrowing to finance pandemic recovery efforts and infrastructure projects. As of 2023,
the country’s debt-to-GDP ratio stands at approximately 63%, raising concerns about long-
term fiscal sustainability. This increasing debt burden highlights the country's continued
dependency on external financial sources. Despite economic growth, inequality and poverty
remain significant issues. According to the Philippine Statistics Authority, about 16.6% of the
population lived below the poverty line in 2018. The benefits of economic growth have not
been evenly distributed, with wealth concentrated among a small elite. This disparity reflects
the uneven development patterns described by both Dependency and World System Theories.
To address the issues highlighted by Dependency and World-Systems Theories, the
Philippines needs to adopt policies that reduce dependency and promote equitable
development. Enhancing local industries, investing in infrastructure, and improving education
and skills training are essential steps. Additionally, renegotiating trade agreements to favor
local industries and reducing the over-reliance on remittances can help build a more resilient
economy. The government’s "Build, Build, Build" infrastructure program aims to stimulate
economic growth by improving connectivity and creating jobs. However, it must ensure that
these projects benefit local communities and industries rather than primarily serving foreign
interests.
Analyzing the contemporary condition of the Philippines through the lenses of
Dependency Theory and World System Theory provides valuable insights into its economic
challenges and position in the global economy. The historical legacy of colonization and
current economic dependencies highlight the relevance of Dependency Theory. Meanwhile,
the Philippines' role in the global supply chain and its semi-peripheral status, as outlined by
World System Theory, underscore its intermediary position in the world economy. To address
these challenges, the Philippines must pursue policies that promote economic diversification,
reduce dependency on external sources, and ensure inclusive growth. Strengthening
domestic industries, investing in education and technology, and fostering regional cooperation
are essential steps toward achieving sustainable development. By understanding its place in
the global economic system, the Philippines can better navigate the complexities of
globalization and work towards a more equitable and prosperous future.