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Philippine Services Sector: Domestic Policy and Global Markets

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Southeast Asia beyond Crises and Traps

Part of the book series: Studies in Economic Transition ((SET))

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Abstract

The Philippines experienced a dramatic turnaround in the past decade: once the proverbial basket case, its economy distinguished itself as among the world’s fastest growing by the start of the 2010s. This chapter attributes the country’s spectacular growth to its booming international trade in services, notably, its labour export and business process outsourcing (BPO) industries. External and domestic factors combined to produce the boom. The fragmentation of global production and technological advancement created new opportunities for the services industries, but domestic policy also aggressively linked Philippine labour to global markets, institutionalising the deployment of Philippine workers abroad and incentivising the proliferation of so-called cyberzones to attract global BPO providers. The chapter argues that trade in services has enabled the country to go beyond the structural constraints that had previously hampered growth, and introduces the concept of labour export hazard in which substantial earnings from abroad remove the incentive for the Philippine state to improve the domestic economy. That said, for the country to climb up the value chain in services would require increasing investment in human capital and broadening the nexus between manufacturing and the services sectors.

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Notes

  1. 1.

    In 2010, for instance, FDI flows in the ASEAN-4 countries were estimated as: Philippines, $1.1 billion; Thailand, $9.1 billion; Malaysia, $10 billion; and Indonesia, $15.3 billion (World Bank 2015).

  2. 2.

    Global householding has grown through the years due also to factors such as declining fertility, changing welfare policies, and shifting gender roles in labour-receiving, developed countries; and higher wages for labour-sending, developing countries (Douglass 2007).

  3. 3.

    For instance, Republic Act No. 8042 or the Migrant Workers and Overseas Filipinos Act of 1995 stipulates that the government ‘does not promote overseas employment as a means to sustain economic growth and achieve national development’ even as it called for the deregulation of recruitment operations.

  4. 4.

    Arroyo holds the distinction of being the biggest borrower among all Philippine presidents until that time. In 14 out of his 21 years in office, Marcos incurred a debt of PhP 570 billion while Presidents Aquino, Ramos, and Estrada borrowed a total of PhP 1.51 billion – ‘P2.03 trillion less than what Arroyo borrowed in her first six years in office’ (Pablico 2008).

  5. 5.

    In 2005, the POEA operated regional offices in 14 key cities across the country.

  6. 6.

    In 2006, for instance, rumours of an attempted coup led Arroyo to declare a short-lived emergency rule (Conde 2006).

  7. 7.

    In 2010, the heads of the National Economic Development Authority, Finance Department, and the Department of Budget Management were, respectively, former Senator Ralph Recto and House Representatives Margarito Teves and Rolando Andaya.

  8. 8.

    An ADB study, for instance, noted that one in four youth (those in the 14 to 24 age group) are out of school or out of work or both (Medenilla 2015).

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Authors and Affiliations

  1. Asian Studies Graduate Programme, Asian Center University of the Philippines Diliman, Metro Manila, Philippines

    Antoinette R. Raquiza

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  1. Antoinette R. Raquiza
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Correspondence to Antoinette R. Raquiza .

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  1. National Graduate Institute for Policy Studies, Tokyo, Japan

    Boo Teik Khoo

  2. National Graduate Institute for Policy Studies, Tokyo, Japan

    Keiichi Tsunekawa

  3. National Graduate Institute for Policy Studies, Tokyo, Japan

    Motoko Kawano

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Raquiza, A.R. (2017). Philippine Services Sector: Domestic Policy and Global Markets. In: Khoo, B., Tsunekawa, K., Kawano, M. (eds) Southeast Asia beyond Crises and Traps. Studies in Economic Transition. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-55038-1_8

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  • DOI: https://doi.org/10.1007/978-3-319-55038-1_8

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