Lorraine M.

Moreno International Political Economy

AB Foreign Service 301 Sir. Jumel G. Estrañero

Foreign Direct Investment (FDI) growth in the Philippines: Boon or Bane?

Foreign Direct Investment (FDI) plays an exceptional and vital role more especially in Global
arena. It can supply firms with new markets where there isn’t really existing demand, but there
could be. And marketing channels which serves as a pathway where commodities such as goods
or stuffs flows from producers to consumer. Foreign Direct Investment occurs when a corporation
in one country establishes or build a business operation in another country, through the
configuration of a new wholly owned affiliate, or obtaining a local company, or establishing a joint
venture in the host economy. According to Mr. Orinton, Foreign direct investments defined as a
company from one country making a physical investment into building a factory in another
country. Foreign Direct Investment is also very essential when it comes to transferring of
technology contributing relatively more to growth than domestic investment. And it has a major
role in Internationalization of business.

Foreign Direct Investment (FDI) could help both home and host country. Each of them will gain
different benefits in variety of ways which will affect the economic status of one's state. The home
country will benefit with regard to payments. Because what is debit to host country is credit to
home country. It also leads to establishing of new job market with great expertise and
indespensable skills.

The profit of the foreign firm will proceed to the home country unlike domestic producers which
they provides for their own country. The home country is also exposed to create new market share
and it is responsible to create many in the future. On the other hand, the benefits to the host country
are the effects and balance of employment, resource transfer and payment as well. Thus, the host
country will much more having a higher financial status compare to the home country. The change
of technology and the managerial skills will have a serious effects executed by the company.
Therefore, It creates job opportunities through which the resident of that state would be benefited.
And by using FDI, the country can achieve a current account surplus (where exports are greater
than imports) and reduce current account deficit (where imports are greater than exports). (Hill,
2005)
FDI has many benefits or positive sides but it could also have a negative impact like losing of local
business. If we will going to relate it in our country, Just like what we all know that most Filipinos
love to patronize imported things or stuff. And it is like the local companies will much more
affected in terms of money and stability and it will be beneficiary to the foreign ones who invests
here in the Philippines. Another one is the unemployment in developing countries because many
people will tend to apply or chose to work in Multinational corporation and it will leads to lack of
employees, labor and manpower as well.

I think the China can directly engage with the Philippines as part of economic cooperation because
they these two countries has deepening their relationships. According to Aaron Jed Rabena, China
is becoming a partner in the provision of Philippine domestic public goods. Despite the fact that
many issues arises like Sea disputes, they still continue to deeper their relationship and supporting
the goods and production of the country.

I think one of the Major Challenges that the Philippines is facing in FDI is the Competition of
market especially many Multinational Corporations are establish here in our country. That's why
it will have a competition not only in the manpower but also in wages or money matters that would
lead to Financial crisis. And surely it will affect the economic growth and stability of the
Philippines. Next is the sustaining the Global growth and Stability of our Country which would
aim to make better in the next years rather than in our present times. Globalization can affect the
inflow and outflow because it is a kind of movement wherein investments are aided by the
technology and it is connected to FDI and it is both essesential in the Political Economy of our
country.

Foreign Direct Investment has changed through past decades. According to Mario Lamberte, The
Philippines is one of the countries in Southeast Asia that has experienced massive capital inflows.
Being a latecomer in this arena, it can avoid the undesirable effects of these inflows by drawing
lessons from the experiences of Latin American and other Asian countries. That's why i
recommend to be aware, updated and to be knowledgeable enough about the Foreign Direct
Investment. By this, we can be able to avoid the unpleasant outcome of the past in order to develop
in our present times and to make better in the future. And to promote Bilateral and Multilateral
Diplomacy to the Foreign investors of our country in order to have deeper relationship with our
country.
References:http://onlinelibrary.wiley.com/doi/10.1002/9780470670590.

https://larrycheng.com/2015/01/21/the-difference-between-existing-markets-and-new-markets/

http://myessaypoint.com/positive-negative-impact-fdi

https://www.ukessays.com/essays/economics/both-home-country-and-host-country-in-fdi-
economics-essay.php