Subject: International Political Economy Date: March 14, 2018

Name: Jan Aerielle D. Almontero Professor: Jumel G. Estrañero

Course and Section: AB Foreign Service and FS302

The Foreign Direct Investment in the Philippines : A Helping Hand for the
Economic Growth of the Country

The term FDI is an abbreviation for the word Foreign Direct Investment. The Foreign
Direct Investment is defined as an investment in the form of controlling ownership in a
business in one country by an entity based in another country. For a broader definition,
FDI or Foreign Direct Investment includes mergers and acquisition, building new facilities,
reinvesting new profits, and intra company loans which is earned Foreign Direct
Investment are commonly made in open economies that offer a skilled workforce and
above-average growth prospects for the investor, as opposed to tightly regulated
economies. The key feature of FDI is that it is an investment made that establishes either
effective control of, or atleast substantial influence over the decision making of a foreign
business.
In the context of foreign direct investment, advantages and disadvantages are often
a matter of perspective. Starting with the advantages, first is the access in the global
markets. Foreign Direct Investment can be an effective way for one country to enter into
a foreign market. Some countries limits the foreign company access to their market but
acquiring or starting a business in the market is a means for it to gain access. Another
advantage is that it can access to the resources and acquire important natural resources.
FDI also offers a source of external capital and increased revenue. Foreign Direct
Investment can also have some drawbacks such as the lowering of comparative
advantage of the nation. Countries should not allow foreign ownership of companies.
Second disadvantage is the foreign investors might strip the business of its value like
selling unprofitable portions of the company to local, a less sophisticated investors.
Some countries like Singapore, Japan, United States are engaging an investment
with the Philippines and aside from these countries, Philippines can also directly engage
with China as part of their economic cooperation. China is a hegemony when it comes to
the economic perspective. Their products can be seen everywhere in the global market,
and having to start an alliance already with China, it would be alot more easier to engage
with them when it comes to investment besides China has already engaging an
investment with us, one good example is the China Telecom. If this would be successful
then China would be able to help the Philippines economy to grow and be stable.
No man is an island, same with the Philippines as a developing country cant still
stand on its own. The Philippines still needs the support of other developed countries for
it to grow economically as well as politically. The Philippine economy continues to be
stable and has positive fundamentals. The ASEAN and the FDI will be one of the factors
that will drive the future sustainable growth of the Philippines. Thus, one of the major
challenges is to maintain and increase the foreign investment here in the country. The
Philippines needs to catch up among the other member states of the ASEAN Integration.
The Philippines is currently at the bottom when it comes to foreign investment unlike the
other countries, with that the Philippines must be mindful of its situation and must be able
to address on its weaknesses for further development and progress.
As a recommendation, the Philippines mus take progressive measures to improbe
and monitor our current standing globally when it comes foreign investments. The
Philippines must also monitor local business as well as the foreign ownership. Another
one is the Philippines must expand its infrastracture programs and working with ASEAN
and global trading partners to increase cross borders relationship and investments.