Research

1. AN ANALYSIS ON THE IMPACT OF GLOBALIZATION TO THE TRAFFIC SYSTEM
PARTICULARY ON TRADE, FINANCE AND MIGRATION IN THE PHILIPPINES.
DENISE CRUZ PONTIPEDRA
BS CRIM 2-1B
I. INTRODUCTION
Globalization is the word used to describe the growing interdependence of the
world’s economies, cultures, and populations, brought about by cross-border trade in
goods and services, technology, and flows of investment, people, and information.
Countries have built economic partnerships to facilitate these movements over many
centuries. But the term gained popularity after the Cold War in the early 1990s, as these
cooperative arrangements shaped modern everyday life. This guide uses the term more
narrowly to refer to international trade and some of the investment flows among advanced
economies, mostly focusing on the United States.
The wide-ranging effects of globalization are complex and politically charged. As
with major technological advances, globalization benefits society as a whole, while
harming certain groups. Understanding the relative costs and benefits can pave the way
for alleviating problems while sustaining the wider payoffs.
Since ancient times, humans have sought distant places to settle, produce, and
exchange goods enabled by improvements in technology and transportation. But not until
the 19th century did global integration take off. Following centuries of European
colonization and trade activity, that first “wave” of globalization was propelled by
steamships, railroads, the telegraph, and other breakthroughs, and also by increasing
economic cooperation among countries. The globalization trend eventually waned and

2. crashed in the catastrophe of World War I, followed by postwar protectionism, the Great
Depression, and World War II. After World War II in the mid-1940s, the United States led
efforts to revive international trade and investment under negotiated ground rules, starting
a second wave of globalization, which remains ongoing, though buffeted by periodic
downturns and mounting political scrutiny.
Many scholars say it started with Columbus’s voyage to the New World in 1492.
People traveled to nearby and faraway places well before Columbus’s voyage, however,
exchanging their ideas, products, and customs along the way. The Silk Road, an ancient
network of trade routes across China, Central Asia, and the Mediterranean used between
50 B.C.E. and 250 C.E. is perhaps the most well-known early example. As with future
globalizing booms, new technologies played a key role in the Silk Road trade. Advances
in metallurgy led to the creation of coins; advances in transportation led to the building of
roads connecting the major empires of the day; and increased agricultural production
meant more food could be trafficked between locales. Along with Chinese silk, Roman
glass, and Arabian spices, ideas such as Buddhist beliefs and the secrets of paper-
making also spread via these tendrils of trade.
Unquestionably, these types of exchanges were accelerated in the Age of
Exploration, when European explorers seeking new sea routes to the spices and silks of
Asia bumped into the Americas instead. Again, technology played an important role in
the maritime trade routes that flourished between old and newly discovered continents.
New ship designs and the creation of the magnetic compass were key to the explorers’
successes. Trade and idea exchange now extended to a previously unconnected part of

3. the world, where ships carrying plants, animals, and Spanish silver between the Old
World and the New also carried Christian missionaries.
The web of globalization continued to spin out through the Age of Revolution, when
ideas about liberty, equality, and fraternity spread like fire from America to France to Latin
America and beyond. It rode the waves of industrialization, colonization, and war through
the eighteenth, nineteenth, and twentieth centuries, powered by the invention of factories,
railways, steamboats, cars, and planes.
With the Information Age, globalization went into overdrive. Advances in computer
and communications technology launched a new global era and redefined what it meant
to be “connected.” Modern communications satellites meant the 1964 Summer Olympics
in Tokyo could be watched in the United States for the first time. The World Wide Web
and the Internet allowed someone in Germany to read about a breaking news story in
Bolivia in real time. Someone wishing to travel from Boston, Massachusetts, to London,
England, could do so in hours rather than the week or more it would have taken a hundred
years ago. This digital revolution massively impacted economies across the world as well:
they became more information-based and more interdependent. In the modern era,
economic success or failure at one focal point of the global web can be felt in every major
world economy.
Globalization involves the increasing international integration of production
processes and the market for goods and services. It results from the liberalization of
national economies, reduction of trade barriers, freer movement of foreign direct
investment (FDI) across the world, expanding role of multinational firms in international
production and growing intrafirm trade across national boundaries.

4. In the last quarter-century, a host of political, economic, and technological changes
noticeably accelerated the trend toward globalization. Political changes included the end
of the Vietnam War (1975) and the Cold War (with the fall of the Berlin Wall in 1989 and
the Soviet Union in 1991). Complementing these political develop-ments, an increasing
number of countries abandoned their policies of protectionism and lowered barriers to
free trade. At the same time, technological innovations in communications and
transportation facilitated the flow of goods, people, and information across the globe.
Today, the rise of Internet commerce is driving the expansion of the global marketplace,
underscoring the need for a transportation system that is international in reach.
Faster and cheaper transportation systems allow multinational corporations to
build manufacturing facilities across the globe while maintaining scheduled, frequent
deliveries of parts and finished products. For example, advances in the aviation system
allow businesses to substitute just-in-time deliveries from remote manufac-turing plants
in place of large inventories. Today, about one-third of world trade consists of shipments
between branches of multinational companies [UN Annual].
The extent of this manufacturing expansion is visible in many countries, including
Mexico, China, India, South Korea, Indonesia, Thailand, Turkey, and Pakistan. In 1980,
manufactured goods as a share of exports exceeded 50 percent only in India and South
Korea, and were as low as 2 percent in Indonesia . However, by 1997, manufactured
goods exceeded 70 percent of exports in seven of these eight countries. The exception
was Indonesia, where manufactured goods grew from 2 percent to an amazing
42 percent of exports by 1997 [World Bank 1999].

5. "Transportation is the industry that connects other industries...it is the key to
globalization."
Globalisation is defined as the mobility across borders of goods and services,
people, capital and knowledge (BIS (2017a)). In the past half century, the world economy
has become much more integrated, interdependent and intertwined as globalisation and
liberalisation appear to have become an inevitable and irreversible trend. Regional trading
arrangements, the removal of restrictions on the flow of trade and investment, and rapid
technological changes have led to the deepening of economic integration and the
heightening of globalisation (Aldaba (2011)). Emerging market economies (EMEs) have
also become much more tightly integrated in terms of trade, finance, global value chains
(GVCs) and migration (BIS (2017b)). Some have attributed an unprecedented period of
peace and prosperity to globalisation as it has spurred growth and productivity as well as
expanding opportunities for businesses, investors and workers (Ibrahim (2017)). This is
true particularly for EMEs, where many observers consider globalisation as a major cause
of strong growth and significant poverty reduction in recent decades (BIS (2017b)).
However, due to the adverse and lingering impact of the Great Financial Crisis (GFC),
there has been a growing backlash against globalisation, not only in EMEs but also in
advanced economies, particularly in the United Kingdom and the United States. A pattern

6. of resurgent protectionism is observed to be emerging across the globe and inward-
looking policies are getting more support.
II. Background and Purpose of the Study
Globalisation is defined as the mobility across borders of goods and services,
people, capital and knowledge (BIS (2017a)). In the past half century, the world economy
has become much more integrated, interdependent and intertwined as globalisation and
liberalisation appear to have become an inevitable and irreversible trend. Regional trading
arrangements, the removal of restrictions on the flow of trade and investment, and rapid
technological changes have led to the deepening of economic integration and the
heightening of globalisation (Aldaba (2011)). Emerging market economies (EMEs) have
also become much more tightly integrated in terms of trade, finance, global value chains
(GVCs) and migration (BIS (2017b)). Some have attributed an unprecedented period of
peace and prosperity to globalisation as it has spurred growth and productivity as well as
expanding opportunities for businesses, investors and workers (Ibrahim (2017)). This is
true particularly for EMEs, where many observers consider globalisation as a major cause
of strong growth and significant poverty reduction in recent decades (BIS (2017b)).
However, due to the adverse and lingering impact of the Great Financial Crisis (GFC),
there has been a growing backlash against globalisation, not only in EMEs but also in
advanced economies, particularly in the United Kingdom and the United States. A pattern
of resurgent protectionism is observed to be emerging across the globe and inward-
looking policies are getting more support.
This study analyses the extent and impact of globalisation in the Philippines in
terms of trade, finance and migration. In the Philippines, trade globalisation and migration

7. have been more prominent than financial globalisation. While empirical estimates show
that globalisation has positively affected the country’s economic growth and employment,
substantial evidence for its impact on inequality and poverty has yet to be found, as
preliminary estimates show mixed results. There are both winners and losers among
industries and in the labour market. Thus, more inclusive policies could potentially help
cushion the negative consequences of globalisation and facilitate adjustments to narrow
the gap between winners and losers. Towards this end, the Bangko Sentral ng Pilipinas
has made contributions primarily through its focus on low and stable inflation; the
facilitation of greater financial inclusion; and greater involvement in global cooperation
efforts to further strengthen rule-based international transactions
III. SCOPE AND LIMITATION
This study was focuses in determining the relationship and effects of globalization to the
traffic system in the Philippines particularly on trade, finance and migration. This study
utilized an experimental-descriptive comparative design to analyse the relationship and
impact of globalization to the traffic system in the Philippines.
IV. STATEMENT OF THE PROBLEM
Metro Manila and other major cities are experiencing major traffic congestion
because high economic and population growth in the last decade were not accompanied
by commensurate and timely investment in infrastructure. In the last four years, the
government fell short of its planned infrastructure spending by an average of PHP50
billion per year or roughly $1.1 billion. A number of public-private partnership (PPP)

8. projects have also been delayed at various stages from planning to implementation. In
particular, the much needed LRT-MRT common station has been delayed for five years
now since inception as the two operators have yet to agree on where to build it.
To compensate for the lack of infrastructure, the government has implemented
some stop-gap short-term measures to ease congestion, but some of these have resulted
in inadvertent and occasionally severe consequences. For instance, I’m sure that all of
us motorists who use C5 highway (which traverses from south to north of Metro
Manila), remember how horrible traffic was there some days last year—the unintended
consequence of a more restrictive truck ban. The rush to deliver goods using poorly-
maintained trucks driven by sleep-deprived drivers resulted in major road accidents. Most
of them happened at night or early morning when the truck ban was lifted. I remember
two instances last year when it took more than five hours to get to work due to accidents
involving trucks that were not cleared up in time for the morning rush hour.
All of these contribute to an estimated productivity loss of around PHP2.4 billion
($54 million) a day or more than PHP800 billion ($18 billion) a year – an amount enough
to fully plug underinvestment in infrastructure, education, and health. In truth, the
country’s long history of underinvestment in infrastructure is one reason why many
Filipinos are in poverty. A typical Filipino farmer has limited access to reliable roads,
bridges, and irrigation to produce better crops and connect to markets in the cities. This
contributes to very high food prices, which reduce real income of all Filipinos. For
instance, Filipinos pay double for rice compared to Thais or Vietnamese.
All of these investments in infrastructure, alongside investments in health and
education, will cost money. However, in the last seven decades, the government has not

9. raised and sustained enough revenues to fund these. The current system cannot raise
the necessary revenues to fund important investments because it is quite complex,
inequitable, and inefficient.
The good news is that higher revenues do not necessarily require higher tax rates.
For one, the government can raise around PHP530 billion ($12 billion) in revenues solely
by improving tax administration. This means improving tax collection efficiency and
plugging leaks in the tax system, without modifying or increasing tax rates. However, even
if corruption and tax evasion were eliminated, tax revenues would still be inadequate to
make up for the country’s investment deficit. This means that policy reforms are needed
as well.
However, raising tax revenues need not be painful for society as a whole. Any
change to the tax system should be done in an equitable way so that the rich pay more
than the poor relative to their income, and that two individuals with the same income pay
the same amount of taxes. This means taxing goods and services consumed more by
richer people, such as gasoline, and raising property valuation since properties are highly
correlated with wealth.
Of course, these reforms need to be accompanied by transparency and
accountability measures to ensure that public funds are properly used. As taxpayers, we
all want to see how our hard earned taxes are being spent, and see and feel the benefit
from these public goods. The government has already started this initiative with open
data, where some government data is made publicly available in user-friendly forms. This
must be sustained after this administration.

10. Transportation affects nearly all aspects of the daily lives of Filipinos, from direct
effects like mobility and commute time to indirect effects like its impact on food prices.
More investment in highways, skyways, MRT, and bus systems, financed by a simpler,
more equitable, and more efficient package of tax policy reforms, would be a significant
step in the right direction. As globalization rises, what would be its impact to the
Philippines traffic system particularly on trade, finance and migration.