What Has Been the Effect of the “Economic Nationalism” Provision of the 1987 Philippine Constitution?
This article is posted under Commentary
The provisions of the 1987 Philippine constitution are supposed to bear improvement to the economy and welfare of Filipinos. And in terms of boosting nationalism, the people who drafted the 1987 constitution used the economy as a tool. Yet while the “economic nationalism” provision has its advantages, there are also disadvantages that seem to bring down the Philippine economy and the welfare of citizens even more. Below are some of the negative effects of the provision.
Discouraged foreign investment
One of the effects of the 1987 Philippine constitution’s economic nationalism is limited foreign investment. In fact, the country has one of the lowest levels of foreign direct investments in Southeast and East Asia. Naturally, this effect is expected considering foreign investors are allowed to own only a limited percentage of local companies and considering consumers are urged to support and purchase Philippine products.
Encouraged monopolies leading to higher prices, limited selection, and lower quality products and services
While patronizing Philippine goods and services is advisable to promote a love for the country, limiting the room for foreign investment encourages monopolies and hinders healthy competition. Monopolies exist when one major company has enough power to dictate the prices, quality, and selection of products and services. Monopolies become very powerful because competitions are not big enough to threaten them.
Without foreign investments that are capable of introducing competition in the Philippine market, monopolies become lax in providing a wide range and continuously improved products for Filipino consumers. In addition, because consumers have no other product choices, monopolies can increase or decrease prices at will. In the end, the people who suffer big price increases are those who have low-paying jobs or are minimum wage earners.
Lowered the rate of job growth and depressed wages
A third effect of limited foreign investment brought about by the economic nationalism provision is a decreased rate of employment. Similarly, wages are tied to specific levels and are increased only limitedly. Why these effects occur is because local businesses have minimal funds to fuel operations and to pay workers.
Foreign investment in the country can only amount to so much that businesses fail to run as efficiently as they should. This sub par performance leads to insufficient output and funds, so, local companies hire only a few and, often, the best workers. In addition, those who possess few job-essential skills do not have a chance to work and improve their lives.
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Photo Credit : World Economic Forum
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