Economics

ECONOMICS Overview of Economies Australia and The Philippines are both very different countries and their economies follow quite closely to this comparison. The Philippines’ economy has been ranked as the 36th largest in the world whereas Australia is ranked 18th. Since the leadership of Ferdinand Marcos The Philippines economy went from a well established market economy to on which was more centrally planned. This proved to be quite disastrous. The Philippines suffered economically for quite some time and it is only since the 1990s that the economy has started to recover. On the flipside Australia, although in a region of many developing countries has an economy that is on par with many of the leading European countries. This can be accredited to a 17 year period of solid growth. This economic boom had much emphasis on reforms, comparatively low inflation, a housing market boom and strengthening relations with China. Confidence in both consumers and businesses together with high export prices for commodities and agricultural products fueled the economy to such an extent that it almost ‘overheated’. Unfortunately this boom ended with the recent Global Financial Crisis. Pattern and Structure of Industry Much of the industrial production in The Philippines is centered on processing and assembly operations of items such as food, beverages, tobacco, rubber products, textiles, paints, veneer, paper and paper products. Other heavier industries are dominated by the production of cement, glass, industrial chemicals and other commodities. However they also rely quite heavily on the shipment of electronic goods for about two-thirds of export revenues. Outsourcing industry is also growing very fast in the country. It is estimated that the majority of the top 10 call centres from the US will be based in The Philippines. Australia, on the other hand, has an economy that has features of a western economy. The service sector is one of the main contributors to Australia’s economy. It consists mainly of the banking, financial, entertainment, media, tourism, health and education sectors. this has been growing over the last 2 decades. The natural resource and commodity sectors have also been a large contributor to the economy’s growth. This includes natural gas, coal, iron etc. The reason for much of Australia’s natural resources and commodities being such a help for the economy is due to the growing ties with China. China buys a lot of these commodities, that is why they fetch such a high export price. Economic Growth Although The Philippines being still quite a young country economically, that is, it is still developing, its growth has been unusually good. Growth in the country has averaged 4.5% since 2001 and was 5.9% in 2008. The World Bank, however, has stated that with poverty, weak tax collection, high unemployment, underemployment and many mounting global uncertainties, global and domestic instability there is the question of whether this high growth can be sustained over the medium term. If the country wants to try and reduce some problems eg. poverty, weak tax collection, unemployment etc. it must try and sustain growth for at least 10 years. Australia was in a 17 year economic boom up until the recent Global Financial Crisis. This was at a rate of approximately 3.6% per year. This growth in the economy was due the growth in export markets, agriculture and commodities, as well as the services sector. The new found export partner, that is China, has helped these markets grow thus expanding the economy. Quality of Life As of 2006 32.9% of the Philippine population was below the poverty line. Unfortunately this has risen from 30% in 2003 despite good economic growth and a rise in GDP. They have quite a percentage of literate people having 92.6 % of the population being able to read and write. The life expectancy is also quite good being 71.1 years, this being ranked 133 in the world. On quite the opposite side of the story, Australia, according to the CIA World Factbook none of the country’s population is below the poverty line. This has been managed by high GDP, GDP per capita, low unemployment levels and good economic growth. The Australian Government also provides the population with a well established public healthcare system, excellent education system with 99% of the population being able to read and write, social welfare and a good infrastructure. Australia also have one of the best life expectancies with it being 81.63 years, ranked number 6 in the world. Unemployment In 2009 the unemployment rate in The Philippines was 7.4%. Although this figure may seem unsatisfactory compared to Australia’s unemployment rate, this is good news for the Philippine government and economy. This rate has fallen dramatically since 2005 when the unemployment rate was 11.50%. The unemployment rate in 2009 was not the best Australia had seen at 5.7%. However this is still a good figure taking into consideration recent financial troubles. The Government was able to keep this rate minimal due to several government policies that were put in place at the necessary times. These included stimulus packages which were issued to the population of the country and interest rate cuts. Australia was also very fortunate in that its main industries were not affected by the Crisis due to continued demand from export partners. GDP per capita Even though GDP grew barely 1% in The Philippines, the country weathered the GFC better than its immediate neighbours. This was due to minimal exposure to securities issued by troubled global financial institutions, lower dependence on exports, relatively resilient domestic consumption and a growing business process outsourcing industry. The GDP averages $3300 US per capita which ranks the country 126th in the world. Low unemployment rates and a well established economy that is still growing has landed Australia with a high GDP per capita of $38 500 in 2009. This grows annually at a rate of 4%. This ranks Australia as 13th in the world. Debt Levels (total and government) Public debt was 58.7% of GDP in the Philippines in 2009. External debt of the country was $53.14 billion in 2009. This compares drastically to Australia’s public debt which was 18.6% of GDP in 2009 and had a total of $920 billion as of 2009. Government Provisions: education, health, social welfare The Philippine Government provides an education system for the people and spend about 2.5% of GDP on the system. The Government also provides a social welfare department known as The Department of Social Welfare and Development. They provide for Filipino workers, elderly and the development of various areas in The Philippines. Healthcare is also another provision from the government. Although this healthcare system is fairly new many of the doctors and nurses are fully trained to standards of many developed countries. Public hospitals only make up about 40% of this system. Australia also provides this systems to its population. The Government spends approximately $19.3 billion on the education system, approximately $47 billion on a comprehensive public healthcare system and provides social welfare for all of the population. growt Environmental Sustainability Mismanagement of fisheries resources has been estimated to cost the Philippines government $420 million lost annually in revenues. This is mainly due to poor fisheries management, ineffective policies and poor enforcement of these policies. As the population as increased so has the need for construction material and living space. This has resulted in many coastal regions being excavated, dredged and the coast being made to suit certain needs. Deforestation is a major problem. Only about 3% of the original cover remains. Inconsistent laws, inadequate regulations, poor enforcement and lack of funding has made forest conservation a major challenge. In Australia the Government spends approximately 3 billion dollars on the environment each year. This is in the form of funding many different organisations which care for the environment. Australia is very positive in its moves to become environmentally sustainable. For instance Australia has signed various agreements that attempt to cut emissions and reduce pollution on a global scale. Conclusion Both the Philippine and Australian economies have similarities and differences. However in todays global economy it seems that both economies are headed the same way. That is, being integrated into a complex market where Transnational Corporations dominate their own particular industries and competition is everything. http://www.state.gov/r/pa/ei/bgn/2794.htm http://www.panda.org/who_we_are/wwf_offices/philippines/environmental_problems__in_philippines/ http://www.forbes.com/feeds/afx/2008/04/01/afx4837406.html http://www.indexmundi.com/philippines/unemployment_rate.html http://www.aigroup.com.au/portal/binary/com.epicentric.contentmanagement.servlet.ContentDeliveryServlet/LIVE_CONTENT/Publications/Reports/2009/Factors%2520snapshot.pdf http://hdrstats.undp.org/en/countries/country_fact_sheets/cty_fs_PHL.html http://www.economywatch.com/world_economy/philippines/ http://www.abs.gov.au/ en.wikipedia.org/wiki/Economy_of_Australia http://www.dswd.gov.ph/ http://www.environment.gov.au/about/publications/budget/2009/ebo/index.html http://australia.gov.au/topics/environment-and-natural-resources/environmental-sustainability