Francesca Ria R.

Colima International Political Economy

AB Foreign Service- 301 Sir. Jumel G. Estrañero

Improving Philippines: FDI as a Means to Economic Development

Foreign Direct Investment (FDI) is an investment in a business to a country by a

company based from another country. It is a “long term investment” which involves

establishing or acquiring properties and includes not only ownership but also other things

which complements it. It is the key to economic development for it helps boost one

country’s economic growth.

Some of the advantages brought by the FDI are the creation of jobs and employment.

Because, as investors start their company within a country, it would need a workforce

comprising of that country’s nationals. People, employed to this foreign businesses or

companies, will then learn and adopt new skills. This may later help the general to gain

information to research and development that would actually benefit their own country’s

production. FDI does not only give benefits to individuals but it also brings positive

outcomes to the state. It may be through FDI that one country’s transportation system be

developed and improved. All in all, FDI will help in the advancement of a country’s

economy.

But there are also cons FDI may bring to a state. If more FDI would invest in a country,

then there’s a possibility of creating an influx of domestic concerns presumably due to the

negligence of domestic businesses and practices. It may also cause a political sway in a

country because there may be a chance of an interference from that foreign investor’s
government. FDI does generate a lot of opportunities for people; however, if one nation

depends too much on this then it would cause a shock and possibly be detrimental to a

country, especially if in the future a failure or instability will happen.

In the Philippines, it owes foreign investors for contributing to the country’s

progressing economy. In light of FDI, the Philippines, as it takes part in globalization,

should participate in economic cooperation through engagement with other countries to

adequately suffice its own financial sectors, and other sectors related to it. Our engagement

with China must be fully considered. On the resurgence of a flourishing RP-PRC bilateral

ties, China might help in maintaining and increasing the economic progress of the

Philippines. It is a win-win situation somehow for both countries. Philippines must also

interact with the member-states from the European Union (E.U.). The president, President

Duterte, should not be hostile to them just because the union meddles with his anti-drug

campaign. He must not reject the aid or deny any assistance from them or any countries,

especially if it doesn’t seem dangerous to the national security and interest.

The unsteady investment climate, crimes and other criminal related activities, poverty,

and the apparent effect of climate change in the Philippines are some of the major

challenges facing FDI stability and instability. More so, as the world opens up to

international trade, or the globalization itself, inflows and outflows get affected as well.

Globalization affects FDI inflows in a manner that countries are vulnerable to interact and

cooperate with one another; thus, like the Philippines, it welcomes foreign companies to

invest in the country where it will help in generating employment and finances. However,

in FDI outflows, it is by globalization again, that makes an investor shift from another

country because that country might provide more resources and better opportunity to that
company. The outflow of investment would now affect and produce a decline in the

Philippine’s economy.

FDI will always bring new benefits and opportunities for a country. It produces an

oozing optimism in a country’s economic development. Therefore, in improving and

maintaining FDI and the investment climate as well as avoiding investment outflow, the

Philippines must be able to provide a politically stable government. It should observe that

political and economic stability give impetus to foreign investments. Second, a sound

working environment free from any sort of conflicts and fear will certainly attract FDI.

The Philippines must be able to provide a secure and safe environment for companies and

businesses. Third, investors should be given access to the resources and information from

the country which they will need in the conduct of their business operation; however,

should not be unlimited. Fourth, the country should promote a better, fair and unbiased

policies that will attract companies and businesses overseas. Lastly, to increase FDI

inflows in the Philippines, the President, who is actually the biggest factor being

considered by the investors, should appear friendly and hospitable. He should not be

hostile and should not appear with a frightening aura. Additionally, the decisions made by

the president on his country and those policies he imposes from his own nationals influence

also an investor’s decisions.

References:
“Foreign Direct Investment- FDI”. Investopedia. Accessed March 12, 2018.
https://www.investopedia.com/terms/f/fdi.asp
Lucas, Daxim L. “FDIs surge to $10-B in Duterte’s first full year”. Inquirer.net. March
12, 2018. Accessed 12, 2018. http://business.inquirer.net/247542/fdi-foreign-direct-
investment-duterte-economy-inflow-increase
The Volatilian. FDI_Part 2: Why attract Foreign Direct Investment?. YouTube video,
1:58. January 30, 2017. https://www.youtube.com/watch?v=Sa-VycvKxbU