The following article is a standard sample format of a Research Paper (Term Paper) by a High School student. This format is as of 2014.
How Inflation Rate Affects in the Filipino People?
Research Paper
By: Yves Von V. Villamayor
Teacher: Mrs. Antoinette
Andromeda-Barrameda
Subject: Social
Studies
Date Submitted: December
11, 2014
DEDICATION
This
research paper is lovingly dedicated to my father who is working overseas for quite
long year now, and to all Overseas Filipino Workers (OFW) who are scattered around
the globe. By making this research
paper, I would like to put my hats off and give my big salute to all OFWs in valuing
the hardship, perseverance and sacrifices they made just to provide the better living
for their family.
My
father decided to work in Middle East to sustain the increasing needs of our
family and to provide a better future for my two siblings (and me). As an engineer, he went to this barren land
of sand dessert to receive a decent pay that most engineers like him are not
compensated in local employment. But
this pay is not sufficient to cover the extreme lonesome of being away from
home and will not ever equal the greatest moments that he’d supposed to spend
with his children that he misses in his life.
The
OFWs are the back bone of our economy, keeping it afloat with their huge
remittances and making it alive amidst of economic crisis. The dollar reserve of the government that is
attributed to OFWs thru the remittances they send have contributed significantly
in keeping the current account deficit manageable, making it the major source
of the country’s national budget and stabilizes the value of the local
currency. The OFWs embrace the challenge of leaving their families miles away
from home and took the bitter pills of sacrificing so much of themselves in
exchange of a better and brighter future and success for their family and
country.
While
I am writing this research paper, I came across to understand the significant
role of the overseas Filipino workers who play a pivotal role in the ever
changing global competition. We are lucky to receive their sacrifices dedicated
to us who were left in our home. And
because of this, I am really grateful and proud to say that I am a son of
an OFW. True to its sense and meaning,
they are the modern day heroes that are deserved to be honoured.
*****
ACKNOWLEDGEMENT
This
research paper will not complete without mentioning my deepest appreciation to
the persons who became part of this educational experience. Before starting this research paper, I would
like to thank the following persons whom I owe a great depth of gratitude:
Manong Jun De la Cruz,
a pedicab driver who served as my means of transportation while going from one
place to another in different corners of Manila. Also to Manang
Maria Santos who always assisted me in FX terminal in Crossing, Shaw Blvd,
Mandaluyong City.
Thanks
to my friends Mark Joseph and Fernan, to Roel and Richard R., the Tropang Mama's Boyz Ronald, Rodgee and Edwin, and to 3Rs Rob, Renz and Richard S. who were
with me most of the times going to different places during the busy hours while
making this research.
Engr.
Ronaldo B. Real for the valuable comments, suggestions, advices and ideas about
economics principles.
My
auntie Professor Nelly T. Vitor for lending me some of her pertinent articles
that I read and other available data while I am writing this research paper.
My
mother, Mrs. Alliah V. Villamayor for her moral and financial support during
the making of this research, who provided me her personal knowledge about the
theme of this research paper when she explained me, and guided me while
browsing the internet.
Special
thanks to my father, Alexson V. Villamayor for many information he provided me
considering that we are miles distance away but indeed his unwavering support
to me has been constant until the completion of this research paper.
And
to God Almighty who is giving me the strength till mid-night, sound mind to
understand this assignment, and perseverance throughout the completion of my
research. To God Be the Glory.
*****
TABLE OF CONTENTS
Title Page ......................................... 1
Dedication ......................................... 3
Acknowledgement ......................................... 4
Table of Contents ......................................... 5
Introduction ......................................... 6
Content .................................... 7 – 10
Definition of Terms ........................................ 11
Finding/conclusion ........................................ 12
Bibliography ........................................ 15
Curriculum Vitae ........................................ 16
INTRODUCTION
Throughout
the years, inflation rate in the Philippines has become the defining factor of
our economic lifestyle and our own financial status as well. It is imperative to understand how and why
inflation occurs in the world we live in.
Included
in this research study are the causes and effect of inflation during its high
and low. While reading, it is aimed to
give a useful information about inflation and understand how this happen in our
everyday life.
In
an ordinary citizen, the basic impression on inflation rate is the idea that it
is the measure of the value of our money and the prices of goods and
services. It is said that the lower rate
is the better for the country. That is,
the lower rate of the inflation, the lower prices of basic commodities. In a country like Philippines, this very idea
seems to be very difficult to understand because no matter how the government
say the inflation is getting better, people cannot see it because the prices of
goods and services are getting higher.
Money
runs the economy. It needs more business
to operate and more customers to patronize the goods and services to make the
money in the market circulate. It needs
more money to reduce the prices. If this
is the very reason, why then don’t we just print more money? How I wish this to happen if this will answer
the needs to have money circulating in the market to make our economy grow.
But
it is really not as simple as that. Why
does the Bangko Sentral ng Pilipinas, Central
Bank of the Philippines in english, (the
independent monetary authority for regulating the money flow in the Philippines)
cannot print more and more bills if that is that easy? This is because printing more bills to
address the inflation will give us the opposite: deflation. The value of our money will devaluate if
everybody can buy whatever they want.
Sounds good, yes but at the end of the day it is definitely no. Having the money flooding in the market will
make the banknotes less value because no matter how many banknotes you have; it
is useless if you cannot find what you want to buy. Because of the diving down prices, traders
will no longer produce and manufacture products with less profit. That is why it has to understand that there
is need to control the amount of cash in the circulation. It is check and balance.
*****
How Inflation Rate Affects in the Filipino People?
First,
what is inflation? Inflation is the term
that describes the increase or decrease in price, products and services. It
is the nonstop increase in the general level of prices which is measured as an
annual percentage increase. Inflation
rate is the percentage rate of change of a price index over time. It is widely calculated by calculating the
movement of change in a price index. The National Statistics Office of the
Philippines measures the inflation rate in the Philippines. Every young student, every career men
and women, even the bystanders in the street or even every plain housewife,
whether we like it or not are all mobilized in one way or another by inflation.
The
economy does well when there is money circulating. When business and people and business can
afford to buy goods and services, people can make a living. Jobs and commerce, these what make us go
round. In this time of age, everybody
must work in order to live their life and the world to keep goes round. The more jobs in the market, the more labour force
attract and the more jobs are the better to help everybody enjoy the inflation. Every year, Philippines are producing
thousands of young eager minds of new graduates. This alone adds the growing unemployment rate
searching for job, aside from the brain drains and underemployment who are
aspiring a better position. True, the higher unemployment rate causes the
inflation rate goes up too.
Because
it needs to have full labour force to work in order generate and circulate the
money and so the economy does good. If
people and the entrepreneurs can afford to buy goods or services, the cycle of
trading, business, commerce and labour will goes on continued. That is why it is important to have these new
graduate and unemployed to land the job in order to continue the cycle. The government and private companies launch
job fair, in cases they cannot afford to accommodate all these competitive
searchers loaded with full range of skills then the world of Overseas Filipino
Workers opened the door to work in different countries. More jobs to combat the inflation.
The businessmen and the general public as well
are encircled with this inflation because our daily life has something great to
do with it. From the morning Filipino
bread called “pan de sal” we eat
during breakfast up to our plan of getting another out of town trip to Boracay,
El-Nido, Batanes, etcetera, our decisions are without doubt depends on
inflation rate. This means, whether you
are from the upper class or below the average class, whether you are doctor,
lawyer, engineer and teacher or you are the noble farmer, street vendor,
volunteer, and students, people from all walk of life is under the power of
inflation rate. From the public
supermarket where the prices of basic needs such as cooking oil, garlic, onion
are the mirror of inflation rate be it high or low, our standard cost of living
then is depends on the prices of these basic commodities. You may not use garlic, onion etcetera but
whether you like it or not, it has the domino effect in our overall calculation
of inflation rate. Meaning to say, our
purchasing power is strong when these commodities are at low prices and we are
tightening our belt when the prices are high.
On how the inflation rate affects on the people
from class A to ordinary citizens, the inflation rate play very important role.
When our currency (peso) gets strong, the purchasing power of peso becomes
strong too. This means the inflation
rate will go down and the prices of commodities will go down too which the
consumer will take advantage to buy more products and services. And this too means the money that will come
in every company is bigger while the money that will go out is less. And when the consumers are buying the
products, the law of supply and demand take into
the scenario. The law of supply and
demand is an economic model of price determination in a market. It concludes
that in a competitive market, the unit price for a particular good will vary until
it settles at a point where the quantity demanded by consumers (at current
price) will equal the quantity supplied by producers (at current price),
resulting in an economic equilibrium for price and quantity. In economics, there are four basic laws of
supply and demand:
1. If
demand increases (demand curve shifts to the right) and supply remains
unchanged, a shortage occurs, leading to a higher equilibrium price.
2. If
demand decreases (demand curve shifts to the left) and supply remains
unchanged, a surplus occurs, leading to a lower equilibrium price.
3. If
demand remains unchanged and supply increases (supply curve shifts to the
right), a surplus occurs, leading to a lower equilibrium price.
4. If
demand remains unchanged and supply decreases (supply curve shifts to the
left), a shortage occurs, leading to a higher equilibrium price.
For
the economy to function, producers must supply the
goods that consumers want. This
is known as the law of supply and demand. “Supply” refers to the amount of
goods a market can produce, while “demand” refers to the amount of goods
consumers are willing to buy. Together, these two powerful market forces form
the main principle that underlies all economic theory.
The law of supply and demand explains how prices are set for
the sale of goods. The process starts with consumers demanding goods. When
demand is high, producers can charge high prices for goods. The promise of
earning large profits from high prices inspires producers to manufacture goods
to meet the demand. However, the law of demand states that if prices are too
high, only few consumers will purchase the goods and demand will go unmet. To fully
meet the demand, producers must charge a price that will result in the required
amount of sales while still generating profits for themselves. During the low inflation rate, this will make the company to produce more products and
services in low capital. In short, they
are getting more pesos while the value of their payables which is in dollars is
getting small.
On the other side, when the value of peso
devaluates which is happening when the inflation rate goes up, the effect is
most likely not favourable to company and consumer as well. This means, the company, the producers, and
manufacturers are putting bigger capital in order to produce the product and to
provide the service to their customers. It
is because while they are manufacturing their products or services, the cost of
materials that are needed in making their products or services is getting high
too. If this is the case, definitely the
manufacturer will add to the price of their finished products or services
offered in order for them to continuously produce again or operate their
service. It needs to happen otherwise
the business will stop or close. If this
closure happens, it will mean more demand from the consumers and here the law
of demand and supply will again take into scenario. If the demand is high and
the supply is low, this will be the chance of other producer to take advantage
the necessity of the consumer by increasing more on the price of the
product. This is because during the shortage
of supply in the market especially the lack on basic needs, the consumers will
buy the product regardless of it is at high price because they need it
basically. As a measure for this, our
government has the Department of Trade and Industry (DTI) who regulates the
prices.
From businessmen, entrepreneur, and capitalist
to ordinary people, inflation rate hits everyone. If the inflation rate is high, an ordinary
housewife who is making a weekly grocery will unable to follow her grocery
budget. Increase in prices will exceed
her budget by as much as half percentage despites cutting on some items and she
may not make it even close to the borderline.
Not only in the basic need, the mother has to pay the increasing bill
for services starting from their electricity, water and communication service
to service for their children like tuition fees, medical and health care needs,
hair cut for her boys and girls, and even the transportation service they use
to go anywhere they need. These are the
times when the producers or manufacturers are making their products at high
cost of materials due to inflation rate too, and eventually transferring to the
consumers the cost they have used to continue the cycle of commercial trading.
On the other side, it should be felt by the
ordinary people when the inflation rate is low because the prices are going
down too. It is said that a strong
currency means higher purchasing power that will enable us to buy more goods
and services. However, the law of
economics seems not applicable in Philippines.
Low inflation rate is not being felt at all by consumer sectors in fact
instead of going down the prices, the prices of prime commodities are rising. In our case as citizen of the third world
country, the effect of peso appreciation and the strong stock market is not an
overnight result to reap the immediate benefits. It will take years of sustained economic
growth for us to see the benefits of strong value of peso due to several
reasons like population explosion, infrastructure, peace and order, political
crisis, etcetera. Our life, or better to
say our modern life is dependent to inflation.
The attorneys, the doctors, street vendors, all of us, we as Filipino
feel the dramatic effect of inflation rate during its high and low. Aside from the businessmen who are the first
in line to like or dislike the inflation rate, ordinary people specially the
family of those who have father, mother, children, or siblings who are working
in other countries are also receiving the loss or benefits of inflation. While the OFW is working in other country
that has no major issue in inflation, the poor OFW has nothing in control to
the family every time the inflation rate in the Philippines is going up.
If a strong peso means having a higher
purchasing power, then there should be nothing to worry for the families of
OFWs in the decrease in the dollar’s exchange rate since it will be covered up
by an equivalent decrease in the prices of basic commodities and services. But this is not the case. While the value of the regular amount
remitted by an OFW reduces, the power to purchase reduces too because of the
increasing prices of commodities. This
is the dilemma of the Filipino family.
To cite an example, if an OFW is maintaining a monthly budget of 22,000
pesos for the last few months which is equivalent to 400 US dollars, if the
inflation goes down which will cut on the value of dollar rate, then this means
the OFW cannot send anymore the same 400 US dollars and the family cannot live
the same life as before. Because, while
the value of the peso is appreciating but the prices of basic commodities
remain stagnant. Here, it is loss for
the OFW, the family and the economy where the significant volume of remitted
money of the OFWs saves the economy of the country. In order to maintain the equivalent value of
peso against dollar, the OFWs have to tighten their belts in able to send more
dollars to sustain the need of their family back home. While the family of the overseas workers have
to make the best of what how much they received from family members abroad.
In reality, the daily life of every Filipino
people lies on inflation and deflation. It
can tell how much we can do if we can afford the command of prices and the
demand of our needs. Sad to realize, inflation
reflects our life in negative way. It
tells poverty that reflects in our society where poor is outnumbering the
rich. It shows how is our life, the cost
of living, different means of savings to survive, the quality of life we are living. On how the inflation affects in the Filipino
people is huge and remarkable because life in this age and time is a matter of survival
amidst of the commercialization.
*****
DEFINITION OF TERMS
Bank
Notes – this is referring to the paper bill printed by Bangko Sentral ng Pilipinas.
Colonial
Mentality – is a conceptual theory around
feelings of inferiority within some societies post-European colonialism,
relative to the values of the foreign powers which they became aware of through
the contact period of colonization. In Philippines,
it is refer to preference of foreign brands.
Deflation
– is a decrease in the amount of available money or credit in an economy that
causes prices to go down.
Global
crisis – the financial crisis of 2007–2008, also
known as the Global Financial
Crisis and 2008 financial crisis, is considered
by many economists to have been the worst financial crisis since the Great
Depression of the 1930’s.
Inflation – it is defined as a sustained increase in the
general level of prices for goods and services.
Merriam-Webster Dictionary defines inflation as a continuing rise in the
general price level usually attributed to an increase in the volume of money
and credit relative to available goods and services.
Inflation Rate – the rate of change of prices as indicated by
a price index and calculate on a monthly or annual basis.
Law of demand and supply –the theory that prices are determined by the
interaction of supply and demand: an increase in supply will lower prices if
not accompanied by increased demand, and an increase in demand will raise
prices unless accompanied by increased supply.
In economics, “supply” refers to the amount of goods a market can
produce, while “demand” refers to the amount of goods consumers are willing to
buy.
Purchasing power – the worth of money as determined by what
it can buy at a given time in comparison with what it could buy at a specified
previous time.
Recession – a period of general economic decline, defined as
a decline in GDP for two or more consecutive quarters. It is typically accompanied by a drop in the stock market and increase in
unemployment.
Return
On Investment – A profitability measure that evaluates the performance of a business
by dividing net profit by net worth.
Stock
Market – a system for buying and selling stocks or a place where stocks are
bought and sold.
TTG - Travel Trade Gazette is
a weekly newspaper for the travel industry based in UK and Ireland.
Underemployment – is the condition in which people in a
labour force are employed at less than full-time or regular jobs or at jobs
inadequate with respect to their training or economic needs.
Unemployment – Condition of a person who is able to work, is
actively seeking work, but is unable to find any.
*****
CONCLUSION
Managing the
inflation is bigger than our life that is so tough to sustain. It has to act all government agencies to keep
it manageable. Because inflation means
our economy, it is the measure how far can we go and how much we are
behind. After I read several articles,
news and blog, gathered some information and until I wrote this research paper,
I sat in my bed and tried to think what it should supposed to do to handle the
inflation in the Philippines. As a young
mind, as an ordinary citizen and as a high school student, I think inflation
can be controlled by imposing real serious mechanisms so that every people of
the Philippines be it young, old, rich and poor can enjoy the distribution of
government return to its citizens. It’s
purely finance, meaning all these things that are happening to our inflation
are about money, business, job, and manpower.
To sustain this inflation, the government must generate more jobs and
rely on local jobs. Generate more jobs,
invite foreign investors and encourage the local entrepreneurs to engage in
business. More jobs mean more employment
and eventually bigger taxes collection.
We need to give jobs to those unemployed in order for them to buy
commodities, to save money in the bank, and to improve their lives. This makes the money is circulating. This is the return of investment that
sustains the inflation rate go down, appreciates the value of currency and
gives purchasing power of peso. Local
job is important in order for us to be self-reliant. For the longer time of our being independent
country, I think we must also independent in relying to our own resources. Boost the agricultural sector, this is the
sector where we will not need to heavily rely on the foreign investors. We must self-sufficient in our own crops
especially in rice which we need to import rice while we have abundant, wide
open and perfect land for farming. And
in rural places like most in provinces, farming has been the livelihood that
could maximize the resources both the labor force and the soil by aiding them
with full support.
Let us patronize
our own products. I believe it is about
time for us to disown colonial mentality.
We have to remove in our principle the concept of having the imported products are better than locally manufactured products in terms of quality and
service. We have many talented workers
who can equal or even surpass the caliber of those foreign labors who are
making the imported home furniture, shoes, perfume, apparels, and
etcetera. We have to stop choosing the
imported chocolates, candies, garlic, corn over the locally manufactured and
harvested. By patronizing our own
products, we are giving our fellowmen more capital to produce more, helping
their industry to keep on going and helping them to grow and expand. And definitely it helps our inflation
manageable.
Invest in
tourism. Our country has an array of
beautiful places that we can be proud of and showcase to whole world. There are still many hidden and undiscovered
places that are waiting to uncover.
Earning the international recognition as the “Destination of the Year”
during the 25thAnnual TTG Travel Awards 2014, it is the perfect time
to promote and improve our local tourist spots by securing the safety of the
foreigners and giving them the convenience from the point of entry in our
international airport to their point of destination. But this is not only goes for the foreign
guests only. It is equally important to
promote our tourist spot to our locals.
It is common reaction and grievance from local tourists when comparing
the cost of travel to domestic and going to neighboring countries for tour that
it is either the same or sometimes it is even cheaper to go outside than to go
for local tour. If the Department of Tourism can lower the cost such as the
travel tax, the airway fair, and hotels through coordination with travel
agency, ticketing offices and resorts proprietors, then it will be a big
come-on to locals to try visiting own country.
Lower the cost and let us not be foreigners to our own country.
Create more
jobs. It is nice to generate jobs in
provinces where its inhabitants will not need to go to crowded Manila. Industries can bring to these regions to
spread the employment across the country.
By doing so, it is enhancing the lives of the residents and reinforcing
the local community as well. And it also
makes the provinces into developing region into cities. And also, this will withhold every Filipino
who is planning to work to other countries if there is available job nearest to
their home and family. Being a son of an OFW, I know how much the sacrifice of an OFW and the family. Working in a foreign country is
difficult. It is not secured that
anytime an OFW can be repatriated to give their job to the locals of the host
country. During localization, recession
and war, all these uncertain factors are stimulating the OFW’s job security
that when laid off, bunch of unemployment is waiting for them. That is why it is important to create more
jobs. As we know, OFWs are the living
heroes. From the ten million OFWs who
have kept the Philippines alive and its economy afloat, their remittance alone
enabled our economy to survive regional and global crises. The OFW phenomenon, which was supposed to be
a temporary solution to the country’s growing unemployment during the 1970’s
has become an important part of the economy.
Imagine what would happen to our unemployment problem if the ten million
OFW were suddenly come home due to mass lay off? This might be a hypothetical question but can
put in reality. Employment is only one
of the major contributions of the OFWs.
Their remittances saved our economy from collapse during the debt crisis
in the early eighties (1980’s) and enabled us to avoid recession during the
global financial crisis in 2008. It is
not an exaggeration to say that the OFWs fueled the boom in the property
business, banking, retailing and even the automotive market, making the
inflation rate tolerable. The reality is
that the OFWs are driving the Philippine economy and this is even more
significant given that our economy continues to be driven by consumption
spending because we still lack an industrial base.
Designate an OFW
Bank for our overseas workers. Since OFW
losses when the dollar weakens due to strengthening peso that they themselves
are strengthening it, a designated bank that will take care the hard earned
money that they remit to Philippines should assign. A fixed rate may help them to remit more
money against the unstable rate of peso against dollar. More remittances, more money circulates lower
inflation. Because beyond the economy,
the OFWs have changed the lives of millions of their countrymen as well as the
Philippines landscape when they brought us so many benefits. Given their many contributions, they deserved
the assistance and attention that the government and nation can give.
Having
said these, I would like to give my sincerest thanks to our all OFWs. They may
not know or realized it yet but their contributions to our country have been
playing significantly in every aspect of our economy. This is how I appreciate the OFWs. But then it should go to all. We need to empower the people because on the
first place, they are the grassroots who are the first in line customers of the
products and services available in the market.
They are the very reason why the entrepreneurs have confidence to invest
the business. Like what I said, it has
to act all government agencies to keep inflation manageable. The fast growing population explosion cannot
get along with the improvement of economy.
Although the economy may really growing but the growth is not enough to
distribute largely to medical, educational, social and military needs of the
Filipinos. It is outnumbered, many are
sharing with the slight growth making this inflation unable to feel by ordinary
people. Many are sharing with the slight
growth. The peace and order should also
be addressed. More investors are
supposed to come if not for the danger of extremists, leftish and the radical
groups including the political stability – it disappoints the prospected
investors. Infrastructure like road,
bridges, electric power, telecommunication facilities to name a few should
improve to ensure the fast and continuous appreciation of inflation rate.
All in all, the
most urgent solution that I believe to handle inflation is generating more jobs
to make the money circulate in the market.
Being a country that is politically active, it must start from the top
to lead the determination and the rest will follow. Everybody is affected with the flow of
inflation, even the simple Manong who
peddles bottled water in the street. If
there are more decent jobs available in the market, the poor street vendor will
employ himself where he can earn no less than his income in peddling bottled
water and for sure will empower him to patronize the Philippines made products.
*****
BIBLIOGRAPHY
Insights,
“Sharing the Trench” Dec. 8, 2012.
Date viewed 7 Dec. 2014< http://alex-insights.blogspot.com/2009/12/sharing-trench.html>
Merriam-Webster.
“Purchasing Power” Date viewed 8 Dec 2014
Wikipedia
The Free Encyclopedia. “Inflation” Date
viewed 7, Dec. 2014
Wikipedia
The Fee Encyclopedia. “Supply and Demand”.Date viewed 7 December 2914
*****