Facade under construction: socio -economic impact of Hanjin as the largest FDI and shipbuilding in the Philippines.

Abstract

Like many other developing countries, the Philippines have a high regard to Foreign Direct Investments (FDI). In line with this, it enables different neoliberal policy reforms and legislations to take place. To make the Philippines more competitive than other economies, the government provides an attractive offer for the foreign investors with the use of investment incentives. Most of the country‘s target investments are mainly strategic industries like shipbuilding.

To date, Hanjin‘s venture in the shipbuilding industry in the country is the biggest single FDI in history. The company‘s ownership and internalization advantages reinforced by the locational advantages of the Philippines made its shipyard in Subic as the fourth largest facility in the world. Also, as the shipbuilding giant together with other biggest foreign shipbuilders, it had greatly contributed to the country‘s achievement as the fifth biggest shipbuilder in the world. However, the success of Hanjin as a form of FDI lies way beyond its performance within the industry. In assessing the venture‘s socio-economic impact in the local and national economy, this study used cost-benefit analysis with consideration of its financial and spill-over effects. The researcher also used Eclectic theory and Marxist view on evaluat ing the company‘s behavior as FDI. It is found in the study that job generation is Hanjin‘s greatest contribution to the economy. However, despite its large capital investment, generation of financial as well as other spillover benefits for the country are quite limited.