The Contribution of SMEs to the Local Power for Economic Reproduction in the Philippines

Abstract

The paper introduces and elucidates Okada's approach of the local power for economic reproduction. It uses the approach as a tool to analyze the role and contribution of SMEs in the local economy of the Philippines. Under the approach, the local power for economic reproduction is the power that determines the scale and quality of economic reproduction. It strengthens when the funds locally generated are used and circulated within the locality.

The paper points out the country's propensity of using imported means of production that has led to chronic trade deficit. Due to the chronic trade deficit, the country has faced numerous balance of payments crises. The government has responded to the crises by actively using external debt and foreign direct investment. However, external debts and foreign direct investments are attendant with local funds outflow for debt servicing and for profit remittance. The paper argues that these weaken the local power for economic reproduction.