and the united states, as " the workshops of the world, " had accomplished innovative developments such as steam engines and the telephone, and had created mass production systems by constructing modern factories based on these developments. they also established a manufacturing trade in which they imported materials from all over the world and exported industrial products. the volume of global trade increased as free trade was promoted by " the workshop of the world. " today, though the term " globalization " is widely used in a variety of fields, economic globalization had its origins in the 19th century. richard baldwin, a professor of economics at the university of geneva, points out that in the period of globalization led by the united kingdom and the united states, people started to trade goods all over the world because the cost of trade had declined due to innovation, and wealth had concentrated in " the workshop of the world. " 2 from the 1970s to the end of the 1980s, japan and germany caught up with them, took over the role of " the workshops of the world, " and accumulated wealth rapidly. gvcs and the economic growth of asia a new era of globalization started at the end of the 1980s as the cold war ended. foreign direct investment increased globally mainly due to the large capital inflows into the former eastern bloc countries such as china and those in the former soviet union and in east europe. also, the establishment of the world trade organization ( wto ) in 1995 strengthened the institutional framework of free trade. over this period, many multinational companies, which already had hubs in various regions, evolved their production systems even more. they segmented the process, from planning and development of products to the production of parts, assembly, and sales. they optimally decentralized locations for the production process and services all over the world by seeking economics of scale and see r. baldwin ( 2016 ), the great convergence : information technology and the new globalization, the belknap press of harvard university press, cambridge, massachusetts. comparative advantage. by the middle of the 2000s they had constructed a network of international specialization in a finely meshed pattern, which is called gvcs. the development of it greatly contributed to the establishment of gvcs. this is because it enables firms to collectively manage and control a large number of geographically dispersed processes. professor baldwin, whom i mentioned earlier, notes that the lower cost of information processing due to the development of it since the 1980s had made it easy to share information between developed and emerging countries

s strong macroeconomic fundamentals as well as the increasing needs of a growing economy. the country ’ s external payments position remains resilient and sustainable as it enjoys support from different fronts. these include remittances from overseas filipinos ( ofs ), revenues from the it - bpo industry, receipts from the robust tourism sector, and sustained inflows of foreign direct investments. for 2019, the bsp sees a bop surplus of $ 3. 7 billion equivalent to 1 percent of gdp. the current account deficit, on the other hand, has been revised upward to usd 10 billion, equivalent to 2. 8 percent of gdp. we continue to see this as financeable given support from structural inflows. the country ’ s gross international reserves ( gir ) now stands at around us $ 85 billion as of endmay 2019. this is roughly equivalent to 7. 5 months ’ worth of imports of goods and payments of services and primary income. in addition, the passage of r. a. no. 11256 or the gold law would allow the bsp to increase its purchases of domestic gold to further build up the level of the philippines ’ gir, which serves as the country ’ s primary buffer against external economic shocks. the law exempts from excise and income tax the sale to the bsp of gold sourced from small - scale mining activities. fourth, the bsp ’ s implementation of capital market reforms facilitates easier funding access. the bsp is a long - standing advocate of reforms to further deepen the country ’ s capital market. capital market development helps finance infrastructure projects and limits concentration risks in the banking system, thereby facilitating investment in long - term government bonds, lowering borrowing costs, and improving monetary policy transmission. at the same time, this allows the private sector to tap into a broader market or avail themselves of alternative financing opportunities for infrastructure projects. the bsp continues to enhance the regulatory environment ( e. g., refinement of benchmarks and trading rules ) by allowing banks to offer instruments that help hedge risks and provide ways of portfolio diversification. on the other hand, the liberalization of the banking system, which allowed the entry of new foreign banks into the country, enhances the quality of competition in the banking system, expands the array of financial products and services at competitive rates, encourages more foreign direct investments ( fdi ), and opens alternative financing opportunities to fund infrastructure projects. before i end my presentation today, i would like