The knee-jerk reaction by some economists to the double-digit contraction in exports is to blame weak demand abroad.  Unless you have been living under a rock, it is now widely known that some countries in Europe—the much-maligned PIGS or Portugal, Italy, Greece and Spain—as well as the United States, are dealing with very serious financial problems of their own.

The economic downturn in the West has no doubt dampened economic activity in emerging markets like the Philippines, with the net effect of slowing our foreign trade and investments activity. However, there is more than meets the eye here.

A careful analysis of the facts will bear us out. The National Statistics Office reports that the decline in Philippine export earnings was due mainly to the 47.9-percent slump in electronic-product shipments. These components, devices and semiconductors comprise a whopping 46.8 percent of our total exports.

Some say the decline is a reflection of global market forces. Former Budget Secretary and Economist Benjamin Diokno theorizes: “The genre of Philippine electronics exports is not in line with what the new generation of electronics products demand.”

“My worst fear is that the plunge in exports is structural,” he frets.

This is echoed by some of the higher-ups at the National Economic and Development Authority (Neda). Assistant Director General Ruperto Majuca has said that while he believes the main reason behind September’s worrisome export figures is external—the euro-zone crises, Japan’s catastrophic earthquake and tsunami and US economic rollercoaster, among other things—heavy dependence on electronic products is a major factor in our current export malaise.

Fortunately, Trade Secretary Gregory Domingo has declared that his department will promote the growth of other sectors to help develop alternative export products and encourage the expansion of local business, particularly in the countryside.

In a recent forum spearheaded by the BusinessMirror, Philippines Graphic magazine and radio station dwIZ, the University of Pennsylvania, Wharton School-trained trade secretary said developing a robust agriculture and tourism industry will boost our country’s export and economic growth. We gather from him and his able lieutenants that the DTI is closely eyeing the opportunities and strengths in these areas. Their work here shall constitute a major plank in the economic platform of the Department of Trade and Industry.

Domingo said the country’s import and export trade could be turbocharged if only we are able to strengthen our agriculture activity. We should be producing more raw materials for foodstuff, for instance, as well as other products extracted from the ground, like mineral resources, to take advantage of the requirements of our resource-hungry neighboring countries, such as China and India.

But he maintains that all growth initiatives must be inclusive. This means that in the rush to development, the poorest of the poor should also benefit, especially those in the remote villages and provinces with no access to jobs, financing and livelihood opportunities.

Domingo, who used to be the managing head and vice chairman of the Board of Investments (BOI), said his department will continue to focus in providing assistance to the micro- and small and medium enterprises or SMEs. These groups, he asserts, will be the growth engines in driving the economy because they employ most of the disadvantaged and less-privileged members of society in terms of education and financial wherewithal necessary for social mobility.

He cites the example of a pili-nut processing plant in the Bicol region.  A relatively small P100,000 investment in a packaging facility by the government has resulted in a handsome-looking and very presentable world-class product ready for shipment to cater to the discriminating taste of the international market.

Domingo also expresses full support for the planned Asean economic integration targeted for implementation in 2015. He admits it is with “cautious optimism” that he believes an Asean zone would be established, given the difficulty of combining the different economic systems of the members of Asean, but he agrees there is great wealth to be created by connecting to the world’s emerging economies.

In fact, the flow of goods, people and capital is now shifting away from the West and into the emerging markets in Asia as well as Africa. Perhaps the Philippines should also move toward widening its circle of trading partners to include other developing economies of the world.

With the huge debt problems of Europe and the US, there is a clear trend away from trade and investment flows dominated by Western consumer demand. This is the new phenomenon we see currently reshaping the world economy.

By reaching out to more trading partners in the emerging economies and diversifying our export items to include Class-A agricultural products and processed raw materials derived from our rich natural resources, we are likely to weather the economic storms pummeling the West.

To be able to forge ahead and achieve economic development in these troubled times, it is wise to follow the advice of market pundits: don’t put all your eggs in one basket.

Ed Javier is a co-host of the daily radio show, Karambola sa dwIZ, which airs Mondays to Fridays, from 8 to 10 a.m. on 882 kHz AM radio. Radio station dwIZ is a sister company of the BusinessMirror.