THE Philippines has shown a marked improvement in global competitiveness. In the 2014 and 2015 Global Competitiveness Index (GCI) report of the World Economic Forum (WEF), we now rank 52nd among the 144 countries included in the research up 33 places up from where we were in 2010.
The WEF GCI identifies 12 pillars of global competitiveness to include institutions; infrastructure; macroeconomic environment; health and primary education; higher education and training; goods market efficiency; labor market efficiency; financial market development; technological readiness; domestic and international market size; business sophistication and innovation. The first four pillars are basic requirements; the second six are efficiency enhancers, while the last two are innovation and sophistication factors, each weighing 44 percent, 47 percent and 9 percent, respectively, in measuring a country’s competitive index.
We are now transitioning from factor-driven and efficiency-driven economies. Factor-driven economies rely on a strong private and public institutions, infrastructure and macroeconomic environment competing on the basis of its primary endowments. To fully transition to becoming efficiency driven, the Philippines needs efficient processes and high labor productivities by way of having a quality secondary and tertiary education system, one that is relevant to the needs of industry.
Are we globally competitive yet? Overall the answer is Yes, against the emerging and developing economies of Asia. I am generally not a fan of the government, but the data of the WEF cannot be ignored. Truly, we have made significant headway in being globally competitive and the trend shows we are getting there at a pace faster than most countries. GCI reports, “Up seven places, the Philippines [52nd of the 144 countries] continues its upward trend. The country’s gain of 33 places since 2010 is the largest over that period among all countries studied.” It’s just that wealth has yet to trickle down.
The report further notes and I quote: “The results suggest that the reforms of the past four years have bolstered the country’s economic fundamentals. The trends across most of the 12 pillars are positive, and in some cases truly remarkable. In the institutions pillar [67th], the Philippines has leapfrogged some 50 places since 2010. In particular, there are signs that the efforts made against corruption have started bearing fruit: in terms of ethics and corruption, the country has moved from 135th in 2010, to 81st this year. The recent success of the government in tackling some of the most pressing structural issues provides evidence that bold reforms can yield positive results relatively quickly. A similar pattern is observed in terms of government efficiency [69th] and the protection of property rights [63rd]. Finally, the Philippines has made significant strides in terms of technological adoption [69th, up eight]. The country is one of the best digitally connected developing Asian nations, close behind Malaysia [60th] and Thailand [65th].”
While we have made great strides in being globally competitive, other pillars need close attention and quick action if we are to transition to the next stage. Our airports (108th) and seaports (101st) leave much to be desired. Traffic remains monstrous in the major thoroughfares in Metro Manila and the major metropolis. The Metro Rail Transit and the Light Rail Transit is grossly inadequate, ineffective and inefficient, to say the least, hazardous, as well. Labor force productivity remains low at 91st in the pack. Our higher education programs is ranked 64th in this dimension, not too bad but will not carry us to the next level. For years, stable and low cost power supply remains elusive, with a potentially looming power shortage this summer.
Much still has to be done, in particular government spending in infrastructure must continue at a faster pace in order to prime the economy. The private sector has been doing its part in pumping investments. Strong government support by way of creating an environment of credibility and reliability must be put in place in order to ensure that wealth is equitably distributed and benefit the poor.
The GCI reports the issues that remain high in the list of the business community. The government must address festering concerns in doing business in the Philippines to include corruption (17.6 percent); tax regulations (13.3 percent); inefficient bureaucracy (12.6 percent); and tax rates (9.7 percent). E-mail: rbo811@yahoo.com