"Economic development is not a pre-determined state."
"Economic development is not a pre-determined state."
Is the Philippines getting better as a place for doing business? Is it competitive in attracting capital?
Well, look again. In the 2019 Global Competitiveness Report of the World Economic Forum, the Philippines ranked a disappointing 64th out of 141 countries. So the answer is No.
The 64th place is down eight rungs from 56th in 2018. Overall score in 2019 si 61.9, lower, though slightly, than the 62.1 points in 2018.
The Philippines’ decline is ironic given that its is located in the Asia Pacific, the most competitive region in the world today.
It may be that the government has been trying to improve, mightily, the rules for doing business, like cutting red tape and enhancing efficiency. However, other countries hungry for investments are doing much better and thus have consequently improved their rankings.
The WEF’s Global Competitiveness Index 4.0 (4 refers to the Fourth Industrial Revolution or the age of the Internet) aggregates 103 individual indicators, using data from international organizations as well as from the World Economic Forum’s Executive Opinion Survey. Indicators are grouped into 12 “pillars”: Institutions; Infrastructure; ICT adoption; Macroeconomic stability; Health; Skills; Product market; Labor market; Financial system; Market size; Business dynamism; and Innovation capability.
WEF says Singapore is the country closest to the frontier of competitiveness. The country ranks first in terms of infrastructure, health, labor market functioning and financial system development.
The Philippines fell in nearly every pillar: Institutions—87th from 101st; infrastructure—96th from 92nd; health—102nd from 101st; labor market—39th from 36th; information communications technology adoption—88th from 67th; macroeconomic stability—55th from 43rd; skills—steady at 67th; product market—52nd from 60th; financial system—43rd from 39th; market size—31st from 32nd; business dynamism—44th from 39th; innovation capability—72nd from 67th.
The Philippines ranked 102nd in health, the lowest grade for the country among the pillars.
The WEF 2019 The Global Competitiveness Report series, first launched in 1979, provides leads to unlock economic growth, which remains crucial for improving living standards. In addition, in a special thematic chapter, the report explores the relationship between competitiveness, shared prosperity and environmental sustainability, showing that there is no inherent trade-off between building competitiveness, creating more equitable societies that provide opportunity for all and transitioning to environmentally sustainable systems.
However, for a new inclusive and sustainable system, explains WEF, “bold leadership and proactive policy-making will be needed, often in areas where economists and public policy professionals cannot provide evidence from the past.”
The report reviews emerging and promising ‘win-win’ policy options to achieve the three objectives of growth, inclusion and sustainability.
Introduced in 2018, the GCI 4.0 maps out factors and attributes that drive productivity, growth and human development in the era of the Fourth Industrial Revolution. The 141 economies in the study account for 99 percent of the world’s GDP.
The index aims to measure the drivers of “total factor productivity,” the part of economic growth that is not explained by the growth in the factors of production. TFP can be interpreted as how smartly these factors are used and is the main determinant of long-term economic growth. To put it simply, how efficiently units of labor and capital are combined for generating output.
The GCI 4.0 aggregates 103 individual indicators, using data from international organizations as well as from the World Ecoanomic Forum’s Executive Opinion Survey.
A country’s performance is scored on a 0-to-100 scale, where 100 represents the “frontier,” an ideal state where an issue ceases to be a constraint to productivity growth.
Each country should aim to move closer to the frontier on each component of the index. The GCI 4.0 allows economies to monitor progress over time. This approach emphasizes that competitiveness is not a zero-sum game between countries—it is achievable for all countries.
Sustained economic growth remains a critical pathway out of poverty and a core driver of human development.
Growth has been the most effective way to lift people out of poverty and improve their quality of life. For least-developed countries (LDCs) and emerging countries, economic growth is critical for expanding education, health, nutrition and survival across populations.
With a decade left, WEF frets that world is not on track to meet most of the 17 United Nations’ Sustainable Development Goals by the deadline of 2030.
On Goal 8 (Decent Work and Economic Growth), LDCs have consistently missed the target of 7 percent growth since 2015. Extreme poverty reduction is decelerating.
At current pace, it is estimated that by 2030 the rate will stand at about twice the 3 percent target set in Goal 1.
As of 2015, 46 percent of the world’s population struggled to meet basic needs. Hunger is on the rise again and affects one in nine people in the world.
The “zero hunger” target set by Goal 2 will almost certainly be missed. It is clear that for most of the past decade, growth has been subdued and has remained below potential in many developing countries.
Economic development is not a pre-determined state. Pro-active efforts are needed to start and sustain the development process. The GCI 4.0 highlights the profound competitiveness deficit that needs to be urgently addressed to restore productivity and growth to improve living standards.
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