When people go to buy a car, they don’t normally make the decision based solely on the vehicle’s colour, or the quality of its in-car sound system; nor its handling and breaking performances; nor its fuel-consumption rate, nor even its price. These and many other factors are taken into consideration before the customer can assess, overall, which vehicle best suits his/her requirements.
When it comes to working out a country’s competitiveness in relation to other counties, a similar holistic approach is required. Like the cars on the market, the countries will have positive and negative factors. And it’s only by appraising those and then weighing them all together that a truer overall evaluation can be made.
This is precisely what the 2017-18 Global Competitiveness Index had done. Produced by the World Economic Forum, its purpose is to determine the competitiveness rankings of 138 countries world wide. It does this by means of three sub indexes which, in turn, cover 12 separate criteria, or pillars. These pillars, though evaluated separately, have a cohesive effect – in short, they are the parts that form the sum.
Here we look at how the Philippines ranks overall in each of the three sub indexes – ‘Basic Requirements’; ‘Efficiency Enhancers’ and ‘Innovation and Sophistication Factors’ – in the context of its peer group, the states of the Association of Southeast Asia Nations (Asean). Asean member, Myanmar, is not covered in this survey.
In the remaining five parts of this series, we’ll delve into the 12 pillars and show where the Philippines – and its Asean neighbours – exhibit strength and weakness. Under ‘Basic Requirements’, for example, we’ll be looking at four areas: ‘Institutions’, ‘Infrastructure’, ‘Macroeconomic Environment’, and ‘Health & Primary Education’.
Here, then, are the overall rankings of the Asean countries for each of the three sub-indexes.
‘Basic Requirements’ are: Singapore, 1st; Malaysia, 26th; Thailand, 44th; Brunei, 50th; Indonesia, 52nd; Philippines, 65th; Vietnam, 73rd; Laos, 99th; Cambodia, 96th.
‘Efficiency Enhancers’ are: Singapore, 2nd; Malaysia, 24th; Thailand, 37th; Indonesia, 49th; Philippines, 58th; Vietnam, 65th; Brunei, 87th; Laos, 104th; Cambodia, 114th.
‘Innovation and Sophistication Factors’ are: Singapore, 12th; Malaysia, 20th; Indonesia, 32nd; Thailand, 47th; Philippines, 53rd; Brunei, 78th; Vietnam, 84th; Laos, 93rd; Cambodia, 118th.
While globally it stands up reasonably well, within the Asean theatre – where competition is the most critical – none of these are good results for the Philippines. The first, ‘Basic Requirements’, is poor; the other two, at best, are lack-lustre.
Relating these results to our opening analogy, the Philippines is a mediocre vehicle of no more than average performance. In a race around the Asean circuit, therefore, it’ll be beaten by all but the region’s smaller and underpowered emerging economies. And that happens to be the case.
Commerce – for everything from innovation to exports; whether manufacturing goods or providing services – is an extremely competitive arena. And in it, the first law of the jungle – the survival of the fittest – determines how well each competitor fares.
Certainly, the Philippines has some very strong points but these are more than offset by weaknesses elsewhere. What this suggests is that to right the ship a holistic approach to making the Philippines more competitive needs to be adopted.
In other words, the weak parts of this vehicle – whether that relates to its bodywork (infrastructure) or impediments to its road performance (e.g., corruption; tax rates) – need to be identified and replaced. Until that happens, the Philippines cannot hope to compete with the higher-performance competitors of Asean.