In the latest Global Competitiveness Report of the Switzerland-based World Economic Forum (WEF), the Philippines ranked 56th out of 140 countries. It was also the fifth most competitive economy among the 10 members of the Association of Southeast Asian Nations.
That 56th ranking globally is actually the average for nearly 100 indicators that determine an economy’s proximity to the frontier of competitiveness, or the ideal state.
What is important to note here is that the WEF believes that competitiveness is not only associated with higher incomes, but also better socioeconomic outcomes, including life satisfaction.
The WEF report is perhaps the most comprehensive measure of a country’s competitiveness. It looked at 12 pillars or drivers of productivity: institutions, infrastructure, information and communication technology adoption, macroeconomic stability, health, education and skills, product market, labor market, financial system, market size, business dynamism and innovation capability.
Within each pillar are more detailed indicators.
In total, there are 98 indicators an economy is measured against. The Philippines scored respectably in some, and poorly in others.
Among the country’s high points were in macro-
economic stability (43rd), labor market (36th), financial system (39th), market size (32nd) and business dynamism (39th). However, the report noted that the country’s institutions were the weakest link among all indicators.
The Philippines scored poorly in the security category (101st), infrastructure (92nd), road connectivity (129th), exposure to unsafe drinking water (101st), efficiency of train services (100th), and electrification rate (100th).
Other low rankings for the country: health services (101st), time to start a business (115th), cost of starting a business (97th) and insolvency recovery rates (112th).
These weak indicators are still seen as disruptive factors for doing business in the country.
The WEF changed its methodology for the 2018 report to take into account the full impact of the ongoing Fourth Industrial Revolution.
Prof. Klaus Schwab, founder and executive chair of the WEF, described this Fourth Industrial Revolution as being characterized by a range of new technologies that are fusing the physical, digital and biological worlds.
He mentioned ubiquitous, mobile supercomputing, intelligent robots, self-driving cars, neurotechnological brain enhancements and genetic editing.
The evidence of dramatic change is all around us and happening at exponential speed, he said. The resulting shifts and disruptions mean great promise and great peril, such as the potential to connect billions more people to digital networks and manage natural resources in ways that can help regenerate the environment.
However, grave risks are also at play: Organizations might be unable to adapt, and governments could fail to employ and regulate new technologies to capture their benefits.
To respond to these challenges, the WEF noted that, for economies to be successful in the era of the Fourth Industrial Revolution, they need to be resilient (building buffers and economic mechanisms to prevent financial crises or mass unemployment), agile (embracing change rather than resisting it), and creative (building an innovation ecosystem where innovation is given incentives at all levels).
Most important, however, is for economies to adopt a human-centric approach to economic development. The WEF explained this to mean that countries must recognize the essential role of human capital to generate prosperity, and that any policy that adversely affects people’s potential will reduce economic growth in the long run.
As a consequence, governments will have to ensure that the speed of change and the introduction of new technologies ultimately translate into better living conditions for their peoples.
Schwab’s call for leaders and citizens — to “shape a future that works for all by putting people first, empowering them and constantly reminding ourselves that all of these new technologies are first and foremost tools made by people for people” — is worth repeating and translating into official national policy.
Is the Philippines putting its people first?
This is the only way it can truly be competitive in the world — to focus on doing better for the 104 million Filipinos in its midst.