is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:
I’ve never been a fan of jargons. A little test that I have (a bit discriminatory sometimes I know) is whether a person feels the need to resort to technical terms or the latest business buzzwords during meetings. Thus, anybody who regularly spews out words like metrics, synergize, take that offline, breaking silos, strategic vision is without fail a person who does not know what he’s talking about. The same way anybody who aggressively pumps up his staff to have "fire in the belly" is more often than not merely suffering from diarrhea.
But I was indeed appreciative of the fact that the Department of Trade and Industry came out with a road map to attain investments and exports en route to achieving a 10% GNP expansion. This is with the view to "eliminate" poverty by 2016, which coincidentally is the year the term of the present administration ends. As reported in the newspapers, the road map would make a focus on "key sectors," such as agriculture, business process outsourcing, road infrastructure, power infrastructure, manufacturing, mining, and tourism.
The problem, however, is how to achieve the said goals. Any good plan goes beyond concrete goals but includes possession of necessary information grounded in experience and real-world circumstances. The issue really for the Philippines (and this was acknowledged by our trade officials) has to do with competitiveness. Because no matter how many trading partners we have or markets opened, the same would still not matter if our competitiveness were lacking.
A significant area of our competitiveness issues goes beyond that of red tape (though indeed a huge problem) and corruption (which still needs to be actually addressed). Equally as important are management practices and productivity. When one looks at the world competitiveness surveys, these are the usually overlooked areas where the Philippines lags behind its competitors. This is a real issue and it has actual, quantitative consequences.
One consequence is the inability to take advantage of our present trade agreements. Studies have shown (and confirmed) that Philippine utilization of the FTAs, particularly that of the 1992 AFTA, have lingered in the region of 20-25%. Of course, trade officials recently underscored their plan to increase awareness of the said preferential trade provisions available to our businessmen. But, frankly, I’ve been dealing in international trade for more than a decade now and I know that it would definitely take more than seminars or workshops to address this perpetual utilization issue.
Another consequence is, even assuming that the markets are indeed opened, how sure are we that our businesses would be able to satisfy the market, both in terms of quality and quantity? Because an opened market does not necessarily mean that the consumers in those markets will buy our products or services. Several years after JPEPA had been made effective, for example, we still have to get a double-digit figure in the number of nurses working in Japan.
This boils down again to the value of education as a component of economic policy. When US President Barack Obama gave his State of the Union address last week, despite being criticized for lack of details, nevertheless he was spot-on in saying that in order to improve its economy, the US needs to "out-innovate, out-educate, and out-build the rest of the world." One US study confirmed education to be "the single-biggest determinant of career success." Thus, "the unemployment rate for people who never graduated high school is 15 percent -- depression-level joblessness. For high-school grads with no college, unemployment is 10.4 percent, and for college grads it’s just 4.9 percent."
For the Philippines, education is clearly a primary key to fostering innovation and productivity. But education has always been strangely absent in our priorities. The roadmap doesn’t emphasize it and neither does the International Trade Strategy that was drafted by members of the PIDS with the funding assistance of the European Union.
There was also this disturbing comment from one trade official: "Most pronouncements made by the (National Economic and Development Authority) are qualitative. We [the DTI] will try to be as quantitative as possible in our analysis of how we can attain our growth targets. We need to be sure that our assumptions are well-founded. There should be empirical data to support what we want to achieve." That’s laudable, indeed. But aren’t these guys supposed to be working as one team? Any strategy or road map is not supposed to work in a vacuum. And the problems are so complex that the efforts of one are necessarily connected to the efforts of others.
Finally, why the undue focus on GNP? Nobel laureate for economics Amartya Sen recently chided India for focusing too much on growth (calling such "very stupid") when more serious indicators need to be addressed, such as nutrition. The same goes for the Philippines and to which I add education, health, and social mobility. But, that, I guess, is for another article.
