is my Trade Tripper column in this weekend issue of BusinessWorld:
The year's start is a good time for studying
indexes. While some would take them with the proverbial grain of salt,
nevertheless, your Trade Tripper finds such statistical measures
interesting. Particularly if one takes a number of them and they end up
corroborating each other directly or indirectly. Besides, as is oft
said: you can’t manage what you haven’t measured.
The first of the indexes for the year is the 2014 Economic
Freedom Index released just over a week ago. As its name indicates, the
Heritage Foundation’s study measures a country’s openness to trade,
economic mobility, and prosperity.
The Philippines apparently presented a somewhat blurry picture in terms of economic freedom (see http://www.heritage.org/index/country/philippines).
It is currently ranked 89 (out of 186 countries), although the same is
said to be an improvement by 1.9 points. Amongst Asia-Pacific countries,
the Philippines placed 16th out of 42. Overall, the Philippines is
considered "slightly below the world average" or "moderately free."
However, it is in the Index’s category of "Rule of Law" that is of
interest. For the Philippines: "Corruption and cronyism are rife in
business and government, with a few dozen leading families holding an
outsized share of wealth and political power. Judicial independence has
traditionally been strong, but the rule of law is generally weak. A
culture of impunity, stemming in part from a case backlog in the
judicial system, hampers the fight against corruption. Delays and
uncertainty negatively affect property rights."
The foregoing should be read alongside the SWS survey of Filipino
businessmen, with "a lot" reporting of corruption increasing by 56% in
2013. Also interesting is the comparative with the country whose
progress is most closely observed in the Philippines: Vietnam. As of
2010, Vietnam has overtaken the Philippines in terms of lessened
corruption and is currently three ranks higher than the latter.
The Economic Freedom Index goes on to discuss ease of doing business or
"regulatory efficiency," noting that in the Philippines "launching a
business takes 15 procedures and 35 days." This should be read alongside
the category Open Market: "The average tariff rate is 4.8%. Tariffs
provide over 20% of government revenue. Tariff-rate quotas restrict some
agricultural imports. The legal and regulatory systems may be difficult
for foreign investors to navigate."
Then there is the World Economic Forum’s 2013-2014 Global Competitiveness Index (see http://reports.weforum.org/the-global-competitiveness-report-2013-2014/).
The Philippines has certainly made improvements in this regard, ranking
59 out of 148 countries. However, the data seems to indicate that it is
more of a private sector achievement overriding the obstacles placed by
One can see this in our high scores in "business sophistication" and
market size (which perhaps can be related to the fact that the Index
declares our population to be at 94.9 million, with a substantial chunk
of that -- it must be added -- belonging to the youth sector).
It is in the areas that government has the most responsibility that the
Philippines ranks lowest: infrastructure, corruption, inefficient
government bureaucracy, burdensome tax and labor regulations, and last
(but certainly not the least) policy instability (which has been a
peculiar Philippine flaw for the past decade and a half).
Nevertheless, the undoubted key for whatever prospects that may open to
the Philippines is in education. I’ve written previously of one striking
Philippine statistic and that is in the area of demographics: Filipinos
30 years old and below comprise around 70% of the population (with
those below 14 years at 35%, with the median age at 22.9 years old).
Those at 65 years old comprise only about 4.1%. The future of this
country quite simply depends on how well that 70% is educated.
The Times Higher Education World University Rankings 2013-2014 (see http://www.timeshighereducation.co.uk/world-university-rankings/2013-14/world-ranking)
declares itself to be "the only global university performance tables to
judge world class universities across all of their core missions --
teaching, research, knowledge transfer and international outlook. The
top universities rankings employ 13 carefully calibrated performance
The usual suspects are there: Cambridge and Oxford definitely (as well
as some school called Harvard). From the Asian region, the list is
filled with Japanese, Singaporean, Hong Kong, South Korean, Taiwanese,
Indian, Israeli, Turkish, Saudi Arabian, and Thai schools.
And yet (although one is free to ignore the rankings for whatever
excuse) not one of our schools joined the list of top universities. Not
even in the "looser" Times Higher Education World Reputation Rankings,
which is based on "nothing more than subjective judgment."
Which is quite disappointing considering all the fanaticism generated by
the local top universities here among their students and all the
basketball games and all the personality cults created by their faculty.
The foregoing, of course, should spur us to try harder. All the more
when one considers this final index: Germanwatch’s 9th annual Global
Climate Risk Index (http://germanwatch.org/de/7659), finding the Philippines as among those suffering worst from weather related devastation.
But then we don’t really need an index to tell us that.