RP’s competitiveness falls

Slide caused by poor infrastructure, labor market, institutions

The Philippines’ ranking as a competitive economy fell 16 notches over the last year because of poor scores in infrastructures, institutions and labor market, according to the latest World Economic Forum (WEF) report.

In its Global Competitiveness Index 2009-2010, the forum reported that the Philippines ranked 87th with an index of 3.9 among 133 countries surveyed. The country placed 71st the 2008-2009 report.

The Philippines’ ranked 113th in institutions; infrastructures, 98th; macroeconomic stability, 76th; health and primary education, 73rd; higher education and training, 68th; goods market efficiency, 95th; labor market efficiency, 113th; financial market sophistication, 93rd; technological readiness, 84th; market size, 35th; business sophistication, 65th and innovation 99th.

The Global Competitiveness Index is based on 12 pillars of competitiveness, providing a comprehensive picture of the competitiveness landscape in countries around the world at all stages of development.

These pillars include institutions, infrastructure, macroeconomic stability, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market sophistication, technological readiness, market size, business sophistication and innovation.

This year, more than 13,000 business leaders were polled in 133 economies.

The survey is designed to capture a broad range of factors affecting an economy’s business climate. The report also includes comprehensive listings of the main strengths and weaknesses of countries, making it possible to identify key priorities for policy reform.

Behind neighbors

The Philippines was still lagging behind many of its neighbors, including Malaysia, which ranked 24th; Thailand, 36th; Indonesia, 54th; and Vietnam, 75th.

The United States, the largest economy in the world, fell one slot to second position because of the weakening in its financial markets and macroeconomic stability.

Singapore, Sweden and Denmark rounded out the top five.

European economies continued to prevail in the top 10 with Finland, Germany and The Netherlands following suit. The United Kingdom, while remaining very competitive, continued to fall in competitiveness from last year, moving down one more place this year to 13th, a development mainly attributed to the continued weakening of its financial markets.

Fundamentals first

Klaus Schwab, founder and executive chairman of the World Economic Forum, said, “The strong interdependence among the world’s economies makes this a truly global economic crisis in every sense. Policy-makers are presently struggling with ways of managing these new economic challenges, while preparing their economies to perform well in a future economic landscape characterized by growing uncertainty. In a difficult global economic environment, it is more important than ever for countries to put into place strong fundamentals underpinning economic growth and development.”

Xavier Sala-i-Martin, professor of economics at Columbia University in New York City and co-author of the report, added, “Amid the present crisis, it is critical that policy-makers not lose sight of long-term competitiveness fundamentals amid short-term urgencies. Competitive economies are those that have in place factors driving the productivity enhancements on which their present and future prosperity is built. A competitiveness-supporting economic environment can help national economies to weather business cycle downturns and ensure that the mechanisms enabling solid economic performance going into the future are in place.”

The World Economic Forum is an independent international organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agenda.

Incorporated as a foundation in 1971 and based in Geneva, the forum is impartial and not-for-profit. It is tied to no political, partisan or national interests. –Darwin G. Amojelar, Senior Reporter, Manila Times