World Bank cites threats to mfg competitiveness

By Czeriza Valencia (The Philippine Star), Sep 22, 2017

MANILA, Philippines — Advancements in technology and changing global trade patterns are threatening the competitiveness of developing countries as investment destinations for manufacturing, the World Bank said.

In a new report titled “Trouble in the Making? The Future of Manufacturing-led Development,” the multilateral development bank said as global trade slows down and global value chains “remain concentrated among a relatively small number of countries,” industrial automation is increasingly “influencing which locations are attractive for production.”

The report said these shifts would adversely affect employment prospects in developing countries that rely on the manufacturing sector to provide work for low-skilled workers but would also give countries the opportunity to revamp their workforce.

Among the technologies that threaten to disrupt employment prospects for low-skilled workers include smart automation, advanced robotics and 3-D printing. World Bank said these are now increasingly used by global manufacturers of cars, electronics, apparel and other consumer goods, thus changing how countries compete for production.

World Bank urges policymakers to adjust their approach to job creation and capacitate their workers for available jobs in the future.

“Technology and globalization are changing how manufacturing contributes to development. We will need to embrace this change rather than fear it,” said Anabel Gonzalez, World Bank senior director for trade and competitiveness.

“In the past, the manufacturing sector created jobs for unskilled workers and increased productivity. In the future, developing countries will need to update their policies along with their infrastructure, firm capabilities and job creation strategies to meet the demands of a more technologically advanced world,” she said.

But all is not lost for developing countries that want to revive their respective manufacturing sectors.

World Bank is urging developing nations to adopt policies that encourage increased competitiveness by way of lowering production costs, offering a better business environment, having institutions that support new ways of doing business, and improving infrastructure.

Governments must also provide for enhancing the capabilities of its workforce by providing for the acquisition of new skills for workers, having better managed firms, and policies that support the use of new technology.

While global trade continue to be weak, countries should still strive for connectivity in trade in goods and trade in services.

The Philippines itself is pursuing reforms to revive the manufacturing sector through the Manufacturing Resurgence Program (MRP) under the Comprehensive National Industrial Strategy (CNIS). This program aims to rebuild the existing capacity of industries, strengthen new ones and sustain the momentum of industries with competitive advantage.