Calling a spade
Business World, 8 August 2012
First there was the Goldman Sachs (GS) paper, circa 2005, that included the Philippines among the so-called Next Eleven (N-11), referring to the 11 countries that had a high potential, together with the BRIC (Brazil, Russia, India, China), to give the G7 (US, UK, France, Germany, Italy, Japan, Canada) a run for their money, in terms of dominating the world economy in the 21stcentury. The N-11 are Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, South Korea and Vietnam.
Then at the beginning of this year came an HSBC paper, entitled “The World in 2050 — From the Top 30 to the Top 100,” which went further than the GS paper and projected that the Philippines would be the 16th largest economy by 2050.
Both of which, at first blush, looked like great news indeed. And for some diehard PNoy enthusiasts, was proof positive of the roaring success of his Social Contract with the Filipino people.
But such apparently glowing appraisals of the Philippines do not seem to jibe with the latest assessments of the Aquino government’s performance, whether done by the government itself (National Statistics Coordination Board StatDev 2011 — Pnoy’s state of the nation address was not used, because it was necessarily selective in nature), or by a non-partisan, non-government group (the Movement for Good Governance), or by international organizations. To wit:
As mentioned earlier and elsewhere, the NSCB’s StatDev 2011, which adopts the tracking method used for monitoring the Millennium Development Goals in determining the pace of performance in achieving the targets set out in the Philippine Development Plan’s Results Matrices, indicators monitored, 72 indicators exhibited “good” performance (likely to achieve the target), 13 turned in “average” performance (things could go either way), and 79 showed “poor” performance (performance less than 50% of expected, and therefore unlikely to achieve the target).
The Movement for Good Governance (MGG) Scorecard 2012, based on 35 indicators covering the economy, public finance, governance, health, environmental management and education, recorded an overall score of 5.59, using a scoring system ranging from 0 (the President broke his contract completely) to 10 (the President has achieved his target), with 5 indicating “accomplishment lower than expected.”
With respect to the evaluation of international organizations, they show mixed results:
The Doing Business 2012 report, compiled by the World Bank Group, shows the Philippines’ overall ranking among the countries deteriorating rather than improving (from 134 to 136). Out of the 10 “topics” that made up the overall score, its ranking deteriorated in seven (the greatest deterioration was 10 places downward in “getting credit) and improved in three (getting electricity, trading across borders and enforcing contracts).
The Global Competitiveness Index 2012 shows the country moving up at least 10 places in the rankings — from 85 (out of 139 countries) in 2010-2011 to 75 (out of 142). Out of 12 indicators that were evaluated, our performance deteriorated (relative to other countries) in only three — although quite an important three: infrastructure, health, and labor market effectiveness.
The best improvement in ranking was in macroeconomic environment, where we jumped 14 places.
The Millennium Challenge Scorecard, in which the Philippines aspires to be above the median score (in order to qualify for aid, or be eligible for a “Compact”), shows the country scoring below the median in 11 out of the 20 indicators covering three policy categories. Examples of our below-median scores were in Rule of Law, Control of Corruption, Investing in People, and Land Rights and Access.
In the World Justice Project Rule of Law Index, where the country aspires to be in the top third of the regional rankings (by 2016) from the bottom third, we rose from the 11th percentile to the 25th percentile, but our score deteriorated in “access to civil justice” and “effectiveness of criminal justice.”
Finally, in the Failed States Index, where the higher the rank, the greater the problems, the Philippines improved from 51 to 56 out of 177 states, but our best rank was 68 in 2006.
In a nutshell, the Philippines, whether by government assessment, non-government assessment, or international assessment, is underperforming (and it has been doing so for a long time, as we have been overtaken by any number of johnny-come-lately countries).
Given this at-best-mediocre performance of the country, how do we reconcile it with the GS and HSBC projections?
Very simply, if we read the latter papers more closely, the seeming disconnect disappears. First, because when they talk (particularly the HSBC paper) about largest economies, what is referred to is size — total gross domestic product (GDP), rather than per capita GDP (income per person). Thus, you have the Philippines as the 16th largest economy in 2050 and Norway as the 48th. But the per capita GDP of Norway, in constant 2000 US dollars, is projected to be $59,234, making it 7th in per capita income, while our per capita income in 2050 estimated at $10,893, or 72nd place. In these projections, by the way, our population rises from 93 million to 155 million in 40 years, while Norway’s goes up from 5 million to 6 million in the same period.
Then, still focusing on the HSBC report, one sees that it assumes an average annual growth rate of 6.1% in Philippine per capita income between 2010 and 2010. Now that is an even more heroic assumption than what is in our own Philippine Development Plan 2011-2016, which is 7-8% a year for GDP, and therefore 5-6% a year on a per capita basis (assuming a population growth rate of 2%). Our actual per capita growth rate for 2011 was something like 1.7%.
The term “panglossian” (baseless optimism) comes to mind when one reads the report, and the GS paper is not far behind.
The third way of reconciling the seeming gap between the rosiness of our future as painted by, say, the GS paper and the reality of our present is that the GS paper, from the very outset, talks about the “N-11 Dream,” and states forthrightly that “we are conscious of the leap of faith that is needed to believe that this potential might be realized.”
Unfortunately, it seems that so far “only Mexico and South Korea, and to a lesser degree, Turkey and Vietnam” have both the potential and the conditions to make the dream a reality.
Where is the Philippines in all this?
It is grouped together with Egypt, Indonesia, Bangladesh, Nigeria and Pakistan — as countries “with broad-based weaknesses, which need improvement in almost all categories.”
That’s the worst possible group. The other countries are classified as either “broadly good growth environment” or with “specific weaknesses in a few areas.”
The bottom line here is obvious. We know what the country’s weaknesses are — they are detailed in our Philippine Development Plan. If we can overcome these, then of course there will be no stopping us. So the question is: can we