MAP Insights

As the Philippine economy rebounds from the deepest COVID-induced recession among our neighbors, we now see GDP growth that so far looks the fastest. But that is not something to brag or get complacent about, as part of it is the “base effect”: it’s arithmetically easier to get a higher percentage growth from a low base, which is where we’re coming from after having shrunk the most. Moreover, we actually have the fastest inflation in the neighborhood, driven by inordinately higher domestic food prices, and also the highest rate of joblessness.

The good news about jobs is that we’re back to pre-pandemic unemployment rates of less than 5%. The bad news is that the quality of jobs has gotten worse. Proof: even as official jobs data show that we’ve added 4.2 million jobs since late 2019, less than half (2 million) were wage and salary jobs, now making up a smaller share of the total (62.7% last January vs. 64.2% in October 2019). On the other hand, unpaid family workers grew by 1.2 million, now 7.9% of the total from only 5.9% then. On top of that, the pandemic recession killed small businesses, with those who are “self-employed with employees” still 127,000 less than in 2019.

As we move forward, there are at least five new directions we must pursue to strengthen our economy and secure people’s lives: 1.) Fix our urgent and interlinked crises on hunger, malnutrition, and education, 2.) “Provincialize” agricultural development, 3.) Ease our overly protective and inward-looking trade policy, 4.) Go all out for exports, and, 5.) Cash in on our creativity. Let’s tackle each in turn.

FIX OUR URGENT AND INTERLINKED CRISES ON HUNGER, MALNUTRITION, AND EDUCATION

Our high incidence of malnutrition, especially stunting in one of every three Filipino children five years old and under, is literally a public health crisis that our top leaders must address with urgency. It threatens the very future of our country in a rapidly digitalizing world where artificial intelligence will be crucial.

And yet even our natural intelligence is handicapped because cognitive and learning abilities had been impaired by high levels of childhood stunting for decades. More than stunted height, stunted brain development is the graver consequence of severe malnutrition early in childhood.

Our bottom ranks in international comparisons on education and intelligence indicators — another urgent crisis in our midst — traces as much to malnourished and hungry children as it does to an inferior educational system. If we truly believe that our children are our future, then we must ensure their food security.

‘PROVINCIALIZE’ AGRICULTURAL DEVELOPMENT

This relates directly to the second new direction, which is to fix our weak farm and fishery sector to raise productivity, lower prices, and make food widely affordable and accessible to every Filipino.

Top-down management of the sector that persisted in spite of legally mandated devolution since 1991 failed miserably to bring out its potential. A well-run devolved system should have provinces taking the lead coordinative role in making farmers and fishers productive and competitive within their respective areas. But provinces must receive strong and sustained technical and counterpart budget support from the National Government through the Department of Agriculture, which must henceforth be measured on how well they build up provincial capacities to manage agriculture and fisheries.

EASE OUR OVERLY PROTECTIVE AND INWARD-LOOKING TRADE POLICY

The age-old approach of trying to help farmers mainly via protection (by shutting out or tightly controlling imports) proved counterproductive, and only fostered complacency, growing inefficiency, un-competitiveness, and higher prices. The historical emphasis on protection must give way to greater focus on productivity, impelled by a more open trade policy calibrated to push government and producers to work towards matching the productivity of neighbors that we actually mentored in years past.

GO ALL OUT FOR EXPORTS

In line with this, we must shed our inward-looking economic policy and aspire to produce and sell goods and services well beyond our domestic market, to tap vast and virtually unlimited growth opportunities in the regional and global markets.

The Philippines’ abysmal export performance relative to its neighbors must and can be reversed, but it starts with raising domestic productivity to the point that imports are not feared because the real-ground is the international marketplace.

CASH IN ON OUR CREATIVITY

Exporting what we are abundant in is the logical starting point, and Filipinos’ well acknowledged endowment in artistic and creative talent should be a low-hanging fruit to propel an invigorated export drive.

How the Korean government strategically pushed their “Hallyu” culture wave should be an inspiration and model for jockeying Filipino creativity into a multi-billion-dollar export industry. This could span music, dance, drama, cinema, culinary arts, software and games design, animation, graphic design, furniture, fixtures, fashion accessories, and many more. The Philippine Creative Industries Act (Republic Act 11904) provides enabling legislation, but laws are useless without strong multi-sectoral coordination, collaboration, and appropriate budgets to make it move beyond dreams into realization.

Moving on, every informed analyst expects slower growth this year for the world economy, and ours. The bigger challenge is to make that growth better-quality growth that uplifts the lives of the broad mass of Filipinos across the nation. And for this, we need to break new paths. Too many tired old mindsets and approaches brought us nowhere.

Cielito F. Habito is a member of the Board of Governors of the Management Association of the Philippines (MAP), and was President Fidel V. Ramos’ secretary of Socioeconomic Planning in 1992-1998. This article summarizes the author’s presentation at a recent MAP Mini-General Membership Meeting and Economic Briefing held in Cebu City.

map@map.org.ph

cfhabito@gmail.com