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PHL competitiveness stalls, amidst other faltering emerging markets

Posted: 2014-05-20

 

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APC Analysis of WCY 2014
Philippine Results
Asia-Pacific Results
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The Philippines dropped four places in the 2014 World Competitiveness Yearbook (WCY) ranking to 42nd this year from 38th in 2013. In 2012, the Philippines ranked 43rd, making it a net one notch improvement in two years. Among Asia-Pacific countries, the Philippines dropped to 12th this year from 11th last year. Most other big emerging markets fell in ranking such as China (21st to 23rd), India (40th to 44th), and Thailand (27th to 29th). Elsewhere in Southeast Asia, Malaysia (15th to 12th) and Indonesia (39th to 37th) both made gains in ranking. This year, IMD ranked 60 countries worldwide, the same number as last year.

WCY measures four broad factors in measuring competitiveness -- economic performance, government efficiency, business efficiency and infrastructure. It uses economic data from various international and national sources, as well as an opinion survey in generating over 300 criteria to assess and rank the competitiveness of nations.

The Philippines' Economic Performance factor dropped six places from 31st to 37th. Although GDP growth was 7.2 percent -- second highest among WCY countries -- the Philippines was dragged down by its recent modest export performance. And although prices remained steady, inflation is relatively higher than many of the other countries in the ranking.

The Government Efficiency ranking also dropped -- from 31st last year to 40th this year. A series of high-profile corruption cases likely contributed to the deterioration in the perception of corruption, and both BIR and BOC failed to meet their collection targets. Nevertheless, the 32 percent decline in the budget deficit and the 12 percent increase in national government revenue made up for some of the losses the perceptions-based criteria. The deterioration in the country's rank this year may have been sharper had it not been for these macro-fiscal policy gains.

The Business Efficiency factor ranking also went down to 27th from 19th, as the stock market cooled down significantly last year after a hot streak in 2012. This was not uncommon among many emerging market economies, due in part to the monetary policy of major industrial countries.

Infrastructure, consistently the lowest-ranked factor for the Philippines, fell to 59th from 57th, as growing attention on poor roads and transportation facilities (notably the NAIA airport which has been consistently ranked among the world's poorest) was compounded by the slow implementation of PPPs. A looming power crisis -- along with a controversial price hike in late 2013 -- also likely contributed to this decline.

The Philippines' drop in WCY ranking this year is accounted for by three factors. First is the slowdown in the growth of previously fast-growing indicators. Second is that although the Philippines fared well in some indicators, other countries simply fared better. A third set of factors point to indicators that have been perennial weak points for the country.

Overall this year, the United States retained its number 1 ranking, followed by Switzerland (2nd), Singapore (3rd), and Hong Kong (4th).

Since 1997, the AIM Policy Center has been the Philippine partner institute of the International Institute for Management Development (IMD) for the annual release of the WCY. For more information, contact AIM Policy Center at policycenter@aim.edu or call (+632) 892 4011 ext. 5105.

Watch the video of Prof. Arturo Bris of IMD as he discusses the results of the WCY 2014.

 

For more information on the global results, please visit http://www.imd.org/wcc/news-wcy-ranking/.

 


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