Competitiveness, Competition Policy, and Shared Prosperity

 

SMALL AND MEDIUM ENTERPRISE DEVELOPMENT COMPETITIVENESS, COMPETITION POLICY, AND SHARED PROSPERITY SECTOR DRIVERS OF GROWTH AND DEVELOPMENT

Competitiveness, Competition Policy, and Shared Prosperity

For over 20 years, the Center has spearheaded evidence-based discussions in national and international competitiveness. In light of the country’s impressive economic performance and resilience in the past decade, the Center, in 2016 embarked on an investigation of The State of Shared Prosperity in the Philippines. Findings indicated that the benefits of the country’s economic successes have yet to be broadly felt, as the poor and marginalized continued to struggle with cyclical and in-work poverty, insecure employment, and the vulnerability to natural calamities. Meanwhile, high operation and transaction costs for businesses and households and low investments in technology, entrepreneurship, and innovation threaten the sustainability of output growth and macroeconomic stability. These results were presented and discussed with representatives of business, government, civil society, and academia in a forum about the latest developments and forward-looking strategies for the realization of shared prosperity.

Enterprises are the primary creators of value and wealth in the economy, so pushing for sustainable economic growth and development hinge on the ability of the country’s enterprises to compete in local and international markets. National competitiveness is thus strengthened by structures, institutions, and policies that support the productivity and efficiency of enterprises. World competitiveness rankings provide a benchmark for assessing a country’s level of competitiveness and areas for improvement based on statistical trends and expert opinion. Since 1997, the Center has been the Philippine partner institute of the International Institute of Management Development, based in Lausanne, Switzerland for the annual publication of the World Competitiveness Yearbook. The Center’s data gathering, survey dissemination, and vetting with experts has allowed the Philippines to consistently figure in the yearly rankings. Subsequent policy analysis and communication with mass media help interpret the results for key stakeholders and the broad Philippine public.

National competitiveness encompasses the political, social, and cultural environment in which citizens live and enterprises operate. Considering heightened local and international concern about security, in 2016, the Center conducted a series of studies on Broad Insecurity, touching on fear of crime, perceptions about local authorities, and changes in economic behavior. Together, the studies’ results implied that a high-trust society and a strong sense of community does not necessarily develop from heavy-handed enforcement. Rather, opportunities for growth and development must be provided within a stable environment in which individual incentives and societal goals align and prompt cooperation across sectors.

The enactment of a national competition policy in the Philippines is a landmark step in making markets more competitive, which strengthens national competitiveness by encouraging productivity and innovation among firms and by providing consumers with more and better-quality goods at lower prices. Telecommunications is a common priority sector in the discussion of competition policy because it serves as the backbone of a modern connected economy and is vital to the day-to-day activities of businesses and consumers.  In 2016, the Center conducted an industry analysis to evaluate the structure of the market and value chain, which may underlie market performance and potentially allow anti-competitive behavior. The study revealed the advantages of regulatory local loop unbundling to open network access, relative to other interventions for increasing competition in the industry. The Center is currently investigating the competition policy landscape across ASEAN and in other emerging markets to gather evidence of the benefits produced by competition policy implementation, particularly in the development of small and medium enterprises. 

Ultimately, the push for national competitiveness and shared prosperity are geared towards realizing better standards of living for the Filipino people. The Center’s work helps stakeholders makes sense of status quo, anticipate key developments, and set priorities for individual and collaborative action.