Ano ba talaga ang problema ng Pilipinas?

Blogger's Note: Remember the story about the shipwreck crew of a tanker composed of Singaporeans and Filipinos?
Wash ashore a deserted island, the crew was divided into two groups based on nationality. Then they divided the island: at one side are the Filipinos and on the other side are the Singaporeans. To survive their ordeal, the Singaporeans organized themselves into a committee where one is in-charge of food, gathering wood for fire, building a temporary home and one surveying the horizon for any ship crossing the see. By the seventh day, the Singaporeans were saved by a passing fishing boat. The Filipinos? They were still debating among themselves who would become their leader. Read the story below to know the our problem(s).

No Free Lunch: State of the nation: An authoritative view
Posted: 2:54 AM Jul. 25, 2005, Cielito Habito, Inquirer News Service
Published on Page B5 of the July 25, 2005 issue of the Philippine Daily Inquirer.
this story was taken from www.inq7money.net
URL: http://money.inq7.net/columns/view_columns.php?yyyy=2005&mon=07&dd=25&file=11

THE WORLD Bank recently released one of the more authoritative analyses of our country's continuing development challenges in the document titled "Philippines: From Short Term Growth to Sustained Development." While I am not in complete agreement with all of the paper's analyses, the document captures most of the development issues confronting the nation quite well. More importantly, it supports its observations and analyses with ample data and references to the development literature.

Productivity lag
The paper's analysis of the Philippines' long-term development perspective highlights what many of us already know, i.e. that our country's performance has fallen well short of our neighbors over the past decades. Our productivity, in particular, compares rather poorly with others. Output per Filipino worker grew by only about 1 percent a year over the last 43 years (1960-2003). In contrast, our neighbors averaged 4.4 percent, and all developing countries of the world combined averaged 1.4 percent. Thus, while output per Filipino worker rose by 50 percent through those four decades, it grew 450 percent, or nine times faster, elsewhere in East Asia. While our neighbors' growth mostly came from rising investment and productivity, ours came mostly from consumption, making up 85 percent of our average growth since 1990. The contribution of growth in physical capital to our overall economic growth was only a third of that in other East Asian economies. And while East Asia experienced an average 1.4-percent annual growth in total factor productivity (TFP) in the last 40 years, our own average annual TFP growth was actually negative in the same period!

Poor investment climate
The above trends trace to a large extent to the way the foreign investment surge that swept the region in the 70s and 80s largely passed us by. We gained some lost ground in the 1990s with our positive economic climate then, but after the Asian financial crisis and our own unsettled internal politics thereafter, we are again largely missing the boat.
Statistics show that investments in 2005 have not only slowed down; they actually dropped. The World Bank paper observes that by most measures, the Philippine investment climate has deteriorated relative to other countries. While all three international rating agencies have been downgrading both our sovereign ratings and outlook since last year, our neighbors have been receiving ratings upgrades. This has significantly raised the borrowing cost for both our private firms and the government relative to our neighbors. Interest rates on Philippine borrowings abroad were more than 400 basis points (4 percentage points) over the benchmark US treasury bonds as of end-2004. In contrast, the spreads for China, Thailand and Malaysia were well under 100 basis points (1 percentage point). Our country risk rating has dramatically deteriorated in the last three years from 47 to 61 in the Economist Intelligence Unit (EIU) Country Risk Scoring System, while our neighbors either maintained or improved on theirs. The story is the same with our competitiveness ranking in the World Economic Forum Global Competitiveness Index. An Investment Climate Survey conducted jointly by the World Bank and the Asian Development Bank in 2004 revealed that 62 percent of firms think the Philippine business climate had either "sharply" or "moderately" declined.

Slow progress on poverty
Lack of productivity growth and investments have translated directly to lack of progress in overcoming poverty. Compared to our neighbors, we have been much slower in bringing down poverty. Between 1990 and 2000, the percentage of people earning less than $1 a day fell by 9 and 11 percentage points in Thailand and Indonesia, respectively, but fell only 5 percentage points in the Philippines. And even though average income (measured as GDP per person a year) of Filipinos exceeds that of Indonesians by over a third, poverty incidence is still higher in the Philippines.

Measures of income inequality also show us to be closer to Latin American countries than our own neighbors. Income of the richest one-fifth of the Filipino population is 12.4 times that of the poorest one-fifth, while the corresponding ratio is 11 times for Thailand, 7 for Malaysia, and only 4.4 for Sri Lanka. We were actually better off in 1988, when this rich-poor ratio was just 10 to 1, showing that inequality actually worsened in the Philippines through the 1990s. While recent government reports indicated some improvement in 2003, their veracity has been put to question by data inconsistencies pointed out by knowledgeable experts.

Leadership failure
The World Bank paper affirms yet another thing we already know: that weak governance and institutions lie at the heart of our perennial underperformance. Many of us had hoped that Edsa 2 would pave the way for an improvement on this score, only to find that we instead moved from bad to worse. Lack of principle-centered leadership and a government devoid of clear direction (vision), basic morale (inspiration) and teamwork (cohesion) can only lead us even farther away from the rest of the pack. Can we really expect to get better if top-level decisions are clearly driven by politics rather than by sound, unwavering principles? If the general mood in government offices is one wherein the top leadership is widely spoken of with disdain in hushed tones, by officials down to rank-and-file employees (Malacañang, it seems, has yet to wake up to this reality)? If basic unity, solidarity and teamwork within and among various units of government is missing (witness the ongoing blame-throwing, instead of cooperation, between BIR and DOJ on the tax evasion cases--I can almost hear the tax evaders laughing!)?

And yet we are now told that the Cabinet will be left to work by themselves, when what they have sorely needed all along is an active and effective team captain (again, Malacañang misses the point!).

Can the state of the nation really get better under its current governance and leadership?

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