2019 Philippines WEF Global Competitiveness: Dissecting The Positive and Negative Factors

This country is certainly not a bed of roses. But neither is it entirely a bed of thorns. The latest World Economic Forum (WEF) Global Competitiveness Report 2019 was not positive of the Philippines as it slides eight notches lower to the 64^th place out of 141 countries from the 56^th spot out of 140 countries in 2018. But there are factors and aspects where we ranked high.

There are four major areas with sub-criteria, namely enabling environment (institutions, infrastructure, ICT adoption, macroeconomic stability), human capital (health and skills), markets (product market, labor market, financial system, and market size) and innovation ecosystem (business dynamism and innovation capability).

Under enabling environment, we jumped up 20 notches from 101^st to 87 for institutions but moved down 4 notches from 92^nd to 96^th for infrastructure, 12notches for macroeconomic stability from 43^rd in 2018 to 55^th. Our biggest drop is in ICT adoption where we are 88^th currently from 67^th. This criterion includes mobile-cellular telephone subscriptions, mobile-broadband subscriptions, fixed-broadband internet subscriptions and fiber Internet subscriptions all pe 100 population and percentage of Internet users of adult population.

For human capital, we have gone further down from 101^st in 2018 to 102^nd of 141 countries this year. But we remained at 67^th in terms of skills. We have posted an increase in markets, particularly in product market from 60^th to 52^nd, and market size from 32^nd to 31^st this year. But we went down from 36^th to 39^th this year for labor market and 39^th to 43^rd for financial system.

Looking at all the 12 criteria which falls under the four areas, the Philippines may have scored higher than the average among lower-middle income countries, but we are below average the East Asia and Pacific group. This means we may not have slowed down but all our neighbors picked up the pace.

Looking at the factors under each of the criteria (there are over a hundred factors) – it is noteworthy to take a look at the areas where the Philippines is among the Top 40 countries to understand our strengths and to know what we have been doing right so we can keep on doing them. It is also important to identify where we have performed badly or to see the areas where the Philippines joined the bottom 40 countries.

Here is the list of sub-criteria and our rank in that area, starting with where we did well.

THE PHILIPPINES IN THE TOP 40 COUNTRIES IN THESE ASPECTS

Rank	Indicators
7	Internal labour mobility
9	Insolvency regulatory framework
9	Diversity of workforce
10	Companies embracing disruptive ideas
19	Environment-related treaties in force
19	Budget transparency
19	E-Participation
26	Airport connectivity
33	Social capital
39	Energy efficiency regulation
36	Environment-related treaties in force
35	Meritocracy and incentivization
28	Reliance on professional managemen
13	Pay and productivity
18	Extent of staff training
29	Quality of vocational training
20	Skillset of graduates
22	Digital skills among active population
13	Ease of finding skilled employees
24	Critical thinking in teaching
35	Trade openness
26	Labour tax rate
24	Market capitalization
17	Soundness of banks
20	Non-performing loans % of gross total loans
28	Gross domestic product
17	Attitudes towards entrepreneurial risk
18	Entrepreneurial culture
17	Attitudes towards entrepreneurial risk
24	Willingness to delegate authority
20	Growth of innovative companies
26	Multi-stakeholder collaboration

THE PHILIPPINES IN THE BOTTOM 40 COUNTRIES IN THESE ASPECTS

Rank	Indicators
114	Organized crime
137	Terrorism incidence
126	Reliability of police services
110	Judicial independence
111	Freedom of the press
103	Burden of government regulation
109	Efficiency of legal framework in settling disputes
121	Conflict of interest regulation in Corporate Governance
125	Road connectivity
103	Electricity access
105	Exposure to unsafe drinking water
105	Pupil-to-teacher ratio in primary education
115	Extent of market dominance
116	Redundancy costs
104	Worker’s Rights
130	Credit gap (Financial System Stability)
108	Banks’ regulatory capital ratio
106	Cost of starting a business
118	Time to start a business
112	Insolvency recovery rate
102	R&D expenditures

We need to pay close attention to these positive and negative indicators now to vie for the ranking but to improve our situation as a country.

Marking the strenghts with blue and the weaknesses with red will show that our strength lies in our human capital. Almost all the parameters under that pillar comprise our strength. Our weakest pillar is institutions, and over-all, our enabling environment.

Our innovation ecosystem is both our weakness and strength. We need to understand the blue and red areas and how we can create conducive and level playing field in these pillars.