Competitiveness in a Globalizing Economy:
PES’ 46th Annual Meeting
For the third year in a row, the Friedrich Naumann Foundation for
Liberty (FNF) has supported the annual meetings of the
Philippine Economic Society (PES). The theme this year was
“Competitiveness,
Growth and Equity in a Globalizing Economy.” It was held
at the
Bangko Sentral ng Pilipinas,
Manila on 14 November 2008. The topic choice proved to be prophetic
as the financial crisis engulfing the world revealed grave systemic
weaknesses in the assessment of risk.
The conference had the traditional mix of keynote speeches in
the plenary, delivered, among others, by Ambassador Cesar Bautista
of the National Competitiveness
Council and Eric Le Borgne, the resident representative of
the World Bank. There
were also parallel panels devoted to specific topics and a final
session that looked at future prospects. This featured Ralph Recto,
National Economic Development
Authority chairman, Benjamin Diokno,
University of the Philippines School of Economics and Peter
Wallace, Wallace
Business Forum.
The PES conference brought out a lot of important insights: The
country has achieved a good degree of
macroeconomic stability,
and the
financial sector is considered to be safe and mostly
untouched by the global crisis. However,
corruption
remains a constant and growing concern, with the country
falling even more behind in several global studies.
This has
serious consequences for investment in
two ways: It has a
severe impact on the quality
of
infrastructure projects and limits their number
since their costs are so inflated. This in turn hurts investment,
especially outside Central Luzon, because the infrastructure needed
for business to thrive is not there.
Corruption, inadequate regulation, bureaucratic weaknesses and
political uncertainty directly discourage investments too. The
Philippines has a much lower share of investment to GDP
than its neighbours, and this has been declining
in recent years. Therefore the long-term growth prospects
do not look good. Moreover, the looming recession
caused by the financial crisis in the US and Europe will certainly
hurt the country. Although there is a chance that it would not
mean an outright recession, just a slowdown of growth
to 3 percent - 4 percent. Several speakers warned that
in this context, however, political turmoil like a prolonged
battle over charter change would pose a serious
threat to the economic well-being of the country. Already
political instability is cited as one of the top three concerns
of investors in a 2007 survey of the World
Economic Forum and the Makati
Business Club.
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“The conference showcased the high quality of economic analysis
and the international outlook of the Filipino economists,”
said Siegfried Herzog, FNF resident representative. “It was
a great opportunity to learn what ails the global economy, and what
has been keeping back the Philippine economy. The outlook for 2009
is rather worrisome. We have to
hope that the economic crisis
is not compounded by a political crisis. That’s a
lesson that has come across loud and clear,” he said.
Herzog gave a presentation at the PES meeting entitled: “Competitiveness:
Some Lessons from Germany.”
This year’s PES meeting was followed by the 11th
international convention of the East
Asian Economic Association (EAEA). Its theme was: “Regional
Risk Management in East Asia.” The conference was held at
the Diamond Hotel, Manila from 15-16 November 2008.
