High economic gloatBy Conrado R. Banal III
Philippine Daily Inquirer
Nowadays, we hear terms like “leapfrog” (an old children’s game), “sweet spot” (used in sports like baseball, tennis and golf) or “critical mass” (term in nuclear physics) to describe how our economic is doing. We hear them from the mouths of technocrats in the Aquino (Part II) administration, for instance, or some business organizations.
Do you think that perhaps they are only trying to make economic concepts easier to grasp for us down here, translating economic jargon into something that can be understood by children, golfers and nuclear physicists?
Seriously, anyway, Finance Secretary Cesar Purisima, the chief tax man of the government who, by virtue of his position, is recognized traditionally as the captain ball of the current administration’s economic team, used the term “sweet spot” in a recent financial conference, organized by the business publication Euromoney.
Attending the same conference was our chief moneyman, Gov. Amando Tetangco Jr., the two-term head of the Bangko Sentral, who also heads our policymaking body, the Monetary Board.
Together, Purisima and Tetangco are said to be the most influential economic officials in this country, primarily because of their important positions. When they talk, the entire business community listens. They can easily set the direction of the economy.
Thus, everybody in business sat up when, during the Euromoney conference, they talked about the Philippine demographic as the most exciting part of our economic prospects—its so-called “sweet spot.”
We are supposed to hit it about six years from now, or in 2018, when a huge portion of our population will have reached the right age to become productive, the age when most people actually start looking for jobs.
By that year, supposedly, this country will have something like 45 million in the labor force. As the thinking goes, such a huge work force should offer us a lot of promise for economic growth. We have all the manpower.
According to the Purisima-Tetangco economic tandem, other countries enjoyed rapid economic growth as soon as they reached the “sweet spot” in their population profiles.
What can probably boost our economic prospects some more is the scheduled integration of the 10 fast-growing countries in the Association of Southeast Asian Nations into an economic bloc three years from now, or in 2015. Perhaps the other countries can provide the capital and technology, while we take care of the manpower. Not to mention us being a huge market, of course, what with about 10 million OFWs with spending power!
You see, according to official estimates, among the countries in the region, we currently have the youngest population median age of 22 years. There really is a lot of energy and ambition among the young adults in any country.
It seems that our economic managers precisely want this country to harness the vigor of youth—something missing in the aging populations of Europe and Japan.
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Luckily for us, the “sweet spot” line of economic thinking may be explored—at least in theory—during the annual meeting of the Manila-based multilateral financial institution ADB, or the Asian Development Bank, an event dubbed “Manila 2012.”
The 67 member countries of ADB actually vied to host the event. The last time the Philippines hosted it was more than 10 years ago.
This is really a global conference, attended by central bank heads, finance and economic planning ministers from those 67 member countries, together with officials of other multilateral institutions, civil society, investment bankers, business leaders and the academe.
I gathered that the organizers expect some 4,000 delegates to this year’s ADB meeting to be held at the Philippine International Convention Center.
By the way, the event will also feature the “Philippine Corporate Investment Pavilion,” to be staged at the SMX Convention Center, aiming to give those 4,000 delegates some information on key industries in the Philippines.
Smuggling is not one of them. And so is jueteng.
Anyway, in the ADB annual meeting itself, one of the main topics will be “leapfrogging,” a modern-day term for an economic strategy, designed for a developing country with a strong labor force, purposely bypassing industrialization, moving from an agriculture economy and straight to a service-led economy.
The richest countries in the world actually went through phases in their economic development—agriculture, industrialization and service. Industrialization came about when agriculture became efficient, because they needed to process their farm products. The service sector then developed to support the industrial sector.
The ADB annual meeting, with this year’s theme “Taking the Right Growth Road—Manufacturing and Modern Services,” will look into the trend among developing economies where the service sector provides a strong boost to economic growth.
For instance, what are their prospects alongside the Asian tiger economies, which now include China, by the way, since those highly industrialized countries can be rich markets for the service sectors in the developing countries?
It is said that the globalization of business has allowed countries to export services such as information technologies, biotechnology, call centers and outsourced business processes.
The Philippines caught on the trend earlier on. In fact, the Aquino (Part II) administration claimed that the Philippines had become the world’s biggest call center service provider.
“Leapfrogging,” in other words, may be working for us.
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It is the same strategy that Purisima and Tetangco talked about during the Euromoney conference, and they even added the “sweet spot” in the Philippine demographic that would happen in 2018—the year when our young and able labor force would hit 45 million.
Okay, that “sweet spot” may very well be our last chance to solve the problem of poverty, since we already messed up our manufacturing sector, maimed as it was by smuggling, while our agriculture sector remained in the dark ages.
Still, for us to thrive in the global service sector, we need to invest in education and infrastructure. Really, how do you manage 45 million going to work to call centers all at the same time without mass transport? And since our proficiency in the international business language called English is said to be the main factor in our growing BPO sector, how do we keep on educating our youth if we have a shortage of about 200,000 classrooms?
For us to hit the “sweet spot” and score with the “leapfrog,” our government really has mountains of work to do.
Otherwise, all the talk about our big break in 2018 for high economic growth is just a lot of gloating.