The Philippines moved up five notches to rank 47th out of the 140 economies assessed for the World Economic Forum’s Global Competitiveness Index 2015-2016 on the back of the country’s favorable macroeconomic environment, capacity for innovation and business sophistication.
The new ranking placed the country in the top third of the global competitiveness survey, a year ahead of the target set out by Philippine agencies.
Despite the improvement, however, the conduciveness of the country’s business environment continued to be hampered by “problematic factors.” The WEF competitiveness survey identified these as inefficient government bureaucracy, inadequate supply of infrastructure, corruption, complexity of tax regulations and high tax rates.
Other factors that posed hurdles for businesses to flourish included policy instability and restrictive labor regulations.
The WEF’s Global Competitiveness Report is an annual publication that measures productivity and competitiveness by gathering statistical and survey data on 113 indicators that capture concepts that matter for productivity. These indicators are grouped into 12 pillars, namely institutions; infrastructure; macroeconomic environment; health and primary education; higher education and training; goods market efficiency; labor market efficiency; financial market development; technological readiness; market size; business sophistication; and innovation.
These are, in turn, organized into three sub-indices in line with three main stages of development, namely basic requirements, efficiency enhancers, and innovation and sophistication factors.
Based on the 12 pillars, the Philippines recorded an overall score of 4.4, which was the same from the last year’s competitiveness index.
According to the GCI results, the Philippines had the highest ranking at 24th place under the macroeconomic environment pillar, followed by market size pillar at 30th place, and business sophistication at 42nd place (state of cluster development, value chain breadth, production process sophistication, among others).
The Philippines ranked 48th place under the innovation pillar, which talks about the country’s capacity for scientific research and development; 48th for financial market development; 63rd for higher education and training; 68th for technological readiness; 77th for institutions, which measured property rights, intellectual property protection, diversion of public funds and public trust in politicians, among others.
Among the lowest rankings were in the goods market efficiency pillar at 80th (intensity of local competition, extent of market dominance, effectiveness of anti-monopoly policy); in labor market efficiency at 82nd (flexibility of wage determination, hiring and firing practices), and health and primary education pillar at 86th place.
The lowest ranking was in infrastructure, wherein the country placed 90th. This measured the quality of roads, railroad, port and air transport infrastructure, among others.
Compared to its neighbors in the Asean, the Philippines had the fifth-highest ranking in the WEF GCI after Singapore, which placed second; Malaysia (18th place); Thailand (32nd); and Indonesia (37th). Vietnam placed 56th.
Overall, the WEF GCI identified Switzerland as the most competitive economy, followed by Singapore, United States, Germany and Netherlands. Rounding up the top 10 most competitive economies were Japan, Hong Kong SAR, Finland, Sweden and United Kingdom.
“Seven years after the global financial crisis, the world economy is evolving against the background of the new normal of lower economic growth, lower productivity growth and high unemployment. Although overall prospects remain positive, growth is expected to remain below the levels recorded in previous decades in most developed economies and in many emerging markets,” the WEF report said.
“Growth prospects could still be derailed by the uncertainty fueled by a slowdown in emerging markets, geopolitical tensions and conflicts around the world, as well as by the unfolding humanitarian crisis. At the same time, some positive developments—such as the rapid diffusion of information and communication technologies (ICTs) giving rise to new business models and revolutionizing industries—bear great promise for a future wave of innovations that could drive longer-term growth,” the report further stated.