Philippines urged to shift resources to exports, services
MANILA, Philippines—Philippine economic growth can only happen if country resources were shifted from low-productivity sectors like agriculture, pulp and paper to high-productivity export manufacturing and services.
This is according to Mastercard Worldwide Global Economic Advisor Dr. Yuwa Hedrick-Wong, who was in the country recently for an economic briefing.
Yuwa shares that by sector, Philippine real GDP growth from 2008 to 2011 averaged 22.6 percent for agriculture, 31.3 percent for industry and 46.1 percent for services.
He said that the findings were analogous to indicators in other regions that show that labor productivity in agriculture can be as low as 2 percent compared to 19 percent for manufacturing, despite a similar level of people skill and education.
Capitalize on manufacturing
Very recently, quite a number of factories migrated from China to Vietnam and other lower labor-cost countries due to China’s escalating labor cost.
If the Philippines can grab manufacturing contracts equal to at least 1 percent of China’s labor force, this would mean 3.2 million local Philippine jobs, says Yuwa.
Moreover, Yuwa stresses that China is no longer just a manufacturing hub.
In 2010, China became one of world’s largest investors with $144 billion sunk into other countries.
Thus, it is likely that China will migrate from manufacturing to more high-yielding industries and services.
In 2010, China’s direct investment in Vietnam is equal to 1,050 manufacturing firms affiliated with Chinese-owned firms.
Skills, tradable services
Switzerland is a great example of a landlocked country having one of the world’s highest per-capita income rooted on manufacturing and highly specialized labor.
Among the world’s biggest brands and manufacturing plants based in Switzerland are Nestle for food processing; Novartis for pharmaceutical products; Samafil for roof coating; Sika AG for construction, automotive and transportation; and Nokia Siemens for communications and technology.
Switzerland, with a population of only 7.6 million compared to China’s 1.34 billion, is proof that population is not a guarantee or a detriment to economic growth, but skilled labor remains a key to economic progress.
Both have capitalized on manufacturing and tradable services, and the Philippines is urged to follow suit.
E-mail at [email protected].
