Positioned for economic takeoff

If you look at the ongoing large-scale disruptions in the global economy through a strategic, opportunistic lens, there’s reason to think that our economy could be at a turning point to finally break out of decades of false starts and booms and busts. To be sure, self-inflicted roadblocks remain in the way of our getting there. But precisely because these are self-inflicted, they are within our control, and we can conceivably clear these obstacles, provided that we work hard together in unison to do so. Now, more than ever, we need the UST (unity, solidarity, and teamwork) that former President Fidel V. Ramos widely preached in the 1990s as the critical factor if our national boat is to surge forward and stop moving in circles by rowing in different directions.

Looking back, we’ve had several false starts and boom-bust cycles since gaining self-rule after World War II, when we emerged as the second-richest economy (i.e., with the second-highest per capita gross domestic product) in Asia, after Japan. But boom-bust cycles began to bedevil us in the 1950s to early ’60s, then in the 1970s to early ’80s, the 1990s, the 2000s, in 2010 onward, and in the postpandemic surge until last year’s slide. The busts came from debt-induced balance-of-payments crises in the late 1960s (fueled by former President Ferdinand Marcos Sr.’s overspending for his reelection) and again in the mid 1980s (deepened by the assassination of former Sen. Benigno Aquino Jr.); the Asian financial crisis in 1997; the world financial crisis in 2008; and the pandemic in 2020. Through most of those ups and downs, our neighbors somehow consistently surged ahead, passing us one by one, and now leaving only Cambodia, Myanmar, and Laos trailing us.

Where we missed out was in industrializing our economy the way the “Asian Tigers,” South Korea, Taiwan, Singapore, and later Thailand, Malaysia, Indonesia, and Vietnam did. Their turning points happened in the 1960s for Taiwan, South Korea, and Singapore; in the mid 1980s for Thailand and Malaysia; and in the late 1980s for Indonesia and Vietnam. We started calling ourselves a “Tiger Cub” in the 1990s, but true to our boom-bust history, lagged again in the 2000s, by which time Indonesia overtook us in per capita GDP, and then Vietnam in 2020. Our latest false starts began around 2010, and then, with the pandemic recovery in 2021, but last year saw the industry sector end with a fourth-quarter decline.

So what makes me think our economy is well-positioned for takeoff? I can give at least five reasons.

One, global trade disruptions caused by the Trump tariffs, rising wages in China, and now the Iran conflict, have put global value chains in flux and are opening opportunities to position ourselves for wider and deeper involvement and integration within them. In a global economy being fragmented by geopolitical dynamics, US, Japanese, and European firms prefer to locate production in countries seen to be politically reliable partners, which the Philippines can well position itself to be. Two, we have a demographic advantage of having an abundant young English-speaking workforce, traditionally and widely known as caring, hardworking, productive, creative, trainable, adaptable, and resilient.

Three, we are endowed with exceptionally rich natural resources to feed manufacturing industries, most needed in a world increasingly distrustful of synthetics and attracted to more natural and environmentally friendly products. Four, our geographical advantage as a logical gateway to Asia from the Pacific side promises strong potential as a naval transshipment hub and maritime center, especially with the ports in Kaohsiung and Singapore already facing capacity constraints. Five, global and regional trends, including aging populations, ever-increasing demand for medical and wellness facilities, and continuing reliance on outsourcing—are distinct opportunities that the Philippines has been well equipped and well positioned to meet.

But all these won’t just fall into our laps and assure our industrialization and rapid economic growth in the years ahead. There is so much we must do differently for our takeoff to finally happen. The Asian Tigers and our dynamic Asean peers had certain things in common when their own takeoffs commenced, which we must emulate as a minimum: an aggressive export-oriented industrial policy; large-scale investment in industrial zones and supporting infrastructure; strong investment in quality education; and a consistent, stable, and predictable governance environment. The first requires a dramatic turnaround from a historical populist, inward-looking, and protectionist economic policy regime; the others require proper and convincing resolution and closure to our ongoing massive corruption scandals, and even more difficult, greater political maturity among our electorate and the politicians we put in power.

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