The Philippines marginally improved its ranking by one notch to 41st from 42nd in the 2017 World Competitiveness Yearbook (WCY) among 63 countries as its impressive economic performance failed to offset declines in business and government efficiency categories.

With the very small improvement, the Philippines’ 2017 ranking matched went back to its ranking in the 2015 WCY edition and adjusted accordingly its place among Asia-Pacific Economies to 11th from 12th in 2016.

fiscal-reforms tax

WCY, which is published by the International Institute of Management Development (IMD) since 1989, analyzes and compares the ability of countries to provide efficient structures, institutions, and policies that allow enterprises to compete domestically and internationally.

In the 2017 report, the economies were evaluated across 346 criteria in four broad categories: Economic performance, government efficiency, business efficiency, and infrastructure. The WCY uses both macroeconomic data and perceptions-based indicators in ranking the competitiveness of countries.

The Philippines’ performed best in the economic performance as its rank soared 12 places to 26th in 2017 from 38th in 2016.

This improvement was largely driven by a jump from 31st to 12th in the Domestic Economy subfactor, led by robust GDP growth, as well as improvement in the Employment sub-factor from 19th to 4th. Notably, the Philippines ranked 3rd in both real GDP growth and resilience of economy, but placed near bottom of the rankings in GDP per capita.

But more than GDP and productivity, national competitiveness encompasses the political, social, and cultural environment in which enterprises operate. The competitiveness of a nation and its enterprises enables sustainable value creation and prosperity not only for enterprises but for the people.

This year, the country faltered in Government and Business Efficiency, factors that are essential for sustainable value creation and long-term  competitiveness. Laggard improvement in Infrastructure also weighed on the country’s overall ranking.

This was reflected in its Government Efficiency ranking which declined from 36th in 2016 to 37th in 2017. While the country rose nine places in the Public Finance sub-factor, from 34th to 25th, this could not make up for drops in the sub-factors for Tax Policy (15th to 18th) and Societal Framework (43rd to 51st).

The Philippines also performed well in the criteria for central bank policy (2nd), but continued to lag behind in terms of start-up procedures and other criteria covering ease of doing business.

Notably, the rankings for Business Efficiency likewise saw the Philippines slip, from 24th in 2016 to 28th this year.

Drops were registered in the sub-factors for Productivity and Efficiency (36th to 52nd), Labor Market (4th to 5th), Management Practices (24th to 28th), and Attitudes and Values (12th to 18th),  while the country rose from 35th to 33rd in Finance.

The Philippines placed highly in skilled labor, flexibility and adaptability, and national culture. On the other hand, the country placed 62nd in both overall productivity and labor productivity.

Finally, the country continued to perform poorly in Infrastructure despite going up one place in 2017, from 55th to 54th.

The Philippines’ ranking has fluctuated in the ’40s, with sporadic jumps to the high ’30s for most of the past two decades.

Overall, most of the improvements in ranking were driven by data-based  indicators, while decreases were mostly accounted for by perceptions-based factors.

Hong Kong topped the 2017 competitiveness rankings, with Switzerland, Singapore, The United States, and the Netherlands completing the top five.

In the bottom of the ranking are several economies undergoing political or economic upheavals, including Venezuela, Brazil, and Ukraine.


Manila Bulletin

1 June 2017



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