Transcript A Note on International Competitiveness

Comments on Trade, Inclusive
Growth and Inclusive Policy
Making by P. S. Intal, Jr.
Josef T. Yap
Philippine Institute for
Development Studies (PIDS)
9 December 2008
Record of Trade Liberalization
Share of Manufacturing Sector in the GDP
China
Indonesia
Malaysia
Philippines
Thailand
Viet Nam
1980
43.47
12.97
20.70
25.70
21.51
16.09
1985
38.00
17.81
21.10
25.15
21.92
16.39
1990
35.45
23.03
24.22
24.83
21.52
12.26
1995
39.47
26.90
26.38
22.99
25.20
14.99
2000
40.54
27.75
32.60
22.49
33.59
18.56
2006
43.1
28.0
29.8
22.9
35.1
21.3
Development Has Lagged
Gross domestic product based on purchasing-power-parity (PPP)
per capita, current international dollars
China
Indonesia
Malaysia
Philippines
Thailand
Viet Nam
1980
252.382
727.179
2,353.10
1,248.56
1,090.44
299.613
1985
503.02
1,059.86
3,425.11
1,335.07
1,646.27
491.986
1990
795.913
1,537.79
4,837.74
1,750.42
2,901.23
656.97
Source: IMF World Economic Outlook Database, April 2008
*IMF Estimates
1995
1,512.37
2,262.57
7,513.25
1,979.16
4,679.26
1,007.80
2000
2,372.14
2,435.31
9,062.08
2,333.09
4,950.67
1,419.90
2007*
5,292.02
3,724.54
13,315.08
3,377.52
7,900.24
2,586.63
Poverty Record is Disappointing
Poverty and Inequality in East Asia
Population in
Proportion of
Poverty
Population
(in percent)
Below $1
(PPP) a Day
2002-07
(%)
2002-06
Gini
Coefficient
China
2.50
10.80
0.47
Indonesia
16.70
7.70
0.34
Malaysia
5.10
0.00
0.40
Philippines
30.00
13.20
0.44
Thailand
9.80
0.00
0.42
Viet Nam
19.50
8.40
0.37
Source: Asian Development Bank Key Indicators, 2007
Why Has Trade Liberalization
Failed in Many Aspects?
• EXCHANGE RATE POLICY NOT
SUPPORTIVE
• Rodrik, D. (2008): “The Real
Exchange Rate and Economic
Growth”. Downloaded from
http://ksghome.harvard.edu/~drodrik/R
ER%20and%20growth.pdf (October).
Why Has Trade Liberalization
Failed in Many Aspects?
• Lack of a Strategic and Coherent
Industrial Policy
• Memiş, E. and M. F. Montes (2008):
“Who’s Afraid of Industrial
Policy?” Discussion Paper, Asia
Pacific Trade and Investment Initiative,
UNDP Regional Centre in Colombo
(May).
Why Has Trade Liberalization
Failed in Many Aspects?
• Poor physical infrastructure
Roots in the country’s external debt
policy and weak tax effort
• Weak institutions and poor
governance
Why Has Trade Liberalization
Not Been Inclusive?
• Spotty record in improving human
capital
• Lack of Safety Nets
• Labor market institutions,
industrial relations
WHAT CAN BE DONE?
Main recommendation: Inclusive
Policy Making
• “An approach to ensuring that policies
and strategies take into clear
consideration the impact of such policies
on disadvantaged groups, operationalize
social integration of previously
marginalized groups, and to enhance
citizen participation in governance”
• Q: Isn’t this DEMOCRACY?
Main recommendation: Inclusive
Policy Making
• Q: Why haven’t democratic
institutions worked in the
Philippines?
• Q: Why are institutions weak?
• Q: How does one strengthen
institutions?
INDUSTRIAL POLICY
• Review our tariff rates vis-à-vis
WTO bound rates
• Mining-Manufacturing Link
• Competitiveness of Firms
ASEAN’s COMPETITIVENESS GOAL
• Transform their economies from mass
production-based ones relying on
unskilled or semiskilled labor to
knowledge-based ones. Knowledgebased economic activities comprise
R&D, product and service design, high
value-added skills processing and
marketing for the domestic, regional
and global market places (Ariff 2003 as
cited by Yamazawa and Hiratsuka, 2003)
Strategic Industrial Policy: Main
Areas
• Human Resource Development
• Technological Capability and
Skill Development
• Physical Infrastructure
Enhancing Technological
Capability through Regional
Cooperation and Integration
• Fostering local firms/entrepreneurs:
e.g. Local Industries Upgrading
Program; New age economic
agreements, e.g. JPEPA
• Focus on SMEs
Main Elements of Fragmentation and
Agglomeration
Main Elements of Fragmentation and
Agglomeration
 Emphasis should be at the subnational level
 Involve local governments
 Islands of excellence should lead
the way
너를 감사하십시요
Maraming Salamat!!!
Terima Kasih
ขอบคุณครับ
ありがとう
Cảm ơn rất nhiều
ຂອບໃຈຫລາຍໆ
謝謝你。
THANK YOU !!!