Saturday, February 03, 2007

The Philippines and the changing global power equation

A few weeks ago, more than 2,000 leaders from business, politics, academe, media, and civil society will once again meet in Davos, Switzerland for their annual powwow. Many of us probably dismissed it as just another junket for those who control the levers of global power, but this one is special and we should watch it closely. For the first time, these people—the elite of the elites of the brave new global order—are going to admit officially that indeed the world’s power relations are changing and we are in for a more exciting and probably challenging world.

This year’s theme is all about “the shifting power equation” which offers a lot of promises as well as challenges to the global economy. Among these changes they will talk about are the growing prominence of the emerging economies that include China, India, and many other fast-growing countries in the Asia-Pacific Region; the increasing economic and political clout of producers of commodities (e.g. oil, gas, coal, iron ore, among others); the enhanced voice of individuals over institutions, and the rising role of consumers over producers. They are going to talk about new economic drivers, the impact of technology on society and business in a world that is increasingly so interconnected.

Somehow the forces of change discussed there now are fast transforming us. If we are to take advantage of the emerging opportunities in the brave new global order as well as cope with its challenges, we need to understand these processes.

Ten years ago, electronics and semiconductors accounted for only 42 percent of the country’s exports with farm-based products like coconuts, pineapples, bananas, tuna, seaweeds, and baskets having significant percentages. Today, manufactures account for 86 percent of the country’s exports, the bulk of which are electronics and semiconductors. Farm-based products now account for only 4 percent.

Ten years ago, 36 percent of our exports were purchased by the Americans, such that we would always a catch cold, nay severe influenza, when America sneezed. When combined with our exports to Japan, Netherlands, Hong Kong, Great Britain and Germany, more than 70 percent of our exports were purchased only by seven countries. Doesn’t this look like the classic neocolonial dependence? China and India were not even listed among our markets.

Today, America only accounts for 18 percent of the country’s exports. China is now our third largest market next to Japan. Suddenly we can see our friends in the Asean buying about 17 percent of our products. The rest are accounted for by Europe and the rest of the world. What we see here is a diversified export market for Philippine products, a trend that should lessen our vulnerability to external shocks such as a possible slowdown in the US economy. Uncle Sam may sneeze but we don’t have to land in intensive care because the world seems to have developed the capacity to adapt to the fast-changing environment. Of course, compared to 10 years ago, the Philippines has more growth drivers, foremost of which are the dollar remittances, electronics, agribusiness, mining, business and process outsourcing—all connected to the changing dynamics of the global economy.

Of course, there are challenges as well and the forces of change under way are going to highlight these problems if our leaders remain oblivious to this global transformation. For instance, the increasing globalization of business and economic activities suggest that job creation would largely benefit the highly educated and skilled ones who coincidentally mostly belong to the higher social strata. It’s going to accentuate the obsolescence of our education system and heighten the frustrations of those who want to take advantage of global economic opportunities but cannot yet do so for lack of the right skills and capabilities. In effect, these global forces of change could potentially polarize society if the country’s leaders continually forgo much-needed reforms.

Well, this problem is already here. Notice the changes in the urban landscape brought about by outsourcing. Certainly, the ranks of the middle class are growing with the mushrooming of cyberservices in our midst. Notice the steady rise in the sales of cars and condominiums. These changes may offhand make one feel that something good is on the way, that there are lots of reasons to be optimistic about the future. And yet, and yet, some alarming signals need urgent attention and action: for one, joblessness is not improving. That’s because the poor unskilled boys and girls from the slums don’t have the Ateneo accent and the spunk—not to mention the pricey training cost, averaging P30,000, to get into medical transcription. Their only chance to partake of the bounties from outsourcing would be through selling pirated DVDs along Ayala Avenue during night time, the earnings from which would never give them a decent living. Worse, that high-risk job could land them in jail.

Those who abhor globalization per se tend to take comfort in the fact that the Doha Round of trade negotiations is almost dead. The truth is that what really drives globalization are the continuing breakthroughs in logistics and transport technologies. Globalization therefore will move forward like an unstoppable force putting greater stress on our domestic policies on transport, communications, shipping and port operations. We will soon realize that the continuing oligopoly in these sectors, nurtured by the dirigiste policies of the past, is hurting us more than benefiting the blessed few. But reforming these sectors would also prove a challenge especially for political leaders of this country.

These days, one major problem confronting the body politic is the utter lack of legitimacy of many of our political and social institutions. Old-style politics of patronage and corruption partly explains this. But the greater speed of information flows brought about by the Information Revolution is another explanation. Unless our political institutions undergo reforms, this rising voice of the empowered individuals, mediated by technology, are likely to create more schisms in the political system.

Yes, the agenda of reform in Davos is our agenda as well, even though the lifestyles of the rich and powerful may seem so far removed from our daily lives. Those who are there are as scared as we are of not being able to ride change. The one great leveler, therefore, is our having greater passion in understanding—nay, anticipating—the nature and impact of this change and transforming it to our benefit. Sounds like a tall order but it’s the only way to go.

No comments: