Philippines: Cellar-dweller, as usual

CEBU, Philippines — Last month, our country was again associated with poor performances. We were 91st out of 130 countries included in the Global Opportunity Index (GOI). GOI is designed by the Milken Institute (MI) “to assist investors seeking opportunities outside their local markets, as well as countries intending to improve their business environments.”

There are 100 indicators and these are classified into five categories: Business Perception, Economic Fundamentals, Financial Services, Institutional Framework, and International Standards and Policy.  The countries’ performances in the GOI have been used by investors in deciding where to put their money.

The fact is, the GOI, according to MI, “remains a strong predictor of capital movements 10 years after its inception.” That the “index alone explains 64.7 percent of the variation in per capita foreign direct investment (FDI) inflows and 51.7 percent of per capita portfolio inflows to countries across the world,” it added. Clearly, therefore, it means that a better index results in higher FDI and poorer performances mean it will come in trickles.

Well, sadly, that’s the way the world saw us to be for decades now, a poor performer. To recall, in 2021, our dear country (ranked 134th out of 134 countries surveyed) was dead last in Global Finance’s ranking of the world’s safest countries. Simply put, we were the most unsafe of all countries included in the survey which takes into account three fundamental factors.  These factors are war and peace, personal security, and natural disaster risk (including the unique risk factors stemming from Covid-19).

In this survey’s 2019 iteration (the same factors considered but without the influence of Covid-19), we were likewise dead last out of 128 countries included in the survey.  Probably, we should ask Global Finance (GF) to include Syria and Afghanistan in the future surveys to make sure that we won’t become the perennial cellar-dweller.

Also, in the same year 2021, the World Bank (WB) released its findings that “Filipino students are not meeting the learning standards for their grade level.” Its study revealed that “80% of students do not know what they should know" for their level.

Yes, probably, there were initiatives that may have addressed some deficiencies, yet, the fact remains that there is really something wrong with our education system. Lest we forget, according to the Trends in International Mathematics and Science Study (TIMSS) 2019 by the International Association for the Evaluation of Educational Achievement (IEA), our Grade 4 students scored 297 in math and 249 in science, just enough to land 58th place among 58 countries that participated. Simply put, we were dead last.  Another cellar-dwelling performance.

There are at least two key takeaways from these developments. On being among the bottom dwellers in the GOI and the most unsafe among 134 countries in the GF survey, the repercussions should include foreign investors’ appetite towards us. Will there be an investor who will pour his money into a country whose business environment is unpalatable? Or, worse, globally perceived as unsafe? He must be insane if he does.

On our education sector’s performance, the consequences could also spell trouble. For one, its effects can last for years. Just imagine those who were in grade 4 in 2019, whether they finish school (be it in senior high or college), will they be ready for the industries’ needs by then? If not, then productivity suffers. Therefore, we won’t be surprised if by then, we will become cellar-dwellers again in a global productivity survey.

Moreover, we are known globally as exporter of labor. Prior to the pandemic and right after, we’ve been raking in billions a month in OFWs’ remittances. Known spenders, OFWs’ beneficiaries’ (spending) habits said enough to our economy which is 70% consumption driven.  However, if we cannot overhaul our education system, soon enough, we will be producing inferior graduates. Therefore, our labor exports will take a hit.

Remember, other populous countries are emulating us. They try to learn English and are likewise exporting labor. Therefore, if we won’t do anything, our graduates, by then, will be less competitive. Consequently, those dollar remittances will certainly dwindle. If there are no other major economic activities that will sprout by then, our economy will certainly suffer.

To reemphasize, having these poor performances (GOI, GF’s survey, WB’s report and TIMMS 2019) means continuing anemic inflows of FDIs and potential loss of dollar remittances in the future. So, where are we headed to?