Thursday, November 7, 2013

Philippine economic growth: mere ILLUSION

Lets be clear: the rise in the stock market IS NOT AN INDICATION OF ACTUAL INCLUSIVE GROWTH. The phenomenon is based on so-called "hot money" being pumped in to fuel the real estate boom, low-end BPO service jobs, and retail. None of these sectors produce long term sustainable growth. Worse, the money could be pulled out by investors and re-invested in other markets outside the country at any time. The Philippines still lacks the required elements for real growth such as a robust manufacturing sector. WE DO NOT PRODUCE ANYTHING OF REAL VALUE. Instead, the local economy is propped up by consumerism, funded by OFW remittances. It is precisely because of this that the Philippines remains unattractive to foreign investment. Much of the FDI money avoids Manila and finds its way to Indonesia, Malaysia, Vietnam, Thailand, and now Myanmar.

Incidentally, the claim that the Philippines is outstripping its neighbors is hogwash. Just take the case of Indonesia. While the Philippines has undergone its boom-and-bust cycles, Indonesia's TRILLION DOLLAR economy grows at a steady 6% per year. More people want to do business with Indonesia as well as other ASEAN countries compared with the Philippines. Since the 1990s, Indonesia about doubled the FDI it received; in Thailand, it quadrupled. Since BS Aquino took office, FDI actually DECLINED for the period 2010-2012. We currently attract the SMALLEST amount of FDI among the five largest ASEAN economies.


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