AS we enter the homestretch of the P-Noy administration, there will certainly be discussions on how this administration has performed, particularly in the realm of economics and governance. It would be good to assess this administration from an external and comparative view, rather than just comparing it with past performances.
Along this line, the National Competitiveness Council (NCC) has been keeping track of the country’s competitiveness scorecard. Competitiveness here means many things and essentially it can be summarized as the productivity of a country, based on different indicators. Of the twelve competitiveness reports that it tracks, the Philippines has actually improved in seven from 2011. These are in the Global Competitiveness Report, Ease of Doing Business, Corruption Perception, Economic Freedom; Global Information and Technology, Travel and Tourism, and Enabling Trade Index. The improvements in some of the rankings can be considered substantial as they reflected increases of more than 10 ranks. Since these indices use standards for each indicator therein, results show that improvements within the country (whether in the form of policy or administration) have been observed and recorded in the global environment. At the same time, declines in these rankings also reflect certain weaknesses within the country.
It is also possible that declines may mean that, while the Philippines is improving, other countries are improving better. The country has been faring bad in the aspects of logistics and innovation, where it dropped by five and 10 ranks, respectively. The weaknesses in these reports mirror the actual gaps in infrastructure and education performance of the country. Summarizing the country’s performance from these reports already provides a perspective on how the PNoy administration has performed and it can be said that it has done well.
However, these results are seen mainly from an external perspective. There remains a need to know if these indicators actually represent improvements within the country that are observable and measurable, as well. Hence, in 2012, the NCC, with the assistance of the Invest Project under the United States Agency for International Development , came up with a local competitiveness index. The original idea is to develop a measurement that will allow local domestic product and growth to be measured at the cities and municipalities level.
In the course of the process, what was developed was a local competitiveness index that takes into consideration the parameters being considered in the global rankings. Finding the commonalities among the reports, the framework that was developed zeroed in on three core components of competitiveness in economic dynamism, governance and infrastructure development. Within these components, there were identified indicators that were validated and confirmed with the regional counterparts of the NCC.
In 2013 the first Cities and Municipalities Competitiveness Index (CMCI) ranking was implemented. Being voluntary in nature, about 285 cities and municipalities participated in the first round. The number has increased to 534 local governments in 2014. For the 2015 round, it is expected that about 1,000 local governments out of the total 1,634 local government units will participate. With this number, it is now possible to aggregate results to provincial levels and have provincial competitiveness index, as well. This will bring us closer to the idea of creating indicators that emanates from the local government levels that can be aggregated to provinces, then to regions, then national and, eventually, connect it with our global rankings.
The last three years of implementing the CMCI has proven to be a challenge for the local government units (LGUs). This has brought upon them the need to seriously gather and record data that are collected and available at their level. For example, data on the business registrations, including the gross revenues of firms, jobs created, productivity, among others, emanate from the business permits data. This data can be aggregated to represent the size of the local economy and comparing them into two periods will allow us to estimate growth. Hence, in a way, the indicators already show the local economic growth.
Other than local economic data, the index also requires that LGUs provide data on their governance capacities. Indicators, like local tax revenues and business registration efficiency such as number of steps and time required to register a business and availability of basic services are measured. Finally, the index considers aspects of infrastructure covering roads, connectivity, accommodations, among others. For many LGUs, this is the first time they are seriously compiling these information, which are crucial for local investment locators, as well as for their own measurement of local growth. The 2015 CMCI results will be announced by the middle of July.
Now that a database has been created, the pertinent government agencies, such as the National Economic and Development Authority and the Philippine Statistical Authority can now work in the institutionalization of this process to formalize and further standardized the data being gathered. This will now ensure that growth and competitiveness is nurtured at the local level and can be aggregated to the national level. This will then avoid the comment. “We did not feel the growth.”
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Alvin P. Ang, PhD, is professor of Economics and senior fellow of Eagle Watch, Ateneo de Manila University’s macroeconomic forecasting unit.