Transcript Critical reading and writing in the task

“Impact of ASEAN 2015 to
Inclusive Growth and
Development in the
Philippines”
ALVIN P. ANG, Ph.D.
Senior Fellow, Eagle Watch and Professor
Department of Economics, School of Social Sciences
Ateneo de Manila University
Outline
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Defining inclusivity
Contextualizing Inclusivity in ASEAN
ASEAN integration as a route to inclusivity
Philippine context
Conclusions
What is Inclusivity?
• Equity, Equality of Opportunity, Protection in
Markets and Employment Transitions
(Commission on Growth and Development,
2008)
• Raising the pace of growth and enlarging the
size of the economy by providing a level
playing field and increasing productive
employment opportunities (Ianchovichina
and Gable, 2011)
Inclusive Growth
• Difficult to quantify as indicators as
separately analyzed as an issue of
inequality and an issue of growth
• Thus, inclusivity means that economic
growth and reducing inequality are
happening at the same time
ASEAN Community 3 Pillars
The AEC from a broader lens
The need for integration!
ASEAN 2015
ASEAN 2015 is
Not an emerging
Problem but a
Validation of the
Region’s integration!
It is a world of
Integrating
intermediate
Goods!
Production of a
Hard drive
ASEAN 2015
The ASEAN integration process is intended
to address:
• Core issues: Small market, transactions
costs, policy consistency and stability
• Domestic issues: especially related to
priority integration sectors
ASEAN initiatives on Inclusive
Growth
• The ASEAN Framework for Equitable
Economic Development (3rd sub Pillar)
– Recognized the need to narrow
development gaps within and between
Member States, better access to opportunities
for human development, social welfare and
justice and more inclusive participation in the
process of ASEAN integration and community
building
…ASEAN initiative…
• Target policies to promote sustainable
growth and providing equal opportunities
irrespective of income, gender and size of
enterprise
• Connectivity among member states
through physical infrastructure, human
capital mobility, technology transfer and
access to markets
ASEAN Challenge
• Most achievements in AEC are in the 3 sub
pillars.
• Equitable Economic Development pillar
focuses only on SME Development and
Initiative for ASEAN Integration (IAI)
• Inclusive growth will require more deliberate
individual country efforts that integrate and
connect with other member countries.
ASEAN Challenge
• Integration seems to be the best option to
achieve Economies of Scale for the region
– however access to opportunities and
gain are not certain.
• Integration may require regional identity –
which is not present in the region that has
no common religion, language and a
single land mass (Daniel Wu)
Key to ASEAN Inclusive Growth
• Not to insist on a regional redistribution
policy, but for each member country to focus
on ensuring domestic capacities to harness
competitive advantages
• ASEAN can review the development gap and
tap public private expertise to execute
assistance policies related to institution
building, human capital development,
infrastructure and finance.
Building Up – Trade capacities
• Right policies – necessary conditions
• Institutional framework to implement right
policies – sufficient conditions.
• Institutions include culture, political
structure allowing for economic policies
and institutional policies to work together.
• Effective use of investments is another –
requiring the shift of dependence from
international sources to domestic sources
2 levels
• Domestic openness to trade and investments
– Domestic reforms leading to inflow of FDI including
other technologies and skills>increase
competitiveness of domestic production>trade
promoting production> giving rise to further increase
in FDI>high economic growth
• Regional openness from one group of economies
to another
– Countries following openness lead to regional division
of industrial labor and stopping competition among
countries with same production- complementary vs
competition>intraregional investment and trade
Philippine Example
• Minimizing gap require higher economic
growth and direct policies that close nonincome gaps.
• Philippine growing robustly above the 5%
generational growth since 2010 but
continue to have poverty rates of close to
25%.
• Threats due to uncertain global
environment and natural disasters
Investment Grade
• Philippines continue to receive good marks
Growth can be internally financed
30%
Direct investment
as % of GDP
25%
Gross domestic
capital formation as
% of GDP
20%
15%
Gross national saving
as % of GDP
10%
OFW Remittances as
% of GDP
5%
0%
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
-5%
Portfolio
investment as % of
GDP
GDP Contribution per industry
140,000
Other Services
120,000
Public Administration
R. Estate, Renting &
Business Activities
Financial Intermediation
100,000
80,000
Trade and Repair
Transport, Storage &
Communication
Electricity, Gas and Water
Supply
Construction
60,000
40,000
Manufacturing
20,000
Mining & Quarrying
0
1q14
4q13
3q13
2q13
1q13
4q12
3q12
2q12
1q12
4q11
3q11
2q11
1q11
4q10
3q10
2q10
1q10
4q09
3q09
-40,000
2q09
1q09
-20,000
Fishing
Agriculture and forestry
Top Exports and Imports
Exports
Share
Imports
Share
Electronics
Clothing
Furniture
Wiring
Copper
Bananas
Tuna
58%
4%
3%
2%
2%
1%
1%
Electronics
Fuel
Transport
Food
Machinery
Chemicals
Iron
35%
22%
5%
5%
4%
2%
3%
Employment Structure
100%
90%
80%
70%
60%
50%
Services
Manufacturing
40%
30%
20%
10%
0%
Agriculture
Poverty Incidence Remains a
Challenge
60.00
50.00
40.00
30.00
20.00
10.00
0.00
2012
1991
2006
2009
Poverty Highest in Low Economic
Activity Areas
60.0
50.0
40.0
Share to GDP
Poverty Incidence
30.0
20.0
10.0
-
Connecting Domestic Inclusivity
to ASEAN integration
• Consider the priority sectors that match our
inclusivity issues! i.e. Agriculture and Tourism
• firms that gain from market expansion & improved
competitiveness will definitely gain
• POTENTIAL BENEFIT - increased FDI, wider
market access for Philippine firms and their
products, lower input costs, lower
transactions costs, better quality goods &
services at lower prices for consumers
Philippine Products in Jakarta
Supermarket!
Philippine Responses (DTI)
1. Sustain current revenue streams in IT-BPO,
semicon-electronics
2. Pursue SME countryside growth (coffee, cocoa,
processed food, coco coir, etc.)
3. Develop new revenue streams (clinical services,
animation, software and game development)
4. Recapture sectors (apparel, footwear, travel
goods, auto-parts, electronic manufacturing)
5. Revisit backbone sectors (copper downstream,
chemicals, iron and steel)
Challenges
• Our SME sector is facing the following
challenges (DTI):
• Lack of access to finance, technology,
skilled labor, inability to comply with
standards
• Weak linkages to high tech sectors
• Penetrating export market a major
challenge
Philippine Overall Strategy
• Growth Strategies to have SPATIAL and
SECTORAL dimensions to ensure
inclusivity (NEDA, 2014)
• Geographical convergence of living
standards must have an integrated, locally
anchored service delivery…(PHDR 2013)
Inclusive Response
• Response must be area specific…eg
provinces with high proportion of poor
requires social assistance programs, while
those prone to hazards must have social
insurance and income diversification
• Create sectoral outcomes eg agriculture –
improved food security, finance – expanded
access, environment – sustainable and
climate-resilient economy
PIDS Recommendations
• Capacity building is crucial
• Compliance with standards – need for
education, information, technical support
• Setting up accredited testing laboratories
• Catering to SMEs
• Align domestic laws and regulations with
ASEAN commitments.
• Need for greater information and education
campaign
Conclusion
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Work outside and Build inside!
Ensure external commitments can be met
DTI-led road map must be area specific
Commitments to be clear to the national and
local bureaucracy
• Inclusivity requires the participation and
responsibilities of LGUs
• Reconsider our agricultural policies and
strategies
ASEAN tariff
• Zero import duties – potatoes, vegetables,
spices, ingredients, sauces, coffee (for
rice, 40 to 35% and sugar, 10 to 5% in
2015)
• We may have protected the agricultural
sector too much at the expense of sending
people abroad.
Challenge localities to be
Competitive
localities
The FINAL WORD….
GET READY TO COMPETE!
Isaiah 54:2-3 (NIV) Enlarge
the place of your tent,
stretch your tent curtains wide, do not hold back;
lengthen your cords, strengthen your stakes. For
you will spread out to the right and to the left…
Thank You and God bless!
www.angalvin.com
Twitter: @angalvin