RP economic growth tends to become domestic-led than export-driven
Cagayan de Oro City (11 September) -- The nation's economic comeback shows the kinds of remedies that struggling developing nations must consider to compete in the global economy.
Thus, following China's rise as a manufacturing power, the nations of Southeast Asia, once one of the world's most popular manufacturing hubs, have been trying to make themselves more attractive to foreign investors and markets.
"The whole region is going through the same process and it's all in response to China," says Luz Lorenzo, an economist who covers the region for ATR-Kim Eng Securities Inc. in Manila. "But how do these countries survive China?" she asks.
Many problems remain in the Philippines. One of the richest countries in Asia before world War II, our country saw its economy deteriorate during the decades of misrule, punctuated by military coups and economic mismanagement.
Pres. Gloria Macapagal-Arroyo, herself, has survived two attempts by military officers to grab power. The country has called in the US military advisers to help tackle a persistent Islamic insurgency and it continues to be criticized widely for human-rights abuses and corruption.
Meanwhile, the recent economic progress could be undermined by problems that have long plagued the economy as the country has a legacy of crony capitalism that has left former associates of the late Pres. Ferdinand Marcos in powerful positions in the business sector.
Political analysts say Ms. Arroyo must avoid spending the growing tax receipts on unnecessary projects that benefit her own political supporters and questions remain about the government's ability to collect corporate taxes.
Moreover, the Philippine economy is heavily dependent on exports, which account for around 40% of its gross domestic product (GDP).
A significant economic slowdown in the US could harm that sector. But economists contend that domestic investment and demand has become a more important driver of the economy and could help buffer it from global economic problems.
"The growth story here is changing from one which is export driven to one which is domestic led," says Lorenzo. (PIA 10) [top]