Monday, May 11, 2009

Rising above the status quo

Can we be competitive against China, India, Malaysia and Thailand?

There is no question that we Filipinos can match their brain power. (The writer had worked with them at close range for a decade.)

If there is one difference between us and them, it is we have yet to rise above the status quo.

It brings to mind New Europe versus Old Europe – when asked by Americans how they could spend so much time in a cafĂ©, the response was: “We live to eat, which is alien to and why Americans miss the finer things in life.” And the Americans would reply: “But look at how successful McDonald’s is in Paris!”

There was a column about the U.S. ambassador to the Philippines in a local daily; she was in awe about the sophistication of the Filipinos. She had spent time in a couple of other countries and must have a basis for saying so.

Our facility in the English language and being well-informed of developments and events in the rest of the world, our Spanish and American heritage and our love for travel could explain our level of sophistication. (The writer has worked in countries where nuances were lost in translation – which is probably why the Ambassador is impressed with the Filipinos; while doing business appeared inefficient in non-English speaking countries, this seeming disadvantage was more than compensated by their desire for a better life.)

To rise above the status quo we may have to take a piece from the 7 pillars of Western wisdom; and pragmatism is one of them. (See:

We believe we are adaptable people: when the US Armed Forces ran Clark and Subic we would drive like they did while inside the base; when we rent a car in California we do likewise.

And as one columnist put it, in Metro Manila we have to drive like everyone else, i.e., aggressively if not discourteously otherwise we would be left behind.

This attitude is not strange; it is human nature as behavioral scientists in Obama’s camp (pre- and post election) explained in a recent Time magazine article (Obama is using the science of change; April 2, 2009), i.e., people feel comfortable doing what others do.

But this thing that others do may be confined to a local setting like within the country and not beyond. As most Filipinos know, our neighbors have progressed much more than we have yet we have not adopted the things they have done.

In reading how Filipinos view the challenge of change, there seems a common belief that we must fix our educational system. We are in good company; U.S. opinion leaders have been debating education reform for years.

Others say we need better leaders or a different form of government or a different economic model or a different constitution.

It appears we are looking at two things: (a) leadership and (b) structure.

Unfortunately as the writer wrote in an earlier article, leadership in a democracy comes from us; the quality of our leadership is a function of the quality of the pool, meaning us. (See:

And structure comes from both us and our leadership, i.e., our perspective as a people.

The bottom line is: we need to look at us, dig deep into our mind and our heart and our soul and work from there to create the leadership and the structure that we want.

What made the Asian tigers and China? Or more to the point, how did they become economic tigers?

They knew what they lacked and opened their arms to outsiders to provide these to them.

Their educational system has remained the same. Their leadership system is still the same.
Their basic structure is the same.

What has changed then? They have pursued capitalism aggressively with foreigners supplying much needed capital: in the process they gained technology and the know-how that comes with it, world-class manufacturing and the requisite R&D, access to foreign markets and critical skills-set to pull together a more dynamic economic system thus making them competitive in the bigger globalized world.

This is the core of why we are different from our neighbors? Obviously the range of opinions would differ given the variation in our perspectives. If Obama is tapping behavioral scientists to help him get America to embrace his agenda, should we follow his lead?

For instance, behavioral scientists prescribe “unfreezing exercises” whenever groups of people are dealing with the challenge of change. In accounting and budgeting lingo, they call it “zero-based” budgeting. In other words, don’t do incremental budgeting but rather start from scratch. In behavioral science, it means unfreezing thoughts that can render us inflexible. Kids call it generation gap or why we won’t understand them. In fact we call them kids irrespective of age.

Our neighbors have managed to change? What about us? What we seem to be creating are barriers against some present day realities that on the one hand our neighbors chose to embrace.

For instance, we have erected barriers (imposing limitations) against foreign ownership in our schools. Knowledge is power and if we set aside the debate on this issue for a moment, the search for knowledge ought to be expansive not restrictive – which also explains our sophistication; our love for travel has shown us what it is like across the seas, i.e., it is educational.

Many Asian countries have partnered with foreign educational institutions; it has accelerated in the recent past when Western educational institutions embarked on global partnerships and expansion – for instance, Stanford University has ten overseas campuses. Such partnerships are creating a far richer educational environment and providing greater access to contemporary knowledge in many parts of the world.

The point is: we should seek to make our educational system expansive and world class by partnering with world-class educational institutions. And in the same manner that China was flexible with ownership structures in order to attract foreign investors we should focus on getting the best educational institutions over and not start with setting up barriers like ownership restrictions.

Foreign educational institutions may not necessarily want 100% ownership, but our thrust ought to be: to seek knowledge expansion and not impose ownership restrictions.

In an interconnected world we cannot talk of competitiveness from a purely local perspective given our limited resources. And competition starts with knowledge expansion . . . not restriction . . . or confined to internally fixing our educational system.

Competition is also more than brain power. GM and Ukraine are two entities with lots of brain power. We all know about GM. The writer had never met a rocket scientist until he worked with Ukrainians. Rocket scientists were in great abundance in Ukraine. Yet today Ukraine is at the bottom of the economic heap, being propped up by Western institutions lest they crumble given heavy external debt and a collapsed export business – principally extraction industries – on top of their messy politics.

In the Philippines, what we have seen over the years is that shutting out the outside world does not guarantee our economic protection, progress and development. For instance, import-substitution was meant to be temporary or until we become more competitive. Yet today decades later we remain uncompetitive and hence we continue to seek protection.

Seeking protection risks moral hazard or the law of unintended consequences, i.e., humans take the path of least resistance and in the process do not develop the capacity to face greater challenges. It is a self-fulfilling prophesy. Moral hazard is something that we know instinctively or why there are good works that we are not predisposed to supporting.

If positive thinking reinforces positive behavior and outcomes, negative thinking reinforces the opposite?

For instance, what are the implications of the following protectionist elements if in indeed they represent our perspective as a people: (a) imposing barriers against foreign ownership in schools, (b) restricting foreign professionals to practice in the country and (c) continuing to seek protection in trade as spelled out in foreign investment negative list?

We can say that we are gradually putting down these barriers or that unfettered capitalism is unwise to begin with. That may be good sound bite and great intellectual exercise (and sophistication) but how does it translate to economic realities?

China and the Asian tigers took a more pragmatic posture in this regard and the results are quite evident: they did not leave themselves naked and without protection but they were focused on the thrust of their economic plans – aggressively attract foreign investors and be flexible with ownership structures, for instance.

The various restrictions that we put communicate to the outside world that: we don’t trust our educational system, we don’t trust our professionals, we don’t trust our ability to compete in today’s interconnected, globalized world?

That is not the face we want to present to foreign investors? We want to demonstrate and exude confidence: our engineers are world-class, our financial managers are savvy, our accountants can teach their Western counterparts a thing or two, our lawyers represent Fortune 500 and Global 2000 companies; and on and on and on.

How do we begin to look forward? By rising above the status quo and setting our sights higher?

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