Saturday, July 2, 2016

Paying a heavy price for insular worldview

We may or may not realize it but our underdevelopment and the poverty we’re constantly harping on stem more from our insular worldview? For example, even our biggest enterprises are after OFWs both at home and abroad. And if we put that side by side with the efforts to raise our competitiveness, what chance do we have to deconstruct – figure out and get a good handle on – the demands of global competition if our mindset is to cater to our own – and not to learn about the wider regional if not global market?

In fairness to the Aquino administration, including the Department of Agriculture, from the get-go it worked on a number of road maps. We now have a new administration and it appears we need more work on these road maps. How do we diversify agriculture exports, for instance?

“The Duterte government will harness what previous administrations have failed to tap – ‘blue economy’ or the ocean and marine resources, which have the potential to generate at least P1 trillion.

“Incoming Socio-economic Planning Secretary Dr. Ernesto Pernia said the domestic economy is mostly dependent on land resources which is not even half of the country’s bounty since a huge ‘wealth of the economy’ are marine resources . . . We need to evaluate and monitor our blue economy.” [Duterte gov’t to push for P1-T marine economy, Lee C. Chipongian, Manila Bulletin, 23rd Jun 2016]

This will be a new avenue that we’re opening. And if we are to succeed, it would not be bad if we in fact revisit our mindset. Because if we want to truly define where we want to be with the “blue economy,” we have to turn things on their heads – i.e., “begin with the end in mind.”

For example, “Outright redistribution of coconut levy funds to farmers is unwise,” Dr. Emil Javier, Manila Bulletin, 25th Jun 2016. “[I]n order to derive the most benefit from coconut, the whole industry should be made more productive, profitable, competitive and sustainable all the way from primary production to processing to exports.”

In other words, to succeed in the blue economy, the industry “should be made more productive, profitable, competitive and sustainable all the way from primary production to processing to exports” – like we must with coconut. [But unlike the coconut industry, it must not be a lure for political patronage and cronyism and oligarchy.]

And to turn things on their heads means the industry would want to understand what the needs of the end consumers are. And they’re not a mystery. Processed and branded products are there for all to see – in retail stores, in supermarkets and grocery stores. If they are foreign brands it means that the products can travel beyond local shores. And we should then find out which these export markets are and figure out the size of the industry, regionally and globally.

The object must be to prioritize and target the biggest industries; the bigger the playing field the greater the chances that we can capture a piece of it. But that demands benchmarking against the biggest players in the industry and understanding their business models – from investment to technology to innovation as well as people development, product development and market development.

The foregoing, in broad strokes, is what a road map would look like. It “begins with the end in mind” in order to attain a virtuous cycle – which is where the benefits to the farmer or fisherman will come from – not some ad hoc unsustainable dole outs. And we need a judicious perspective if indeed we are to rebalance the economy.

In developing a road map, the key is to look beyond the primary or basic produce because that is where competitiveness occurs – and measured and tested. And where innovation begins. And we should not focus on local brands but foreign brands. For example, what are our neighbors able to market beyond their shores? What about the global players? The more there are global players the bigger the industry is.

It is not rocket science. But because our mindset is held hostage by our insular worldview, anything regional or global to us is a mystery? Or how bad are those big countries anyhow? This posting is an effort to demystify innovation and global competitiveness albeit there is a learning curve that we will and must go through – but we need to start somewhere.

Thirteen years ago the writer's Eastern European friends could only imagine packaged consumer products selling at 50 euro cents because during the communist regime everything in their local stores sold for (today’s equivalent of) 50 euro cents. And whether they’d serve the purpose was nobody’s concern. What you saw was what you took, no questions asked.

Until one day there was no bread for anyone. It was the beginning of the end of the Soviet empire. We can sentimentalize about economic and political systems but until we figure out how to attain a virtuous circle it's still rhetoric. What about connecting the dots – and think ecosystem? Full development represents an ecosystem. And why at the end of every posting in the blog there is a spiel about what development entails.

Yet today these ex-socialists have embraced the mantra and are living out the reality of innovation and global competitiveness. And they started somewhere – it was a process not a magic wand. That “need” not “price” is the way to open the mind and think through what “begin with the end in mind” means. That the commissars and the hierarchy cannot dictate what people must buy. And given human need is a continuum and is dynamic, pricing cannot be static.

And to move across this continuum of need is the challenge to innovation and competitiveness. It is a fundamental principle that we must recognize if indeed we are to rebalance the economy and create more jobs. It is not the other way round where the mindset is to find a market for what we produce – or why the zillion roadshows we’ve done for the longest time have not raised our export profile compared to our neighbors. We need reforms big time with due respect to the new DTI chief.

“The Philippine economy must rebalance its economy by increasing the share of agriculture and manufacturing to economic output and relying less on the services sector to create more jobs, incoming socioeconomic planning secretary Ernesto Pernia said.

“[W]hile the economy has benefited from increased investments and the rise of the services sector, progress remains concentrated in the capital and is largely unfelt in the provinces. As such, there is a need to revive the agriculture and manufacturing sectors as these industries have the capacity to create more jobs in the countryside.

“To reduce poverty and attain inclusive growth, we need economic rebalancing.” [Pernia bats for economic rebalancing, Czeriza Valencia, The Philippine Star, 25th Jun 2016]

In other words, “Why would you institutionalize a stop-gap measure?” “A contradiction in terms,” Editorial, Manila Standard Today, 26th Jun 2016. “Under the 4Ps program, families belonging to the ‘poorest of the poor’ are given cash incentives on the condition that they send their kids to school and avail themselves of health services offered in their communities. The premise is that the government simultaneously works towards providing sustainable employment for the recipients of the dole. One day, they would no longer need the assistance as they provide for their own needs.”

How far behind are we compared to our neighbors if not the rest of the world given our insular worldview?

For instance, FDIs are not purely about investments. They are as much about technology and innovation, and beyond and why we need to attract global players over – not build a fence like Trump talks about. Of course, given our oligarchic economy, we have our Donald Trumps too, and why we are the regional laggard.

Rejecting immigration has been a recurring reality in the West. And the Jews, but not only, know it firsthand. Nor is the disruption in the economic order. Today the Arabs, Eastern Europeans and Africans are the ones being rejected.

Progress has always brought about obsolescence. Yet man has always demonstrated strength of character. And progress has likewise created the most middle class the world has ever seen, lifting great numbers out of poverty. We Pinoys are the exception given our instincts to cling to the past even when aristocracy should have already been history. Sadly, despots have not disappeared either and consequently Arab springs or like versions are sticking around.

Beyond globalization, there are those that also have no time for Christianity. The good news is Pope Francis is reaching out. And Angela Merkel, the daughter of a Lutheran pastor from East Germany, stands as a model true to her faith and heritage. While we Pinoys despite Francis and Merkel are using the Constitution to keep Filipinos at war with Filipinos? Or is that limited to Imperial Manila? Is that why as fate would have it, President Duterte comes from Mindanao?

“Why independence, if the slaves of today will be the tyrants of tomorrow? And that they will be such is not to be doubted, for he who submits to tyranny loves it.” [We are ruled by Rizal’s ‘tyrants of tomorrow,’ Editorial, The Manila Times, 29th Dec 2015]

“As a major component for the education and reorientation of our people, mainstream media – their reporters, writers, photographers, columnists and editors – have an obligation to this country . . .” [Era of documented irrelevance: Mainstream media, critics and protesters, Homobono A. Adaza, The Manila Times, 25th Nov 2015]

“Development [is informed by a people’s] worldview, cognitive capacity, values, moral development, self-identity, spirituality, and leadership . . .” [Frederic Laloux, Reinventing organizations, Nelson Parker, 2014]

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