We must swing to an investment-industrial economy.

Indeed, we must, not tomorrow, but yesterday. And there is theology to it.

Did we grow up hearing the parable of the talents?

Then consider: We are a consumption-service economy and are proud to keep to the paradigm. What’s behind the initiatives to cast a wider net via the public service act and the retail business?

Granted, we are looking at FDIs. But an enormous hole in the Philippine economy is in industrial development and exports.

In other words, it is not that we don’t need a public service act. But that is merely to get us in the game. We must take that giant leap from a consumption-service economy to an investment-industrial economy as demonstrated by the Asian Tigers, then China, and more recently, Vietnam.

Do we recognize that we’re stuck with logical yet linear and incremental thinking? Does that explain why our neighbors left us in the dust?

Enough of “pwede na ‘yan?”

Why can’t we get ahead of the curve with our electricity needs? Unless we forward-think and aggressively pursue industrial development, we won’t ever figure out the electricity challenge!

We must beat the hell out of the competition, full stop.

The following must be front and center, so here it is again, a quote from a prior posting:

“Because we are a consumption economy, household consumption accounts for 73.5% of our GDP end-use. Compare that to 49% for Thailand and 55% in the case of Malaysia.

“On the other hand, we allocate 31% for export initiatives, while Thailand puts 68% and Malaysia 71%.

“Unsurprisingly, the Philippine industry contributes a low-31% to GDP, against Thailand’s 36% and Malaysia’s 38%.

“That explains why the exports of these countries are 3.3 times in the case of Thailand and 2.6 times for Malaysia.

“Finally, where it hits Juan de la Cruz, Thailand’s GDP per capita is 2.2 times that of the Philippines, and Malaysia’s is 3.3 times.”

If the above doesn’t sound straightforward, we people – and that goes beyond us Filipinos – woke up to a world where logical yet linear and incremental thinking brought success.

Still, progress-wise, the most significant leaps came from visionaries because they could forward-think. And with it comes the ability of lateral and creative thinking, captured in bodies of knowledge that single out Einstein, Beethoven, Rembrandt, Jobs, among others.

Unsurprisingly, social scientists distilled the 4 Cs to 21st-century skills, i.e., critical thinking, creative thinking, collaboration, and communication.

Why have we become the regional laggard – with Juan de la Cruz paying a heavy price, i.e., abject poverty? Because despite the lapse of decades that saw our neighbors do it, we have failed to Industrialize.

It is not rocket science. World history continues to play it out.

But why can’t we?

Our caste system assumes that rank has its privileges. And that reinforces our inward-looking bias and inability to look and take in the bigger world out there.

For example, we can’t get over lionizing our tycoons and top companies despite being embarrassed by the Vietnamese. It’s called the real world. Still, we can’t figure out a way to look outward that the world keeps leaving us behind.

It is not to be ungrateful; there is theology to it

Beyond the parable of the talents is the creation story and the character of this universe, i.e., dynamism and interdependence.

Here’s again a quote from a prior posting:

“When everything affects everything, you have a “dynamic system.”

“Dynamic systems are hard to understand and nearly impossible to copy.

“We humans are no good at modeling more than a couple of variables simultaneously. The math quickly becomes overwhelming. If you have two variables that affect each other, you have, most likely, one interaction. If you have eight variables, there are roughly 251,548,592 interactions. [Here’s an aside. Recall how the blog speaks to mirroring the photosynthesis phenomenon when pursuing a challenge or an undertaking. Whatever the object is, a business example will still illustrate it. There are three sets of variables to manage: the  (1) marketing mix — product or service, pricing, placement, promotion; (2) resource mix — men/women, machine, materials, money, method; (3) execution mix — who will do what, when, where, and how. That makes for fourteen variables. What math can pull them together? Then recall the Ph.D. I assisted in her dissertation. Her master’s degree thesis was a market research project, so she and the professor agreed that the Markov algorithm would be central to the dissertation. But the real world is more complex. See the fourteen variables, explaining why her dissertation became the roadmap of a world-famous brand.]

“You’re never going to model an “innovation stack” on a spreadsheet – you can’t do the math.

“But companies love math, especially math that senior managers can use to make decisions. Take that math away, and they’ve nothing concrete upon which to base a decision.

“Entrepreneurs fighting for survival outside the civilized market don’t build mathematical models of what will happen; they do it and observe.

“You cannot view the elements of an “innovation stack” individually. No single element can link or unlink without changing the behavior of the other “elements.” The innovation evolves as a whole. Even without mathematical certainty, it makes intuitive sense.” [James Morgan McKelvey Jr., “an American billionaire businessman, co-founder of Square, Inc., a financial payments company. He is the appointed independent director of the Federal Reserve Bank of St. Louis.’]

But then again, please recall my simple verbiage speaking to my Eastern European friends:

“What must be the minimum level of sale to a client and then to the collective universe to reap the benefits of scale? But to do the math in advance doesn’t guarantee correctness. But with experience, big data, and extrapolation, the scenario comes to life. And it will guide future efforts too, but bear in mind that as the numbers grow, they become more dynamic.”

What’s the point? It is about forward-thinking, not logical yet linear, and incremental thinking. See above; the most significant leaps progress-wise came from visionaries.

But we don’t have to be geniuses or a billionaire like McKelvey.

It is about thinking scale and overcoming the crab mentality. It is about overcoming our inexperience in nation-building and development by copying what our neighbors have done and are still doing.

It is about the discipline of distilling the “vital few” from the “trivial many,” i.e., big data is meaningless if we don’t separate the wheat from the chaff.

It is about extrapolation, but simple math will do.

Let’s assess that. Don’t we know now that CREATE and SIPP won’t generate the tax revenues a Samsung Vietnam contributes to Vietnam? We don’t even have to do the math. Samsung Vietnam delivers more revenues (over $50 billion) than the Philippine eight top companies combined.

Can we not extrapolate that?

Here’s another example. Back in 2009, our GDP was twice that of Vietnam’s. But, and it’s a BIG BUT, their FDIs were 377% of ours, and in total investment, they were 137% more.

Can we not foresee that they will overtake us because we rely on a consumption economy driven by OFW remittances and call centers? While they attracted the likes of Samsung, i.e., tech devices that require layers of subindustries to pull together and hence the multiplier effect in quality and high-paying jobs?

That is not rocket science. Instead, it demands that we reinvent ourselves.

Please recall that the blog started in 2009, and the preceding explains why its title came to be Philippine Economy: reinventing ourselves.

Think how we haven’t gotten off our Pinoy paradigm.

Start with the comprehensive agrarian reform program. The celebration of the OFW phenomenon. The celebration of the BPO sector. The celebration of the manufacturing uptick.

Or think of the scores of industry road maps or even Arangkada or AmBisyon.

And so our answer is the public service act and foreign retailers?

How will they compete against the likes of Samsung Vietnam in delivering incremental GDP and tax revenues?

That’s why we need people that think out of the box to brainstorm with us. Think of Tim Cone and Jon Canto.

We need people that don’t think like us. Otherwise, we won’t take those blinders out.

We must swing to an investment-industrial economy.

Indeed, we must, not tomorrow, but yesterday.

Gising bayan!