ADB STUDY:  RP'S COMPETITIVENESS DETERIORATED IN PAST 2 DECADES

MANILA
, June 9 , 2004
 (STAR)
By Ted P. Torres  -  The country’s competitiveness has deteriorated in the last two decades as reflected in the labor sector’s decreasing wage rate, stagnant capital-labor ratio and decreasing productivity, Asian Development Bank (ADB) economist Jesus Felipe said in a study conducted recently.

According to Felipe, the country’s level of competitiveness, which was characterized by declining real wage rate and labor productivity, has not varied much in the last 20 years.

"These characteristics indicate that the country is stuck in low-level equilibrium trap," Felipe said, adding that "this situation has profound implications for long-run growth and for the potential growth rate of the country."

While wage rates and labor productivity started to recover in the mid-1990s, Felipe explained they are still below the early 1980s levels.

"From a policy perspective, efforts must be made at increasing the investment rate and the rate of accumulation," Felipe said.

Felipe stressed that by increasing the level of competitiveness, monopoly power and rents could be eliminated while prices of commodities could be lowered. This could likewise lead to higher real wages.

He added that this assessment reinforces the view that the Philippines is immersed in a supply-side vicious cycle where capital scarcity implies low income; low income implies a limited capacity to save; and limited saving leads to limited investment and capital scarcity.


Reported by: Sol Jose Vanzi

© Copyright, 2004  by PHILIPPINE HEADLINE NEWS ONLINE
All rights reserved


PHILIPPINE HEADLINE NEWS ONLINE [PHNO] WEBSITE