With growth in big developed economies all but flatlining, what do firms — investment banks and securities trading houses — whose entire business models hinge upon “growth” ad infinitum turn to? Where else but to ever more volatile and unreliable “emerging markets”. The Philippines is in one of these arbitrary lists of “emerging” economies — specifically one called “The Next 11″.
The Next Eleven (or N-11) are eleven countries — Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, South Korea, and Vietnam — identified by Goldman Sachs investment bank and Jim O’Neill as having a high potential of becoming, along with the BRICs (Brazil, Russia, India, and China), the world’s largest economies in the 21st century. The bank chose these states, all with promising outlooks for investment and future growth, on December 12, 2005.
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And now, according to a BusinessWeek “report”, the Philippines is a country to “keep an eye on”…
…there are signs that the Philippines, the world’s 33rd largest economy, might be on a sustainable upward trajectory. Under the leadership of Benigno ‘Noynoy’ Aquino III, son of late ex-president Corazon Aquino, the country is fighting corruption and tax dodging and is investing heavily in infrastructure and relief for the poor. His 2012 national budget calls for 26 percent further infrastructure spending than in 2011, addressing access to potable water, better roads, and train service.
Of course. What else can investment banks do but talk up a market — any market! These firms depend on a degree of confidence that the future looks bright for them to sustain their analysts’ promised mega-bonuses. As such they will sell confidence. The investment banking industry is institutionalised conflict-of-interest at its finest.
The BusinessWeek report is all positive spin, but ends up inadvertently highlighting pretty much all of what makes the Philippine economy a hollow shell — a bubble even — citing as signs of good times ahead, the fact that Manila “sports the third largest mall on the planet: SM City North EDSA, with 1,100 shops, 400 of which include places to eat”, and the attractiveness of the country as a site for multinationals’ call-centre operations, a trend that simply points to the fact that there is nothing in the domestic economy and its capital base that promises much else for the exploding supply of Filipino job seekers. In the same manner, the report paints a peachy picture of what is really the quintessential weakness of the Philippine economy — its dependence on foreign employment…
Perhaps no other economy so disproportionately enjoys such a steady stream of incoming dollars, euros, and pesos. According to the Philippine Overseas Employment Administration, the January-March period saw job orders for professional and technical, service, and production workers jump by 25 percent over the same period last year.
Quite ironic, considering that it is the very markets that now weaken the global economy — the slow-growing mature economies of the West and northeast Asia — that remain the engines of this much-hyped Third World “growth”. The inherent risk in putting the Philippines’ growth eggs in the basket of dependence on all things foreign seems to have escaped the “expert” sensibilities of whoever wrote this report. More likely these risks were simply glossed over. When you are possibly on the payroll of publicists hired by investment banks — or national governments — anything can be made to look rosy, even mere stopgap measures to prop up a hollow consumption-, labour-added-value-, and extraction-based economy.
The Philippines is no more than a consumer market. Filipinos simply spend their money and spend their days finding ever more creative ways to convince themselves how much they deserve to spend their money on the latest trinket or gadget.
In that kind of a market, what sorts of industries is the Philippines likely to attract under a hypothetical regime of unfettered access to foreign capital of the sort preferred by foreign governments and investment banks? Most likely this: industries that will further grease the pipeline that channels cheap manufactured goods from highly-capitalised economies to the living rooms of increasingly impoverished Filipinos. Filipinos, in turn, will increasingly fund these purchases with the same old labour-intensive solutions — working overseas and working for the factories and retail outlets that manufacture and sell them these trinkets.
Perhaps the Philippines will never be the fountainheads of capital that excellent economic miracles like Japan, Korea, Taiwan, Singapore, Malaysia, and China had become. After all, in the same way that not all people are destined to be rich business owners, not all countries are destined to be on the right side of the capital creation equation. And as such, not all countries that have access to capital (domestic or foreign) will necessarily grow its capital base and transition from an economy dependent on labour deployment for income to one that depends more on capital deployment for income.
[NB: Parts of this article were lifted off the Wikipedia.org article “Next Eleven” and used in accordance with that site’s Creative Commons Attribution-ShareAlike License consistent with the same license applied by Get Real Post to its content.]
benign0 is the Webmaster of GetRealPhilippines.com.