There’s a saying, “what gets measured, gets managed.” The World Competitiveness Yearbook (WCY) is one of those measures. It’s not perfect, but useful. It’s been around for 37 years, constantly refining its methods among a group of economies. It enables a country to evaluate itself over time and, more importantly, to compare itself against its peers in real time. For the Philippines, this means comparing our rank against our immediate competitors in Association of Southeast Asian Nations (Asean).
The yearbook is based on four pillars: economic performance, government efficiency, business efficiency, and infrastructure. It combines hard data (170 indicators) and an executive survey (95 indicators). The combined score tells us how capable an economy is of fostering long-term value creation and prosperity. It can gauge risk perception, friction cost for business, and talent attraction, and it can validate reforms or spot infrastructure gaps.
The good news this year is that the Philippines has risen from No. 51 last year to No. 47 out of 70 economies reviewed. Our highest ranking was No. 38 in 2013. On a per pillar basis, we dropped from No. 33 to No. 38 in economic performance, rose from No. 51 to No. 45 in government efficiency, improved from No. 46 to No. 30 in business efficiency, but stayed mired at No. 60 in infrastructure, our persistently weak pillar.
Among the key drivers behind our drop in economic performance were gross domestic product (GDP) per capita, food costs, portfolio investment assets, and exports, all in the bottom 10-15 percent of world tables. Our main strength lay in long-term employment growth and rising GDP per capita as we move toward middle-income status.
The key drivers behind the improvement in government efficiency were better business legislation and regulatory processes. The reduced number of days for start-ups produced a jump from 64th to 13th, reflecting that the work of the Anti-Red Tape Authority was yielding results. The reduced impact of bureaucracy on business is a step in the right direction.
In business efficiency, productivity, labor upskilling, improved gender balance in access to finance, and management practices were among the factors cited for the rise in global rankings. Growing openness to innovation, digitalization, and artificial intelligence-driven transformation were also positive steps.
Our big area of concern lies in infrastructure, which remains persistently low at No. 60, dropping since 2022 and unchanged over the last three years. It covers basic infrastructure (water, secure internet servers) and social infrastructure (health and education). The health and education performance is particularly worrisome since these take the longest before improvements are felt, with long-term implications on talent growth and retention. On the bright side, we are recognized for investments in telecommunications, renewable energy, public-private partnerships, and high-technology and ICT exports.
One sobering thought is that the Philippines still ranks second to the bottom among our Asean neighbors, our principal competitors in many fields.
While the four pillars are equally weighted, we view government efficiency and infrastructure as the most critical because they impact all sectors. Bureaucracy, rules, and red tape are felt by all segments of society. The same is true for infrastructure, except that its improvements take longer to be felt.
We’ve often been asked, with so many indicators, which should we fix first? The answer lies in setting short and long-term objectives. Over the short term, improvements in governance, cutting red tape, and improving rules and regulations can have immediate effects, especially if we cut corruption and render justice against the perpetrators. That instills trust that citizens’ taxes are used for the right purposes. Over the long term, we need to focus on physical and social infrastructure, but start immediately and play the long game. We need to restructure government and pursue more public-private collaboration to ensure continuity over time. We can no longer keep changing infrastructure plans with every change of administration.
Over my years of tracking global competitiveness reports on the Philippines, we’ve learned a number of lessons. I won’t go over the full list of 10, but would point to a few. First, governance and leadership matter. When high priority was given to competitiveness, rule of law, and consistency, agencies aligned and performance improved. Second, it’s about delivery. These reports don’t measure plans; they measure accomplishment and implementation, against fixed timelines, not moving targets. And third, the competition never sleeps. Even if we are progressing against our own performance, we need to measure how much progress our competitors are making. If they move faster, we are falling behind.
The government should use the WCY and other global reports as a toolkit for determining what works and what doesn’t.
GUILLERMO M. LUZ
Chairman, Liveable Cities Philippines
Chair of the advisory board of the Rizalino S. Navarro Center for Competitiveness
