Bernardo M. Villegas
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Rebalancing Strategy
published: Mar 31, 2017



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Adapting to the Global Trends (Part 2)

           We have considered seven global trends identified by IESE business professor Dr. Adrian Done that will have significant repercussions on Philippine growth potentials in the coming decades.  We continue with five more global trends before considering possible proactive programs to meet the challenges posed by these trends.        

          8.  War, terrors and social unrest will continue and potentially increase.  In the last century, there was either the unipolar international system in which the US was the only real world power or a bipolar one  represented by the Cold War between the US and the USSR.  In the present century, a “multipolar” system prevails.  This is likely to have some destabilizing effects, with the emergence of strategic rivalries.  For example, there are the territorial disputes in the Asia Pacific region involving the big powers like the US and China and the smaller players like the Philippines, Vietnam, and Indonesia.  As it is increasingly evident in China and Vietnam, not to mention in the Middle East, social unrest will remain a high risk in many countries.  To quote Dr. Done:  “Pressures on key resources, lack of employment and economic disparities are likely to provide the conditions for social ills such as disaffection, radicalism, piracy and organized crime.”

          9.  The world will remain, by and large, oil-dependent in the coming decades, despite a decline in its share of energy supply.  Recent developments, however, may lead some to question this long-term projection as the US becomes self-sufficient in energy because of its tapping indigenous supply of shale oil.  With or without high oil prices, however, there will be greater efforts to develop and implement alternative energy sources for environmental reasons. Thanks to the long-term strategic plan that was implemented during the Marcos regime, the Philippines is one of those fortunate emerging markets that have significantly reduced their dependence on oil imports.  In fact, the Philippines can already be considered a “world power” in geothermal energy, being able to export its own technology to such countries as Indonesia, Chile and Peru.  Also for environmental reasons, there is continuing effort to develop the renewable sources of energy like solar, wind, and tide.

          10.  Humans will continue to destroy ecosystems and biodiversity will be on the decline.  There will be sustained pressure on the environment, leading to acceleration in extinction rates.  Many terrestrial and marine ecosystems will be in danger of collapse.  Collapses of high-impact food chains may motivate more sustainable behaviours.  More nations will become ecological debtors, consuming and dumping more than the Earth can sustain.  A possible area in which the Philippines may be able to contribute in a small way to the environment is to plant our denuded forests with palm oil, coffee, cacao and other high value crops.  This trend is already discernible in Mindanao where most of the deforestation occurred in the last century.  Malaysian groups are partnering with Filipino entrepreneurs to establish palm oil plantations in Bukidnon and other regions.

          11. Health and well-being for all will remain an unfulfilled goal.  The big killers will be chronic, non-communicable diseases such as coronary heart disease, stroke and other cerebrovascular diseases, cancer, Alzheimer’s and other dementias, etc.  Uneven distribution of income and wealth will create conditions for infectious diseases to thrive in poor countries.  With increasing global travel, increasing drug resistance and limited drug innovation for such illnesses, the risk of epidemics of new infectious diseases will remain high.  The recent (2014) Ebola epidemic in African nations is a case in point.

          12.  Natural disasters will affect greater numbers of people, but potentially kill fewer.   As pointed above in discussing climate change, there will be improvements in hazard planning and rescue of victims, already visible in the Philippines.  Dr. Done adds:  “…more people will be exposed to increasing floods, storms, extreme temperature and droughts.  Earthquakes and volcanoes will remain ever present, intermittent, but high-impact hazards.   Increasingly populous cities with inadequate planning and unsafe buildings all put many at risk—especially the poor.  Several cities will remain disasters waiting to happen.”

          From the Philippine point of view, not all these 12 global trends are of equal importance.   We have to choose a few to which we can react by formulating medium-term and long-term plans.  Global trend 2 (shifts in geopolitical power) should motivate our leaders—both from the private and public sectors—to capitalize on our major strengths within the ASEAN Economic Community, which have to do with our above-average management and professional manpower.  We can assert our leadership in managing ASEAN enterprises both within the Philippines and in our neighbouring countries in Southeast Asia.  We can provide our ASEAN neighbours with the English-speaking professionals they will increasingly need to run multinational enterprises.  To get the most up-to-date technology, especially in IT, biotech and nanotechnology, we have to amend our Constitution so that we can more freely bring in Foreign Direct Investments which are conduits to advanced technology and markets.  Our infrastructure development program which should last for at least another two decades should embody the latest technologies through a greater participation of foreign companies in the Public Partnership Projects (PPPs).  Needless to say, we can address many global trends at the same time by investing a greater portion of our GDP on infrastructures, especially in energy, water, telecom and airports. 

            We should equip our young, growing and English-speaking population with higher knowledge and skills in information technology, biotechnology, engineering and the sciences.  At the lower manpower level, we should remove the bias among our young people against the technical skills that a more manufacturing-intensive economy will need, i.e.  plumbers, electricians, carpenters and mechanics.  We should elevate the occupation of our farmers to that of farm entrepreneurs who can apply the most advanced business tools to increasing the productivity of our farms, both large and small. The next stage of agrarian reform should allow the consolidation of land to attain the economies of scale in the production of high-value crops.   We should establish retirement estates in which our own retirees can peacefully and joyfully co-exist with the senior citizens from the rest of Asia. We should be relentless in eradicating poverty in the Muslim areas, the only long-term solution to the tribal conflicts in Mindanao.  We should dot our rural areas with thousands of rural health clinics that give primary health services in to the poorest of the poor.    Finally, we should continuously improve our ability to take care of those portions of our population most vulnerable to natural calamities.  For comments, my email address is bernardo.villegas@uap.asia..