Page last updated at 09:05 CST6CDT, Friday, 04 December 2015 PH
I have been directing more of my communication efforts towards professional people in their thirties and forties. These are the present and future leaders who will guide our country in the next twenty to thirty years back to the economic leadership that we enjoyed after the Second World War and lost because of failures of economic policies in the last quarter of the twentieth century. These will be the men and women who will live long enough to verify the forecasts being made about the year 2050 by various think tanks and other institutions looking into the distant future. Many are familiar with the long-term forecast made by economists of the Hong Kong Shanghai Bank in 2012 which placed the Philippines as the sixteenth largest economy by 2050. More recently, the Economic Intelligence Unit (EIU) came out with another long-term macroeconomic forecast. I would like to continue communicating to these age groups about the possible global environment that they will be facing so that they can input the information into their own personal and professional plans. They are the ones who will make the forecasts happen. A good number of them were the first graduates of the CRC College of Arts and Sciences (now the University of Asia and the Pacific) where I was the first Dean in the early 1990s.
According to the EIU, China will overtake the United States in 2026 in nominal GDP in US dollar terms and maintain its position as the largest economy all the way to 2050. The U.S. will be the second largest economy in 2050. India is expected to move up the rankings to third place, attaining average real growth of about 5% up to 2050. Three emerging markets today, Indonesia, Brazil, and Mexico, will be fourth, seventh, and eighth, respectively. Among the others in the top ten by 2050 will be Japan, Germany, the UK and France. Western economies within the top ten will continue to play major roles in the global economy. Only Italy will lose its place within the top ten. Our future leaders then should focus a great deal of attention on today’s emerging markets of China, India, Brazil, Indonesia and Mexico, making it a point to travel to these countries as priority destinations for both business and leisure. In fact, it would be wise for some of their children to master some of the languages of these giant economies, such as Mandarin, Bahasa, Spanish, Portuguese.
The next thirty or more years will see the continuing rise of Asia in which the Philippines will stand out as one of the fastest growing economies, possibly reaching an annual GDP growth rate of 8% or more in the next ten years, by my own reckoning. According to the EIU, by 2050 Asia will account for 53% of global GDP. China and India will each be richer than the next five (Indonesia, Germany, Japan, Brazil and the UK) put together. Given China’s and India’s economic clout, they will assume a much bigger role in addressing global issues such as climate change, international security and global economic governance. In the medium term, this would require the world’s existing powers—notably the US—to allow India, and especially China, to play a greater role on the world stage and modify international institutions to give them room to exert greater influence. Our young leaders should be especially knowledgeable about Chinese-Philippine relations, actively cultivating closer contacts with the Chinese at all levels of society. The Filipino-Chinese business community has a special role to play in this very important strategic direction that we should take in building closer relations with China
The EIU refers to “a new era of global demographic decline.” Growth in the global population is expected to see a dramatic decline from an average of 1.3% in the 1980-2014 period to 0.5% across the 2015-50 period. The slowdown in the growth rate of the global working-age population will be even starker, with a drop to 0.3% in the 2014-50 period. compared with an average growth rate of 1.7% in the 1980-2014 period. The Philippines will continue to enjoy its demographic dividend, showing the third largest increase in labor force after Nigeria and Pakistan. The EIU takes a sanguine view of Philippine labor productivity. Our country will register the largest increase in the percentage contribution to GDP of capital investment and Total Factor Productivity (TFP). There is, however, a caveat issued by the EIU: For countries with favorable demographics, our forecasts assume that growth-friendly policies are pursued and are successful in providing jobs for a growing workforce and ensuring longer-term growth. Failure to achieve this will lead to a growing number of potential workers unable to find employment, resulting in a source of significant political instability and a missed opportunity in terms of seizing an advantage offered by favorable demographics.
Those who are now in their thirties and forties and are expected to rise to positions of leadership in the public or private sectors can make use of these long-term macroeconomic forecasts to formulate their long-term personal and professional plans. If they want to contribute to the demographic advantage that the Philippines enjoys, those who are married among them should consider having at least three, if not more children, to help the nation avoid the demographic winter already troubling countries like Singapore and Thailand, not to mention Japan and South Korea. They should give a lot of importance to improving the productivity of our agricultural sector by making the necessary infrastructure investments. To escape the “middle income trap,” there should be greater investment in research and development and quality higher education. Finally, there should be a move from less technologically intensive production to capital-intensive manufacturing production, which will be facilitated by a large domestic market resulting from higher per capita income and a larger population that by 2050 will be reaching 150 million people. Those in their thirties and forties today have a great challenge facing them to make these forecasts come true. As long as I live, I will continue to guide and motivate them. For comments, my email address is email@example.com.