Bernardo M. Villegas
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It`s in the Regions Stupid!
published: Aug 13, 2019






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We Can All Be Millennials (Part 2)

          Last March 23, 2018, I had the opportunity for the first time in my more than sixty years of giving speeches to address the most heterogeneous audience as regards the ages of those present.  It was the graduation or moving up of three sets of students at the Rosevale School run by parents in Cagayan de Oro.  The oldest batch was made up of those finishing their senior year (or Grade 12).  The second batch were those transitioning (or moving up) from Grade 10 (junior high school) to Grade 11 (senior high school).  The youngest were those graduating from Grade 6 of elementary school to first year high school.  This was a milestone for me also because it was the first time I addressed products of the newly installed K to 12 curriculum.  Obviously, as in all graduations or moving up ceremonies in the Philippines, there were the ubiquitous parents, grandparents and even great grandparents.  It was a challenge to deliver a talk to those four or five generations and say things that would interest them all.

         Fortunately, as I found out when I heard the Valedictorian of the Grade 6 group deliver a talk, the school has such a high quality of education that the 12-year-olds in that batch were very mature and could understand issues and matters of interest to the adults.  There was no need for me to engage in child talk.  I did not hesitate to tell them that all those who were graduating or moving up are very fortunate because they will be seeing the Philippines transition from Third World to First World in their lifetime, i.e. the next twenty to thirty years.  Their parents and even grandparents were glad to hear this prediction because, given the increasing longevity of Filipinos and especially Filipinas as the Philippines attains First World status, many of them can still realistically expect to live at least another twenty years or more (in the next twenty years, the parents  of the graduating students would be only in their late fifties and the grandparents would be in their late  seventies or eighties). 

         What does it mean to be a First World country?  In per capita income terms, that means that in the next twenty years, the Philippines can aspire to move first toward an upper middle-income economy with a per capita income ranging from $3,955 to $12,235 (in today’s prices).  That means we would resemble Malaysia, China or South Africa today.  Then in those twenty years, we can finally reach a standard of living of those who have per capita incomes of $12,235 (also in today’s prices) and up.  That would make us comparable to Singapore, Taiwan, South Korea, or Spain today.  Like these countries today, we would be able to bring our poverty incidence (percentage of population living below the poverty threshold) to single digit levels (from more than 20 percent today).  In fact, a leading investment bank Goldman Sachs had forecasted that by 2050 the Philippines will be the seventeenth largest economy in the world.

         To explain my optimism about the long-term prospects of the Philippine economy, I told them the reasons why my own generation (the baby boomers) and the Generation X (those born between 1965 to 1982) saw the Philippines deteriorate from being the most advanced economy in Asia, next only to Japan, to the “sick man of Asia” by the end of the last century.  Cutting a long story short, I told them that the most important reasons had to do with erroneous economic policies.  For almost fifty years after the Second World War our leaders implemented an inward-looking industrialization strategy that spawned a host of very capital-intensive and unproductive industries that were protected from international competition by high tariff walls, very low interest rates, and a strong peso.   These industries were concentrated in the National Capital Region, leading to a very unbalanced growth that kept the regions outside Metro Manila economically backward.  This strategy prevented the country from taking full advantage of its demographic dividend as our neighbors did.  The tiger economies (first Singapore, Taiwan, Hong Kong and South Korea and then later, Thailand and Malaysia) followed the exact opposite and nurtured export-oriented, labor intensive industries that took advantage of the global markets to sell their goods and to employ their people.  To make matters worse, unlike what Thailand, Indonesia and Malaysia did, we completely neglected countryside and rural development by underinvesting in farm-to-market roads, irrigation systems, post-harvest facilities and other services that the poor farmers needed to earn a decent living.  Of course, corruption also siphoned off large amounts of money away from development, but so did governments in South Korea, Malaysia and Thailand.  In fact, even today South Korea and Malaysia—already middle-income or First World economies—are still struggling to eradicate corruption. I mention this so that we do not despair if it will take us a longer  time to  remove corrupt officials from both the public and private sectors.

         Fortunately, over the last fifteen to twenty years at least, we have been overturning these flawed economic policies.  Our Governments have been moving away from the inward-looking, protectionist policies and have been encouraging more labor-intensive industries though more realistic exchange rate and interest rate policies.  Especially under the present Government that has implemented a very aggressive Build Build Build program, we are catching up in infrastructure spending, especially in the countryside.  Although much is still to be done, there has been some improvement in good governance, especially with the abolition of the pork barrel system in Congress that was the biggest source of corruption in the past.  There is also a very conscious effort to promote the development of regions outside the National Capital Region.  Today, regions that are already growing faster than Metro Manila are those in Davao, Northern Mindanao, Ilocos, Central Luzon, Central Visayas and Eastern Visayas.

         I told the graduating youth in Cagayan de Oro to make sure that as they assume leadership of the country in the next twenty years or so, they should avoid like the plague adopting the failed strategies of the past and to continue with the reforms that have already been initiated by at least the last three Governments.  I told them that we need a critical mass of leaders (and followers) who will really think of serving the common good in their respective occupations and positions. I told them that it is not only for reasons of patriotism that they should use their talents and educational accomplishments in the Philippines instead of looking for work abroad because the Philippines will be one of the most attractive investment destinations during the coming years, thanks to its growing, young and English-speaking population.  Also for economic reasons, they should resist the temptation of flocking to Metro Manila that will no longer be the most dynamic region in which to seek employment.   Other metropolitan areas will boom around the Clark and Central Luzon region (the so-called Pampanga Triangle), Batangas and Southern Luzon, Metro Cebu, Iloilo and Western Visayas, Davao and Cagayan de Oro, the very home city of the students I was addressing.    Although I understand that most of them, because of their proven intellectual capacity, will choose to pursue a college education, those who have an inclination towards such technical skills as carpentry, mechanics, plumbing, farming and other TESDA-oriented vocations should not hesitate to pursue their interests because there is already a big shortage of these skills in our rapidly industrializing economy.   In fact, the Build Build Build program is being partly stymied because of a shortage of construction workers.   (To be continued)