Bernardo M. Villegas
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Lessons from the Tiger Economies (Part 3)

          As mentioned above, it is too late for the Philippines to be a major exporter of manufactured goods.  We missed our opportunity in the last century when our policy makers insisted on an inward-looking, import-substitution style of industrialization in contrast with the export-oriented strategies of our neighboring tiger economies.  Today, however, we are a serious contender for service exports.  We should consider learning from what Singapore is presently doing to significantly increase the productivity of its service sector.  As The Economist reports: “Singapore has been the boldest in trying to whip its service sector into shape, from its restaurants to its construction firms.  It has refined its gauges for measuring productivity (for example, floor area completed by a construction worker each day).  It identifies promising companies and offers help:  developing new business plans, say or guiding them abroad to expand.  Edward Robinson, chief economist of the Monetary Authority of Singapore, believe that rich Asian countries ought to have an advantage in modernizing their service sectors.  Given that so many of their people are trained for high-tech work, they are well-paid to deploy digital tools to serve the population more efficiently.”  In fact, this should inspire the industry leaders in our BPO-IT sector to be among the first to adopt robotization and Artificial Intelligence in making its workers more productive instead of fretting about the loss of jobs that automation may occasion in the industry.  There are enough examples in the history of industrialization that show that improved productivity of workers may lead temporarily to some unemployment but will eventually lead to the creation of other jobs that require higher skills.  We just have to make sure that, in cooperation with the academe, there is continuing education for our work force, especially in the service sectors.

         We may also learn from the difficulties South Korea is encountering in introducing such advanced technology as autonomous vehicles.  Although the country has some of the best infrastructure in the world for autonomous vehicles, including world-class chipmakers and carmakers, as well as a growing 5G network, it is ranked by KPMG (a consultancy firm) only 13th on a list of countries best prepared for autonomous vehicles.  One reason given in the report by The Economist is the country’s ambivalence towards other related technologies, such as ride-sharing apps.  Similar to Grab Taxi, the Korean version called Kakao Mobility was strongly opposed in Seoul by drivers of traditional taxis to such an extent that in protest against such apps, four older drivers set themselves on fire.  As The Economist observes: “South Korea’s wariness toward ride-sharing apps highlights the infrastructure in which the tigers are most lacking:  well-functioning social-security systems.  The key to progress in a new technology like autonomous vehicles, may not be a better network but a better pension system.  Without a cushion for those left behind by technological progress, it is harder to marshal support for that progress in the first place.”

         In the case of Hong Kong, it is not only the lack of a better pension system, but a serious shortage of housing for the lower-income households that can partly explain the recent social unrest.  In great contrast with its “non-identical twin” among the tiger economies, Singapore, Hong Kong has not addressed the housing problem of the vast majority of its working population.  Again, quoting from The Economist: “The city-state (Singapore) realized early on that widespread homeownership was essential to social peace.  Over 80% of the population lives in homes built by government agencies, sold at subsidized prices. . .The bottom half of households own a quarter of Singapore’s housing wealth.”    Hong Kong is home to vast inequalities: “The watches on display in Bulgari sell for more than most residents earn in a month.  And the trolleys that now carry protesters’ bricks more typically carry piles of recycled cardboard collected by poor old women, their backs hunched with the effort.  Property prices are outlandish.  A couple recently sold a parking space in a luxury apartment block for $750,000, equivalent to more than 14,000 parking tickets.”  There is no question that Philippine society must devote more resources to solving the housing problem of a large number of the working poor, especially in the urban areas.

         Finally, a most important lesson we can learn from all the four tigers is not to follow their demographic path.  They are all considered endangered species, having the lowest fertility rates in the world:  they rank in the bottom ten worldwide, low enough that each new cohort is expected to be only 55% the size of the parents’ generation. As The Economist observed with some humor: “Their governments have tried without much subtlety or success, to reverse this trend.  Some have even tried their hand at matchmaking.  Singapore’s Social Development Network organizes dinners, films and board games.  One network-certified dating agency will help you find your ideal partner with the help of Lego bricks.  In Taiwan the government has organized speed-dating and bike tours, along other events.  But one senior official is blunt in her assessment: ‘Totally useless.’ “

         For many decades, the four tigers were comfortable enough following the Japanese model.  In fact, before the “tiger” metaphor became popular, Asia’s smaller economies were likened to a smaller animal, the goose.  It was fashionable in the 1970s to talk about the flying geese, fanning out behind Japan.  Today, one of the greatest fears of the four is to meet the fate of Japan’s irreversible stagnation, a major cause of which is ageing.  We should do everything in our power to ensure that the cultural preference of Filipinos, especially because of their Christian faith, for large families will be sustained through the coming decades.  The worst enemy of a buoyant economy is a contraceptive mentality, especially among women which Singapore had to its lasting regret nurtured through its stop-at-two policy.  As long as the average fertility rate is sustained at more than 2 children per fertile woman, the Philippines does not have to fall into the demographic trap that can be worse than the middle-income trap.  To prevent our meeting the same fate as Japan and the four tigers, we should make sure that the Government will stay out of the bedroom and allow Filipino families to freely decide on the number of children they want.   A government-induced fall in fertility rate is irreversible, as even China is now realizing too late.  For comments, my email address is bernardo.villegas@uap.asia.