PRESS RELEASE

22 May 2014

AIM Policy Center releases WCY 2014 results

PHL competitiveness stalls, amidst other
faltering emerging markets

The Philippines dropped four places in the 2014 World Competitiveness Yearbook
(WCY) ranking to 42
nd
this year from 38
th
in 2013. In 2012, the Philippines ranked 43
rd
, making
it a net one notch improvement in two years. Among Asia-Pacific countries, the Philippines
dropped to 12
th
this year from 11
th
last year. Most other big emerging markets fell in ranking
such as China (21
st
to 23
rd
), India (40
th
to 44
th
), and Thailand (27
th
to 29
th
). Elsewhere in
Southeast Asia, Malaysia (15
th
to 12
th
) and Indonesia (39
th
to 37
th
) both made gains in ranking.
This year, IMD ranked 60 countries worldwide, the same number as last year.
WCY measures four broad factors in measuring competitiveness economic
performance, government efficiency, business efficiency and infrastructure. It uses economic
data from various international and national sources, as well as an opinion survey in generating
over 300 criteria to assess and rank the competitiveness of nations.
The Philippines Economic Performance factor dropped six places from 31
st
to 37
th
.
Although GDP growth was 7.2 percent second highest among WCY countries the Philippines
was dragged down by its recent modest export performance. And although prices remained
steady, inflation is relatively higher than many of the other countries in the ranking.
The Government Efficiency ranking also droppedfrom 31
st
last year to 40
th
this year. A
series of high-profile corruption cases likely contributed to the deterioration in the perception of
corruption, and both BIR and BOC failed to meet their collection targets. Nevertheless, the 32
percent decline in the budget deficit and the 12 percent increase in national government revenue
made up for some of the losses from the perceptions-based criteria. The deterioration in the
countrys rank this year may have been sharper had it not been for these macro-fiscal policy
gains.
The Business Efficiency factor ranking also went down to 27
th
from 19
th
, as the stock
market cooled down significantly last year after a hot streak in 2012. This was not uncommon
among many emerging market economies, due in part to the monetary policy of major industrial
countries.
Infrastructure, consistently the lowest-ranked factor for the Philippines, fell to 59
th
from
57
th
, as growing attention on poor roads and transportation facilities (notably the NAIA airport
which has been consistently ranked among the worlds poorest) was compounded by the slow
implementation of PPPs. A looming power crisisalong with a controversial price hike in late
2013also likely contributed to this decline.
The Philippines drop in WCY ranking this year is accounted for by three factors. First is
the slowdown in the growth of previously fast-growing indicators. Second is that although the
Philippines fared well in some indicators, other countries simply fared better. A third set of
factors point to indicators that have been perennial weak points for the country.
Overall this year, the United States retained its number 1 ranking, followed by
Switzerland (2
nd
), Singapore (3
rd
), and Hong Kong (4
th
).
Since 1997, The AIM Policy Center has been the Philippine partner institute of the
International Institute for Management Development (IMD) for the annual release of the WCY.
AIM Policy Centers analysis of this years WCY results is available at www.policy.aim.edu.
For more information, contact AIM Policy Center at policycenter@aim.edu or call at (02)892-
4011 local 5105.