The Philippines Sinks Four Places in 2023 World Competitiveness Rankings

The Philippines has dropped four places in this year’s World Competitiveness Yearbook (WCY), ostensibly due to issues like global inflation, public health crises, geopolitical concerns and other uncertainties. From 48th last year, the country is now ranked 52nd out of 64 economies. 

Published by the Institute of Management Development since 1989, the WCY ranks economies using 255 criteria spread across four competitiveness factors: Economic Performance, Government Efficiency, Business Efficiency, and Infrastructure. Of the indicators, 162 are based on hard data gathered from national sources, while the remaining are perception-based indicators derived from an Executive Opinion Survey (EOS) answered by mid- and upper-level managers in each country covered.

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Within the Asia-Pacific region, the Philippines maintained its position at 13th out of 14 economies for the sixth consecutive year. Only Mongolia ranked lower in the report.

The Philippines slid in the rankings in three out of the four main factors or dimensions of competitiveness: the country’s Business Efficiency factor dropped from 39th in 2022 to 40th in 2023, the Infrastructure factor dropped from 57th to 58th; and, suffering the biggest decline, the country’s Government Efficiency factor fell four places drop from 48th to 52nd.

All the sub-factors under Government Efficiency also declined: Public Finance (from 51st in 2022 to 55th in 2023), Tax Policy (from 13th to 14th), Institutional Framework (from 53rd to 56th), Business Legislation (from 52nd to 57th), and Societal Framework (from 50th to 53rd).

However, on the bright side, the country’s Economic Performance factor improved 13 places, from 53rd in 2022 to 40th in 2023. Sub-factors under this category that saw improvements include Domestic Economy (from 48th to 30th), Employment (from 19th to 9th), and Prices (from 58th to 39th).

According to the report, challenges that the Philippines faces in 2023 include sustaining economic recovery and growth momentum amidst global downside risks, strengthening social protection and health care systems for inclusive development, addressing learning gaps to improve local education system, investing in sustainable infrastructure to reduce climate change vulnerability, and reinforcing efficient public management strategies to support fiscal responsibility. 

The 2023 WCY rankings were dominated by European countries: Denmark at first, Ireland at second, and Switzerland at third.

Meanwhile, in Asia-Pacific, the top three most competitive economies are Singapore (4th place in the overall ranking), Taiwan (6th), and Hong Kong (7th).

“Political fragmentation is a result of COVID-19 and the Ukraine war, and a major upshot is that more and more countries—Singapore, Saudi Arabia and India, for example—are pursuing their own interests,” said Professor Arturo Bris, Director of the WCC. “With inflation pressures easing and uncertain stock markets, we are now able to see winners and losers in a context where multiple crises overlap.”

Some other interesting trends in this year’s WCR: Although countries that did better in the 2022 WCR were largely those first to open up their economies after the global pandemic, they have fallen in the 2023 report (like Sweden and Finland); the most successful economies tend to be smaller, have a good institutional framework including strong education systems, and good access to markets and trading partners (such as Denmark, Switzerland, and Singapore); and while remaining the most competitive regions in the world, both Eastern Asia (19th in 2023) and Western Europe (21st in 2023) fell in their competitiveness rankings by one point.

The Asian Institute of Management Rizalino S. Navarro Policy Center for Competitiveness (AIM RSN PCC) has been the Philippine partner institute of the IMD in producing the Yearbook since 1997. The AIM RSN PCC assists IMD by supplying data from national sources and helping distribute the Executive Opinion Survey (EOS).