Sabal: Reflections on NorMin GDP growth

LAST Thursday, 25 April 2019, the Philippine Statistics Authority (PSA) conducted a nationwide simultaneous news conference on the Gross Regional Domestic Product (GRDP) across all regions in the country.

Region 10 grew at 7 percent in 2018, higher by 1.2 percent in 2017. The national average is 6.2 percent, which makes Northern Mindanao one of the twelve regions (out of seventeen) that grew higher than the country’s GDP in 2018.

Our growth is driven by the services sector, followed by industry and manufacturing. This means that region 10 is a highly industrial and service-oriented economy. Both services and industry sectors grew at around 8 percent in 2018 driven primarily by transport, storage and communication (12.8% contribution to services), public administration and defense (12.6% contribution to services), construction (16.3% contribution to industry), and mining and quarrying (14.6% contribution to industry).

Agriculture remains behind at 0.4 percent growth, which is virtually zero contribution to this year’s regional economic growth. The laggard performance of the agriculture sector is a common scenario in the Philippines. Our agricultural productivity has been sluggish in the past decade or so.

Some members of the press gave striking comments and reactions on the regional data presented by our government agencies. There were questions about how to trickle-down the gains from growth and about the salient role of the government in addressing inequality (or poverty).

In economics, we don’t use the concept of trickle-down anymore. It was an economic policy popularized by conservative politicians like US President Ronald Reagan and UK Prime Minister Margaret Thatcher to justify government support on big corporations, in order to increase their production and minimize their costs. The principle was to assist firms to gain profit so that it will be translated to higher employment and more benefits for the workers. The thing is it won’t trickle-down. Firms win big at the expense of the workers.

So to answer the question, if whether our growth will trickle-down to the last, least, and lost? Only if our government maintains stronger intervention to address inequality such as spending on social services, education, and other anti-poverty measures.

Government can’t empower the enablers and expect that the market will self-correct. Government should roll their sleeves-off to correct market failures directly. Growth targets (market) and development strategies (government, etc.) are intertwined. If we leave the market alone, it will surely grow but create inequality. The government’s role is to reduce the gap between rich and poor and to make sure that the gains from growth will be felt in the years come.

Comparing our growth to the other four regions in Mindanao, ours is modest. Region 10 is the third fastest growing out of five, next to Region XI (8.6%) and surprisingly the Autonomous Region of Muslim Mindanao (7.2%). Our government should take advantage of our strategic location being the gateway to Mindanao. Although our growth is promising but is not enough to achieve our full potential.

Construction contributes 1.5 percentage points to our growth in 2018.

According to a statement released by the National Economic and Development Authority (Neda) 10, the main contributor of the growth in construction is public spending on infrastructure through the Build, Build, Build program. But government investment to agriculture is not enough to increase its productivity in 2018.

Indeed, we can’t control the forces of nature (e.g. typhoons and calamities) but government can surely do something to boost agricultural growth. Neda, however, assures that more policies will be created to improve access to technology. More government programs should be done to update the skills of our farmers and introduce them to new technologies. There should be more research projects to develop our soil and crops.

Finally, Region 10 is an emerging investment hub in the island. According to Neda, one-fourth of the approved investments in country is allotted to Northern Mindanao amounting to 907.2 billion pesos. As a matter of fact, a 4.4 billion dollar integrated steel manufacturing investment is about to be materialized in the region. Neda explains that this investment is expected to generate around 20,000 jobs in the region.

This brings me to my last point, more jobs creation won’t mean more jobs for the folks of Northern Mindanao. Surely, a portion of these jobs will go to migrants from other regions or countries (Chinese workers for instance). This pose a greater challenge to our own pool of workers as competition among these sprouting investments is tough. There must be greater emphasis on skills-building on our younger generation. Our Higher Educational Institutions (HEIs) and technical-vocational schools should develop new programs that will fit in to the needed skills of this generation.

The World Economic Forum (WEF) announces the top ten skills needed to thrive to the Fourth Industrial Revolution in 2020. In short, these are the new skills identified by top employers of the world that they are looking for on their future workers. These new generation skills are complex problem solving, critical thinking, creativity, people management, coordinating with others, emotional intelligence, judgment and decision making, service orientation, negotiation, and cognitive flexibility.

To take advantage of the influx of the investments in the region, mostly from multi-national corporations, our region must focus on building these new skills on our younger generation. After all, development must not be only our government’s responsibility. Other stakeholders, such as in the academe and civil organizations, must contribute.

Over-all, let us celebrate that our region grew more than the government’s target in 2018. Let us all be conscientious in electing leaders this coming May 13. Their policies will help shape the future of Northern Mindanao!

(Jhon Louie B Sabal is the OIC-chairperson of the Department of Economics of Xavier University-Ateneo de Cagayan. Mr. Sabal is a graduate of MA in Economics at Ateneo de Manila University.)


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