Thursday, March 22, 2007

Big Picture, Little Picture

For a country that has been inevitably integrated with the world economy for the last four hundred years, and an estimated 8-10 million of its people working all over the globe, our politics can be surprisingly short-sighted and insular.

While the present administration and the wannabe members of government are scrambling for shrinking domestic resources, the Philippines is missing out on the action in the region. Doing research on China, I came across this nifty little illustration in the UN Commission on Trade and Development's latest World Investment Report.

(Since I can't figure out how to put the link on the image itself, click here for full-size photo)

As you may notice, there is a conspicuous absence of arrows going into or out of our archipelago. I worry that the sort of inflow we are (again) attracting are short-term portfolio investments similar to the ones that triggered 1997 Asian Financial Crisis. The kind that can easily come in and out of our capital markets with a few keyboard strokes.

While there is some news of foreign direct investment (i.e. actual investment in production and sales, etc.), they are in real estate development and gaming. It is questionable whether either a string of hotels and a Manila version of 'Las Vegas' will generate long-term growth not based on local and tourist consumption.

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