Why promoting competition is key to the Philippines’ long-term competitiveness?

WE often conflate competition and competitiveness, the terms frequently invoked in economic policy discussions, yet subtly distinct.

- By Jaime Frias

The former, competition, describes the dynamic struggle among firms for customers and resources. Competition compels businesses to innovate and improve. The latter, competitiveness, refers to the capacity of firms, industries, or entire economies, like the Philippines, to outperform others incontestable markets, This capacity to outperform others, crucially, stems from the systematic development of productive capabilities.

The two are inextricably linked. Intense competition fosters an environment where merit-based outcomes prevail, channeling resources — talent, capital, and market share — to those who generate greater value. In essence, robust competition fuels national competitiveness.

The Philippines offers an interesting case study to examine the concepts of competition and competitiveness. The World Bank’s recent “Growth and Jobs” report, “Running Uphill: Growth Jobs, and the Quest for Productivity,” sheds light on how policy leaders can harness the power of competition to drive long term competitiveness of the Philippine economy.

For instance, Philippine firms engaged in export activities are significantly more productive than their non-exporting counterparts — around 20% more, on average. This suggests that firms exposed to the pressures of global competition strive to become and remain competitive.