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9.27.2006

Global Competitiveness Reports

With so many "Great Minds" running around and proclaiming "Expert Opinions", it is unavoidable for the public to get confused. A good example is the Global Competitiveness Index, with the Philippines, as a case in point.

Despite the recent climb of its currency (Peso), the increasing Forex reserves of its Central Bank and the successful restructuring of its foreign debts, the Philippines went down to #126 (from 121) in the 2006 annual global competitiveness rank, according to a study conducted by the World Bank.

In contrast, two similar studies (released earlier) showed gains. Reports published by the World Competitiveness Center (WCC) and the World Economic Forum(WEF) both showed upgrades by a few steps. WCC reported the Philippines to have climbed from from #51 to #49, while WEF's study showed an ascend from #73 to #71.

The contrasting reports, therefore leads to a number of questions, including:
- Which study is the most reliable?; and,
- How are the Global Competitiveness Ranks determined?

To be able to find the answers, all three studies mentioned will have to be scrutinized.

En este momento, kindly enlighten us.. What do you think?

9.25.2006

Oil Prices

This should be a very good piece of info for import dependent economies. Oil prices are down by US$17/ barrel.

Of course, Oil exporting countries are not very happy with this news. However, prices have been steadily rising, the past several months and most of the world has been praying for its halt, at the very least. Just a couple of years ago, the price of Crude Oil was about half of the current level.

Where is the price of Crude Oil headed? Some predict some increases in the short term but what really scares me is the calculation that the real value of Oil is about thrice its worth today.

What do you think?

What drives an entrepreneur

Excerpts from an article written by Ed Morato, one of the most respected professors at the Asian Institute of Management:

"The Global Entrepreneurship Monitoring (GEM) Report (2001) cited a strong correlation between entrepreneurial activity and economic growth as revealed by their studies on 29 countries. For the Philippines, this was validated by the writer's time series analysis (1970-2001) showing the correlation between the establishment of new enterprises and gross domestic product (GDP).

From the 21-year data base, the researcher discerned a revealing pattern. The dramatic growth in new enterprises coincided with periods of high political and social stability (i.e. the first seven years of martial law, the first three years of President Cory Aquino's government and the entire six years of President Fidel Ramos). The abrupt entrepreneurship falls coincided with periods of high political and social instability (i.e. the waning years of President Ferdinand Marcos when he was reportedly sick, the last three years of Aquino following the military coups and power crisis, and the years of President Joseph Estrada).

The researcher concluded that political and social stability is the necessary condition that would create an attractive economic environment for entrepreneurship."

In conclusion, he wrote;

"From the 59 specific factors, the researcher concluded that seven general factors influence entrepreneurship significantly. These are the following:

1. Macroenvironmental factors: Political, economic and social
2. Cost of doing business: Includes logistics and transport costs, utilities, credit, taxes, incentives, informal and extra-legal costs
3. Cost of producing products and delivering services: Includes raw materials, supplies, semi-processed goods, cost of servicing customers, professional services, labor costs, overhead expenses, rent, etc.
4. Market opportunities: Actual and potential demand and supply conditions, market and customer characteristics, needs and wants, market structure and environment, market trends
5. Industry clusters: The concentration of competing and complementary enterprises within an area
6. Ancillary and Related Industries: Industries and enterprises that comprise the supply and market chains of a major industry grouping
7. The Entrepreneurs: The characteristics, traits, personal conditions, background, talents, skills, education, training and history of the entrepreneurs themselves

The survey yielded a major conclusion: Entrepreneurs, first and foremost, look at themselves, their personal capital and their capacity to run an enterprise before venturing into business.

At the same time, they are very sensitive to the investment signals sent by the macro environment. If the investment climate looks favorable, they muster the confidence to invest.

Next, they assess the basics of producing their products or services, which are driven by the two major costs--raw materials and labor costs--and by the cost of doing business--led by infrastructures and utilities. Then, they evaluate the industry cluster conditions, focusing on the availability of capital, raw materials and natural resources."

Along with this, entrepreneurs examine the related, ancillary and support services they can avail of. Finally the entrepreneurs discern the attractiveness of the market opportunities presenting themselves in terms of their profit and growth potentials.

Read the entire article here

Effective Leadership

Today, John Maxwell writes:

Leadership is Influence

"I couldn't have said it any better. You don't need a title to be a leader in life. And the simple fact of having a title won't make you a leader.

"I've found that everyone has the opportunity to lead, every day. It doesn't matter what your position is, or how long you've worked at your job, whether you help to run your family, a PTA committee, or a Fortune 1000 company. Anyone at any level can learn to be a leader and help to shape or influence the world around them.

"Do you shape your life and career?

"Do you inspire or influence others?

"Do you work to achieve specific goals by working with or coordinating the efforts of others?

"If you answered "yes" to any of these questions whether you realize it or not, you are a leader.

"Leadership expert John Maxwell describes leadership as positive influence. That is the most simple and elegant definition of leadership I know.

"In my experience, people lead for different reasons. The one thing they do have in common is passion -- passion for life and for what they do.


Furthermore, he noted;


How Does a Leader Act?

"What are the key characteristics of titled and untitled leaders?

They:

Believe they can positively shape their lives and careers.
Lead through their relationships with people, as opposed to their control over people.
Collaborate rather than control.
Persuade others to contribute, rather than order them to.
Get others to follow them out of respect and commitment rather than fear and compliance.

Read the entire article here

9.15.2006

A BIT ABOUT ROAD SAFETY, TAXES AND PUBLIC GOODS

The road was a bit slippery, last Sunday morning, and I saw a motorcycle cop, sans a crash helmet, leisurely driving his bike on a highway. Please take note of the salient words of my previous sentence. It was a SUNDAY, on a HIGHWAY (speedway), the road was SLIPPERY and he WAS NOT WEARING A CRASH HELMET. In addition, the cop swerved his bike from the leftmost lane towards the opposite side, as if he was the only soul in that part of the planet.

To add a few more observations, his upper garment looked like a sweater, embroidered with the name of his unit. I wonder if it was an official Police officer’s uniform.

In relation to my discourse for today, let me start by saying that ordinary citizen’s pay taxes through direct means, like income taxes, and indirect methods, through the purchase of cigarettes and other taxed commodities. The income tax is quite easy to figure out but what about the purchase of cigarettes? Well, cigarettes are heavily taxed and whenever consumers buy it, they are, in effect, shouldering the tax being levied by the government.

The Taxes collected by the government are used to pay for public goods (and services) that the society enjoys. Classic examples of public goods include traffic lights, public schools, public highways and national defense. In relation to this topic, relevant examples of public goods/services would be the Highway Patrol and Public Safety.

Therefore, it is quite accurate to say that government employees (Cops) are being paid by the taxpayers to “Serve & Protect”.

In last Sunday’s incident, the cop did something contrary to the character that he was being paid to perform. Instead of being a role model and an enforcer of road safety, he intentionally endangered himself and posed as a hazard to the neighborhood.

The cop, at that instant, was providing the community with a “Public Bad”. I had the urge to refer to it as a government failure but unfortunately, economics has a different definition.