WHO do you think is going to be the president of the Republic of the Philippines in year 2167? Who are the senators? The Estradas? The Rectos? The Enriles? The Osmeñas? The Aquinos? The Cayetanos? The Santiagos? Or the likes of Senator Manuel “Lito” Lapid? Will we even have senators by then?

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What about the congressmen? The De Venecia great-great grandchildren? Or will they be the spawn of the Mitras, the Arroyos or the Marcoses?

Whoever gets to rule the legislative roost, the Philippines, according to the Commission on Growth and Development (CGD), will become a First World Country in, oh, 159 years.

This means that the Philippines will finally become an economic powerhouse like Japan, EU and, if it manages to reverse its current economic freefall, the U.S. – all of which belong to the Organization for Economic Cooperation and Development (OECD).

This prediction is part of the findings of the final report of the Commission on Growth and Development titled “Growth Report: Strategies for Sustained Growth and Inclusive Development.” The commission is co-funded by the World Bank, the William and Flora Hewlett Foundation and the governments of Australia, Sweden, the Netherlands and United Kingdom.

In effect, therefore, the report points out that the Philippines would not become part of the OECD if its government could not meet the economic growth of today’s first world countries.

“Growth is not an end in itself,” the CGD report states. “But it makes it possible to achieve other important objectives of individuals and societies. It can spare people, en masse, from poverty and drudgery. Nothing else ever has. It also creates the resources to support health care, education and the other Millennium Development Goals to which the world has committed itself. In short, we take the view that growth is a necessary, if not sufficient, condition for broader development, enlarging the scope for individuals to be productive and creative.”

Estimating growth rates

The report also sought to describe the differences in the economic performance of developing countries by estimating the growth rate it would need to achieve to catch up with industrialized countries at a given date, in this case, 2050 and 2100.

In the report, the commission says that using data from 1996 to 2006, the country only grew by a maximum of 4.3 percent and an average of 2.2 percent. To catch up with OECD countries using this data, the commission said the Philippines needs 159 years to become fully industrialized.

However, if the country wants to catch up by 2050, it will need sustained growth of 6.5 percent; and to catch up by 2100, the country needs a GDP of 4.1 percent.

“Because industrialized countries’ secular growth rate is about 2 percent per capita, developing countries need to grow at much higher rates to catch up,” the report states.

“Many countries have an average per capita growth rate for the decade well below the OECD secular per capita growth rate, implying that they would never catch up at such rates. On the other hand, [data show that] all countries grew at a rate above 2 percent in at least one year. Using this rate renders the calculation mathematically feasible, but its economic meaning needs to be interpreted carefully,” the report warned.

Meanwhile, since 1960, the report says only six of the 25 largest developing countries in the world have grown faster than 3 percent in terms of per capita while 10 had growth rates below 2 percent.

The report implies that many developing countries like the Philippines have fallen farther behind industrialized countries’ incomes.

The Philippines’ real GDP in 2006 was $99 billion, which contributed 1.2 percent to the total real GDP of developing countries in 2006.

The country’s real compound annual GDP growth rate from 1980 to 2006 was 2.9 percent, while per capita GDP grew by 0.7 percent.

On the other hand, the report said, the Philippines’ real GDP from 1960 to 2006 grew by 4 percent while per capita GDP grew by 1.4 percent.

Export and ‘mobile’ labor

The report adds, “Growth strategies that rely exclusively on domestic demand eventually reach their limits. The home market is usually too small to sustain growth for long, and it does not give an economy the same freedom to specialize in whatever it is best at producing.”

It also notes that “catch-up growth is also made possible by an abundant labor supply.” It continues, “As the economy expands and branches out, new ventures draw underemployed workers out of traditional agriculture into more productive work in the cities. Resources, especially labor, must be mobile. No country has industrialized without also urbanizing, however chaotically.”

The report also emphasizes the need for a strong leadership and effective government to attain economic growth.

The report says “an increasingly capable, credible and committed government” is important, particularly in achieving catch-up growth.

The commission says policymakers need to choose a growth strategy, communicate their goals to the public and convince people that the future rewards are worth the effort, thrift and economic upheaval.

“[Policymakers] will succeed only if their promises are credible and inclusive, reassuring people that they or their children will enjoy their full share of the fruits of growth,” the report asserts.

Passable roads and reliable electricity

The report also highlights the need for impressive rates in public investment for infrastructure, education and health, especially when attaining rapid economic growth.

Investments for these sectors pave the way for new industries to emerge and raise the return to any private venture that benefits from healthy, educated workers, passable roads and reliable electricity.

“Growth entails a structural transformation of the economy, from agriculture to manufacturing, from a rural work force to an urban one. This transformation is the result of competitive pressure. Governments committed to growth must therefore liberalize product markets, allowing new, more productive firms to enter and obsolete firms to exit. They must also create room to maneuver in the labor market, so that new industries can quickly create jobs and workers can move freely to fill them,” the commission points out.

Launched in April 2006, the Commission on Growth and Development brings together 21 leading practitioners from the government, business and the policymaking arenas, mostly from the developing world.

The commission is chaired by Nobel Laureate Michael Spence, former dean of the Stanford Graduate Business School. Danny Leipziger, vice president of the World Bank, is the commission’s vice-chairman.