Economic System

Following the line of thinking of Gall (1977), “systems attract systems-people”, which would mean that a smaller system will have the opportunity to survive and grow within a bigger system that is friendly or akin to it. Example, a school that promotes quality education would attract quality teachers and students; an enterprise that calls for zero-defect production would attract precision officials and workers. This is also true with an economic system that supports entrepreneurship. It would attract entrepreneurs to put up businesses.

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Overtime the relationship becomes symbiotic for existence and growth. Among the existing economic systems in the world today, it is capitalism that is perceived to be conducive to entrepreneurial activities for its certain characteristics. Capitalism promotes the free market of enterprise, where businesses have the freedom to compete, which in return provides the society to exercise their freedom of choice, and with the limited role of the government to interfere with business decisions, the capitalist economic system is assured to remain as long as business enterprises tends to flourish.

Socio-Cultural Core Values Naisbitt (1996) has described the Asian countries divided by culture, language, political ideology, religious philosophies, and geography as an Old Asia that is now transforming into New Asia that is forged by economic integration, technology, especially telecommunications, and travel and mobility of people into one coherent region, just as many young people today throughout Asia, are beginning to call themselves Asians.

In his logically connected study on the growing economy of New Asia, including the Philippines of course, Naisbitt stated that it is the increase of small and medium enterprises in every country which has catapulted the economic growth of the entire region, and he mentioned some proven drivers beyond purely economics: a. From nation-States to Networks. With the intensifying network of businesses in the entire region fuels the small and medium enterprises to widen its trade relationship within the region, Chinese network of entrepreneurs is taking the lead;

b. From Traditions to Options. While it is widely believed that the West is losing moral standing internationally, the new Asian assertiveness in doing business that strongly involves Asian common values: strong family ties, hard work, respect for learning, honesty, self-discipline, and self reliance have defined a new way with which a common Asian country could adopt towards development, which is “Asianization” and not “westernization”;

c. From Government controlled to Market-Driven. Central government control and direction of economies of the region have shifted to market economies, fuelling an explosion of economic growth and opportunities (economic cooperation and coordination) among the small and business enterprises across the region; d. From Labor-Intensive to High Technology.

Where a dramatic shift from labor-intensive technology-enabled agricultural production and manufacturing has been observed as a strong factor for mass production; e. From Export-led to Consumer-Driven. As exports build up, consumer spending increases, middle class emerges where small and medium enterprises arise; f. From Male Dominance to the Emergence of Women. Looking at Chinese-network as an entrepreneurial model in Asia, apparently in China, women make up 25% of the entrepreneur. Financial Literacy

Kiyosaki (2001) explained in his book, Rich Dad Poor Dad, that an educated Dad stresses the importance of reading books, but end up as employee for the rest of his life and never had financial investment to meet both ends after retirement, while a rich dad stresses the need to master financial literacy if there is the desire to do business and build up an Empire State Building, and eventually retires with a financial investment that could be handed over to a financial-apprentice-successor.

Kiyosaki further stressed that without financial literacy, people end up buying liabilities that serves as financial leaks rather than assets that generate gains to add up on what has been invested (Figures 5-9, Cash Flow Formats). Indeed there are financial lending institutions on every country ready to help start up and existing small and medium enterprises. Here in the Philippines, there is the Planters Bank that has been outstandingly recognized for its focus in lending to start up and existing small and medium enterprises.

Its personnel even extend services as business development advisers in assisting customers, which are not widely practiced by other banks. Entrepreneur’s lack of financial literacy however, would have the strong tendency to become excessive and imprudent and would lost sight in its investment. Summary and Conclusion Small and Medium Enterprises (SMEs) could start up like any other businesses and could end up like any other businesses.

To easily distinguish them however, is to merely look at their total asset, inclusive of those arising from loans but exclusive of the land on which their office, land, and equipment are situated, ranging from PhP3,000,000. 00 to PhP100,000,000. 00. SMEs are recognized by the government as a positive solution to increase the number of employment in the country as well as add up to the country’s gross domestic production. For this reason, a development council has been created to assure the undertakings of the government will truly and beneficially cascade to all of them.

This initiative is a good start yet it requires stronger effort to develop the scorecards and cascade down the initiatives into measures and concrete program of actions to the various agencies being tapped to perform. According to DTI (2004), SMEs comprise 99. 6% of all the registered businesses in the country, have contributed 32% to the country’s total Gross Domestic Product, and have generated 70% employment for the country. In comparison with the other Asian countries, the Philippines ranks third in terms of SME establishments and ranks fourth in terms of employment.

The aggregate of these small and medium enterprises however, is like figure of a huge fish composed of tiny fishes. They are big in number but small value added. Strong research and development and intensified entrepreneurial administrative capability is seriously needed to harness the technical component and commercial component of an industry to produce high valued goods and services like Singapore has: semi-conductor, electronic chips, mobile chips, efficient port operation services, back office operations, and business process outsourcing.

What differs Philippine SMEs to the other SMEs in U. S. , Europe, and the rest of Asia, is their concentration on light and medium consumable goods more than services and high valued commodities and services. The entrepreneurs are the stakeholders of SMEs that could thrive particularly in a capitalist economic system, driven with socio-cultural values, and pragmatic financial literacy. As clearly observed, the stiff economic competition of U. S. and Europe is putting the Asian countries in a very disadvantage position.

The socio-cultural values displayed by Asian countries are something that should continue to intensify. Hoecklin (1995) has vividly defined the road of globalization: the entire region has to develop global economies of scale but at the same time be responsive to local environment; has to continuously nurture culture bound diversity, yet at the same time keep integration; and has to maintain flexibility and at the same time be focused. Cultivating Asian core values would lead to a greater chance of success to build up milestones on the road of globalization.

Why China has become the entrepreneurial model in Asia? Sanchez (2007) in his book entitled: 8 Secrets of the Truly Rich, Chinese parents inculcate into the minds of their children that they have to study well in order for them to build up their business empire, while Filipino parents inculcate to the minds of their children to study well in order to find a high paying job. The rest is history. Chinese network is now dominating small and medium enterprises in the entire Asia, while Filipinos are dominating employment all over Asia.