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publication September 24, 2018

Growth and Productivity in the Philippines: Winning the Future

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Key Findings
  • Sustaining higher productivity growth will be key for the Philippines to achieve its vision of becoming a prosperous society free of poverty by 2040.
  • The Philippines’ ability to sustain its current high growth rate will depend primarily on two factors: how the country can accelerate investment in improving its physical infrastructure, and how it can make better use of capital, labor, and technology to increase productivity. 
  • Productivity growth is particularly important for the agriculture sector where many poor families derive their incomes.
  • To achieve its long-term vision of becoming a prosperous middle-class country free of poverty by 2040, the Philippines will need to triple its income per capita in the next two decades. To reach that level of income, the Philippine economy will need to grow at an annual average rate of 6.5 percent in the next 22 years, faster than its average growth rate of 5.3 percent since 2000.
  • Sustaining higher productivity growth will require removing constraints affecting the country’s entrepreneurs, potential investors, farmers, and other producers. Among these constraints are low domestic and foreign competition, especially in key sectors like telecommunications, transport, and electricity; regulations that are stifling entrepreneurship and small and medium-enterprises; and restrictions on foreign participation in the economy.
  • The recommendations focus on three areas for reforms: improving market competition through regulatory reforms, simplifying regulations for trade and investments, and reducing labor market rigidities and costs.