The latest report, "Running Uphill: Growth, Jobs, and the Quest for Productivity," highlights significant economic developments in the Philippines since 2010. The economy has experienced rapid growth primarily driven by capital accumulation, which accounted for over 90% of the growth. However, productivity gains have been limited with total factor productivity contributing less than 10%, and human capital contributions being negligible.
Job creation has been robust with more than 11.7 million jobs added since 2010. Real wages have increased by an average of 24%. However, three out of four new jobs were in non-tradable sectors that typically show slower productivity growth.
Growth has been spatially inclusive and pro-poor. Low- and middle-income regions have led much of the post-2010 growth. Incomes for the bottom 40% have grown faster than those for the top 20%, reversing trends from previous decades.
Macroeconomic stability has played a crucial role. Inflation remained contained and fiscal sustainability was preserved despite large shocks, facilitating increases in public investment from 2.9% to 4.1% of GDP between 1999-2009 and 2010–2023.
However, challenges persist as growth and job creation are concentrated on non-tradables while export competitiveness has declined along with the number of export firms over the past decade.
Other challenges include regulatory complexity constraining business dynamism, lack of employment creation at scale by top firms, technology adoption constraints due to skills scarcity and lack of incentives, and recurring climate shocks affecting firms’ productivity and wages.
As the Philippines approaches upper-middle income status, it faces a steeper path ahead. Traditional drivers like demographics, remittances, and infrastructure are no longer sufficient to ensure convergence with high-income economies.
Global forces are reshaping how growth and jobs are created through technological disruptions altering labor markets and reducing job intensity of growth; recurring climate events redefining competitiveness; and potential stalling before reaching high-income status without structural reform.
The report outlines a reform agenda built around three strategic pillars:
Pillar I focuses on foundational investments in infrastructure and human capital including preserving public investment in connectivity, expanding transport logistics digital infrastructure; investing in early childhood nutrition education quality job-relevant skills; strengthening local government capacity public service delivery closing spatial social gaps.
Pillar II aims at creating a more competitive enabling business environment through streamlining business regulations reducing policy uncertainty; strengthening competition policy addressing barriers firm entry scaling exit; lifting cabotage restrictions reducing inter-island transport costs.
Pillar III emphasizes mobilizing private capital at scale by improving public-private partnership frameworks investment planning expanding support firms particularly new small ones accessing regional global markets technology services strengthening financing innovation ecosystem facilitating firms’ investment technology adoption research development.
If implemented as a package these reforms could transform Philippine growth trajectory raising long-term GDP growth by 1.4 percentage points creating additional 5.1 million jobs by 2040 boosting real wages by 12.9% with largest gains services industry ensuring progress widely shared through decisive reform sustaining faster-for-longer growth.