The FINANCIAL — MANILA, September 24, 2018 – Sustaining higher productivity growth will be key for the Philippines to achieve its vision of becoming a prosperous society free of poverty by 2040, according to a new World Bank study released here.
Titled Growth and Productivity in the Philippines: Winning the Future, the report finds that the more efficiently the country can use its resources (human capital, natural resources, machines, technology, knowledge, among others) the better chances it will have to generate high-paying jobs and reduce poverty. Productivity growth is particularly important for the agriculture sector where many poor families derive their incomes, the report adds.
The Philippines has introduced reforms in the late 1980s and 1990s that transformed the country into one of the top performers in East Asia today. Since 2010, it has been growing at an average of over 6 percent, and income per capita nearly doubled between 2000 and 2017. The Philippines is clearly in a better position now to speed up reforms to achieve its development goals, Warwick said.
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, the report says. 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.
According to the report, 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.