Exploring the prospects of services-led development for the Philippines

Abstract

The growing importance of the services sector has prompted an examination of possible pathways to maximize its impact, particularly on the quality of economic growth. Some emphasize promoting job creation and exports in the sector, in addition to ensuring that the services requirements of the rest of the economy are met. Others argue that the potential for services-led development depends on being able to replicate the features of industrialization by leveraging trade, technology, training, and targeting. There are also proponents of more active strategies on the demand side of labor markets. This paper discusses the interrelated issues the country must address in pursuing economic transformation through services. Priority actions include boosting productivity, expanding services outside the National Capital Region, implementing structural reform, strengthening exports of digital services, accelerating digitalization, and increasing innovation. For the Philippines, harnessing services to achieve broad-based and inclusive growth should be the essence of services-led development.

JEL classification: L80, L88