Sustaining the Philippine manufacturing sector

Abstract

The Philippine manufacturing sector is an anomaly in East Asia’s economic development experience in that it fails to provide the dynamic growth push the successful East Asian economies experienced. After undergoing a wrenching adjustment in the 1990s and early 2000s, the sector is likely to experience robust growth from impulses from other sectors of the economy and as its industrial restructuring process deepens and widens to industries and niches in which the country has comparative advantage. In the process, the sector contributes to broad-based growth in the country, the first ever in its post-World War II economic history. In this scenario, the country’s manufacturing sector will be essaying a model of manufacturing sector–overall economy interaction different from the historical experience of most East Asian economies. This scenario would demand improvement in the country’s investment climate, requiring not only economic and institutional reforms but also political reforms.

JEL classification: E62, H83, J24, L60