THE Philippine economy will grow at a ‘more of the same’ pace until 2050 unless the country’s economic policy centers on the modernization of agriculture and the development of the manufacturing sector, and the government adopts a ‘more active’ role, researchers from the De La Salle University (DLSU) warned.
On Wednesday, the DLSU launched a book with the title, ‘The Philippine Economy Toward 2050: Economic Structure and Monetary Reality.’
The book scrutinized the culprits behind the Philippines’s ‘relative’ economic stagnation compared with its Southeast Asian neighbors despite what the authors called ‘sustained optimistic government rhetoric.’
Upon developing the ANIMO econometric model of the Philippine economy which examined how the economy can ‘realistically progress’ by 2050, Arlene Inocencio, Professor and Dean of the Carlos L. Tiu School of Economics at De La Salle University said: ‘Under current structural dynamics, the economy will continue to grow, but not at a pace meaningfully different from recent experience.’
The result is what the authors describe as ‘more of the same’ (MOTS).
‘Per capita income will rise and poverty will decline, but the Philippines will not approach the income levels of South Korea, much less Singapore,’ Inocencio said in the foreword of the book.
She said achieving faster and sustained growth will require a ‘different economic structure’-one anchored on manufacturing and exports, and therefore active participation in global markets.
At present, she noted that most employment generation occurs in low-productivity services, such as retail and delivery.
The dean of DLSU’s School of Economics pointed out that the authors of this book ‘rightly note’ that the Philippines cannot industrialize today in the same way South Korea did in the 1970s.
Nonetheless, the authors argued that, ‘it is essential to identify competitive niches among the wide range of manufactured products produced globally.’
This process, Inocencio said, would also support the modernization of agriculture, which still employs more than 20 percent of Filipino workers at ‘low productivity and low wages.’
With this, Inocencio said high-income status will remain ‘unattainable’ as long as this sector remains ‘large and unproductive.’
Moving forward, she pointed out: ‘The critical question is whether Philippine firms possess the capabilities to compete, not only in domestic markets, but also globally.’
‘The uncomfortable reality is that many firms lack the organizational and technological capacity required to produce high-quality goods at scale,’ added Inocencio.
According to the book authors, looking beyond 2028, unless the government takes ‘decisive action’ to increase the potential of the economy: ‘We will continue to experience progress, but it will mostly be a continuation of the status quo.’
The authors’ forecasts also indicate that actual growth will be below 6 percent and that a large proportion of the workforce will ‘remain concentrated’ in low-productivity sectors.
‘Our long-run growth forecasts show that the economy will grow at rates below 6 percent until 2050. In fact, growth will slow to 4 percent by 2050. By 2040, our actual growth rate will decrease to 5.1 percent and, by 2050, to 3.6 percent,’ added the authors.
In her speech at the launching of the book, Inocencio emphasized: ‘We are used to hearing that the Philippines’s long stagnation relative to its neighbors is some kind of mystery. That we did everything more or less right and yet somehow fell behind. This book says plainly that there is no mystery. We did not industrialize the way our neighbors did.’
According to Inocencio, the Philippines did not build the manufacturing base that absorbs labor out of agriculture, raises productivity and competes abroad.
Instead, she said the country drifted into a ‘different path.’
‘And the numbers today are the honest consequence of that choice. Korea, Thailand, Indonesia, even Vietnam have moved ahead of us. This is not an accusation. It is a diagnosis,’ the dean of the School of Economics said.
The authors of the book are: Jesus Felipe, Mariel Monica Sauler, Christopher Cabuay, Alellie Sobreviñas, Susan Kurdli, Julián Pérez, Eva Marie Aragones, and Gerardo Largoza.