The High Growth Economy of the Philippines and Its Implications

Yoon Ah Oh and Mingeum Shin

Once called the “sick man of Asia,” the Philippines has become the fastest growing economy in the region over the past two years. Its economy expanded by 6.6 percent in 2012 and it is expected to grow by 7 percent in 2013. High economic growth has been driven by remittances-fueled domestic consumption, the expanding BPO industry, and the construction boom. Increased public spending in infrastructure by the Aquino government also contributed to the high growth.

However, the economy’s structural vulnerabilities, which include chronic poverty, high inequality, persistent unemployment, high population growth, weak manufacturing, and low investment, remain largely unchanged. 28 percent of its population live in poverty and its exceptionally high inequality by regional standards has been largely unaffected by the recent growth. High population growth, which is largely created by a policy failure, puts considerable pressure on job creation and hinders poverty reduction. In addition to chronic unemployment, most jobs are in the informal sector and of low-wage and low-productivity. The situation has led to a growing concern that the Philippines may be experiencing “jobless growth.”

The Philippines went through “premature deindustrialization” where the economy developed without experiencing manufacturing-driven growth and moved into services. Services now dominate the Philippine both in terms of output and a share of employment. Yet except the BPO industry, the productivity of service sector is low and most of the employment in services is informal and of low quality.

Compared to other developing countries in Asia, investment in the Philippines has been low and stagnant. Low tax capacity, complex government regulations, and corruptions are blamed for low investment. Although recent governance reforms by the Aquino government led to an increase in FDI and public spending, further reforms may turn out to be an extremely difficult task due to political economy reasons.

Korea needs to consider a two-pronged approach to expand the Korea-Philippine economic cooperation considering the opportunities and challenges of the current Philippine economy. First, on the opportunity side, the positive outlooks for infrastructure investment and consumption markets offer attractive business opportunities to Korean businesses. The Philippine government will proceed with the large-scale infrastructure projects to improve the country’s inadequate infrastructure. High remittances and the high-performing BPO industry will continue to support the market for consumer goods. Korean businesses can tap into these opportunities. Second, to help the Philippine economy address its structural challenges, Korea needs to strengthen industrial cooperation with the Philippines in the manufacturing sector. This is indeed where Korea has been on the right track. Korea has already included the Philippine in its global supply chain in electronics and shipbuilding. Strengthening these ties will help create jobs and reduce poverty by helping promote the manufacturing sector in the Philippines.

국문요약

제1장 서 론
1. 연구의 필요성 및 목적
2. 선행연구와의 차별성
3. 연구방법과 구성

제2장 최근 필리핀 경제 고성장의 원인과 평가
1. 필리핀 과거 성장패턴과 최근 거시경제지표
2. 최근 필리핀 경제 고성장의 원인
3. 평가

제3장 필리핀 경제의 특성과 구조적 문제점
1. 빈곤과 빈부격차: 빈곤감소 없는 경제성장
2. 고용: 고질적인 고실업과 고용 없는 성장
3. 산업구조 불균형: 서비스 편중, 취약한 제조업, 낙후된 농업
4. 저조한 투자
5. 거버넌스 문제
6. 평가

제4장 한ㆍ필리핀 경제협력 현황과 시사점
1. 한ㆍ필리핀 경제협력 현황
2. 필리핀의 경제성장 패턴과 문제점이 한ㆍ필리핀 경제협력에 주는 시사점

제5장 결론

참고문헌

Executive Summary