Transforming consumption-driven to investment-led economy

The Philippine National Economic and Development Authority has underscored the need to transform the structure of the domestic economy from consumption-driven to investment-led and employment-oriented in order sustain rapid growth.
Socio-economic Planning Sec. Arsenio Balisacan said that given the favorable macroeconomic fundamentals especially the fiscal sector and high business confidence, the government can accelerate the implementation of development programs that will shift the economy to a higher growth trajectory.
He noted that the industry sector has great potential to boost inclusive growth. For instance, the results of the April 2013 Labor Force Survey showed that while employment in agriculture fell by about 624,000 workers, employment in the industry sector grew by 3.8 percent or 224,000 workers from April 2012 to April 2013.
The quality of employment in the industry sector also improved, with the number of persons working 40 hours and over per week increasing to about 79 percent in April 2013, from 64 percent in April 2012, said Balisacan.

“This trend is also reflected in the increasing percentage of wage and salary workers, which rose to about 58 percent in April 2013 from 56 percent in April 2012.”

“The wage and salary worker category is often seen as an indicator of the quality of employment. So when that category is rising in relative terms, it suggests that the quality of employment in the country is also improving,” he said.

Balisacan stressed that NEDA’s drive to revitalize the domestic particularly manufacturing is closely related to its strategy to massively generate quality employment especially for low-skilled workers.

He cited the recommendations of the manufacturing industry roadmap compiled by the Philippine Institute of Development Studies (PIDS).

One of the recommendations is for the government over the next four years to focus on strengthening and rebuilding existing capacity of industries especially those with strong potentials to generate employment; addressing missing gaps and creating linkages and spill-over effects in sectors such as automotive, electronics, food, garments, motorcycle, shipbuilding, chemicals, and allied or support industries.

In the medium medim term from 2018-2021 as domestic capacities are utilized, efforts in the initial stage should lead to expansion and new investments especially in the upstream, immediate or core sectors such as parts and components industries. 

“By linking manufacturing with agriculture, construction, and services, supply chain gaps will be addressed and forward and backward linkages will be strengthened.  As these efforts continue, the objective of having a globally competitive manufacturing sector will be achieved,” said Balisacan.

“The measures and strategies that are needed to promote inclusion are also the ones needed to increase the country’s long-term competitiveness. For example, investing in human capital development, especially in health and education, will also enable us to develop a larger pool of potential S&T and R&D talents.”

“Improving access to transportation, energy, communications, and financing will enable closer interconnections between companies, suppliers, and industry sectors, thus increasing efficiency, reducing barriers to entry, and creating greater opportunities for innovation in products and processes.”

Balisacan said maintaining macroeconomic stability and a good business environment will help attract investments, thus creating employment opportunities and enabling more Filipinos to contribute to growth.

He also pointed out that inclusive growth requires deliberate policies that expand opportunities for remunerative employment and human development.

“It also demands development in the periphery through integration of the lagging areas or regions of the country with the fast-growing, leading areas or regions. Large-scale targeted programs also need to be in place to directly assist those who are unable to participate in the growth process.”

“Scientific and technological innovations can also promote inclusiveness, not only by promoting rapid growth, but through its direct benefits in improving quality of life, food security, and environmental protection,” Balisacan added