Competitiveness, Income Distribution, and Growth in the Philippines: What Does the Long-run Evidence Show?
Felipe, Jesus; Sipin, Grace C. | June 2004
Abstract
This paper considers unit labor costs (ulcs), i.e., the ratio of the wage rate to labor productivity, as the indicator of competitiveness in the Philippines. It is shown that ulcs have an interpretation from the point of view of the functional distribution of income (i.e., the distribution of output between labor and capital). The paper documents the dynamics of the labor share in national income for 1980-2002, and provides an analysis of the long-run performance of the Philippine economy. The most salient features are: (i) decreasing wage rate (until the mid-1990s) and labor share; (ii) stable profit rate and increasing capital share: (iii) stagnant capital-labor ratio; (iv) decreasing capital productivity; (v) decreasing labor productivity (until the mid-1990s); and (vi) increasing markup, the latter interpreted as an indicator of the firms’ capacity to enforce a certain claim on profits against laborers and competitors, or as an index of the capacity of firms to exert anticompetitive practices. It is argued that these characteristics indicate that the country is submerged in a “low-level equilibrium trap.” This situation has profound implications for long-run growth and for the potential growth rate of the country, and explains the progressive deterioration of the Philippines during the last two decades, although some signs of recovery can be discerned.
Citation
Felipe, Jesus; Sipin, Grace C.. 2004. Competitiveness, Income Distribution, and Growth in the Philippines: What Does the Long-run Evidence Show?. © Asian Development Bank. http://hdl.handle.net/11540/1910. License: CC BY 3.0 IGO.Keywords
Development In East Asia
Development Planning
Development Research
Technology Development
Aid And Development
Asian Development Bank
Comprehensive Development Framework
Development Cooperation
Development Management
Development Planning
Development Strategies
Development strategy
Development models
Economic development
New technology
Rural planning
Aid coordination
Industrial projects
Infrastructure projects
Natural resources policy
Educational development
Economic development projects
Economic forecasting
Economic development projects
Municipal government
Technology transfer
Exchanges of patents and technical information
Technical education
Technology tCommunication in rural development
Communication in community development
Economic development projects
Development banks
Economic forecasting
Environmental auditing
Cumulative effects assessment
Human rights and globalization
Transfer Technocracy
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http://hdl.handle.net/11540/1910Metadata
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