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Why Has the Philippines’ Growth Performance Improved? From Disappointment to Promising Success

dc.contributor.authorJesus Felipe
dc.contributor.authorGemma Estrada
dc.date.accessioned2018-06-19T18:34:31Z
dc.date.available2018-06-19T18:34:31Z
dc.date.issued2018-04-15
dc.identifier.issn2313-6537 (print)
dc.identifier.issn2313-6545 (electronic)
dc.identifier.urihttp://hdl.handle.net/11540/8296
dc.description.abstractThis paper analyzes why the Philippines’ growth performance has improved significantly in recent years. As in the medium to long term actual growth adjusts to potential, we posit that the reason behind this improvement is that the country’s potential growth is increasing. We derive an estimate of the potential growth rate, defined as the growth consistent with a constant unemployment rate, through the notion of Harrod’s natural growth rate and Okun’s Law. Kalman filter estimation allows us to obtain a time series of potential growth rate for 1957-2017. Results corroborate that potential growth is increasing. It reached 6.3% in 2017, the highest value during the last 60 years. We find that in recent years, labor productivity growth (technical progress) accounts for most of the country’s potential growth rate, as the trend labor force growth displays a downward trend. A decomposition of labor productivity growth shows that the within effect accounts for 70% of it, and that most of it is due to manufacturing productivity growth. As actual growth in 2017 reached 6.7% and to maintain the growth momentum, Philippine authorities ought to focus on increasing potential growth to enable more room for growth in a stable macroeconomic environment. Finally, two key results emerge from our analysis of output and productivity growth, and employment. First, estimates of Okun’s Law indicate that the response of Philippine unemployment and visible underemployment to output growth is very small. However, the response of total underemployment is positive and significant. Second, productivity growth does not destroy employment.
dc.languageEnglish
dc.publisherAsian Development Bank
dc.rightsCC BY 3.0 IGO
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo
dc.titleWhy Has the Philippines’ Growth Performance Improved? From Disappointment to Promising Success
dc.typeWorking Papers
dc.subject.expertEconomic Crisis
dc.subject.expertEconomic Efficiency
dc.subject.expertEconomic Policies
dc.subject.expertRegional Economic Development
dc.subject.expertJob Evaluation
dc.subject.expertEvaluation
dc.subject.expertMacroeconomic
dc.subject.expertMacroeconomic Analysis
dc.subject.expertPerformance Evaluation
dc.subject.expertImpact Evaluation
dc.subject.expertEconomic Welfare
dc.subject.expertEconomic Incentives
dc.subject.adbCrisis
dc.subject.adbUnemployment
dc.subject.adbEconomic cooperation
dc.subject.adbGross domestic product
dc.subject.adbEmployment
dc.subject.adbEconomic forecast
dc.subject.adbEconomic indicators
dc.subject.adbGrowth models
dc.subject.adbGross domestic product
dc.subject.adbMacroeconomics
dc.subject.adbEconomic forecast
dc.subject.naturalFinancial crisis
dc.subject.naturalLabor economics
dc.subject.naturalRegional economics
dc.subject.naturalTurnover
dc.subject.naturalEconomic survey
dc.subject.naturalJob analysis
dc.subject.naturalLabor turnover
dc.subject.naturalInternational relief
dc.subject.naturalExports
dc.subject.naturalEconomic development projects
dc.subject.naturalEconomic policy
dc.subject.naturalEconomic forecasting
dc.title.seriesADB Economics Working Paper Series
dc.title.volumeNo. 542
dc.contributor.imprintAsian Development Bank
oar.themeEconomics
oar.themeEvaluation
oar.adminregionSoutheast Asia Region
oar.countryPhilippines
oar.identifierOAR-007882
oar.authorFelipe, Jesus
oar.authorEstrada, Gemma
oar.importTRUE
oar.googlescholar.linkpresenttrue


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