Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/306796 
Year of Publication: 
2024
Series/Report no.: 
UPSE Discussion Paper No. 2024-05
Publisher: 
University of the Philippines, School of Economics (UPSE), Quezon City
Abstract: 
Using time series data from 1945 to 2023, this paper develops stylized facts to trace the historical origins of the Philippines' narrow economic base. Econometric models are then estimated to analyze the drivers and benefits of economic diversification in the Philippines. The empirical results suggest that reindustrializing the domestic production base can significantly enhance economic diversification. Strategies that accelerate the growth of local industries, especially to catch up with the dominant services sector, are vital. Effective policies should focus on developing physical and human capital, improving connectivity, and fostering domestic innovation. This push for greater diversification is justified by its potential benefits on output and growth stability, and diversification and growth of exports. The paper also explores various routes towards economic diversification and industrial upgrading in the Philippines using the product space approach. The first route is directed towards leapfrogging to a more sophisticated economic structure in the product space. The second route points at climbing the value ladder within global value chains. The third route leads to the strengthening of the local industrial base that is heavily populated by small and mediumsized establishments.
Subjects: 
economic diversification
industrial upgrading
structural transformation
manufacturing
exports
product space
global value chains
SMEs
Philippines
JEL: 
L16
O14
O25
O33
Document Type: 
Working Paper

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