Manufacturing Policy Brief

Creating more and better jobs is the biggest challenge facing the Philippine economy. For the Philippines to achieve inclusive growth—as President Aquino has declared to be his principal goal for the remainder of his term—strengthening the manufacturing sector is imperative. No country has become a high-income economy without developing a strong industrial sector. Indonesia, Malaysia, Thailand, and Vietnam—economies exporting 2 to 4 times more than the Philippines—have each developed its industrial sector to over 40% of the economy, making industry and manufacturing a development backbone. But in the Philippines, the services sector holds a disproportionate share of GDP.

Fortunately, the Philippine economy has high potential to build on proven strengths in both high value-added and low-cost, labor-intensive manufacturing.