The turnaround in Philippine growth: From disappointment to promising success

College

School of Economics

Department/Unit

Economics

Document Type

Article

Source Title

Structural Change and Economic Dynamics

Volume

62

First Page

327

Last Page

342

Publication Date

2022

Abstract

Philippine actual growth performance has improved during the last two decades. We obtain potential growth rate estimates for 1959-2019 using Kalman filter estimation of Okun’s law. We find that potential growth has been increasing since the mid-1990s. It reached 6.1% in 2017-2019, the highest during the last six decades. As the trend labor force growth displays a downward trend, potential labor productivity growth has accounted for most of the country’s potential growth rate recently. A decomposition of labor productivity growth shows that within-sector productivity growth accounted for 79% of overall labor pro- ductivity growth during 2009-2019. Most of the within-sector effect is due to manufacturing productivity growth. Analysis of the robust determinants of potential labor productivity growth using Bayesian Model Averaging indicates the relevance of proxy variables of both within-sector and reallocation effects, as well as of policy uncertainty.

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Digitial Object Identifier (DOI)

10.1016/j.strueco.2022.03.016

Disciplines

Economics

Keywords

Kalman filtering; Economic development--Philippines

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