As it has missed out on the foreign direct investments, the Philippines has been left behind in the regional integration that led to the deterioration of the manufacturing sector.
Josef Yap, president of the Philippine Institute for Development Studies (PIDS) said this led in part to the slower poverty reduction in the country.
In his presentation on “Regional Economic Integration and Inclusive Growth” yesterday, Yap said manufacturing in then Philippines did not benefit as much the other countries in the production network of the dispersal of facilities by multinationals in the region.
For one, Yap said at the time FDIs started to flow from countries like Japan in the 1980s, the Philippines was in a political turmoil and was carrying a heavy debt burden and was suffering from poor infrastructure.
FDI inward stock as of 2009 to the Philippines stood at $23.559 billion, the lowest among six countries, overtaken even by Vietnam which received $52.82 billion in FDIs that year.
“We did not participate in the regional production network. It’s a contradiction, we had high percentage (of utilization) in exports and imports but manufacturing deteriorated,” Yap said.
He said this is because the Philippines was mostly importing components, assembling them here and is reexporting those as finished products.
“There’s little value added,” Yap said.
The share of manufacturing to GDP in the Philippines continues to decline, 21.4 percent from 27.7 percent in 1980; 27 percent in 1985; 26.8 percent in 1990; 24.7 percent in 1995; 24.5 percent in 2000 and 23.6 percent in 2006.
The share of manufacturing to GDP of Thailand is a high of 35.6 percent in 2010.
“A more dynamic manufacturing sector would have provided more higher-paying jobs to the less-educated workforce, thereby making poverty reduction faster,” said Yap. –Malaya
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