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The turnaround in Philippine growth: From disappointment to promising success

Author

Listed:
  • Felipe, Jesus
  • Estrada, Gemma
  • Lanzafame, Matteo

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 productivity 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.

Suggested Citation

  • Felipe, Jesus & Estrada, Gemma & Lanzafame, Matteo, 2022. "The turnaround in Philippine growth: From disappointment to promising success," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 327-342.
    • Handle: RePEc:eee:streco:v:62:y:2022:i:c:p:327-342
    DOI: 10.1016/j.strueco.2022.03.016
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    More about this item

    Keywords

    Bayesian model averaging; Kalman filter; Okun's law; Philippines; Potential growth;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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