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Integrating SMEs into the East Asian Region: Philippines


  • Medalla, Erlinda M.
  • Aldaba, Rafaelita M.
  • del Prado, Fatima
  • Yasay, Donald


The paper aims to examine the characteristics and factors that constrain the growth of SMEs that are operating within and outside production networks. Based on a survey of 101 firms, the analysis shows that SMEs are not homogeneous. While they share certain characteristics such as age, Filipino ownership, and foreign equity share; they differ in terms of performance export intensity, interest rates on borrowings, major sources of finance, and other economic indicators. The results also show that participation in IPNs benefits SMEs particularly parts and components makers in the electronics and auto industries. In terms of performance, IPN firms have higher mean growth rate and mean labor productivity than non-IPN firms. In terms of barriers to growth, IPN firms are primarily concerned with product and price barriers and difficulties in establishing and maintaining trust with business partners while non-IPN firms’ major concerns are tax, tariff and nontariff barriers and the country’s deteriorating business environment. Two themes dominate SMEs’ concerns on the type of assistance needed. For IPN firms, financing assistance would be crucial while for non-IPN firms, technology development would be the most important.

Suggested Citation

  • Medalla, Erlinda M. & Aldaba, Rafaelita M. & del Prado, Fatima & Yasay, Donald, 2010. "Integrating SMEs into the East Asian Region: Philippines," Discussion Papers DP 2010-31, Philippine Institute for Development Studies.
  • Handle: RePEc:phd:dpaper:dp_2010-31

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    References listed on IDEAS

    1. Epifani Paolo, 2003. "Trade liberalization, Firm Performances and Labor Market Outcomes in the Developing World, what Can We Learn From Micro-Level Data?," Rivista italiana degli economisti, Società editrice il Mulino, issue 3, pages 455-486.
    2. Chand, Satish & Sne, Kunal, 2002. "Trade Liberalization and Productivity Growth: Evidence from Indian Manufacturing," Review of Development Economics, Wiley Blackwell, vol. 6(1), pages 120-132, February.
    3. Marc-Andreas Muendler, 2004. "Trade, Technology, and Productivity: A Study of Brazilian Manufacturers, 1986-1998," CESifo Working Paper Series 1148, CESifo Group Munich.
    4. Krishna, Pravin & Mitra, Devashish, 1998. "Trade liberalization, market discipline and productivity growth: new evidence from India," Journal of Development Economics, Elsevier, vol. 56(2), pages 447-462, August.
    5. Mary Amiti & Jozef Konings, 2007. "Trade Liberalization, Intermediate Inputs, and Productivity: Evidence from Indonesia," American Economic Review, American Economic Association, vol. 97(5), pages 1611-1638, December.
    6. Mary Hallward-Driemeier & Giuseppe Iarossi & Kenneth L. Sokoloff, 2002. "Exports and Manufacturing Productivity in East Asia: A Comparative Analysis with Firm-Level Data," NBER Working Papers 8894, National Bureau of Economic Research, Inc.
    7. Harrison, Ann E., 1994. "Productivity, imperfect competition and trade reform : Theory and evidence," Journal of International Economics, Elsevier, vol. 36(1-2), pages 53-73, February.
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    Cited by:

    1. Khor, Niny & Sebastian, Iva & Aldaba, Rafaelita, 2013. "Enterprises in the Philippines: Dynamism and Constraints to Employment Growth," ADB Economics Working Paper Series 334, Asian Development Bank.
    2. Israel, Danilo C. & Medalla, Erlinda M. & Milo, Melanie S. & Aldaba, Rafaelita M. & Briones, Roehlano M. & Llanto, Gilberto M. & Rosellon, Maureen Ane D. & Galang, Ivory Myka R. & Navarro, Adoracion M, 2013. "The ASEAN Economic Community and the Philippines: Implementation, Outcomes, Impacts, and Ways Forward (Full Report)," Discussion Papers DP 2013-01, Philippine Institute for Development Studies.
    3. Aldaba, Rafaelita M., 2012. "Small and Medium Enterprises` (SMEs) Access to Finance: Philippines," Discussion Papers DP 2012-05, Philippine Institute for Development Studies.
    4. Aldaba, Rafaelita M., 2013. "ASEAN Economic Community 2015: SME Development - Narrowing Development Gap Measure," Discussion Papers DP 2013-05, Philippine Institute for Development Studies.


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