The key to battling poverty in the Philippines is to boost the industrial sector which, unlike the business process outsourcing (BPO) sector, requires high capital investments and provides jobs to people with low educational attainment.
This is the gist of the Asian Development Bank (ADB) report released recently entitled “Taking the Right Road to Inclusive Growth: Industrial Upgrading and Diversification in the Philippines.”
While BPO is a great success, according to ADB Senior Country Economist Norio Usui, it has not created enough jobs to benefit the poor, as outsourcing employs only about one per cent of the labor force, consisting of mostly college graduates.
The ADB report notes that the Philippines had failed to generate inclusive , broad-based growth, despite high and sustained growth over the 2000s.
While GDP has indeed grown over the past few years, thanks to the BPO sector and OFW remittances, the country’s long-standing problems of unemployment, poverty, and low investments remain, the ADB infographic observes.
The key to more inclusive economic growth, according to the ADB, is to strengthen, expand and diversify the manufacturing sector, which can provide employment opportunities for the labor force, including the under-graduates.
Inclusive growth is defined by the ADB report as “involving productive jobs, expanding access to education and health, and building strong social safety nets.”
To achieve industrial growth, the Philippines must identify priority products that can give it competitive edge in export markets, like aquaculture, sugarcane, jewelry, musical instruments and fabrics.
Other measures suggested by the ADB paper are: improved infrastructure and better governance; private sector-government dialogues to address obstacles to increased investments in manufacturing; and strengthened innovation capability of firms.
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