Philippine Productivity Dynamics in the Last Five Decades and Determinants of Total Factor Productivity
By: Llanto, Gilberto M.,
Philippine Institute for Development Studies
Published in 2012 as Discussion Paper, available at the PIDS Library and can be downloaded as DP 2012-11
45 pages
Downloaded 276 times since May 08 2012
Keyword/s: total factor productivity, economic growth, Philippines, labor productivity growth, openness,
Various studies showed that total factor productivity (TFP) has not been a source of growth in the Philippines. It seems that factor accumulation, which is not a sustainable source of growth, has underpinned Philippine economic growth. Studies have also shown that the sustained growth of developed countries has ridden on the back of technological advances rather than on increasing use of factor inputs. Total factor productivity improvement is the only route to sustain economic growth in the long run. After a brief review of economic growth and productivity dynamics of the Philippine economy in the past fifty years, the paper provides an estimation of the determinants of total factor productivity and labor productivity. In the light of the empirical findings reported in this paper, some policy levers present themselves as critical in improving productivity growth in the economy. Investments in education, more government expenditure for improving human capital, greater openness of the economy, and macroeconomic stability are indispensable.