The Philippines has languished in the lower middle-income country (LMIC) classification for nearly four (4) decades, closely approaching the threshold set for upper middle-income countries (UMICs) in 2019 before the COVID-19 pandemic disrupted this transition. Under the Philippine Development Plan (PDP) 2023-2028, the Philippines is targeting to finally attain UMIC status by 2025. With this goal, this paper endeavors to identify the necessary interventions that will facilitate this transition, sustain the country’s economic growth, and be on course to achieve the Ambisyon Natin 2040.
Utilizing a dynamic ordered logistic model with fixed effects grounded on the PDP as its conceptual framework, the study explores the factors that contribute to attaining a higher income status. The findings underscore the pivotal role of human capital development on increasing the probability of attaining a higher income status. Additionally, a well-functioning labor market, robust macroeconomic fundamentals, expanded physical and digital connectivity, and credible and reliable institutions emerge as significant drivers. In line with these results, the paper proffers a policy agenda framework to scale up the middle-income ladder towards UMIC status through productivity-enhancing and equity-inducing policy reforms by developing human capital, transforming production sectors, and fostering an enabling environment.