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The Philippines in global manufacturing value chains: A tale of arrested growth

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  • Prema-chandra Athukorala

Abstract

This paper aims to broaden our understanding of how the overall investment climate of a country conditions its potential for export-oriented industrialization through global production sharing by examining the Philippines’ experience from a comparative Southeast Asian perspective. In the early 1970s, the Philippines had promising preconditions for benefiting from the regional spread of Singapore-centered electronics production networks: deep-rooted colonial ties with US investors, geographical location, a large relatively better educated labour pool with widespread English-language proficiency, and an education system with potential for generating the required technical manpower. However, the industrialisation trajectory over the subsequent years has not lived up to the initial expectations. Manufacturing exports from the country have become increasingly reliant on low-end assembly process undertaken within export processing zones (EPZs) against the backdrop of deteriorating comparative performance within global production networks. The upshot of the analysis is that the lack-luster performance record is rooted in the dualistic incentive structure of the economy that ‘arrested’ the country’s participation in global production networks within the enclave EPZs. The EPZs, which were initially conceived as a harbinger of global integration of domestic manufacturing, eventually became ‘enclaves’ within the economy.

Suggested Citation

  • Prema-chandra Athukorala, 2021. "The Philippines in global manufacturing value chains: A tale of arrested growth," Departmental Working Papers 2021-22, The Australian National University, Arndt-Corden Department of Economics.
    • Handle: RePEc:pas:papers:2021-22
    as

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    File URL: https://acde.crawford.anu.edu.au/sites/default/files/publication/acde_crawford_anu_edu_au/2021-09/acde_athukorala_2021_22.pdf
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    References listed on IDEAS

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    Cited by:

    1. Hal Hill, 2021. "Philippine economic development, looking backwards and forward: An interpretative essay," Departmental Working Papers 2021-24, The Australian National University, Arndt-Corden Department of Economics.

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    More about this item

    Keywords

    Global production sharing; global manufacturing value chain (GMVC); foreign direct investment (FDI); free trade zones (FTZs); the Philippines; industrialization.;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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