23/05/2026
📢 𝗡𝗲𝘄 𝗙𝗮𝗰𝘂𝗹𝘁𝘆 𝗣𝘂𝗯𝗹𝗶𝗰𝗮𝘁𝗶𝗼𝗻
🎉🌻Congratulations to Dr. Karl Robert L. Jandoc, Dr. Carlos L. Vega, and Mr. Ivan Cenon V. Bernardo, on their respective chapter contribution to the book 𝘾𝙪𝙧𝙧𝙚𝙣𝙩 𝘼𝙘𝙘𝙤𝙪𝙣𝙩 𝘿𝙮𝙣𝙖𝙢𝙞𝙘𝙨 𝙖𝙣𝙙 𝙩𝙝𝙚 𝙋𝙝𝙞𝙡𝙞𝙥𝙥𝙞𝙣𝙚 𝙀𝙘𝙤𝙣𝙤𝙢𝙮: 𝘿𝙚𝙫𝙚𝙡𝙤𝙥𝙢𝙚𝙣𝙩𝙨 𝙖𝙣𝙙 𝙋𝙧𝙤𝙨𝙥𝙚𝙘𝙩𝙨, edited by Mario Lamberte and published by the Bangko Sentral ng Pilipinas (BSP).
📕About the Publication
This book critically examines the Philippines’ current account (CA) dynamics and their implications for long-term economic growth. Although existing studies have investigated the Philippines’ CA dynamics, this book differentiates itself through the comprehensiveness of the issues it covers and the depth of its analysis, providing sharper insights for policymakers. The book contains seven analytical chapters, excluding the introduction and concluding chapters.
The first analytical chapter (Chapter 2) examines the historical trends and developments in the current account of the Philippines and compares them with those of peer countries in the Southeast region. As Pakko (1999) pointed out, “In truth, deficits are neither causes nor symptoms of weakness, but are among the many macroeconomic quantities that are determined jointly by the decisions and interactions of households, firms, and governments in the United States and abroad” (p. 13). Thus, many studies have turned to analyzing the determinants of CA balances (e.g., Altayligil & Çetrez, 2020; Chinn & Ito, 2024; Lukas, Lee, & Sun, 2024; Uz, 2010; Vieira & MacDonald, 2020). The first analytical chapter, therefore, also includes an empirical analysis of the drivers of CA balances.
Bringing the analysis down to the country’s changing underlying economic fundamentals is necessary to appreciate the effects of the determinants of CA balances. Usui (2012) offers concrete ideas on this issue by placing structural transformation at the core of economic development. He points out that East Asian economies’ structural transformation has three dimensions: “first, output shifted from low-productivity goods into high-productivity ones, particularly manufacturing goods; second, the labor force moved from traditional activities in the primary sector to modern industry; and third, the export basket diversified toward more sophisticated products” (p. 9). Indeed, a fresh look at the Philippines’ structural transformation in the past few decades, focusing on changes in the structure of agriculture, industry, and services sectors, and the composition of exports and imports using more detailed product classification, can enhance one’s understanding of the country’s CA dynamics. Hence, the second analytical chapter (Chapter 3) provides an in-depth analysis of the country’s structural economic transformation.
Two significant components of the current account are trade in goods and trade in services. A study of CA balances should, therefore, examine the movements of these trades in detail. This book devotes a chapter to each.
Concerning trade in goods, although it covers both agricultural and manufactured products (including processed agricultural commodities), the latter is given more attention by analyzing the manufacturing sector’s role in the country’s economic development, in general, and in the Philippines’ export sector, in particular. The analysis includes unraveling subsectors’ revealed comparative advantage (RCA) and determining the factors that drive the manufacturing sector’s growth. As a small, open economy, the Philippines can exploit economies of scale by accessing world markets. One striking finding, though, by Felipe and Mehta (2016) is that the manufacturing output’s global share remained stable at around 17 percent between 1970 and 2010, indicating that countries must work harder to increase their market share. Product diversification and innovation can improve the quality of existing products, either by the production of new products or the lowering of the production costs of the same products, which can help the country increase its share in the global markets. Therefore, Chapter 4 examines the extent to which these developments have occurred or remained unexploited by the Philippines.
The consistent rise of the country’s services sector share in GDP from 49.9 percent in 1990 to 62.3 percent in 2023 and the role of India’s services sector in powering its economy in the last two decades have inspired many to think that a service-led economic growth can be a viable strategy for the country to pursue. However, some limitations to service-led growth must moderate this optimism, as pointed out by Atolia et al. (2018): it depends on global demand and exports. In the case of the Philippines, Usui (2012) pointed out that “the pace of productivity growth is not comparable to that of India’s services sector” (p. 44). Since then, rapid technological and policy changes and increased demand for services have impacted the Philippines’ services sector. This development suggests examining the revealed comparative advantage of services subsectors and analyzing the shift towards high-value-added services subsectors catering to domestic and foreign demand. Chapter 5 deals with these issues.
Although Levitt’s (1972) seminal paper sparked interest in the servicification of manufacturing, it is only in the last decade that it has been extensively discussed in the literature. “Servicification means that manufacturing increasingly depends on being able to buy service inputs, hire service professionals, and to sell service output” (National Board of Trade, 2016, p. 3). Firms do so due to the potential of servicification to boost their performance and increase their competitiveness in the domestic and foreign markets. Global value chain analysis can be enriched by considering that manufacturing firms also export services bundled with goods, as inputs embodied in exports of goods, or as activities within manufacturing firms (Miroudot & Cadestin, 2017). Despite such high interest in the servicification of manufacturing, few empirical studies exist (e.g., Lanz & Maurer, 2015; Low & Pasadilla, 2015; Haven & Marel, 2018). Therefore, this book devotes two chapters to the subject of servicification. Chapter 6 explores social network analysis to determine how many networks link services and manufacturing firms in the Philippines. Chapter 7 examines the effect of servicification on Philippine firms’ productivity and performance.
Policies significantly drive a country’s CA dynamics. Thus, Chapter 8 presents a historical analysis of the Philippines’ primary policy instruments, namely, industrial, fiscal, trade, and investment policies, from pre-World War II to the present, with an assessment of their consistency and effectiveness.
📍 Link:
https://www.bsp.gov.ph/Media_And_Research/Special%20Publications/BSP-Book-Current-Account-Dynamics-and-The-Philippine-Economy.pdf
