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

Prema-chandra Athukorala ()

Departmental Working Papers from The Australian National University, Arndt-Corden Department of Economics

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.

Keywords: Global production sharing; global manufacturing value chain (GMVC); foreign direct investment (FDI); free trade zones (FTZs); the Philippines; industrialization. (search for similar items in EconPapers)
JEL-codes: F13 F21 F23 O14 O53 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2021
New Economics Papers: this item is included in nep-int and nep-sea
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