The Role of Power Prices in Structural Transformation: Evidence from the Philippines

Majah-Leah Ravago, Arlan Brucal (), Jan Carlo Punongbayan and James Roumasset

MPRA Paper from University Library of Munich, Germany

Abstract: The Philippines provides a leading example of Rodrik’s Rule that developing countries experience deindustrialization at lower levels of per-capita income than did developed countries. Previous studies point to the role of protectionist policies, financial crises, and exchange rate overvaluation as explanations for the shrinking share of industry sector. We complement this literature by looking at how power prices influence the growth and composition of manufacturing in the Philippines, in comparison to OECD countries and Indonesia, Thailand, Malaysia, and Singapore. We find that higher power prices are associated with industry’s share turning downward at substantially lower levels of per capita income and that the decline is somewhat steeper. We find similar evidence for the movement of industry’s share in different regions of the Philippines. The composition of Philippine manufacturing, which stagnated in labor-intensive subsectors, provides supporting evidence that high power rates is likely to be a causal factor behind the structural transformation of the economy.

Keywords: power prices; structural transformation; industrialization (search for similar items in EconPapers)
JEL-codes: O14 Q40 (search for similar items in EconPapers)
Date: 2016, Revised 2017-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: The role of power prices in structural transformation: Evidence from the Philippines (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:87718

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