Rising Growth, Declining Investment : The Puzzle of the Philippines

Bocchi, Alessandro Magnoli

World Bank, Washington, DC

关键词: ACCESS TO BANK;    ACCOUNTING;    ADVERSE EFFECTS;    AGGREGATE DEMAND;    AGRICULTURAL COMMODITIES;   

DOI  :  10.1596/1813-9450-4472
RP-ID  :  WPS4472

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

The economy of the Philippines is opento trade and capital inflows, and has grown rapidly since2002. Over the last 10 years, however, domestic investment,while stagnant in real terms, has shrunk as a share of GDP.In an open and growing economy, why the decline? Threereasons explain the puzzle.First, the public sector cannotafford expanding its investment at GDP growth rates.Second, the capital-intensive private sector does not findit convenient to raise investment at the economy'space.Third, fast-growing businesses in the service sectordo not need to rapidly increase investment to enjoy risingprofits. Yet, the economy keeps growing. On the demand-side,massive labor migration results in remittances that fuelconsumption-led-growth. On the supply-side, free fromrent-capturing regulations, a few non-capital-intensivemanufactures and services boost exports. The economic systemis in equilibrium at a low level of capital stock, where alleconomic agents have no incentive to unilaterally increaseinvestment and the first mover bears short-term costs. As aconsequence, growth is slower and less inclusive than itcould be. To make it speedier and more sustainable, and toreduce unemployment and poverty, the economy needs to moveto a "high-capital-stock" equilibrium. This wouldbe attainable through better-performing eco-zones, acompetitive exchange rate, greater government revenues, andfewer elite-capturing regulations.