By Cai Ordinario, October 2 2018; Business Mirror
Image Credit to Business Mirror
In a statement, Neda Undersecretary for Planning and Programming Rosemarie G. Edillon said as long as the country’s high economic growth is sustained, the Philippines is safe from falling into such trap. The “middle-income trap” describes the situation of an economy that has escaped poverty but still unable to graduate into high-income status due to uncompetitive industries and underdeveloped human capital, among others.
In order to sustain the growth, Edillon said the Philippines and other middle-income countries (MICs) must cope with Industry 4.0 or the fourth industrial revolution, climate change and weak global demand.
“The MICs can avoid the middle-income trap by achieving higher levels of economic productivity through diversification, technological upgrading and innovation, including focusing on high-value-added sectors,” Edillon said in addressing the Third Ministerial Meeting of the Like-Minded Group of Countries Supporters of Middle-Income Countries last week.
Edillon said the Philippines is poised to increase its per capita income to $4,000 in 2019 and $5,000 in 2022, achieving its goal of becoming an upper-middle income economy.
She stressed that while the fourth industrial revolution presents opportunities to accelerate MICs’ economic growth, it can be disruptive.
“We need to ensure broad-based participation in this growth process. We need to improve human capital, especially of the poor, and aggressively address the digital divide. We need to ensure that the technology is accessible to all,” Edillon said.
Edillon added the Philippines has been moving forward in expanding its digital infrastructure on the governance fronts through the implementation of the first-ever national ID system.
On mitigating the impacts of climate change, Edillon reiterated that the Philippines has been supporting the principle of common but differentiated responsibilities, which is part of the United Nations Framework Convention on Climate Change.
Another pressing challenge, she said, is weak global demand resulting from countries’ protectionist policies of some advanced economies.
Edillon said this can be dealt with by stimulating domestic sources of growth and other measures including structural reform, better access to finance and technology, and better infrastructure to increase logistics efficiency, among others.
According to the Asian Development Bank, middle-income economies are
classified into two brackets: the lower middle-income and higher middle-income brackets.
Lower middle-income countries have a gross domestic product per capita of at least $2,000 but less than $7,250, while higher middle-income countries have a GDP per capita of at least $7,250 but less than $11,750. Nine Apec economies, including the Philippines, are currently classified by the World Bank as middle income and have remained as such since 1987, when formal income-based classifications began.
Edillon spoke at a high-level ministerial meeting during the 73rd United Nations General Assembly at the UN Headquarters in New York.
The first ministerial meeting was held on September 23, 2016. Included on its agenda are the promotion of greater political coordination among members of the like-minded group of countries, supporters of middle-income countries and the establishment of common areas of interest and lines of action.