Tuesday, 19 October 2010 12:55
The Philippines along with Pakistan are projected to exceed their historical average economic growth over the next two decades, faster than other Asian countries, according to Asian Development Bank (ADB).
In its study titled, "Economic Growth in Asia: Determinants and Prospects," the Manila-based lender found out the gross domestic product (GDP) projections for the next two decades tended to be lower than historical performance of the 12 developing Asian economies.
"Only in Pakistan and the Philippines did GDP growth projections turn out to be higher than past figures," ADB said.
The lender projected that the Philippine economy, as measured by GDP for 2011 to 2020 and 2021 to 2030 are likely to grow at annual average of 5.96 percent and 5.53 percent, respectively.
These were higher than the actual annual growth rates of 2.02 in 1981 to 1990; 3.76 percent, 1991 to 2000 and 4.81 percent, 2001 to 2007.
From 1981 to 2007, the country's annual GDP growth rate was 3.39 percent. ADB said GDP growth in the Philippines was driven by labor and capital in 1980s and 1990s.
In 2000s, the total factor productivity (TFP) growth had gained the top spot among the sources of GDP growth, with a share of about 45 percent.
Labor growth was still second, contributing 28 percent and capital was a close third, accounting for about 20 percent of the total GDP.
ADB said the TFP was projected to contribute more to GDP growth over the next two decades especially in Indonesia, the Republic of Korea, Malaysia, Pakistan, the Philippines, Thailand, and VietNam. Philippine TFP is projected to grow 2.2 percent for 2011 to 2020 and 2.03 for 2021 to 2030.
TFP is a productivity measure that combines labor and capital. Pakistan is projected to grow 6.76 percent in 2011 to 2020 and 6.33 percent in 2021 to 2030.
Other Asian countries like China is estimated to grow 6.09 for 2011 to 2020 and 4.98, 2021 to 2030; Hong KOng, 4.40 percent and 2.83 percent; India, 4.67 percent and 4.28 percent; Indonesia, 4.66 percent and 4.12 percent; Republic of Korea, 4.39 percent and 3.42 percent; Malaysia, 5.51 percent and 4.79 percent; Singapore, 5.24 percent and 3.28 percent; Taipei, China, 3.68 percent and 2.48 percent; Thailand, 4.01 percent and 3.58 percent and Vietnam, 4.86 percent and 3.74 percent.
"The region’s economic expansion has generally been marked by robust growth in capital accumulation. While labor input, education, and TFP have on the whole been positive as well, their contributions to GDP growth have been much more moderate," ADB said.
For Asia to continue growing strongly, ADB said economies should either increase their rates of factor accumulation or raise productivity, adding that authorities can implement various reforms to achieve these.
"The majority of the 12 developing Asian economies have already registered high rates of capital accumulation in the past 3 decades, and the marginal productivity of capital is set to decline. But if the investment climate is kept attractive, such as through improvements in property rights protection, capital could continue to flow into the regional economies," ADB said.
In addition, ADB said improvements in productivity, such as through greater spending on R&D, could increase GDP growth in 2011–2030.
"Our simulation results confirm that improvements in government policy relating to education, property rights, and R&D can increase our projected GDP growth significantly," ADB said.
In a reform scenario, ADB said GDP growth will increase by more than 1 percentage point in the China, India, Indonesia, Pakistan, the Philippines, and Viet Nam.
This means that the Philippines GDP may grow an annual average of 7.09 percent for 2011 to 2020 and 6.81 percent for 2021 to 2030.
"If Asia adopts growth friendly policies, it can continue to expand at robust rates in the next 20 years," ADB said. (PNA)
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