October 1, 2018

MANILA—The Philippines is still safe from falling into the “middle-income trap” so long as the higher levels of economic productivity are achieved, the National Economic and Development Authority (NEDA) said.

Speaking at a high-level ministerial meeting during the 73rd United Nations General Assembly at the UN headquarters in New York, NEDA Undersecretary for Policy and Planning Rosemarie Edillon underscored measures on how to address challenges that middle-income countries (MICs) are facing.

“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 addressing the Third Ministerial Meeting of the Like-Minded Group of Countries Supporters of Middle-Income Countries on September 26.

The first ministerial meeting was held on September 23, 2016. Included in 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.

The income classification of countries, which is based solely on the per capita income, was created by the World Bank as a lending category.

Edillon said MICs are facing three major challenges: Industry 4.0 or the fourth industrial revolution, climate change, and weak global demand.

She stressed that while the fourth industrial revolution presents opportunities to accelerate MICs’ economic growth, it can likewise 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,” she said.

She added that 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 Nation Framework Convention on Climate Change.

Another pressing challenge, she said, is weak global demand resulting from 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.

The Philippines is poised to increase its per capita income to USD4, 000 in 2019 and USD5,000 in 2022, achieving its goal of becoming an upper-middle income economy.