Philippines' Economic Growth: Comparing with Thailand and Future Prospects

The recent economic growth of the Philippines has been notable, particularly in terms of GDP. In the past, the country has managed to surpass both Singapore and Malaysia in terms of total GDP. However, the comparison with Thailand remains a complex story due to significant differences in population dynamics, infrastructure, and governance. This article aims to explore the prospects of the Philippines catching up and possibly surpassing Thailand's GDP.

Population Dynamics and GDP

When discussing GDP rather than GDP per capita, the Philippines has a distinct advantage due to its rapidly growing population. According to birth rates, the Philippines is on track to outpace Thailand in the coming years. Thailand has maintained a stable population of around 66 million for the past 20-30 years, whereas the Philippines' population is steadily increasing. This demographic shift creates a favorable scenario for the Philippines to surpass Thailand in total GDP.

Challenges in Surpassing Thailand

However, the race towards surpassing Thailand is not without challenges. The Philippines must address several issues:

Inadequate Infrastructure: The infrastructure outside of Luzon is poor, with airports like NAIA ranking among the worst in Asia. Secondary city ports are also underdeveloped. Corruption: Corruption is rampant, and bribery is extremely common. For example, the repair of a 50-meter bridge cost PHP 42 million, which seems implausible unless the bridge was constructed using evian water to mix the concrete. Tax Revenue Collection: The government lacks the necessary political will and enforcement to collect the taxes it should. This results in companies and individuals consistently evading taxes.

Addressing these issues would require significant reforms, including comprehensive and affordable state-run disaster insurance to mitigate the financial impact of natural disasters like typhoons. Additionally, the government needs to take substantive action in agricultural land reform to lift rural populations out of poverty.

Comparative Analysis: GDP and GDP Per Capita

The Philippines has several advantages, such as a large population of English speakers, a growing middle class, and a robust labor force. Nevertheless, resolving these challenges will be crucial for the country to compete with Thailand on both GDP and GDP per capita bases.

GDP per Capita: While the Philippines' GDP growth rate is currently faster than Thailand's, Thailand's population growth is the slowest in the region. The Filipino population, on the other hand, is growing at a much faster rate akin to South Asia. Total GDP: The probability of the Philippines catching up with Thailand's total GDP before 2030 is doubtful. This is due to several factors:

Advantages and Challenges for the Philippines

Several factors could affect the Philippines' chances of surpassing Thailand:

Labor Costs: Filipinos have a lower income per capita compared to Thais, which could make Philippine labor more cost-effective. Population Growth: The rapid increase in young Filipinos entering the workforce could provide a significant labor advantage. Thailand's Comparative Advantage: Despite being wealthier, Thailand benefits from lower labor costs due to surrounding countries providing cheaper labor. Additionally, Thailand's better connectivity to the market and better infrastructure create a stronger economic ecosystem. Business Incentives: Thailand offers better business incentives compared to the Philippines, making it a more attractive destination for overseas manufacturers.

For the Philippines to catch up with and possibly surpass Thailand's total GDP, it needs substantial improvements in infrastructure, governance, and economic policies. The road ahead is challenging but not impossible, provided the necessary reforms are prioritized and implemented effectively.