THE Philippines must improve on its education system and have an upgrade in infrastructure while providing the population with basic services to reduce inequality and promote inclusive growth, a newly launched World Economic Forum (WEF) report said.
“Inclusive Growth and Development Report 2015,” which covers 112 economies, seeks to improve the understanding of how countries can use a diverse spectrum of policy incentives and institutional mechanisms to make economic growth more socially inclusive without dampening the incentives to work, save and invest, the WEF said.
The report includes new benchmark which introduces over 140 quantitative indicators across seven pillars: education and skills development, employment and labor compensation, asset-building and entrepreneurship, financial intermediation in real economy, corruption and rents, basic services and infrastructure, and fiscal transfers.
To enable more meaningful comparisons, the 112 countries are divided into four groups: advanced, upper-middle income, lower-middle income, and lower-income.
The Philippines is one of the 38 lower-middle income countries with enough income to lift most of the populace above subsistence level, the report noted.
But only a few countries in this category have managed to do so. In many cases, inequality of wealth and income remain a significant challenge, according to the report.
“These countries must work both on creating the conditions for growth through productivity enhancements and ensuring that the growth process proceeds in a broad-based and inclusive way,” it said.
Of the 38 lower-middle income countries, the Philippines is among the second-best performers in two of the seven pillars, the report showed.
The Philippines is 11th in employment and labor compensation and 12th in financial intermediation in real economy, according to the report.
“The Philippines benefits from a financial market that allocates resources reasonably well to business development through channels including banks, the equity market, and venture capital,” the report noted.
The country stands in the mid-quantile in the five other pillars of education and skills (16th), asset building and entrepreneurship (19th), corruption and rents (20th), basic services and infrastructure (19th), and fiscal transfers (17th).
“Access to the education system has expanded but still has scope for improvement,” it noted, saying the quality of education in the country needs improvements to better prepare the population for a more dynamic economy.
“This would help tackle the high youth unemployment rate, which would also benefit from a reduction in red tape to encourage the creation of new businesses and related jobs,” it said.
Upgrading infrastructure and access to basic services present other areas of opportunity for reducing high levels of income inequality and increasing the inclusiveness of the growth process in the country, it added.