Vietnam and the Philippines: Transformation and Economic Growth

The column of Joel Ruiz Butuyan, “Comparing Vietnam and the Philippines” (6/18/26) narrates his on-the-ground observation of how Vietnam has surprisingly leapfrogged to overtake the Philippines economically.

It states that “Vietnam’s per capita income is at $4,717, while that of the Philippines is at $3,985 according to 2024 World Bank figures. When translated into purchasing power parity, Vietnam’s real standards are significantly higher at $17,480 compared to the Philippines’ $12,913 … Vietnam is one more proof that it’s not the form of government that lies at the heart of our problems. It’s the kind of political and business leaders who abuse power and monopolize resources that blight our people’s life.”

The quality of the country’s economic life is the mirror of the quality of political governance in terms of dictating the rules, incentives, and stability that drive sustainable growth. Vietnam’s faster income growth than the Philippines is due to the former’s successful structural transformation that involved shifting labor from the low-productivity agricultural sector to high-productivity manufacturing and service sectors. This is measured in terms of service-to-agriculture employment ratio. Relative thereto, there is an established framework that demonstrates that a higher ratio leads to higher purchasing power parity per capita income.

Article continues after this advertisement

I have adopted said framework for comparing Vietnam and the Philippines, including five other neighboring countries, based on 2024 data from different sources, in the order of ascending income, which are as follows: Philippines (ratio of 3.15 and income of $12,913; Vietnam (1.5 and $17,480); Thailand (1.98 and $21,741; China (2.2 and $23,846); Malaysia (7.2 and $34,116); Japan (24.3 and $46,107); and South Korea (13.5 and $55,071). The polynomial regression calculation shows a high R-squared 0.88, which confirms the standard structural transformation path.

FEATURED STORIES

OPINION

OPINION

OPINION

The Philippines with a 3.15:1 ratio, should yield an income higher than Vietnam, Thailand, and China, which is not the case. This is due to the Philippines’ bypassing industrialization to focus on services characterized by a large informal workforce concentrated in low-productivity, low-paying subsectors like wholesale and retail, transport, and eateries.

Nevertheless, the Philippines is actively implementing strategies to reverse deindustrialization and rebuild its manufacturing base. The core policy approach integrates advanced technology, sustainable energy, and an upgraded local supply chain. However, systemic bottlenecks like high electricity costs, logistical gaps, and bureaucratic red tape continue to challenge these policies.

Hence, the Filipino people should unite and close ranks to demand from the three branches of government to focus on economic growth by implementing structural reforms, streamlining legislative priorities, and strengthening institutional check-and-balance mechanisms to minimize political distractions. If the present political and economic predicaments persist, there is no doubt that the 57 percent level of adult Filipinos who are open to living and working abroad, based on recent surveys, could continue to rise.

Article continues after this advertisement

Ed Enderez,

[email protected]

Your subscription could not be saved. Please try again.

Your subscription has been successful.