Philippines: Private Sector Development Challenges and Possible Ways to Go

In the last decade, employment gains from economic growth in the Philippines have been limited, largely due to the underperformance of the private sector. Success of the services sector in general, and that of the business process outsourcing industry in particular, shows that reforms fostering private sector development can be effective. This working paper’s objective is to inform preparation of the Asian Development Bank’s country partnership strategy for the Philippines, 2011–2016. It suggests two specific measures to foster private sector development for inclusive growth: improving government processes and creating an adequate business environment. Special attention is paid to infrastructure improvement by advancing a framework for public–private partnerships. The paper also suggests an approach to foster innovation and knowledge development by the private sector to contribute to productivity-based growth. It ends with suggestions on directions, modalities, and approaches that can be used by the country partnership strategy to support private sector development.