Facilitating Structural Transformation through Product Space Analysis: The Case of Philippine Exports

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This research assesses the sophistication content of the country's current export portfolio and identifies products that result in a more diversified and high value-added mix of export commodities. Using some metrics from the product space, the paper finds that the average sophistication of products included in the country's export basket has barely improved from 1995 to 2014. It has remained lower than the average sophistication content of exports in the world market. The paper also finds that some of the products in the country's existing export basket has potential forward linkages to goods with relatively higher sophistication content, which in turn has potential linkages to even more sophisticated goods. However, transformation does not happen overnight and requires well-thought-out policies, plans, and priorities. To this end, the paper advocates the implementation of measures outlined in the Philippine Export Development Plan. It also identifies other potential actions toward human capital development, innovations, and infrastructure programs.