Global value chains (GVCs) play an important role in creating a more inclusive global economy. The interconnected networks of production and services are enabling paths for small and medium enterprises to expand and grow. In a world where the costs of communication and transportation have been significantly reduced by advances in technologies, policymakers must understand how they can help local firms and industries capture and benefit from increased GVC participation. GVC success stories in various Philippine industries--tobacco, services, and electronics, among others--have evidently contributed to the country's recent positive growth performance. This Economic Issue of the Day discusses the country's competitive advantages, its prospects, and the issues that policymakers must understand and address to create the business environment that optimizes the potential of using GVCs to produce a more inclusive Philippine economy.