In the Philippines, the services sector accounts for 60 percent of gross domestic product and almost 57 percent of employment. Across regions and subsectors, however, the contribution of services varies. Using a simple shift-share technique, this study examines the patterns at the regional and subsector level and decomposes the changes into three factors: national share (growth effect), industry mix (sectoral effect), and regional shift (competitive effect). Focusing on changes in employment, the shift-share decomposition reveals that the overall growth of the economy from 2012 to 2018 had a positive impact in all sectors and regions. However, some industries showed negative sectoral effects, namely, accommodation and food service activities; arts, entertainment, and recreation; and education. Industry-specific factors in education services were quite strong that the economy's dynamism failed to offset the industry mix effect. It was the only sector that registered lower total employment during the period. In terms of the regional shift effects, 109 out of the total 204 regional service industries (53%) displayed locational disadvantages.
Regional Analysis of the Philippine Services Sector
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