The Philippine economic growth story since 2010 has been a remarkable one. The economy has more than doubled in size in the last 15 years, creating a virtuous turning point for the country. Millions of quality wage jobs have been created that by 2019, the modern sector was pulling workers out of the informal sector for the first time ever. In parallel, the stubbornly high poverty rate began to fall fast. This growth has been influenced by what I call the “Growth Triplets” — remittances from overseas Filipino workers, revenues from business processing operations, and a surge in public spending on infrastructure. All three have big multiplier effects on the economy.

Growth has been supported by sound economic institutions and good government policies. An unspoken convention in the Philippines government system is that good policies continue from one administration to the next. Many of these pro-growth policies go back to the 1990s such as the creation of the independent Bangko Sentral ng Pilipinas, which anchors macroeconomic and financial stability, and significant trade liberalization efforts. During the Aquino administration, fiscal consolidation was rewarded with upgrades in sovereign credit ratings, leading to lower debt costs and creating the fiscal space for the Duterte administration’s Build Build Build infrastructure program. Duterte’s tax policy and investment reforms lifted growth further while the Marcos administration has continued infrastructure spending under its Build Better and More infrastructure program.

However, economic growth in the past two years has fallen short of its potential, averaging 5.6 percent instead of 6.0-6.5 percent annually. Does this mean the Philippines’ “Golden Age of Growth” is over?

Not just yet. The recent slowdown in growth is cyclical rather than structural, caused by the lingering effects of the Covid pandemic. The Philippines also still outperforms its peers. But the long-term challenge is nurturing the next generation of growth drivers. While we do not know what these will look like, the best the government can do is to set the policy conditions for growth drivers to emerge. I see three main areas for structural policy reforms that would sustain high growth and generate jobs.

First is locking in infrastructure investments as an inter-generational commitment. Public spending on infrastructure in the range of 5.0-6.0 percent of gross domestic product (GDP) is necessary for the next 20-30 years to address the infrastructure deficit. Importantly, public spending should be on the right infrastructure that improves competitiveness, community wellbeing, and demonstrates value for money. Oversight in implementation of infrastructure projects should be robust.

The second reform area is establishing a comprehensive national competition program to further deregulate services and create a level playing field between investors, including foreign ones. Remaining restrictions on foreign investment should be removed. These competition reforms would entrench a vibrant and innovative private sector. With the Philippine Competition Commission and the Anti Red Tape Agency in place, the Philippines has all the right institutional ingredients for successfully implementing a robust competition policy.

The third is related to investing in Filipinos through education, health and nutrition. The Marcos administration is tackling the decades old neglect of child stunting and malnutrition through the Walang Gutom food voucher program. This program is a transformative undertaking because about 30 percent of children under the age of 5 years suffer from stunting or malnutrition.

But much more needs to be done. The education system is in need of significant reform to address the decline in student performance relative to the rest of the world, as shown in international test surveys. If the Philippines is to outcompete its peers, it needs to out-educate them too.

At the same time, investments in education do not seem to be the income equalizer they once were. Some years back, a Filipino economist and I studied the returns to schooling of Filipinos across the income distribution. We discovered that the returns were falling for workers in low-income groups and rising for those in high-income groups. This implies that workers from poorer families have impeded access to higher paying jobs. The diminishing effect of investments in education on reducing inequality means we need to find new ways to deliver education.

A good first step adopted in other countries is to establish a National Commission on Education Reform. The commission could look at international experience to develop a whole-of-society strategy for improving student performance, including ways to tighten links between the education and training systems and the labor market.

The Philippines can continue to grow above 6.0 percent annually for the next 15 years. Golden Age or not, this will require investments in infrastructure and Filipinos, while creating robust competition in the domestic market against the backdrop of a rapidly changing global landscape.