Will a 25-year-old millennial today see the Philippines become a high-income country by the time they turn 40 in 2040—or at least during the decade between 2040 and 2050? If our gross domestic product (GDP) grows at an average of six percent, the historical performance over the last 15 years under three administrations (Presidents Benigno Aquino III, Rodrigo Duterte, and Ferdinand Marcos Jr.), the answer is no. GDP must grow at least eight percent annually over the next 15 years for our GDP per capita to reach the required $15,000 (at today’s prices) by 2040. That is, of course, if we do not fall into the “Middle-Income Trap” during that period.

Rather than using per capita income as the sole basis for measuring human welfare, we should review what the National Economic and Development Authority (NEDA)—now the Department of Economy, Planning and Development (DEPDev)—presented to the Filipino people as their long-term aspirations. This document, AmBisyon Natin 2040, serves as the Philippines’ official vision for how Filipinos want their lives and country to look by the year 2040. It is not a detailed policy prescription, but a shared destination and a guidepost for future development planning across several presidential administrations.

AmBisyon Natin 2040 was developed through nationwide consultations involving focus group discussions and surveys of thousands of citizens to identify the aspirations of ordinary Filipinos. It answers the question, “Where do we want to be by 2040?” rather than prescribing exact strategies. Specific plans, such as the various Philippine Development Plans, are meant to align with this vision. Since presidential terms in the Philippines last for only six years, this framework helps ensure the continuity of development goals beyond individual political cycles.

The vision for 2040 centers on Filipinos living a life that is Matatag (Strongly rooted), where families live together with work-life balance; Maginhawa (Comfortable), where no one is poor or hungry and all have decent jobs; and Panatag (Secure), where people feel safe in their daily needs and retirement under a fair government.

Key aspirations embedded in the vision include a prosperous, predominantly middle-class society. This state of affairs presupposes a more equitable distribution of income where poverty incidence drops to the levels already achieved by ASEAN peers like Malaysia, Thailand, and Vietnam—roughly 0% to 3% today. Furthermore, the vision foresees Filipinos living longer, healthier lives through better healthcare, and the rise of a smart, innovative society. Education systems must produce critical thinkers and innovators able to upskill and retool in a digitalized world. Ultimately, it envisions a high-trust society where institutions are resilient and communities are culturally vibrant.

AmBisyon Natin 2040 is not an economic plan itself; rather, it serves as an anchor for national development plans, a reference for public and private sector strategies, and a benchmark for citizens to assess progress. These goals also align with global aspirations like the Sustainable Development Goals (SDGs). In sum, the vision is a collective picture of a stable, comfortable, and secure society.

Attaining these goals is a possible antidote to the Middle-Income Trap. In situations where a country falls into this trap—as seen in many Latin American economies—economic growth may continue, but productivity stagnates. Wages rise without a corresponding increase in labor productivity, and economies fail to upgrade. In contrast, AmBisyon Natin 2040 aims for high productivity and high-quality jobs. A key feature of the trap is that growth does not translate into comfortable lives for most people. While countries in the trap grow, they suffer from high inequality; in 2025, some 16 percent of the Philippine population still falls below the poverty line of about $3 per person per day. Without a large middle class to sustain domestic demand, growth eventually stalls.

Furthermore, middle-income trap countries often create jobs with low productivity, mostly in the informal sector. To escape, the economy must move from informality to formality, and from mere assembly in manufacturing to design, engineering, and high-value services. We must rely less on OFW remittances and more on domestic productivity. Quality jobs are the economic signature of a country that has escaped the trap.

As documented by Nobel Laureates Daron Acemoglu and James Robinson in their book Why Nations Fail, no country escapes the trap with weak institutions. Institutional weakness caused by corruption and policy reversals is a major catalyst for stagnation. AmBisyon Natin 2040 highlights the importance of trust in government and predictable, fair institutions. Foreign direct investors, in particular, only invest long-term if institutions are stable.

Fortunately, over at least the last four administrations, there has been continuity in economic reforms. Fiscal discipline has been maintained, with the debt-to-GDP ratio kept within prudent bounds, except during the pandemic when the government had no alternative but to borrow heavily. Since then, the administration has been careful to manage these levels while sustaining fundamental reforms like greater openness to foreign investment and larger infrastructure spending.

However, more structural reforms are needed to reach the 2040 goals. There must be industrial upgrading, such as exporting higher-value semiconductor components and increasing the processing of mineral ores. Education expenditures should increase to four percent or four percent of GDP, focusing on quality basic education and enterprise-based learning in technical schools. Tertiary education should be left increasingly to the private sector. Finally, the agricultural sector must undergo a productivity revolution through the consolidation of small farms and the "nucleus estate" method successfully implemented in Malaysia.