The World Bank (WB) and the International Monetary Fund (IMF) categorize their members according to the level of per capita gross domestic product (GDP). A country with a per capita GDP exceeding a certain US dollar level is deemed a high-income country. The Paris-based Organization for Economic Cooperation and Development (OECD) is composed of high-income countries.
The group of low-income countries is made up of the majority of African nations, most of the South Asian countries and most of the world’s island nations.
The rest of the world’s countries are categorized as middle-income countries. Because there are so many of them, the WB thought it best to divide them into two groups: countries with a per capita GDP above a certain US dollar level were designated as upper-middle-income countries (often called high-middle-income) and those with a per capita GDP below that level were designated as lower-middle-income countries (often called low-middle-income).
Upper-middle-income country status continues to elude the Philippines, and it will continue to do so while the growth of per capita GDP is held down by the governance and economic management issues
Because of its continuing failure to achieve the per capita GDP requirement for upper-middle-income countries, the Philippines has for decades been categorized as a lower-middle-income country. This is almost certainly attributable to the fact that the economic-status categorization is anchored on population—the GDP requirement is per capita—and while the Philippine economy has continually posted above-6-percent annual GDP growth, the Philippine population has not been standing still.
The benefit of increments in GDP has been neutralized by the increases in population. Growing by close to 2 percent annually, this country’s population is estimated to be close to 120 million today. The economy would have had to perform better, or the population would have had to grow more slowly, or both, if upper-middle-income status was to be achieved.
Being upgraded from a lower-middle-income country has been a high-priority objective of the government for a long time. Not only is it prestigious for a developing country to have upper-middle-income status in a large community of lower-middle-income developing countries, but an upgrade represents international recognition that the country is getting close to full economic development. It conveys to the international community the impression that the upgraded country is doing a good job of managing its affairs.
Being an upper-middle-income country yields benefits at the operational level. A country with this status is able to access the resources of the international financial markets—for credit and investment—on terms more advantageous than those for lower-middle-income countries. In addition, its views and positions are accorded greater respect in international economic fora.
Successive administrations have been striving for a near-term upgrade of the Philippines to upper-middle-income country status and have taken specific measures toward the achievement of that desideratum. President Ferdinand Marcos Jr. placed his hope on an upgrade in 2025. In the course of this year, the international financial community began intimating that 2027 was a more likely timetable for an upgrade, considering the occurrence of certain negative developments.
More recently, the Philippines’ aspiration for an improvement in its international economic status suffered a fresh setback. The WB has just indicated that the conditions may not be right for this country’s upgrade to upper-middle-income country status before 2028.
Upper-middle-income country status continues to elude the Philippines, and it will continue to do so while the growth of per capita GDP is held down by the governance and economic management issues that have long plagued the Philippine economy’s development. In deciding upon the economic category of a developing country, the international community is guided by the question of whether the country is really serious about the development of its economy.
The corruption, the leakages, and the destruction they hear about suggest to the world’s economic decision-makers that the Philippines is not really serious. And so, they will continue to categorize this country as a lower-middle-income country until significant progress is made.
(llagasjessa@yahoo.com)
