Legatum Prosperity Index 2016
Philippines
Ranked 60th of 149 on the 2016 Legatum Prosperity Index™
OVERVIEW
Strong performance in the Social Capital and Personal Freedom sub-indices,
coupled with a more competitive economy, has helped the Philippines rise 17
ranks in the Index to rank 60th. Momentum has come from a bullish economy
thanks to upgraded infrastructure and improved governance.
The Philippines’ open-minded business policies and protection of individual freedoms are
rewarded with years of steady economic growth and one of the biggest prosperity surplus
among Southeast Asian countries. The country has climbed 36 ranks in the Business
Environment sub-index to rank 62nd thanks to rapidly improving internet infrastructure and
insolvency procedures, and falling redundancy and electricity costs. This market
improvement is underscored by strong levels of social capital and personal freedom.
However, stubborn poverty levels and a bleak security situation threaten the country’s
rising prosperity.
Legatum Prosperity Index 2016
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Sub-Index Rankings
In the Prosperity Sub-Index rankings,
Philippines performs best on Social
Capital and Natural Environment and scores
lowest on the Safety & Security sub-index.
Visit our Rankings table to see how Philippines
compares to other countries.
PROSPERITY GAP
The ‘Prosperity Gap’ takes a country's GDP and uses it as the yardstick to measure a nation's
expected Prosperity Index ranking.
COMMENTARY
Long deemed an inefficient economy lagging behind its neighbouring Southeast Asian tiger
economies, the Philippines has rapidly improved the competitiveness of its economy and
has begun to catch up. In a region where it is not unusual to prioritise economic growth over
the preservation of individual freedoms, the Philippines had carved out its own definition of
prosperity without sacrificing its economic dynamism. While consolidating personal
freedom gains, particularly high within the region, the Philippines has taken lessons from its
neighbours in how to energise its business environment with large infrastructure projects
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and making itself attractive to foreign investment. Such improvements have been made far
easier by more effective and democratic governance and close societal ties.
In this respect, it is emulating the success of more developed countries, whose open
markets, high levels of individual freedom, and strong social capital have secured them high
levels of prosperity for their wealth. So too is it having an effect in the Philippines. The
country has nearly doubled its prosperity surplus over the past decade, to be one of the
highest in Southeast Asia.
Globally ranked 58th in the Personal Freedom sub-index, the Philippines has been the freest
country in Southeast Asia throughout the last decade. A liberalised political and social
culture helps with one of the world’s highest level of satisfaction with freedom of choice –
91% of Filipinos gave a positive answer in 2015. Growing economic opportunity coupled
with a subsidence in conflict with insurgents in the Muslim-majority south explains the rise
in the proportion of people saying the country a good place for immigrants and ethnic
minorities to live. Though civil union between same sex is yet to be acknowledged by the
law, LGBT groups are much wider accepted by the society. All these point to an increasingly
free and tolerant society.
Safety & Security and Personal Freedom in the Philippines and Southeast Asia.
The Philippines in Southeast Asia: leading in Personal Freedom but falling behind in Safety and Security
Strong Social Capital is another secret to the country’s robust prosperity delivery. Just shy of
the top 20 in 2016, the Philippines can boast of a world-class performance in measurements
related to social linkage. The natural hospitality and friendliness of the Filipinos are reflected
in the country’s Social Capital score, with nine out of every ten satisfied with the
opportunity to make new friends and feeling that they are treated with respect. Without a
developed social safety net, strong family ties are important – more than four fifths of the
population believe they can rely on family or friends in difficult times. Beyond close personal
networks, social bonds in general are also markedly high, nearly half of Filipinos volunteered
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in some way. This in part explains the country’s swift recovery from one of the worst
hurricanes it has suffered that hit in 2014.
Based on these fundamental structures of prosperity, improving performance in Business
Environment sub-index has lifted the country’s prosperity to its highest ever level. After
continuous economic growth in the early 21st century was interrupted by the global
financial crisis, the Philippines government under Benigno Aquino III committed itself to an
ambitious business policy agenda encouraging foreign investment and using public money
to improve infrastructure. This deliberate business friendly agenda has helped push the
country up the Business Environment ranks. The Philippines has skyrocketed by 52 ranks in
Business Environment since 2009 and its economy, long reliant on remittances and tourism,
has found new growth from a developing manufacturing industry. The Philippines has made
progress in both the ease of getting credit and the ease of resolving insolvency, which was
once one of the worst in the world. The labour market has grown more flexible, and
electricity costs are falling.
Nevertheless, formidable tasks lie ahead if prosperity growth is to continue. To start with,
the country’s economy is still in urgent need of development and the population, in
particular rural residents, are craving economic opportunity. Despite recent improvements,
poverty is endemic. Around 13 percent of the population still live on less than $1.90 per day.
Poverty reduction efforts have been hit by a seven percent unemployment rate and a lack of
access to financial services. Fewer than one in three Filipinos hold an account in a bank or
other financial institution, a significant limit on meaningful economic transition.
Safety in the Philippines is also a concern. It is ranked among the bottom ten in the world in
the Safety & Security sub-index. Paramilitary insurgency and terrorist attacks remain a big
concern for the country. Although a landmark peace treaty in 2014 between the
government and the Moro Islamic Liberation Front (MILF), the country’s largest rebel group,
cultivated confidence in a peaceful resolution of the country’s ethnic and regional conflicts,
sporadic outbreaks of violence since then still threaten order.
In sum, how to further invigorate the economy while safeguarding citizens’ safety and
freedoms remains a challenge for those striving to make the Philippines a more prosperous
country.
Ways to make a change
Click on the Tweets to help make a change in your nation.
1. The next tiger? Why an improving business environment could make the Philippines the
next best investment.
2. Free and socially cohesive: how the Philippines has grown one of the largest prosperity
surpluses in Southeast Asia
3. A call for security: Why the Philippines’ continuous progress needs a safety guarantee
Visit Philippine’s country profile on www.prosperity.com.
Legatum Prosperity Index 2016
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