THE LEGATUM PROSPERITY INDEX™ 2016

Bringing Prosperity to Life

Philippines

Ranked 60th of 149

At a glance

Ranks

60 th on the Legatum
Prosperity Index™

69th
62nd
57th
68th
98th
141st
58th
21st
44th

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 the 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.

Note:
In the chart above, each dot represents a country. The curve shows the general tendency with which prosperity increases as GDP per capita increases. If a country falls below the curve, then we can say that compared to all other countries, it is under-delivering prosperity for its citizens. Likewise, if a country rises above the curve, then we can say that it is over-delivering prosperity for its citizens. Learn more about the Prosperity Gap here.

Alternatively, have a look at the Prosperity Gap view on our Rankings table for a full list of countries and to see how each of them are performing on the various sub-indices.

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 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.

The Philippines in Southeast Asia: leading in Personal Freedom but falling behind in Safety and Security.
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 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.


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Data

How to read this graph:
When comparing multiple countries on a spider chart, data points that appear
further away from the center represent a better performance to the points that are closer to the center.