Presentation Information
[1H04]Financial Sector Development in Service-Led Economic Development: The Case of the Philippine Economy
*Hideobu OKUDA1 (1. Teikyo University)
Keywords:
Financial Development,Service-Led Economic Development,Philippine Economy
The relationship between economic development and financial sector development has been the subject of considerable research. The relationship between financial development and economic development in Southeast Asian countries has been explored in works such as Teranishi et al. (2008) "Economic Development and Financial Systems in Asia" (Toyo Keizai Inc.), with the central focus being on the relationship between economic growth driven by industrialization and financial sector development.
The Philippine economy has maintained a relatively high economic growth rate in recent years, and financial deepening has also improved. However, the Philippine economic structure, with manufacturing accounting for only approximately 29% and the service industry accounting for approximately 63%, differs from previous examples in Southeast Asia.
The purpose of this study is to examine how the domestic demand and remittance-driven growth model seen in the Philippines in recent years has brought unique characteristics to the development of the financial sector. Specifically, we compare the financial development of the Philippines in recent years with that of other Southeast Asian countries that have focused on manufacturing as their core economic development, and examine its characteristics and challenges.
The tentative conclusions are as follows. First, a domestic demand-driven economic structure supported by the service industry and remittances has given the financial sector characteristics such as "pro-household and small business-oriented," "emphasis on foreign exchange and remittance infrastructure," and "accelerating digital inclusion." Second, this economic structure requires channels, product designs, and regulatory policies that differ from those of manufacturing-driven models, and the development path of the financial sector will differ from that of traditional Southeast Asian countries. Third, if a domestic demand-driven economy supported by the service industry and remittances finds it difficult to maintain sustainable growth in the future, there is little reason to be optimistic about the future development of the financial sector.
The Philippine economy has maintained a relatively high economic growth rate in recent years, and financial deepening has also improved. However, the Philippine economic structure, with manufacturing accounting for only approximately 29% and the service industry accounting for approximately 63%, differs from previous examples in Southeast Asia.
The purpose of this study is to examine how the domestic demand and remittance-driven growth model seen in the Philippines in recent years has brought unique characteristics to the development of the financial sector. Specifically, we compare the financial development of the Philippines in recent years with that of other Southeast Asian countries that have focused on manufacturing as their core economic development, and examine its characteristics and challenges.
The tentative conclusions are as follows. First, a domestic demand-driven economic structure supported by the service industry and remittances has given the financial sector characteristics such as "pro-household and small business-oriented," "emphasis on foreign exchange and remittance infrastructure," and "accelerating digital inclusion." Second, this economic structure requires channels, product designs, and regulatory policies that differ from those of manufacturing-driven models, and the development path of the financial sector will differ from that of traditional Southeast Asian countries. Third, if a domestic demand-driven economy supported by the service industry and remittances finds it difficult to maintain sustainable growth in the future, there is little reason to be optimistic about the future development of the financial sector.
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