The Philippines Human Capital Review: Investing in the Early Years to Boost Human Potential

The Philippines has experienced robust economic growth averaging 6.3 percent between 2011 to 2019. Despite a pandemic-induced contraction, it remains a top performer in the region and is on track to reach Upper Middle-Income Country (UMIC) status in a couple of years. This growth and dynamism is due in large part to the talent of Filipinos. According to this Human Capital Review (HCR) Report for the Philippines, over 70 percent of the country’s wealth is its people. It has a large and dynamic services sector, which comprises around 60 percent of the economy, as well as Overseas Filipino Workers (OFWs) contributing remittances comprising another 8.5 percent of the economy in 2023. This report shows that the country trails behind countries of similar levels of economic development in quality of education, skills, and nutrition. Raising quality of education and protecting health, especially in the early years, will equip the next generation with the skills they need to meet the demands of higher productivity and higher paying jobs. Investing in the skills of this young population is essential to fuel future growth and increase household incomes. It will help the economy grow faster for longer. If the Philippines focuses on inclusion, it can narrow gaps and reduce inequality of opportunities in the long-term. Investing in human capital of the poor and vulnerable, including women and Indigenous Peoples who are not part of the labor force but are skilled and educated, will allow them to catch-up, reducing disparities. Women have higher education levels than men but are less likely to be in the labor force. Fostering more inclusive participation in the labor market should further catalyze human capital as a driver of poverty reduction. Another unique feature of the Philippines is its large diaspora of skilled people, a reservoir of talent working abroad in various industries such as healthcare, maritime, hospitality, and others. The country can benefit more from its overseas workers who come home with higher level skills and more experience. They can contribute to the development of skills and industries within the Philippines. Future economic growth, narrowing inequalities in income and opportunities, and delivering real improvements in well-being will depend in large part on investments in human capital. This report shares important findings around opportunities to improve service delivery for nutrition, education, and health through support to local governments, digital transformation of service delivery, and inclusion of disadvantaged and vulnerable populations.