Abstract

This paper explores the degree of structural change in the Philippine economy through the input-output framework. It examines how linkages among economic sectors evolved from 2006–2018. One method of determining structural change is by examining changes in these linkages. Two indices are used to evaluate intersectoral linkages: the backward and forward linkage indices. The forward and backward linkage indices, as well as the multipliers for the 16 major industries, were calculated for each of the three input-output (I-O) tables to determine the key sectors from 2006–2018. The study also compares structural changes in the Philippine economy using the multiplier product matrix.

The study reveals that manufacturing is consistently the key sector in the Philippine economy. While it has high backward and forward linkages, its capacity to harness growth in other sectors appears to have diminished over time. From 2020–2023, the manufacturing sector’s share of the total gross domestic product (GDP) dropped by approximately nine percentage points. Had the manufacturing sector expanded rather than contracted, it could have boosted production in sectors where it has strong linkages. Therefore, the government should continue implementing policy reforms and fiscal programs to ensure sustained economic growth.