In business industries, the increasing wage gap is due to the fact that the use of more

complicated technologies and types of equipment requires extra effort from employees. I

would suggest this is most evident in the near term: while the innovation of technology may

boost production and efficiency and decrease the work burden in the long run, at the beginning

of the implementation, workers must modify their skills and experience in order to effectively

use the technology. This necessitates an improvement in effort, such as taking training

programs and concentrating more during the manufacturing process. Therefore, workers will

choose a greater level of quantity and quality of output and will earn better pay as a result.

Thus, businesses that incorporate new technology will become "high-wage plants." Moreover,

the use of new technology will also increase the disparity between high-skilled and low-skilled

workers inside factories. People who are less able to enhance their performance level through

measures such as work training are disproportionately likely to be one of those left behind by

the implementation of new technologies.

If I were to rank the diagnostic decision tree, I would:

1. Low appropriability—implying that investors cannot receive a sufficient return on their

investments. In turn, appropriability issues may be the result of government or market

inefficiencies.

In terms of the risks of government intervention, such macro risks would be done such as

failure to maintain financial, monetary, and fiscal security or stability. If the Philippines or the

Philippine government is piling up obligations at a rate that will jeopardize their level of

compliance with them, the people involved in the economic system are aware that the current

regulations will have to be dismissed and will have to take action to protect themselves from

the potential changes instead of engaging in collaborative investments.

On the other hand, micro risks address structural and institutional flaws, including poor

property rights, massive corruption in the government, and absurdly high taxes. Even though

societal rewards may be significant, actual explicit taxes will reduce private gains—making
investments less appealing. In that way, if the private sector's purchasing power decreases and

resources are not used to boost public savings, the high taxes and negative public savings in

this situation would harm our total savings. Also, the additional high costs brought on by

countermeasures taken to prevent the defective measures of property rights could make

investment unprofitable.

2. High cost of finance: In this instance, economic growth is limited since a higher interest rate is

relevant to investment decisions in the economy, which keeps accumulation low. In turn, this

may be related to two types of policy issues:

2.1. Bad international finance: economic exposure to risks is too high, circumstances for

international investment are unfavorable, debt term increases macro risk, net capital

requirements remain unreasonably excessive, etc.

2.2. Bad local finance: when domestic financial markets are dysfunctional, domestic debtors

cannot accumulate their capital properly, and the risk of bank failures and missed payments

grows.

Both of these factors raise the cost of capital, particularly foreign capital.

What ought to be the central area of policy in this situation? Increasing national savings is the

objective. Reduced government expenditures and wasteful spending with the funds used to

raise public savings would've been one approach. The immediate effects would be greater

overall savings, a reasonable interest rate, better federal debt issues, fewer financial

intermediary margins, and possibly a favorable impact on overseas savings if tied to or

impacted by concerns about fiscal catastrophe. This could be accomplished by reducing the

cost of pensions through a social security system.