Applied Economics

For all purpose

Lesson 3.7
The Economy's Producing Sectors

For Presenration
A. Sectors

The economy has three main producing sectors:

1. Agriculture, Fishery, and Forestry

This sector includes farming and cultivation of agricultural products, fishing, and extraction
of forest products.
2. Industry

•Manufacturing refers to companies that engage in the actual production of goods.

Notable manufacturing firms in the country Include Nestle Philippines, San Miguel
Corporation, SC Johnsons, and Unilever.

•Construction refers to the business of putting up buildings, schools, roads, hospitals,

and other infrastructures.

•Electricity, gas, and water include utility providers such as Meralco, Maynilad, Manila
Water, and Manila Gas.

•Mining and quarrying Include companies that engage in the extraction of minerals and
precious metals and stones.
Industrial Sector
3. Service

• Trade
•Transportation, communication, and storage
•Banking and finance
•Public service ( Government )
• Real estate
•Private services
The agriculture, fishery, and forestry sectors reaps the fruits of
natural resources like the soil, water, and forests. However,
these environmental resources are vulnerable to climate change,
affecting production.

This sector comes the food we cook at home and raw materials
processed or used by other economic sectors

Agriculture accounts for most (84% according to NEDA) of this

sector's production, while fishery lags far behind and Forestry
contributes much less output. 3
The industrial sector processes raw materials from agriculture, fishery,
and forestry into intermediate products, which are further processed into
final products. For example, local makers of wallets and bags produce the
final products by processing the intermediate product of leather, which is
manufactured from the animal hide extracted by agriculture.

The service sector produces the intangibles supporting and complementing

production in the other sectors, as well as among its own industries.
Reliant on its activity is the trade industry that takes on the
complementary role of marketing their produce. The single biggest
industry in resource and output is trade as it accounts for 29% of sectoral
production (NCSB, 2009).
Data from PSA show that the philippine economy
grew by 6.2% in 2018, this was slower than
2017's 6.7% growth. Manufacturing;Trade and
Repair of Motor Vehicles, Personal and
Household goods; and construction were the
main drivers of growth for the year.

Among the major Industries, Services recorded

the fastest growth of 6.8%. This was followed by
industry with 6.7% and Agriculture, Hunting,
Forestry and Fishing (AHFF) with 0.9%
Among the sub- Industries, five posted faster growth in 2018:
Public Administration and zfefense; Compulsory Social
Security grew by 15.2%;Construction, 14.9%; Other Services,
7.7%; Electricity,Gas, and Water Supply, 5.5%; and
Transport, Storage, and Communication, 5.4%.

On the other hand, following sub-Industries posted slower

growth: Financial Intermediation? 7.2%; Trade, 6.0%;
Manufacturing, 4.9% Real Estate, Renting and Business
Activities, 4.7%; Mining and Quarrying 1.3%; Agriculture and
Forestry, 1.1%; and Fishing, which declined by 0.2%.
In terms of the share to the country's total
GDP, Services accounted for 57.8% of the total
GDP. Industry recorded a share of 34.1%
while AHFF comprised of 8.1% of the national
economy.
B.

Competitiveness and Efficiency

1. The fair ranking of the Philippines in world competitiveness means

that the country's industries are yet on their way from the factor-driven
to the efficiency-driven stage. The World Economic Forum (WEF)
Global Competitiveness Report 2018-2019 ranked the Philippines 56th
out of 140 countries in overall competitiveness. The 2018-2019 report
Indicated that the Philippine GCI Increased by 2.3 points and Its ranking
up by 12 spots.
2. However, our industries have yet to attain the efficiency
enabled by higher education/skills, technological readiness,
and product/labor market competition. Much less are we
even close to the innovative stage driven by business
sophistication and innovative ideas.
3. In 2018, the Philippines ranked 5th out of 9 economies
in Southeast Asia in terms of competitiveness, according
to the same WEF report. Globally, Singapore is second
only to the United States in competitiveness, Malaysia is
25th, Thailand is 38th, and Indonesia is 45th.
 4. Among ASEAN countries, the Philippines ranks 3rd in labor
market competitiveness behind Singapore and Malaysia; 3rd in
macroeconomic stability behind Malaysia and Singapore, and 4th in
innovation capability and financial systems. The Philippines,
however, still lags behind its Asian neighbors in terms of institutions,
health, and infrastructure. The Philippines ranked poorly in terms of
terrorism incidence, homicide rate, organized crime, and reliability of
police services.

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5. Figure 3.7 outlines what makes
a country's industries globally
competitive and responsive to
both local and global needs. On
our way to be at least an
efficiency-driven economy, we
still have much to do to improve
market competitiveness,
technological sophistication,
knowledge, and skills, among
others.
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Thank you!