World Bank economists Gonzalo Varela and Kevin Cruz point to a gap hiding inside the Philippines' 15-year growth run. Investment accounted for nine of every ten dollars of GDP growth, but three out of four new jobs since 2010 landed in non-tradable sectors like construction, retail, and local services. Manufacturing employment stalled at 8%, a third of Vietnam's share, and the count of merchandise-exporting firms fell even as the domestic economy boomed. The mechanism is not indifference to trade, it's relative returns. Tradable firms face input costs from power, transport, and logistics they can't pass on to global buyers the way non-tradable firms pass costs to captive domestic customers. Peso appreciation from remittances and BPO exports adds further pressure. Investors follow the easier margin, so capital drifts toward protected domestic sectors even while the headline growth rate looks healthy. This is a case where the growth rate and the growth composition tell different stories, and the composition is the leading indicator. Tradable exposure is what forces firms to adopt new technology, upgrade operations, and build transferable skills, and those gains spill into supply chains and labor markets beyond the exporting firm itself. An economy can post strong GDP numbers for years while its non-tradable expansion quietly erodes the very sector that would have sustained growth once the current investment cycle runs its course. The diagnostic question for any growing economy isn't just "how fast," but "growing where, and does that where compete internationally." ## Source - [[20260805 Rebalancing for the Future - Why the Philippines Needs a Tradables Revival]] — BusinessWorld, Gonzalo Varela and Kevin Cruz, July 31, 2025 — https://www.bworldonline.com/opinion/2025/08/01/688771/rebalancing-for-the-future-why-the-philippines-needs-a-tradables-revival/