The Relationship Between Labor Productivity and Export Competitiveness: A Time Series Analysis of the Philippine Manufacturing Industry

Date

6-2022

Degree

Bachelor of Science in Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Niño Alejandro Q. Manalo

Committee Member

Paul Joseph B. Ramirez Niño Alejandro Q. Manalo Maria Angeles O. Catelo Agham C. Cuevas

Abstract

This study focuses on the relationship between labor productivity and export competitiveness which are recognized to be important factors in achieving inclusive economic growth. The main theory considered in the analysis is the Ricardian theory of comparative advantage wherein labor productivity and export competitiveness are postulated to have a positive relationship. Generally, this study aims to determine the relationship between labor productivity and export competitiveness in the Philippine manufacturing industry. Specifically, the objectives of the study are: to establish the long- run and short-run relationship between labor productivity and export competitiveness using

the Engle and Granger cointegration test and the Error Correction Mechanism (ECM)

model, respectively; and to determine the causality of the relationship using the Granger causality test. The gross value added per worker is used as the measure of labor productivity while the Competitiveness index is used as the proxy for export competitiveness. Based on the findings of the study, labor productivity and export competitiveness in the Philippine manufacturing industry are proven to have a cointegrating relationship implying that they have an equilibrium relationship in the long-run. The Granger causality test shows that there is a unidirectional relationship starting from labor productivity to export competitiveness. As the results suggest, improving the labor productivity through investments in human capital, capital intensity, and investments in R&D would boost the export competitiveness of the Philippine manufacturing industry.

Language

English

LC Subject

Labor productivity, Export competitiveness, Time series analysis

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993.5 2022 E2 M365

Document Type

Thesis

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