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Economy, Manufacturing

Nondurable goods, SBMA, Philippine economy, refined petroleum, microchips

In 2000 manufacturing contributed 23 percent of the GDP. The manufacturing sector accounts for a larger share of national income than agriculture, fishing, and forestry combined. However, more people are employed in those traditional sectors than in manufacturing. Since the mid-1950s, manufacturing has not substantially increased its share of either output or employment.

The manufacturing sector expanded significantly during the post-World War II reconstruction of the Philippine economy. Government controls on imports promoted the development of light industries that produced consumer goods for the domestic market. In the 1970s the government created four special economic zones designed to stimulate manufacturing for the export market. Industries in these export-processing zones receive incentives to produce nontraditional (mainly nonagricultural) exports. The zones have helped to stimulate foreign investment in the Philippine economy, in part because they are exempt from certain taxes and restrictions on foreign ownership of businesses. The success of these zones has led to the creation of other types of special economic zones, such as large industrial estates. Businesses receive tax exemptions and other incentives in these zones. The former U.S. naval base at Subic Bay, for example, is now a huge industrial-commercial zone known as the Subic Bay Metropolitan Area (SBMA). Its modern port facilities and duty-free economic zone have attracted new export-focused industries and foreign investment. The Philippines has some heavy industries, including a copper smelter-refinery and chemical and fertilizer plants. They were built under a government-funded industrial-development program and were in operation by the early 1980s.

Nondurable goods such as processed food, textiles, and tobacco products make up the largest percentage of manufacturing output. Other major products include refined petroleum, chemicals, construction materials, and clothing. The Philippines has increased its production of durable items, especially electrical and electronic equipment and components, nonelectrical machinery, transport equipment, and furniture. The manufacture of electronic items, especially computer components such as microchips and circuit boards, increased substantially in the 1990s for the export market, constituting 62 percent of all exports in 1999. The Philippine economy was therefore affected by the worldwide slump in demand for these items in the early 2000s.

Article key phrases:

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