Philippines Threshold II - Constraints Analysis

MCC’s evidence-based approach to its investments begins with a mutual understanding of a country’s main growth challenges. During the first phase of the compact or threshold program development process, MCC and the selected partner country, jointly conduct a constraints-to-growth analysis (CA). This analysis identifies the constraints to private investment and entrepreneurship that are most binding to economic growth in the country. The results of this analysis enable the country, together with MCC, to select activities most likely to contribute to sustainable, poverty-reducing growth.

The Constraints Analysis Report for the second Philippines Threshold Program highlights the following binding constraints to economic growth: 

1. Energy: The high cost and unreliability of power raises production inefficiencies and limits opportunities for firm expansion;
2. Local Governance: Poor governance at the local level limits investment opportunities and incentives for growth;
3. Transportation and Logistics Bottlenecks: Concentrated growth in the National Capital Region (NCR) coupled with lagging transport infrastructure elsewhere has created bottlenecks in the movement of goods, both international and domestic; and
4. Agriculture: Constraints to economies of scale in agricultural production and protectionist trade policies limit productivity and increase the country’s food insecurity.