The Philippines has long considered sustained growth of income and employment, along with poverty reduction and improved distribution of income and wealth, as major development goals. In pursuit of these goals, the country embarked on an industrialization drive after gaining political independence more than a half century ago. The drive continues today. The primary strategy involves transforming an economy that still has a large agriculture sector into an industrialized one. Through this strategy, policy makers aim to move individuals, households, and enterprises from low- to high-productivity sectors and activities to trigger and propagate the desired economic and social transformation.

A look at the Philippines' development performance over the past six decades, however, indicates that the country has not done as impressively as many of its East and Southeast Asian neighbors, such as Malaysia, Thailand, and the four newly industrialized economies—Hong Kong, China; the Republic of Korea; Singapore; and Taipei, China. Philippine economic growth has not only been slower, it has also been interrupted frequently by episodes of macroeconomic instability, financial and fiscal crises, and recessions. In the 1950s and 1960s, the Philippines had one of the highest per capita gross domestic products (GDPs) in the region—higher than the People's Republic of China, Indonesia, and Thailand. But, the country has now fallen behind. As a result, household incomes have not risen significantly, poverty incidence has declined only slowly, and inequality remains high. In 2006, about one in every four families and one in every three Filipinos lived below the official poverty lines.