From economic strategies to governance and flood control

The Vietnamese economy overtakes the Philippines:

- By Cesar Polvorosa, Jr.

BEYOND TRADE, structural differences in demographics and education shape both countries' long-term trajectories.

Vietnam is aging rapidly. Its median age of 33.3 in 2024 is projected to reach nearly 40 by 2040. This raises the risk of "growing old before getting rich," a challenge like that faced by China. An aging population could slow productivity growth and strain public finances.

The Philippines, with a median age of only 25.7 in 2024, enjoys a major demographic dividend. A youthful workforce offers a long-term advantage for as long as education and job creation systems can sustain it.

The Philippines is however hamstrung by some of the worst education outcomes in East Asia. Its PISA scores in math, science, and reading fall far below OECD averages. Without major investments in foundational learning, digital literacy, and tertiary education, the demographic dividend may degenerate into a demographic burden.

Vietnam, on the other hand, has consistently invested in human capital, especially teacher training and STEM education. Its students regularly outperform global averages, ranking second only to Singapore in Southeast Asia. Although recent PISA results show some slippage, Vietnam's education system remains a key pillar of its competitiveness and is considered a model for developing countries.

Both countries face another long-term challenge: the rise of disruptive technology, particularly AI and automation.

Vietnam's labor-intensive export model is vulnerable to technological disruption, while the Philippines' business process outsourcing (BPO) industry faces risks from AI-driven customer service, automation, and generative AI applications. Both could lose millions of jobs if they fail to adapt. Investment in digital infrastructure, AI readiness, and advanced skills training will determine whether they capture Al-driven productivity or fall victim to it.

ECONOMIC PROGRESS THROUGH GOOD GOVERNANCE