Will a millennial who is 25 years old today see the Philippines as a High-Income country by the time he turns 40 in the year 2040 or at least during the decade between 2040 and 2050? If our GDP grows at an average of 6 %, the historical performance over the last 15 years under three Administrations (Presidents Nonoy Aquino, Rodrigo Duterte and Ferdinand Marcos Jr.), the answer is No.  GDP has to grow at least at 8 % annually in the next 15 years for our GDP per capita to reach the required $15,000 (at today’s prices) by 2040.  That is, if we don’t fall into the Middle-income Trap during that period.

              Rather than just using the per capita income as the basis for measuring human welfare, we may want to review what the National Economic Development Authority (NEDA)—now the Department of Economy, Planning and Development (DEPDev)—presented to the Filipino people as their long-term aspirations in a document called AmBisyon Natin 2040, which is the Philippines’ official long-term vision document that outlines how Filipinos want their lives and country to look by the year 2040.  AmBisyon Natin 2040 is not a detailed plan or policy prescription, but a shared destination and guidepost for future development planning across several presidential administrations.

              AmBisyon Natin 2040 was developed through nationwide consultation involving focus group discussions and surveys of thousands of citizens to identify the aspirations and values of ordinary Filipinos for themselves and their country. It answers the question “Where do we want to be by 2040?”, rather than prescribing exact strategies.  Plans (like the different Philippine Development Plans) are meant to align with the vision.  Since presidential terms in the Philippines last for only six years, AmBisyon Natin 2040 helps ensure continuity of development goals and policies beyond individual political terms.

              The vision for 2040 centers on Filipinos living a life that is:

-Matatag (Strongly rooted):  Families live together with work-life balance and strong community ties.

-Maginhawa (Comfortable): No one is poor or hungry, people have comfortable homes, quality education and decent jobs.

-Panatag (Secure):  People feel secure in their daily needs, future plans, health, and retirement in a clean, efficient, and fair government.

              The key aspirations embedded in the Vision are as follows:

-Prosperous, predominantly middle-class society.  This state of affairs presupposes a more equitable distribution of income in which the poverty incidence is able to go down to the level which its ASEAN peers , like Malaysia, Thailand and Vietnam, have already achieved, i.e. 0 to 3 % today.  By 2040, the Philippines aims to be a country where the vast majority belong to the upper middle-income class and poverty is eradicated.

-Long and heathy lives.  Filipinos are expected to live longer, healthier lives, thanks to better health care and lifestyle outcomes.

-Smart and innovative society.  Education systems at all levels will contribute to producing critical thinkers, innovators, and adaptable lifelong learners, able to constantly upskill, reskill and retool themselves, especially in a highly globalized and digitalized world.

-High-trust society.  There is trust in government and institutions, and communities are resilient and culturally vibrant.

              AmBisyon 2040 is not an economic plan itself.  Rather it serves as:

-An anchor for national development plans (e.g. periodic Philippine development plans prepared by the Department of Eonomy, Planning and Development)

-A reference for public and private sector strategies.

-A benchmark for civil society and citizens to assess progress.

-A tool to align policies across administrations and generations.

              The goals envisioned in AmBisyon 2040 also align with broader global aspirations like the Sustainable Development Goals (SDGs), positioning the Philippines’ long-term vision within global development frameworks.  In sum, AmBisyon Natin 2040 is the Philippines’ collective long-term vision—a picture of the kind of society Filipinos wants by 2040:  a stable, comfortable, and secure in a prosperous, healthy, innovative and high-trust society.

              Attaining the goals of AmBisyon 2040 is a possible antidote to escaping the Middle-Income Trap.  In a situation where a country falls into the Middle-Income Trap (as in many Latin American economies), there is continuous economic growth but productivity stagnates, wages rise without corresponding increase in labor productivity and improvement in skills, economies fail to upgrade and income inequality persists.  In contrast, AmBisyon 2040 aims for a predominantly middle-class society; high productivity, high-quality jobs; strong institutions and social trust and long-term, inclusive growth. 

              A key feature of the middle-income trap is that growth does not translate into comfortable lives for most people.  AmBisyon Natin postulates that no one is poor or hungry; families have decent housing; and people have stable well-paying jobs.   Countries in Middle Income Trap grow, but continue to suffer from high income inequality (in 2025, some 16% of the Philippine population still fall below the poverty line of about $3 per person per day).  A real middle-income society sustains domestic demand, policy stability, and support for reforms.  Without a large middle class, growth stalls. Most importantly, a country cannot escape the Middle-Income Trap with poor education and weak health systems.

              Middle-income trap countries create jobs but with low productivity, mostly in the informal sector and have low value added.  In contrast, AmBisyon Natin 2040 implies stable employment, career progression and work-life balance.  To escape the Trap, economies must move from informality to formality; from mere assembly in manufacturing to design, engineering and services.  There should be less reliance on OFW remittances and more on domestic productivity.  Quality jobs are the economic signature of a country that has escaped the Middle-Income trap.

              As already documented by Nobel Laureates James Robinson and Daron Acemuglu in their widely read book “Why Nations Fail,” no country escapes the middle-income trap with weak institutions.    A major cause of falling into the Trap is institutional weakness caused by corruption, constant policy reversals, and weak rule of law.  AmBisyon Natin 2040 highlights the importance of trust in government; predictable, fair institutions; and security for the future.  Firms, especially foreign direct investors, invest long-term only if institutions are stable. Innovation, a must for continuous improvement in productivity, requires trust and rule of law.

              Fortunately, over at least the last four Administrations, there have been continuity in economic reforms.  Development plans have not been reset every election.  Fiscal discipline has been maintained with the debt to GDP ratio and the fiscal deficit kept within prudent bounds, except during the pandemic when there was no alternative for the Government but to borrow heavily, resulting in the debt-to-GDP ratio doubling from an average of about 30 % to over 60 %.  Since then, the BBM Administration has been careful to keep it at that level and slowly reducing it.  Some of the fundamental reforms, like a greater openness to FDIs and larger investments in infrastructures, have also been sustained.

              More structural reforms are needed to attain the goals of AmBisyon Natin 2040.  There have to be industrial upgrading (e.g. export of higher-value semi-conductor devices and electronic components and increased processing of mineral ores).  Significant economic reforms must be implemented with expenditures in education increased to 4 to 5 % of GDP, spend more and more on quality basic education and Enterprise-based learning in technical schools.  Tertiary education should be left increasingly to the private sector.  The agricultural sector should undergo significant improvement in productivity through the consolidation of small farms by means of cooperatives, the nucleus estate method successfully implemented in Malaysia in the palm oil sector and the conversion of denuded forests into commercial plantations of high-value crops.  To be continued.