Dynamics of Small and Medium Enterprises in a Slow-Growth Economy: The Philippines in the 1990s

This paper reviews the experience of small and medium enterprises in recent years in the Philippines. It notes that, while Philippines economic growth picked up in the early 1990s, the share of its small and medium enterprises (SMEs) in manufacturing employment and value added stayed roughly constant. However, the overall stability masks some dynamism across firm sizes and sectors. Thus, very small firms (with less than 10 workers) had higher than average rates of growth of total factor productivity during 1988-94 while larger firms (of between 50 and 200 workers) experienced a decline in productivity. Towards the end of the decade, the Philippines was affected by the regional financial crisis but far less seriously than some other Asian countries. Small firms do not seem to have been worse hit than larger firms.