Investing in Public Infrastructure in the Philippines: An Input‐Output Analysis

ABSTRACT Understanding the impact of public infrastructure investment (PII) on the Philippine economy is essential for designing policies that maximize economic growth, job creation, and sectoral development. This study evaluates the macroeconomic effects of scaling up infrastructure investment using an Input‐Output (IO) analysis model. Unlike aggregate‐level assessments, it disaggregates effects across sectors to uncover differential multiplier responses and interindustry linkages. Public infrastructure activities were treated as exogenous, and the study applied multiplier analysis, sectoral linkage assessment, income multiplier estimation, and simulation analysis to measure its impact on GDP, employment, and sectoral output. The findings identify manufacturing, transportation, and agriculture as the most influential sectors due to their strong interindustry linkages and capacity to generate broad‐based economic benefits. The manufacturing sector exhibits the highest input (3.31) and output (2.57) multipliers, reinforcing its role in industrial expansion and value chain integration. Transportation and storage (2.38) and construction (2.32) also emerge as critical areas, supporting mobility, trade, and investment. Agriculture, while less integrated, shows strong output potential when investments target productivity and supply chain integration. The income multiplier analysis highlights the role of public administration and education in household income generation, though with limited indirect spillovers. In contrast, manufacturing, transportation, and utilities demonstrate higher multiplier effects, which substantiate their ability in stimulating economic activity. Simulation results reveal that targeted infrastructure investment yields a 1.27 percentage point higher GDP and creates over 2.2 million more jobs compared to a business‐as‐usual approach. Findings emphasize the need for strategic allocation in high‐multiplier sectors to maximize economic resilience, structural transformation, and inclusive growth in the Philippines. These insights contribute to the policy debate on optimizing fiscal spending by linking infrastructure priorities with measurable economic returns.