By Justine Irish D. Tabile, Senior Reporter

Investments in education and health are essential to sustaining economic expansion, but their impact may be limited if public funds are not used productively, the Philippine Institute for Development Studies (PIDS) said.

“Our economy is growing, but the continued growth and expansion of the Philippines is anchored in the quality of our education and our health for our countrymen,” PIDS Senior Research Fellow John Paolo R. Rivera said at the 2026 Development Policy Research Month (DPRM) Kick-off Press Conference on Tuesday.

“This is also why education and health belong in the economic conversation. And it is because health and education shape the productive capacity of our country,” he added.

Mr. Rivera said the key issue is not only the size of government allocations for these sectors, but whether the spending results in lasting gains in human capital and productivity.

“It’s not a question of… how much is the budget, how much is the spending, but whatever that amount is, is that going into productive spending?” he said in an interview on the sidelines of the event.

He noted that spending on classrooms and other school infrastructure will have little lasting value if poor construction forces the government to repeatedly pay for repairs or replacements. In that sense, the way projects are implemented can matter as much as the amount allocated, since weak execution reduces the value of already-limited public resources.

The same concern applies to the health sector, where funding is often directed toward building hospitals and increasing bed capacity, Mr. Rivera said.

He said more resources should also go to preventive healthcare rather than focusing mainly on responding to health problems after they arise.

“It’s really more of putting money into more productive use,” he said, citing preventive care as an example.

In education, Mr. Rivera said infrastructure investments should be matched by more pre-service and in-service training for teachers so their skills and classroom instruction stay current.

“When you invest in teachers and at the same time invest in infrastructure, then you can increase the quality of educational experience being given to the younger generation,” he said.

Mr. Rivera said the current system should be reviewed to determine why investments do not always translate into higher productivity.

“One of the specific bottlenecks there would be the budgetary process, the disbursement process,” he said. “It takes time for these investments to actually become tangible.”

He added that investments and implementation must also keep pace with changing education and health needs, as well as technological developments.

“There’s a time value to it. So, the faster the investment, the faster the implementation should be,” he said.

Otherwise, slow implementation could cause projects to lag behind changing needs to the point that the investments are wasted, he said.

Mr. Rivera also said productive investment requires greater trust and confidence among the government, private sector and households, which may have different incentives for investing in human capital.

He said companies may limit spending on employee training because workers could later be hired by competitors, while households invest in education to improve their children’s employment prospects.

The government, he said, should provide long-term and predictable policies, regulations and incentives to encourage businesses to invest. That predictability, he said, becomes especially important for long-horizon spending because firms decide on training and related investments before the benefits are realized.

“It has to be long term. It has to be predictable. The policy, the regulation, the incentives would have to be predictable because the investment is being done now,” he said.

Companies may underinvest to limit their exposure if they expect policies and requirements to change under the next administration, Mr. Rivera said.

“Investors are in a wait and see stance because they don’t know what will happen in 2028,” he said.

He said policies should remain stable even when the administration changes so that investments already made by businesses will continue.

“That’s why you need trust and confidence to make sure that even if the administration changes, the investment will continue,” he added.

Mr. Rivera said corruption controversies, including those involving flood control projects, have also weakened confidence by raising concerns about policy continuity and changes in infrastructure spending.

Rebuilding that confidence would require greater accountability in the use of public funds, he said, particularly because efficient spending is being weighed alongside calls for stronger public services.

“Accountability should not be a threat because it’s our value proposition,” Mr. Rivera said. “We need to be accountable to people, accountable to taxpayers’ money.”