Investment-driven growth is the way to go

From The Economist:

OUTSIDE China, people tend to assume that the country's impressive economic growth is due to exports. As the chart below, drawn from our special report on China's economy, shows, this notion has always been exaggerated and is now plain false. China grows thanks to high levels of investment—far higher than those seen in previous Asian miracles such as South Korea and Japan. The corollary of this is low levels of private consumption. Some argue that this must lead to imbalances that one day will send China's economy off a cliff. We disagree....

It is investment, not exports, that leads China’s economy. Spending on plant, machinery, buildings and infrastructure accounted for about 48% of China’s GDP in 2011. Household consumption, supposedly the sole end and purpose of economic activity, accounts for only about a third of GDP. It is like the small farthing wheel bringing up the rear. 

A disproportionate share of China’s investment is made by state-owned enterprises and, in recent years, by infrastructure ventures under the control of provincial or municipal authorities but not on their balance sheets. This investment has often been clumsy. In the 1880s, according to Stevens, China showed a “scrupulous respect for individual rights and the economy of the soil”. The road he pedalled took many wearisome twists and turns to avoid impinging on any private property or fertile plot....

China’s cities have grown faster in area than in population. This rapid urbanisation is a big part of the country’s economic success. But it has come at a heavy price in depleted natural resources, a damaged environment and scrupulously disrespected property rights.

This is why I worry, like many others, on the Philippines' consumption-driven growth path.