This report discusses key policy challenges that need to be addressed if the Philippines were to embark on sustainable and inclusive growth. We take the view that the main reason behind the Philippines’ lagging growth and development outcomes in the regional context lies in a sluggish transformation of the economy—in particular, stagnant industrialization. Chronic problems of unemployment, poverty, and low investment are reflections of weak industrial development. This report shows a methodology of choosing products for targeted public sector support, and recommends effective dialogue between the public and private sectors to identify constraints specific to the target products and to develop adequate solutions. The Philippines needs to develop a stronger industrial base to enable the economy to “walk on two legs” of industry and modern services, to create productive job opportunities for the growing working-age population.