Objectives Overview of urbanization and decentralization in the Philippines Implications of urbanization and decentralization on infrastructure provision Lessons learned
Region Level of Urbanization 1960 1970 1980 1990 1995 Philippines 29.8 31.8 37.5 48.6 54.1 NCR 98.1 100.0 100.0 100.0 100.0 Cordillera Adm Region 31.5 38.3 Ilocos 17.6 19.4 22.9 37.8 46.9 Cagayan Valley 14.1 14.1 16.7 24.3 28.8 Central Luzon 26.5 30.2 41.8 59.8 68.2 Southern Tagalog 26.8 30.6 37.1 50.3 57.0 Bicol 21.9 19.2 21.9 31.1 36.2 Western Visayas 30.5 26.7 28.4 35.8 40.0 Central Visayas 22.2 27.9 32.1 40.4 44.8 Eastern Visayas 18.9 19.4 21.8 31.2 36.7 Western Mindanao 16.8 15.8 17.8 31.2 44.6 Northern Mindanao 20.2 20.9 25.6 44.9 55.8 Southern Mindanao 20.9 26.6 34.3 56.6 67.2 Central Mindanao - 15.6 16.8 23.3 27.2 ARMM 19.6 24.5 27.1 Caraga 30.0 50.7 61.5 Basic sources: NSO; 1995 projections.
primacy of NCR has held for a long time because of... government s import substitution program concentration of public investments
Figure 1. High urban levels are associated with low economic growth. 120 100 NCR Urbanization level 80 60 40 20 Central Luzon S. Mindanao Southern W. Mindanao Tagalog Ilocos C. Visayas Bicol C. Mindanao E. Visayas W. Visayas Cagayan Valley N. Mindanao 1995/96 1990/92 0 0 5000 10000 15000 20000 25000 30000 Basic source: NSCB GRDP per capita
Figure 2. Urbanization has advanced but industrialization has remained largely stagnant in most regions. 60 NCR Level of industrialization 50 40 30 Central Mindanao Southern Tagalog Central Luzon Central Visayas Northern Mindanao Western Visayas Cagayan Valley Ilocos Southern Eastern Visayas Mindanao 20 Western Mindanao Bicol 10 1980 1994 0 0 20 40 60 80 100 120 Basic source: NSCB Urbanization level
poor connection between urbanization and industrial growth in the last few decades poor association between urbanization and economic growth
Greater urban dispersal is expected from... Trade liberalization BOI fiscal incentives SEZs growth corridor strategy
fiscal incentives unable to counter the agglomeration pull of the NCR regional development appears to be strongly influenced by trade openness and public spending on social sectors in turn, regional exports are determined by the presence of SEZs, public spending on physical infrastructure and the level of human capital (Pernia et al. 2003).
success of growth corridor strategy is uneven CALABARZON and NCR dominate other growth corridor regions in providing locational pull to industries some evidence of economic growth dispersal in the northern growth corridor opposite is true in South Cotabato-Davao- Zamboanga corridor and the Cagayan de Oro-Iligan corridor
LGU LGU LGU Rev-to- Revenue Expd LGU Expd Share Share Ratio 1985-1991 4.9% 11.0% 51.6% 1992-2001 6.6% 22.2% 35.0% 2001 7.2% 25.6% 31.6%
Provinces Munis Cities 1985-1991 34.3% 48.3% 66.4% 1992-2001 19.9% 29.2% 49.8% 2001 16.2% 22.1% 49.3%
IRA-to- LGU Expd IRA-to- LGU Income 1985-1991 38.0% 36.4% 1991-2001 62.9% 61.8% 2001 60.1% 63.3%
Decentralization: expenditure assignment Local Government Code of 1991 - devolved to LGUs primary responsibility for delivery of basic services and operation of facilities in ff areas: agricultural extension, environment management, health, social welfare services, municipal services, local infrastructure, land use planning
Expenditure pattern development content of LGU expenditures stagnated aggregate LGU spending on infrastructure when measured relative to GNP was fairly constant in post-code period same is true of capital expenditures of LGUs
distribution of development expenditures highly skewed Infra spending of provinces and municipalities (relative to GNP) fell but that of cities went up capital expenditure unevenly distributed across regions (over 2/3 of capital expd of all cities incurred by cities in 4 regions (NCR, III, IV, VII)
Infrastructure projects of cities Road network (Cabanatuan/Batangas) drainage waste disposal/landfill (San Fernando) water supply housing (Naga, San Carlos) basic social infrastructure, e.g.,schools (Marikina and Bulacan) economic enterprise (commercial bldgs., bus terminals)
Generally, infrastructure has grown proportionately with urbanization but. as evidenced by strong association between urbanization and infrastructure growth telecommunications, power and access to water have higher per capita growth as urban growth strengthens opposite is true of roads despite this, large unmet needs still evident in many sectors number of unauthorized housing settlements have increased
Constraints to infrastructure provision Poor local revenue mobilization low level of tax decentralization weak technical capacity poor cost recovery Institutional arrangements metropolitan arrangements LGU credit finance central-local fiscal arrangements
Many attempts amongst LGUs to work together... but efforts to jointly finance investments in infrastructure hampered by lack of legal character of metro agency thus, many large important urban infrastructure continue to be financed by the central government (e.g., MRT)
Improving access to LGU finance Easing of LGU depository bank requirement restructuring of the MDFO unbundling of loans- grant mix provision of enabling infrastructure for LGU bonds
Central-local arrangements matching grants program for infrastructure development for provinces and muncipalities review design of intergovernmental transfers
Lessons learned Importance of tax decentralization for increasing accountability need for well-designed system of intergoverntal transfers need to improve LGU access to credit finance need for an institutional framework to make metropolitan arrangements to work