Regional leaders and laggards | Inquirer Opinion
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Regional leaders and laggards

In 2017, the Philippines ranked 125th in a list of 187 countries based on average income, measured as nominal gross domestic product per capita, with about $3,000 (P151,000). We were in the same league as Papua New Guinea, Bhutan, Vanuatu and Morocco. But looking at just Metro Manila (National Capital Region or NCR), its average income was three times as much ($9,300), at the same level as Mexico (which ranked 69th), slightly below Malaysia with $9,800 (66th), and better than China with $8,600 (71st).

At the other end, the Autonomous Region in Muslim Mindanao (ARMM), our poorest region with average income of only $611 (a mere fifth of our national average), was in the same league as Burkina Faso (174th) and Togo in Africa (175th), and Afghanistan (176th). The only other region in the Philippines with a per capita GDP higher than our national average was Calabarzon ($3,160). The remaining 16 regions had less than $3,000, although not far below it were the Cordillera Autonomous Region, Davao Region and Central Visayas.

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I last wrote of the wide disparities across our regional economies, and how they make the idea of federalizing our government system along the lines of the existing regional groupings a bad idea that could only worsen regional inequalities. A closer look at the sectoral structures of our regional economies further reinforces this observation, and underscores the need for even stronger complementation, rather than starker demarcation of lines among our regions.

Many still think of the Philippines as an agricultural economy. It has long ceased to be so, with agriculture making up less than a tenth (8.5 percent) of our output, behind services (57.5 percent) and industry (34 percent). The only agricultural region in the country—that is, where the agriculture, forestry and fishery (AFF) sector is the most dominant—is our poorest region, ARMM, where AFF accounts for well over half (56.4 percent) of production.

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Industry there makes up a relatively tiny 5.9 percent, whereas services account for 37.7 percent, propped up mainly by government services funded mostly by the national government. The rest of the Mindanao regions may look mainly agricultural, but AFF is actually the smallest sector in all of them. Industry (dominated by manufacturing and mining) accounts for more than a third of production, while services, dominated by trading, is the most prominent sector, accounting for 40-50 percent of the economy.

It is often said that the Philippine economy missed industrializing as it moved directly from agriculture to services as the dominant sector. But one region stands out as an industrial economy: Calabarzon, where industry accounts for nearly two-thirds of output (62 percent). In comparison, the contribution of agriculture there is relatively miniscule at 5.1 percent, while services account for 33 percent. It is also the country’s most populous region, with 15 million residents.

Also industrialized is Central Luzon, where industry dominates with 48.3 percent, against services’ 37.4 percent and AFF’s 14.3 percent. It is also the third most populous among our regions (11 million, behind NCR’s 13 million).

Interestingly, even as AFF has minor shares of total output in these industrialized regions, these same regions are actually the biggest contributors to the country’s aggregate agriculture and fisheries output. Central Luzon accounts for the single biggest share of 16.3 percent, while Calabarzon contributes 10 percent of national AFF production. A close third is Northern Mindanao (9.5 percent), followed by Western Visayas (8.8 percent), Soccsksargen and Ilocos (each with 7.2 percent).

With the wide economic diversity across our country’s regions, one region’s strength can be another’s weakness. We thus need greater complementation among the regions, which starts with the better endowed ones assisting those less endowed via stronger value chain linkages. Still, as I’ve argued before, it’s inevitable that the former share their bounty with the latter if we are to narrow regional disparities within the country—and shifting to federalism now could make that less likely to happen.

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TAGS: ARMM, economy, GDP, Gross Domestic Product
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