Measuring city competitiveness

Ten years ago, the National Competitiveness Council started a new project to measure city and municipal competitiveness. While we measured our national competitiveness against other countries and economies worldwide, it occurred to us that we should undertake a similar measure for our cities and municipalities. Our basic philosophy was that local competitiveness was the foundation for national competitiveness.

Back then, people were already looking for a listing and comparison of our local government units (LGUs) across a broad range of key indicators—ease of doing business, education, economy, infrastructure, and other topics. Our basic problem, then, was no such database existed. It was difficult to collect data on a single city, let alone a range of cities and municipalities. Early attempts had been made to run comparisons of some cities, but these typically covered fewer than 20 cities and could not be sustained annually. Our goal was to cover all 1,634 cities and municipalities nationwide annually, so we could track performance over time.

Our first order of the day was to organize a large data-collection infrastructure and effort, so we could effectively cover the country on a sustained basis. We started by organizing Regional Competitiveness Councils nationwide composed of public and private sector organizations. More importantly, we included local universities to assist us in validating the data. We eventually organized 17 of these regional councils and met three times a year to thresh out the details of data collection and validation.

Our second step was to decide what type of data to collect. We started with three broad pillars—economic dynamism, government efficiency, and infrastructure. Since the ranking and scores were to be based on actual metrics (as opposed to having a panel of judges evaluate each city), we needed to be very specific about each metric.

In 2012, we started with basically zero LGUs and expanded coverage to 1,389 cities and municipalities by 2016. In the beginning, LGUs could barely supply 50 percent of the data required. The indicators were simply never measured or were stored improperly, so it was difficult for them to find the figures. By 2016, LGUs could provide well over 80 percent of the data needed, simply because they got more organized for data collection.

In 2017, we added resilience as a fourth pillar because we felt cities and municipalities needed to pay more attention to disaster risk reduction and management. The frequency and intensity of natural disasters warranted this move. At the same time, we continued to build up coverage to 1,508 LGUs by 2018, when the National Competitiveness Council was dissolved.

Fortunately, the Department of Trade and Industry (DTI) adopted the Cities and Municipalities Competitiveness Index project and continued to expand it and improve its data-collection processes. Significantly, DTI expanded into BARMM and improved coverage there by adding many cities and municipalities.

This year marks the 10th anniversary of this project. It now covers 1,608 cities and municipalities (out of a total of 1,634). More importantly, it has added a fifth pillar—innovation—in recognition of the importance of research, technology, and innovation for each of our cities and municipalities. Their futures will increasingly become more dependent on their ability to innovate since many businesses and future workers will gravitate to LGUs, which do this best.

Now that virtually every LGU is covered in the index, what should our next step be? We should now focus efforts to make the data more understandable and accessible to citizens through data dashboards. If data were made more visual, this could make it easier to read and appreciate. It would also make it easier to spot where improvements are being introduced, as well as identify services which need to improve. In order to do this, LGUs should make their databases more visible and accessible on a real-time basis, rather than through periodic updates (some of them only annually). This will be especially useful for transactions, which many businesses have to undergo at the LGU level (for instance, business registration, real property tax payments, and construction permits).

This would be a fitting way to mark a 10th anniversary and to take local competitiveness in a new direction.

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Guillermo M. Luz served as private sector cochair of the National Competitiveness Council from 2011–2018.

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Business Matters is a project of the Makati Business Club ([email protected]).