No Free Lunch

Toward more dispersed growth

For too long, our economy’s growth has been narrow, shallow and hollow. By narrow, I refer to how too few industries and geographical areas drive that growth. “Shallow” depicts how our top-growing industries don’t pull up the rest of the economy with them due to weak interlinkages with other domestic sectors, being mostly in the services sector, or mostly dependent on imports for raw materials and inputs. “Hollow” describes how growth in output has not come with a commensurate growth in jobs. In 2013, for example, our economy grew by 7.2 percent—the fastest worldwide at the time—but this was accompanied by a miniscule growth in jobs of only 0.17 percent.

I will focus here on the “narrow” description. The fastest-growing industries driving our overall economic growth have consistently been finance (banks and insurance), real estate, retail trade (shopping malls) and business process outsourcing. Note how these economic activities, especially banking and real estate, are primary sources of wealth for the country’s top billionaires. Hardly anyone in the Top 15 Forbes list has substantial involvement in manufacturing, much less agriculture or agribusiness. No surprise, then, that growth has not been broadly felt.


The other glaring aspect of our narrow growth is in how Metro Manila and its surrounding provinces account for a dominant share, and a growing one at that, of our country’s gross domestic product (GDP). In 2015, the National Capital Region, along with Central Luzon and Calabarzon, accounted for nearly two-thirds (63 percent) of our total GDP. Fifteen years ago, this share was smaller (although unduly dominant even then) at 55 percent. This implies that our growth has become even more Metro Manila-centric in the past decade. Little wonder that the tag “Imperial Manila” continues to resonate and raise emotions among our compatriots in the south.

Clearly, we must make a deliberate effort to decentralize and disperse economic activities more broadly and more equitably across the country’s regions. In the 1990s, the Ramos government consciously moved to provide larger shares of the infrastructure budget to Mindanao and the Visayas, along with designating and investing in regional agroindustrial centers in every region of the country. It is not clear if such affirmative action for our southern regions has been sustained since then.


How well are the various regions contributing to our overall economic growth lately?  The good news is that all regions, save for one, have been positively contributing to the domestic economy’s growth, as reflected in the latest gross regional domestic product (GRDP) statistics, for 2014. The lone and understandable exception is the Eastern Visayas region, having been hard-hit by Supertyphoon “Yolanda,” which caused a 2.3-percent decline in the region’s output.

The Davao Region led the regions with a 9.4-percent GRDP growth rate, pushed by manufacturing with a zooming 18.8-percent growth. Also driving that growth were mining and quarrying, utilities, real estate and banking. Agriculture, while a traditional mainstay in that region, grew by a relatively sluggish 2.4 percent. Central Luzon was a close second with 9-percent growth, propelled by manufacturing growth of 19.1 percent, along with construction, banking and agriculture. Central Visayas (with 8.8 percent) and the Caraga Region (7.8 percent) were next, followed by Northern Mindanao (7.2 percent), Mimaropa, Zamboanga Peninsula (both 6.5 percent), Cagayan Valley and Soccsksargen (both 6.4 percent).

Sadly, the Autonomous Region in Muslim Mindanao trailed with a mere 3-percent GRDP growth, the worst performer other than the disaster-hit Eastern Visayas.  Metro Manila only comes in tenth, or below the median, with a 5.9-percent growth rate.  The good news here is that the majority of the regions (9 out of 17) grew faster than the national average of 6.1 percent. This implies that regional growth had indeed been propelling our economy’s overall growth. In other words, much more is happening in our economy than what we can see in Metro Manila.

One of the most visible trends we’ve seen in the past decade is the sprouting of big shopping malls all over the country. This may be taken as a sign of growing purchasing power in the regions, propelled in large part by overseas remittances, to be sure, but also by rising domestic incomes. We could all do much more to strengthen our local economies and raise their contribution to overall growth. Government agencies, for one, can consciously raise the share of the regions in their public investment budgets. Banks can make a conscious push for more loans in the countryside rather than allow rural savings to be siphoned off to Manila-based enterprises. Other businesses can explore branching out into the provinces more actively (there are vast untapped opportunities out there!). And moneyed provincial residents can consciously invest in countryside-based enterprises rather than whisk off their capital to Metro Manila or, worse, overseas.

Even we ordinary consumers can play an important role here. As a resident of Los Baños, Laguna, I constantly remind myself to buy everything I need within the town whenever I can, rather than shop in Manila where I spend my working day. This way I am helping strengthen the local economy, and avoid further concentrating income and wealth in the capital. If all of us who had the choice between shopping in local neighborhood stores and in urban centers consciously chose the former, we would help spread the economy’s growth more evenly across the Philippine countryside.


E-mail: [email protected]


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TAGS: decentralization, economy, Growth
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