Federal system to speed up regional growth

A federal system of government reduces the central government’s control over the regions and gives them more power instead—a practical measure.

The Philippines—with its total area of 300,000 square kilometer and a population of over 100 million individuals of different faiths and cultures, composing more than 100 ethnolinguistic groups—can hardly be governed effectively from the top. Their traditions and history  are totally varied and unique in their own ways. Their identities took root more than 400 years ago. And the economic policies of the national government are usually largely incompatible with the business topologies, natural resources and cultural orientations of each region.

A federal system will allow local governments to pursue initiatives that fit their respective conditions, capacities and culture. Thus the exploration, employment and use of local resources will benefit the places where they will be sourced.

There surely are regions that have low resources, and are socially-fragmented by conflicts and highly vulnerable to disasters. There are also regions that have seen dramatic growth in the last three decades.

The growth of countries—and regions—is fundamentally the result of endogenicity, not external factors. Great economists like Paul Romer, Robert Lucas, Hirofumi Uzawa hold that investments on human capital, innovation and knowledge are strong drivers of growth. It is knowledge economy and investments in education, health and nutrition that determine growth.

On the other hand, if people are constantly subjected to insecurity, poor government services, hunger and poverty and other forms of human injustices, regional growth never occurs.

But endogenous growth has spillover effects—even externally, on near-by places. For example, if the Davao Region grows, Regions X, Soccsksargen and the Autonomous Region in Muslim Mindanao get to benefit. If Region X’s local economy grows as a result of the Davao’s pull effect, Caraga’s region also pulls up.

The spill-over effect of growth will benefit near-by places. Ultimately, workers and professionals who had migrated due to lack of opportunities in their regions will return home because capital and resources there now offer huge returns.

This kind of growth is in contrast to the concentrated growth in urban centers, which is characterized by the growth in the number of informal settlers, worsening pollution, traffic congestion and high incidence of crimes.

A federal system will also facilitate intra-island migration and it will be easier for people to move from one place to another without huge losses in productive capacities, human capital or physical resources. In other words, people can readily go back to their places. A federal system will prevent overcrowding in a particular region.

Endogenous growth assumes growth that depends on effective policy measures. If policies are crafted away from the places where they are to be implemented, the development trajectory will be twisted and will favor the centers. This condition will leave poor regions in perpetual underdevelopment.

It is not the federal system that will push other regions to underdevelopment; it is the current centralized, unitary system of government that caused it.

ADRIAN M. TAMAYO, faculty, Economics, University of Mindanao, member, Lihok Pideral Davao