Academic journal article Journal of Southeast Asian Economies

Regional Development Dynamics and Decentralization in the Philippines: Ten Lessons from a "Fast Starter"

Academic journal article Journal of Southeast Asian Economies

Regional Development Dynamics and Decentralization in the Philippines: Ten Lessons from a "Fast Starter"

Article excerpt

I. Introduction

For several reasons--analytics, policy, deeply entrenched spatial inequality, transitions from economic crises or command economies, and the uneven effects of rapid global integration-spatial disparities and centre-region relations are the focus of much attention in the developing world. Regional science is now at the forefront of development issues. "New economic geography has come of age", in the words of Neary (2001). Arguably, no author has done more to popularize the intellectual fusion of trade and geography than Paul Krugman. As he argued:

   ... one of the best ways to understand how the 
   international economy works is to start by 
   looking at what happens inside nations. If we 
   want to understand differences in national growth 
   rates, a good place to start is by examining 
   differences in regional growth; if we want to 
   understand international specialization, a good 
   place to start is with local specialization 
   (Krugman 1991, p. 3). 

The motives for decentralization vary. There is pressure on central governments practically everywhere to devolve administrative authority and financial resources to the regions. Economic and political crises may trigger major (and sometimes hasty) decentralization programmes, especially when authoritarian, centralized regimes crumble. Within the past two decades, for example, Indonesia, the Philippines and Russia have all experienced deep economic crises and far-reaching institutional and political change. Increased regional autonomy featured prominently in the democratic reform agenda of all three. Both Indonesia and the former USSR ceded territory in the wake of these crises.

Especially in large, spatially diverse countries, there is frequently disenchantment with rule from the centre. Local communities often regard capital cities as corrupt, authoritarian, arrogant and remote. Regional development concerns are also motivated by frustration with failed attempts to achieve progress in bypassed regions.

In some countries, increased regional autonomy may be an incidental consequence of the transition from plan to market. As governments dismantle a command economy and the size of the state enterprise sector shrinks, economic authority inevitably passes from central government planners to private economic agents. Hence power is decentralized, even in the absence of a formal decentralization programme. China, Russia, Vietnam and other former centrally planned economies illustrate this proposition.

In some cases, the experiments with decentralization are "big bang" and hasty (for example, Russia and Indonesia, much of Latin America), while in others there is a long history of federalism and well-developed institutional structures governing centre-region relations (for example, India, Malaysia).

Although there are diverse and powerful pressures to shift power and resources out of the centre, there is no consensus in the literature on how far and how quickly decentralization ought to proceed. As Bird and Villaincourt (1998, p. 1) observe, "Decentralization [is neither] a plague [n]or a panacea". The general presumption is that policy competition between regions is desirable and that, beyond the obvious areas of central government responsibility, such as macroeconomic policy, law, foreign policy and defence, decision-making should be as close as possible to the stake-holders. For example, according to the fiscal federalism literature, with sufficient mobility of voters and capital, decentralization will provide a spur to efficient service delivery. It is also presumed that local governments are more likely than central governments to be responsive to community needs. It is therefore believed that competition for tax and service delivery will act as a discipline on bureaucratic excess and low-quality governance among regions. Mobile factors will exit jurisdictions that fail to deliver, so the argument goes. …

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