08 Philippine Urbanization in the Medium Term - Prof. Cayetano W. Paderanga, Jr

8/9/2019 08 Philippine Urbanization in the Medium Term - Prof. Cayetano W. Paderanga, Jr

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Philippine urbanizationin the medium term

Cayetano Paderanga, Jr.Professor , UP School of Economics

03 February 2010


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Flow of the presentationOverview

Initial status & recommendationsDiminishing role of main cityMain economic policies during the period

Macroeconomic policiesSpatial policies

Current trendsIntegrating markets

Rising tradeRising financial integration

Current global crisis

Initial lessons & recommendations


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Urban developmentsince the 1970s


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Back in the 1970s

Philippine urbanization & primacy(1975)

Dominance of Metro Manila

Uneven regional development


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Overview Philippine urbanization

During the 1970sCharacterized by conscious public effort to decongestMetro Manila

Creation of separate economic known as economic processingzones in NCRs adjacent areas firmed up the position ofCentral Luzon & Southern Tagalog as part of RPs CentralIndustrial Regions

Gradual rise of broad regional centers like Metro Cebu(Visayas region) & Metro Davao (Mindanao region)

By 1975, total population rose to 42.01-m14.9-m (35.6%) in urban areas27.0-m (64.4%) in rural areas


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Comparing oldest & latest census data onurban-rural population:

In 1903, total population reached 7.63-m1.02-m (13.4%) belonged in the urban areas6.06-m (86.5%) found in the rural areas

By 2000, this increased to 76.50-m36.7-m (48.0%) in urban areas39.7-m (51.98%) in rural areas


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Compound Annual Growth Rates for Total, Urban, & Rural Population

Since the post-war period, the growth rate for urban population hasexceeded those of total & urban population

Source: 2007 UN Urbanization Prospects


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Marked shift in population towards the urban areas

Distribution of Total Population, 1950- 2010*

Source: 2007 UN World Population Prospects


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Overview Dominance of Metro Manila

Metro Manila (1975)Population: 4.97- m Filipinos (33.5% of urban popn; 11.9%total popn)Population density: 7,814.5 persons/sq.km.Number of Manufacturing Establishments: 15,760Host to RPs primary gateway both by AIR & WATER &primary Oil Depot

On the other hand, combined numbers for 2nd- ranked

& 3rd

-ranked cities--Metro Cebu &Davao, respectively, still paled in comparison.


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Overview Other regional centers

Metro Cebu (1975)Population: 415,000 Filipinos (2.8% of urban popn; 1.0% totalpopn)Population density: 1,470.4 persons/sq.km.Number of Manufacturing Establishments: 2,840Host to alternate international airport & primary seaport

Metro Davao (1975)Population: 488,000 Filipinos (3.3% of urban popn; 1.2% totalpopn)Population density: 219 persons/sq.km.Number of Manufacturing Establishments: 2,815Host to a tertiary airport & primary seaport


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Urban Population in Major Cities as % of Urban Population

0

5

10

15

20

25

30

35

40

1 9 5 0

1 9 5 5

1 9 6 0

1 9 6 5

1 9 7 0

1 9 7 5

1 9 8 0

1 9 8 5

1 9 9 0

1 9 9 5

2 0 0 0

2 0 0 5

2 0 1 0

a s

% o

f u r b a n p o p u

l a t i o n

Cebu Davao Manila

NCRs share in total urban population peaked at 1975 this has declined following thedispersion of population to nearby areas & conversion of municipalities into charter

cities.



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Urban Population in Major Cities as % of Total Population



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3 Factors that led to primacy of Metro Manila:Socio-economic forces

The US colonial rule (primary product export-led growth)Development policies in post-war period

Import substitution period (1946- 1960)Decline in agricultural regionsStart of population & economic resources shift to Manila

Decontrol & devaluation period (1960- 1968)Development of adjacent urban centers. Driven by 2 factors

Agglomeration economies & spillover effectsRise of Central Industrial Region

Regional awareness period (1970- present)



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Natural endowmentsExcellent ports, well-developed (relative)infrastructure

Historical forcesAdministrative & political center since Spanish Era



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Overview Uneven regional development

Source: NSCB

Annual Growth for Selected Regions, 1975- 2008

Except for selected periods, the growth rates by NCR & S. Tagalog has exceedednational GDP. This means it also bears the brunt of an economic contraction aswhat happened in the 1980-1985 period.

Only C. Luzon managed to record unbroken expansion since 1975.


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Some Observations:The share of regions belonging to the Central Industrialcontinue to rise. In the case of Central Luzon for example, thisrose to 60.51% in 2000 from only 29.22% in 1975.

On the other hand, frontier regions like the ARMM continue tohave slow rate of urbanization. From 18.38% share of urbanpopulation in 1975, this dropped to 11.76% in 1980 before

gradually rising to 21.25% in 2000.


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Compound Annual Growth Rate of Population in Urban Areas

Source: NSO

Since 1975, the rate of urbanization in the NCR has slowed down with C.Luzon & S. Tagalog regions consistently surpassing national average.

Since 1990, rate of urbanization in other regions has been on a downtrend.


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Urban Rural Share of Population Per Region, 1975- 2000

Source: Census of the Philippines


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Diminishing role of main city

In the 1970s, there was greater awareness nowthat Metro Manila and its nearby urban centerswere growing even as the agricultural & frontierareas were stagnating. Thus, there was conscious

public attempt to disperse industries to countryside

This was made more aware by the obviouscongestion of Metro Manila & consequent rise ofurban problems, plus the governments avowed aimof making Metro Manila a national & internationalcenter in the world map


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Overview Main economic policies, 1970s- onwards

Macroeconomic Policies

Gradual dismantling of exchange controls & de facto devaluationof the peso (ideally encourage export industries)However, tariff structure & tax incentives remain in favor of import-substitution industriesExacerbated by frequent minimum wage adjustments

Spatial PoliciesInvestment & Export Promotion PoliciesCreation of Board of Investments- designated area w/c enjoyed generous fiscalincentives

Agricultural PoliciesMasagana 99 rice program

50-km radius ban starting December 1973

Integrated Area Development

Othersnational infrastructure building program, e.g. Phil.-Japan highway, ruralelectrification program


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Overview Main economic policies, 1970s- onwards

These programs only succeeded in encouragingfirms to locate near Metro Manila, hence thecurrent big share of Calabarzon & C. Luzon in

national output.

***and NOT THE DISPERSION OF INDUSTRY INTHE FAR-FLUNG REGIONS.


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Current trends


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Current trends Metro Manila

Metro Manila (2000)Population: 9.93- m Filipinos (27.03% of urban popn;12.9% total popn)Population density: 15,617 persons/sq.km.Number of Manufacturing Establishments: 21,861Host to RPs primary gateway both by AIR & WATER& primary Oil Depot


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Current Trends Actual contribution to national output

Actual Share in Gross Regional Domestic Product, 1975- 2008

Source: NSO


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Current trends Distribution of national output

Gross Regional Domestic Product, Selected Years

Source: NSCB

The combined output of NCR, Southern Tagalog & Central Luzon regions accounted for

more than 50% of national output since 1975 .

C d


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Current trends Distribution of manufacturing output

Source: NSO

NCRs share of manufacturing output was on downtrend from 1975 - 2000, reaching

40% that year. Since then it has been on upward trend.

Regional Share in Manufacturing Output, 1975- 2008


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Distribution of manufacturing establishments

NCR, S. Tagalog, C. Visayas, and Davao regions have shownincreased share of manufacturing establishmentsOutside of these regions, the concentration of manufacturingestablishments has diminished after periods of high concentration.

Source: NSO


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Distribution of small -large manufacturing

establishments

Large manufacturingestablishments concentrate mostlyin S. Tagalog and NCRThis also applies for medium andsmall manufacturingestablishments

Large manufacturing establishments

Medium manufacturing establishments Small manufacturing establishments

Source: NSO


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Distribution of micro manufacturing establishments

Meanwhile, micro-sized manufacturing establishmentsremain to be concentrated in areas outside of theregions of NCR, S. Tagalog, C. Visayas, and Davao.

Source: NSO


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Impacts of theglobal financialcrisis is seen in theindustry sector,particularlymanufacturing andrelated sub-sectors , due to

weak globaldemand

Current trends Impact of the global crisis


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Top Ten Cities/ Municipalities By UrbanPopulation: 2000

Excluding Metro Manila w/c has a population of 9.93-M for the same year,Cebu City and Davao City are the largest in terms of the size of the urban

population

Source: National Statistics Office


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Initial lessons &

recommendations


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Initial lessons

Weberian location factors help explain spatial concentration ofmanufacturing in Metro Manila and later on in Calabarzon &Central LuzonBenefits from spillover effects & agglomeration economiestend to be bigger factors for firms than various fiscalincentives. This also carries potential of further increasingoutput with less additional costs (if externalities areminimized)Change in macroeconomic and allied policies have started to

reduce primacy and increase growth in some secondary citiesGlobalization of trade and integration of markets can heightenor lighten primacy depending on economic policies


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Recommendations

Encourage the further development of other regionalcenters and other secondary cities, e.g. Cebu & Davaoto provide alternative location for firms found in theCentral Industrial regions

Government should invest in both soft & hardinfrastructure to facilitate dispersion of firms incountrysideGovernments needs to raise investments in rural

areas to reduce the demand pull of better employmentopportunities, social services in the urban centers


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Recommendations

Following three-dimensional approachA. Incipient areas: still largely agricultural, low density

Build density and expand markets through:Linkage between barangays and townsFacilitate rural-urban transformation to exploit incipient agglomerationeconomies

B. Intermediate areas: key secondary citiesOrganize administration for effective urban management &build internal infrastructure to reduce externalities

Either enlarge central city/town or fuse adjacent townsInfrastructure to ease congestion & promote internal efficiencyMaintain basic urban services to contain diseconomiesInvestment requirements may dictate phasing development among keysecondary cities


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Philippineurbanization in themedium termCayetano Paderanga, Jr.Professor , UP School of Economics3 February 2010


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What are urbanized areas?*All cities & municipalities having a popn density of at least 1000persons per square kilometer

Poblaciones or central districts of municipalities and cities w/c have apopulation density of at least 500 kilometers per sq km

Poblaciones or central districts (not included in the above), regardlessof the population size w/c have the ff:

Street pattern, i.e., network of streets in either parallel or right angle orientation;At least six establishments (comml, manufacturing, recreational, and/or personalservices); &At least three of the ff:

A town hall, church, or chapel with religious services at onceA public plaza, park, or cemeteryA market place or building where trading activities are carried on at least once a week;A public building like school, hospital, puericulture or health center and library

Barangays having at least 1000 inhabitants w/c meet the preconditionsset forth in 3 above, & where the occupation of the inhabitants ispredominantly non farming or non fishing.

* Same concepts used in the 1970, 1975, 1980 and 1990 censuses


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Metro Cebu

Cebu CityCarcar CityDanao CityMandaue CityLapu-lapu CityTalisay CityNaga CityCompostelaConsolacion

CordovaLiloanMinglanillaSan Fernando

Metro Davao

Davao CityDigos CityTagum CityPanabo CityIsland Garden Cityof SamalCarmenSta. Cruz

08 Philippine Urbanization in the Medium Term - Prof. Cayetano W. Paderanga, Jr

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