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Regional Economic Growth and Convergence in the Philippines: 1975-1997

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  • Manasan, Rosario G.
  • Mercado, Ruben G.

Abstract

This study is a quantitative assessment of regional development performance in terms of economic growth and convergence (described simply as the minimization of disparities in regional income) during the period 1975-1997. The study not only takes stock of how far the goals of regional development have been achieved but also reflects on how development strategies, particularly taking the NIChood path of rapid GDP growth via industrialization, contribute to regional convergence or divergence. The results of the study indicated that marked disparities across regions still persist throughout 1975-1997. However, analysis of convergence revealed a decline in cross-regional dispersion of per capita income which has been seen to occur more rapidly from 1975-1986, a period of declining GDP growth rate than in 1987-1997, a period of accelerated GDP growth. This finding is consistent with the experience of other Asian countries including Malaysia and Thailand where a positive relationship was found between regional dispersion and the growth rate of GDP. In these economies, high growth was largely driven by accelerated industrialization. It, therefore, provides caution that high levels of economic growth (especially where it is led by the rapid expansion of the industry sector) may bring with it risks of regional stagnation, slow regional convergence or even divergence. In this sense, this finding emphasizes the possible tension between NIC-hood and regional convergence. The study concludes with a roadmap that shows the way towards a reconciliation of the two goals of regional development: to promote the reduction of regional disparity and to enhance accelerated growth of the national economy.

Suggested Citation

  • Manasan, Rosario G. & Mercado, Ruben G., 1999. "Regional Economic Growth and Convergence in the Philippines: 1975-1997," Discussion Papers DP 1999-13, Philippine Institute for Development Studies.
    • Handle: RePEc:phd:dpaper:dp_1999-13
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    File URL: https://www.pids.gov.ph/publication/discussion-papers/regional-economic-growth-and-convergence-in-the-philippines-1975-1997
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    References listed on IDEAS

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    1. Sala-i-Martin, Xavier X, 1996. "The Classical Approach to Convergence Analysis," Economic Journal, Royal Economic Society, vol. 106(437), pages 1019-1036, July.
    2. Cardenas, Mauricio & Ponton, Adriana, 1995. "Growth and convergence in Colombia: 1950-1990," Journal of Development Economics, Elsevier, vol. 47(1), pages 5-37, June.
    3. Arsenio M. Balisacan, 1997. "Getting the Story Right: Growth, Redistribution, and Poverty Alleviation in the Philippines," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 34(1), pages 1-37, June.
    4. Paul Cashin & Ratna Sahay, 1996. "Internal Migration, Center-State Grants, and Economic Growth in the States of India," IMF Staff Papers, Palgrave Macmillan, vol. 43(1), pages 123-171, March.
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    Cited by:

    1. Gilberto M. Llanto, 2012. "The assignment of functions and intergovernmental fiscal relations in the Philippines 20 years after decentralization," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 49(1), pages 37-80, June.
    2. Takahiro Akita & Mark Saliganan Pagulayan, 2014. "Structural Changes And Interregional Income Inequality In The Philippines, 1975–2009," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 26(2), pages 135-154, July.
    3. Mapa, Dennis S & Sandoval, Monica Flerida B & Yap, David Joseph Emmanuel B, 2009. "Investigating the Presence of Regional Economic Growth Convergence in the Philippines using Kalman Filter," MPRA Paper 20681, University Library of Munich, Germany.

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