June 15, 2019
Regional inequality in the country, as measured by the coefficient of variation of gross regional domestic product (GRDP) per capita, diminished slightly last year, according to the Department of Finance (DoF).
In its latest economic bulletin on Friday, the Finance department said this inequality “worsened from 2016 to 2017, but improved in 2018.”
The coefficient of variation of GRDP per capita, it added, rose from 0.791 in 2016 to 0.795 in 2017, but reversed that last year, sliding to 0.788.
This coefficient, the DoF explained, measures how levels of GRDP per capita vary with respect to the national average.
Over a longer period, however, the coefficient rose from 0.56 in 1992 to 0.66 in 2012 and further to 0.791 in 2016.
“These show that before the Duterte administration, GRDP per capita of the poor regions lagged behind those of rich regions,” the department said.
It also pointed out that the coefficient declined from 0.421 to 0.246 from 2017 to 2018.
“The reversal in 2018 of the trend toward worsening regional inequality is due to the convergence of regional growth rates,” the DoF explained.
In 2018, for instance, lower-income regions, like Bicol (Region 5), Mimaropa (Region 4B) and the Autonomous Region for Muslim Mindanao, grew faster than the national average at 8.9 percent, 8.6 percent and 7.2 percent, respectively, it said.
‘Still a wide gap’
In a comment, IHS Markit Asia-Pacific chief economist Rajiv Biswas noted that “there is still a wide gap in average per capita incomes between the National Capital Region (NCR) and many other regions of the Philippines,” despite the “marginal improvement” in regional inequality measure.
He said this highlighted the importance of national economic and industrial policies to foster economic development in other regions, which will help in creating new hubs for economic growth and reduce the overall dependence of the national economy on Metro Manila.
Biswas also noted that the key national strategies that would help to improve the industrial competitiveness of other regions would be public investment in critical infrastructure — ports, airports, roads and power projects — in order to attract investments into new regional growth hubs.
“The creation of industrial infrastructure, such as office parks and industrial parks, are also important policies to facilitate the emergence of second- [and] third-tier cities as commercial hubs,” he said.
An encouraging sign seen over the past year, Biswas added, has been the significant acceleration in foreign direct investment in the Philippines, notably in the manufacturing sector, which may help to stimulate regional development beyond the NCR in other commercial hubs.
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