Five days ago, the Department of Finance (DoF) in an economic bulletin reported that regional inequality in the Philippines eased in 2018 compared to 2016 and 2017, citing lower measures of variability in the gross regional domestic product.
The DOF said the coefficient of variation of gross regional domestic product (GRDP) per capita fell to 0.788 in 2018 from 0.791 in 2016 and 0.795 in 2017, suggesting that laggard regions closed the gap with richer regions.
The DoF further said that the overall narrowing of the gap was due to a decline in growth rates of the richer regions coupled with the acceleration of growth in lower-income areas like Bicol, MIMAROPA (Mindoro, Marinduque, Romblon, and Palawan) and the Autonomous Region in Muslim Mindanao (ARMM), now part of the Bangsamoro Autonomous Region in Muslim Mindanao
Well, one summer does not make a climate change.
The fact is that if there was ever a change in the spatial or regional distribution of development in the country in the past, it is not in the direction presented by the DoF.
Previous estimates of the GRDP shows that in 1975, Metro Manila, now the National Capital Region (NCR), contributed 31.6 to the total output of all the regions in the country. At that time there were only 11 eleven regions, including Metro Manila or the NCR. Region 12 was added in 1975 but its GRDP data was not yet available then. See table below.
With Metro Manila, Luzon contributed 64.2 percent of the total output of the country in 1975. The rest came from the Visayas, 18.9 percent, and Mindanao, 16.9 percent.
Thirty-five years later in 2010, Luzon’s contribution to the national economy increased to 73.2 percent, with the Visayas giving only 12.6 percent and Luzon, 14.2. In that year, the NCR’s contribution increased to 35.7 percent from only 31.6 percent in 1975.
Five years later in 2015, Luzon’s contribution remained the same at 73.2 percent. This went down to 73 percent in 2016 but went up to 73.1 percent in 2017 and down again to 73 percent in 2018. Overall, therefore, Luzon reduced its contribution to the national economy by 0.2 percentage points from 73.2 percent in 2010 to 73.0 percent in 2018.
From 12.6 percent in 2010, the contribution of the Visayas to the national economy went down to 12.4 in 2015, increased to 12.6 percent in 2016, remained at 12.6 percent in 2017 but went down again to 12.5 percent in 2018. Overall, the Visayas lost 0.1 percentage in contribution to the national economy from 2010 to 2018, that is, from 2.6 to 12.5 percent.
Mindanao did better than the Visayas. Its 14.2 percent contribution to the national economy in 2010 increased to 14.5 in 2015. It went down to 14.3 percent in 2016 but went up to 14.4 percent in 2017 and 14.5 percent 2018. Overall, Mindanao gained 0.3 percentage from 2010 to 2018, that is, from 14.2 to 14.5 percent in contribution to the national economy.
It can be seen therefore that the losses of Luzon and the Visayas went to Mindanao.
Which region in Mindanao got them? The answer is most went to Davao Region. As shown in the table below, Davao Region started only with 3.8 percent in contribution to the national economy. In 2018, this went up to 4.4 percent.
What is your guess why?
Finally, from only 54 percent in contribution to the national economy the three top regions, NCR, Central Luzon (Region 3), and CALABARZON (Region IVA), increased their combined contribution to 62.4 percent in 2010 and up to 62.8 percent in 2018. This disproves DoF’s claim that regional inequality has narrowed down. For what seems to be the lowering of the variability of the GRDP observed by the DoF was true only to the regions outside of the three mammoth regions, which eats more than 60 percent of the total national output.
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