Contribution of Infrastructure to Economic Growth and Poverty Reduction

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Contribution of Infrastructure to Economic Growth and Poverty Reduction Contribution of Infrastructure to Economic Growth and Poverty Reduction Japan Bank for International Cooperation Republic of the Philippines Comprehensive Impact Study for Metro Cebu Development Final Report March 2004 Global Group 21 Japan, Incorporated Introduction This report was prepared by Global Group 21 Japan, Inc. to investigate the Comprehensive Impact Study for the Metro Cebu Development Project on commission from the Japan Bank for International Cooperation (hereinafter referred to as “JBIC”) in the year 2004. The subject of this study, “Metro Cebu”, is the second largest city in the Philippines to which JBIC had provided assistance surpassing well beyond 100 billion yen in total. In the light of its accountability to the Japanese public and the importance of feeding back lessons for its future projects, JBIC conducts evaluation of its projects every year. At the same time, JBIC recognizes the importance of evaluation not only from an individual but also from a comprehensive viewpoint. Therefore, JBIC initiated this comprehensive impact study for a number of different yen-loan projects in Metro Cebu since the 1970s. In this study, the development planning process for Metro Cebu has been divided into three development cycles for purposes of analyses and organization, namely: (1) the first cycle (1978-1986) which covered the period of the physical development planning of regional growth centers; (2) the second cycle (1987-2003) during which regional urban development for sustainable growth was promoted; and (3) the third cycle (2004 and beyond) which envisions the dispersion of growth away from Metro Cebu. This study evaluated the impact of a number of different yen-loan projects in the Metro Cebu area using the “Urban Development Model” concept. The “Urban Development Model” is the analytical framework for sequencing the urban development and economic development processes where; (1) the central and local governments prepared overall development plans for the region and Metro Cebu; (2) JBIC or other donor agencies assisted both the central and local governments in implementing infrastructure projects identified in the development plans; (3) the development of infrastructure stimulated private capital investments; (4) the level of economic development achieved during the period had positive impact on poverty reduction in the project areas, as a direct consequence of central and local government support of the general development policies. The evaluation of a number of different yean-loan projects examined following the DAC's five evaluation criteria (i.e., validity, efficiency, effectiveness in attaining the objective, impact, sustainability). As for the projects funded by private enterprises, surveys and questionnaires were sent out to the Metro Cebu local enterprises as well as the Japanese and Philippine companies for data collection and analysis. Moreover, the statistical software called “SAS” was used for the impact analysis of the “Urban Development Model” and regional economic growth. On the other hand, for the analysis of poverty reduction, both quantitative (based on various poverty indexes) as well as qualitative analyses (using focus group discussions) were used. Finally, but not least, it is important to mention that in preparing this Report, we sought and received evaluative observations and analyses from a number of real experts on the Metro Cebu yen-loan projects. Prominent among these were the departments and agencies of the Philippine Government involved in the preparation and implementation of yen-loan projects; the Cebu Investment Promotion Center (CIPC), Metro Cebu Japanese Chamber of Commerce and Industry; Professor Michihiro Kaiyama of Saitama University, as well as Masaharu Nagashima; Assistant Professor of Saitama University; and Professor Yoshio Sakakibara of Sakushin Gakuin University. Finally, the Team is grateful for the patience and understanding of the JBIC staff. March 2004 Yoshio Sanaka (Study Team Leader) Global Group 21 Japan, Inc. List of Abbreviations ADB: Asian Development Bank AFTA: ASEAN Free Trade Area AIDAB: Australian International Development Assistance Bureau APEC: Asia-Pacific Economic Cooperation APIS: Annual Poverty Indicators Survey BLGF: Bureau of Local Government Finance CIDA: Canada International Development Agency CIPC: Cebu Investment Promotion Center CMP: Community Mortgage Program CPA: Cebu Port Authority DBM: Department of Budget and Management DepED: Department of Education DFID: Department for International Development DILG: Department of Interior and Local Government DOF: Department of Finance DOH: Department of Health DOLE: Department of Labor and Employment DOTC: Department of Transportation and Communications CPA: Cebu Port Authority DPWH: Department of Public Works and Highways DPWTC: Department of Public Works, Transportation and Communication DST: Department of Science and Technology DSWD: Department of Social Welfare and Development DTI: Department of Trade and Industry EU: Europe Union FDI: Foreign Direct Investment FIES: Family Income and Expenditures Survey FNRI: Food and Nutrition Research Institute IAD: Integrated Area Development ILO: International Labors Organization IRA: Internal Revenue Allotment JBIC: Japan Bank for International Cooperation JICA: Japan International Cooperation Agency LGC: Local Government Code LGU: Local Government Unit MCDP: Metro Cebu Development Project MCDPO: Metro Cebu Development Project Office MCIAA: Mactan Cebu International Airport Authority MCLUTS: Metro Cebu Land Use and Transport Study MDF: Municipal Development Fund MEZ: Mactan Economic Zone MPWH: Ministry of Public Works and Highways NEDA: National Economic Development Agency NGO: Non-Government Organization NHA: National Housing Authority NPC: National Power Corporation NSCB: National Statistical Coordination Board NSO: National Statistical Office PEZA: Philippine Economic Zone Authority PRSP: Poverty Reduction Strategy Paper RCDP: Regional Cities Development Project RDC: Regional Development Council SAPROF: Special Assistance for Project Formulation SEC: Securities and Exchange Commission T/A: Technical Assistance TOR: Terms of Reference UNDP: United Nations Development Programme USAID: United States Agency for International Development Table of Contents Final Report Republic of the Philippines Comprehensive Impact Study for Metro Cebu Development Table of Contents List of Abbreviations 1. Research Background················································································ 1-1 1.1 Research Background and Objectives...........................................................................1-1 1.2 Framework of Analyses ................................................................................................1-2 2. development plans and infrastructure development projects ··············· 2-1 2.1 Development Plans in Central Visayas (Region 7).......................................................2-1 2.2 Infrastructure development of the regional primary growth center: The First Cycle (1978-1986) ........................................................................................................2-4 2.2.1 Characteristics of development planning........................................................2-4 2.2.2 Evaluation of Infrastructure Development Projects........................................2-6 2.2.3 Preparation made during the first cycle for the second cycle..........................2-13 2.3 Urban Development Plan of Regional Cities for Sustainable Development: The Second Cycle (1987-2003) ...........................................................................................2-14 2.3.1 Formulation of Implementation Plan for Regional Cities Development Projects 2-14 2.3.2 Implementation and Evaluation of Regional Cities Development Projects ....2-16 2.4 The Third Cycle (2004~): Dispersion of Growth to Other Regional Cities..................2-37 3. Overview of Private Investment and Development of Industries·········· 3-1 3.1 Confirmation of Private Investment and Development of Industries............................3-1 3.1.1 Change in Size of Investment Capital in Metro Cebu.....................................3-1 3.1.2 Breakdowns by Nationality, Industry, and Investment Amount......................3-5 3.2 Investigations on Investment Objectives ......................................................................3-6 3.2.1 Results of questionnaire and interview surveys of Japanese Companies........3-6 3.2.2 Questionnaires and Interviews with the Local Companies .............................3-13 3.3 Results of Investments ..................................................................................................3-21 4. Leadership and Coordination of Related AGENCIES ·························· 4-1 4.1 The First Cycle and Transition to Regional Development............................................4-1 i Table of Contents 4.2 The Second Cycle (First Period): Preparatory Period for Regional and Urban (City) Development Projects ...................................................................................................4-6 4.3 The Second Cycle (The Second Period): Implementation of regional urban development projects – weak project coordinating organization and attendant problems in Metro Cebu projects..................................................................................4-9 5. Analyses of ECONOMIC AND RELATED DEVELOPMENT Impacts 5-1 5.1 Confirmation of Economic Development .....................................................................5-1
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