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Regions, Institutions and Development in a Global Economy

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Regions, Institutions and Development in a Global Economy Regions, institutions and development in a global economy Divergent regional business systems in the Philippines Regio’s, instituties en ontwikkeling in een mondiale economie Variërende regionale handelssystemen in de Filippijnen This thesis forms part of the research programme Regional Development in a Global Context of the Urban and Regional research Centre Utrecht (URU). ISBN 978-90-393-5178-9 Graphic design, Cartography and figures and DTP: Geomedia [7451], Faculty of Geosciences, Utrecht University. Printed in the Netherlands by A-D Druk b.v., Zeist Copyright © 2009 Bram van Helvoirt. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the permission in writing from the publisher. Regions, institutions and development in a global economy Divergent regional business systems in the Philippines Regio’s, instituties en ontwikkeling in een mondiale economie Variërende regionale handelssystemen in de Filippijnen (met een samenvatting in het Nederlands) Proefschrift ter verkrijging van de graad van doctor aan de Universiteit Utrecht op gezag van de rector magnificus, prof. dr. J.C. Stoof, ingevolge het besluit van het college voor promoties in het openbaar te verdedigen op vrijdag 16 oktober 2009 des middags te 4.15 uur door Bram Johannes van Helvoirt geboren op 20 februari 1979 te Tilburg, Nederland Promotor: Prof. dr. O. Verkoren Co-promotor: Dr. A.C.M. van Westen Examination Committee: Prof. dr. R.A. Boschma Prof. dr. A.H.J. Helmsing Prof. dr. O.D. van den Muijzenberg Prof. dr. E.B. Zoomers Contents List of figures 9 List of maps 10 List of tables 11 List of text-boxes 13 Abbreviations 15 Preface 19 1 Introduction 23 1.1 Background to the study 23 1.2 Main objectives 24 1.3 Setting of the study 26 1.4 Structure of the study 29 2 Towards a relational view on regional economic development 31 2.1 Regions, economic development and diversity 31 2.2 Approaches to explain regional disparities in development 32 2.3 Institutions and varying economic systems 34 2.4 How to identify and compare economic systems? 37 2.5 Comparative business systems 40 2.5.1 Key ideas of the comparative business systems approach 40 2.5.2 Adjustments for analysing business systems in the Philippines 44 2.6 Towards an analytical framework for regional business systems 48 2.6.1 Inter-firm relations 48 2.6.2 The strength of the local state 55 2.6.3 The influence of ethnicity on inter-firm and public-private relations 57 2.7 Constructing a regional model 58 2.8 Concluding remarks 60 3 Research questions, concepts and methodology 63 3.1 Research questions 63 3.2 Main concepts and definitions 65 3.3 Methodology 66 3.3.1 First period of fieldwork: February 2006-July 2006 66 3.3.2 Second period of fieldwork: February 2007-July 2007 69 3.3.3 Secondary sources 71 3.4 Concluding remarks 71 4 Setting the stages: positioning Bohol, Cebu and Negros Oriental 73 4.1 What are regions in this study? 74 4.1.1 The Central Visayas and its position in the Philippines 74 4.2 Intra-regional diversity in the Central Visayas: introducing contemporary Bohol, Cebu and Negros Oriental 79 4.2.1 Small-scale agriculture and tourism: Bohol 80 4.2.2 Export-oriented manufacturing, trade and services: Cebu 83 4.2.3 Agro-industry: Negros Oriental 87 4.3 Path dependencies? Tracing the roots of regional diversity 90 4.3.1 Bohol’s modest and isolated development 90 4.3.2 The changing position of urban Cebu in the global landscape 94 4.3.3 The turbulent development of Negros Oriental 97 4.4 Concluding remarks 100 5 Insertion into value chains: vertical inter-firm relations 103 5.1 The spatial and organisational configuration of value chains 104 5.2 The micro level: business characteristics 106 5.2.1 Ownership coordination 106 5.2.2 Corporate finance 107 5.2.3 Employment relations 108 5.3 Organisation of supply and demand relations 109 5.3.1 Spatial networks of supply and demand 110 5.3.2 Chain governance: establishment and regulation of supply and demand 111 5.3.3 Chain governance: exchanges between suppliers and buyers 114 5.3.4 Chain governance: inter-firm cooperation 116 5.4 The meso level: integrated value chains 118 5.4.1 The agricultural value chains of Bohol and Negros Oriental 118 5.4.2 Export-oriented manufacturing in Cebu 125 5.4.3 Bohol’s tourism industry 127 5.4.4 Qualifying the provincial chains 128 5.5 Concluding remarks 131 6 Horizontal inter-firm relations and the role of business associations 135 6.1 Qualifying horizontal inter-firm relations 135 6.2 Horizontal business networks in the Central Visayas 137 6.2.1 Contact and cooperation between local entrepreneurs 137 6.2.2 Contact and cooperation between local competitors 142 6.3 The role of business associations 144 6.3.1 Types of local business associations 145 6.3.2 Associations’ organisation and activities 148 6.4 Concluding remarks 152 7 The local state 155 7.1 The nature of the local state in the Philippines 155 7.2 Historical state formation in the Philippines 158 7.2.1 Colonial legacies 158 7.2.2 Post-colonial trajectories 160 7.3 Role of the local government in the Philippine state 161 7.4 Local political economies in the Central Visayas 163 7.4.1 The natures of the local states: historical political embeddings 163 7.4.2 Public-private coordination 167 7.4.3 National-local ties 177 7.5 Concluding remarks 182 8 Regional business systems? 193 8.1 Composing the business systems in the Central Visayas 194 8.1.1 Bohol 194 8.1.2 Cebu 198 8.1.3 Negros Oriental 203 8.2 Regional business systems and regional development 206 8.3 Concluding remarks 210 9 Conclusions and discussion 213 9.1 A retrospective view on the study 213 9.2 Answers to the research questions 215 9.3 Interpretation of the findings 223 9.4 Policy implications and suggestions for further research 229 References 233 Appendices 251 Samenvatting 267 Curriculum Vitae 275 | 7 | | 8 | List of figures 1.1: Structure of the study 28 2.1: The two primary dimensions of value chains 47 2.2: Types of value chain governance 49 2.3: Conceptual model 57 4.1: GDP growth rates Philippines and Central Visayas, 1990-2005 74 4.2: Sectoral employment (%) in the Central Visayas, 1993 and 2003 76 4.3: Central Visayas population by province, 1960-2010 77 4.4: Sectoral employment Bohol, Central Visayas and the Philippines (%), 2003 79 4.5: Sectoral employment Cebu, Central Visayas and the Philippines (%), 2003 83 4.6: Sectoral employment Negros Oriental, Central Visayas and the Philippines (%), 2003 87 5.1: Simplified diagram of the agricultural value chains 116 5.2: Agricultural value chains in Bohol and Negros Oriental 120 5.3: Configuration of Cebu’s hub-and-spoke industrial district 123 5.4: Cebuano export-oriented manufacturing chain 124 5.5: Key actors and activities of Bohol’s tourism chain 126 5.6: Positioning of the provincial chains 127 5.7: Cebu’s contractual governance 128 5.8: Bohol’s and Negros Oriental’s captive governance 129 6.1: Provincial compositions of horizontal business relations 136 6.2: Spheres of inter-firm relations along ethnic lines 138 6.3: Contact with local competitors (%) 140 7.1: The structure of local governments in the Philippines 160 8.1: Bohol’s business system 195 8.2: Cebu’s business system 199 8.3: Negros Oriental’s business system 203 A1: Provincial employment by sector (2003) 251 A2: Number and types of banks in the provinces 255 A3: Cargo throughput of major provincial ports, 2006 256 A4: Cargo throughput of major provincial airports, 2001 256 A5: Passenger traffic of major provincial airports, 2001 256 A6: MEPZ I & II exports and their share of total Central Visayas export, 1995-2004 259 | 9 | List of maps 1.1: The Central Visayas islands and their location in the Philippines 26 4.1: The province of Bohol 78 4.2: The province of Cebu 81 4.3: Negros Island 85 A1: Administrative map of the Philippines 249 A2: Administrative overview of Metro Cebu 257 | 10 | List of tables 2.1: Key characteristics of business systems 39 2.2: Key institutional features structuring business systems 40 2.3: Economic importance of ethnic Chinese in Southeast Asia 44 3.1: Chronological overview of main research activities 64 4.1: Regional distribution of GDP (%) and per capita GRDP (in Pesos), 2005 (in constant 1985 prices) 73 4.2: Central Visayas’ GDP by industrial origin, percent distribution 1995-2005 75 4.3: Central Visayas key indicators and provincial distribution, 2005* 77 4.4: Comparison business activities of Alturas and BQ per industry 80 4.5: Cebu’s major urban settlements, 2000 82 4.6: Top ten Cebu export products and markets, 2004 84 4.7: Negros Oriental’s urban population by city, 2000 86 4.8: Number of sugarcane farmers in mill districts by farm size, 2005 86 5.1: Spatial scales of value chains 102 5.2: Types of chain governance 103 5.3: Key ownership characteristics of surveyed firms 104 5.4: Sources of starting capital used by surveyed firms 106 5.5: Number of employees of the surveyed firms 107 5.6: Locations of main suppliers 108 5.7: Locations of main buyers 109 5.8: Establishment of supply and demand relations 110 5.9: Organisation of supply and demand relations 111 5.10: Frequency of contact with suppliers and buyers 113 5.11: Additional contact with suppliers and buyers 114 5.12: Cooperation with suppliers and buyers 115 5.13: Sharing percentages (% claimed by the mill) by mill, crop year 2005-2006 118 6.1: Types of relations among local competitors 134 6.2: Horizontal inter-firm
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