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FEDERALISM UPDATED Savechildren UA&P Fixing Philippine Public Finance Is Federalism the Answer? Ronald Umali Mendoza, PhD Ateneo School of Government Two lost decades… Estrada Aquino 3000 Garcia Macapagal Marcos C. Aquino Ramos Arroyo Duterte 2500 Postponement of Expansion of service TWO FOLD INCREASE IN THE ECONOMY, 1960 TO PRESENTliberalization on sector and decline in Trade some sectors and manufacturing Rapid economic 2000 liberalization increasing growth and import protectionism 1500 substitution Economic Debt – driven growth expansion and 1000 Export privatization of promotion state-owned 500 enterprise 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Text MONOPOLY + DISCRETION – ACCOUNTABIILITY = CORRUPTION TextPOST-MARCOS ERA: RISE OF MINI-DICTATORSHIPS? • THIN DYNASTY • FAT DYNASTY RationaleText for Decentralization § Governance closer to the people to increase efficiency and welfare gains. § 1991 Local Government Code devolved substantial spending, taxing, and borrowing powers to local government units. § Challenge to match resources (i.e. own source revenues and transfers) with expenditures at the LGU level. § Where are we now? IMPERIAL MANILA VS DYNASTIC COUNTRYSIDE Text Is imperial Manila the problem? Text What is “imperial” about Manila? RevenueText composition, by government level (2014) National Government 6% 8% Provinces 4% Cities 82% Municipalities Source: Department of Budget and Management, http://www.dbm.gov.ph/wp-content/uploads/BESF/BESF2016 GovernmentText Expenditure breakdown (2014) 31% Central Office & NCR Departments LGU expenditure 18% 82% Regional Departments 33% Special Purpose Funds (Net of National Government 18% Transfers to LGUs & Debt Service) expenditure Source: Department of Budget and Management, http://www.dbm.gov.ph/wp-content/uploads/BESF/BESF2016 Text 60% of GDP concentrated in only 3 regions in Luzon Regional Real GDP per Capita, Philippines (2016) PHILIPPINES 78,712 NCR 232,836 CALABARZON 94,826 CAR 75,279 CENTRAL VISAYAS 69,390 CENTRAL LUZON 68,649 DAVAO REGION 65,837 NORTHERN MINDANAO 63,874 ILOCOS 49,461 SOCCSKSARGEN 45,484 ZAMBOANGA PENINSULA 43,106 WESTERN VISAYAS 41,486 MIMAROPA REGION 39,825 CAGAYAN VALLEY 39,153 EASTERN VISAYAS 37,261 CARAGA 35,720 BICOL 26,736 ARMM 13,353 0 50,000 100,000 150,000 200,000 250,000 Real GDP per Capita (in Php at constant 2000 prices) Source: Philippine Statistics Authority InequalityText in Human Development Afghanistan Zimbabwe Maguindanao Taw i -tawi ARMM Nigeria Sulu Lanao del Sur Myanmar Basilan Philippines NCR Thailand 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 InequalityText in Life Expectancy 80 75.6 75.9 75 72.9 Male 69.6 Fem… 2015 68.8 - 70 66.9 65 61.9 62.9 60 at Birth 2010 Birthat 55 Life Expectancy (in years)(in ExpectancyLife 50 Philippines NCR Region I ARMM Text IMBALANCED LOCAL GOVERNMENT FINANCE Text If Imperial Manila is a problem for development, then is the dynastic countryside any better? AverageText Dynastic Share (2007 – 2016 Elections) Dynastic share (in %) Position 2007 2010 2013 2016 Governor 69.6 82.3 86.3 81.3 Percentage increase/decrease 12.7 3.97 -5 Vice Governor 62 70.9 75 81 Percentage increase/decrease 8.87 4.11 6.01 Representative 75.3 78.7 75.3 77.5 Percentage increase/decrease 3.44 -3.46 2.25 Mayor 57.6 67.2 67.5 68.8 Percentage increase/decrease 9.6 0.3 1.3 Vice Mayor 40.6 51.2 52.6 56.9 Percentage increase/decrease 10.6 1.4 4.3 81% of Governors. 78% of Congressmen. 69% of Mayors. 57% of Vice Mayors. Text Violent political competition in Masbate. Four Congressmen assassinated between 1989 and 2005. RIZALINA SEACHON-LANETE Meanwhile, 1 in 2 Filipinos in Masbate live governor and dynasty matriarch below the poverty line… 71.25 53.5666 56.3266 57.00 51.3231 42.75 28.50 population) 14.25 Poverty incidence (% of 0.00 ANTONIO KHO 2006 2009 2012 former congressman and dynasty patriarch DATA SOURCE: PHILIPPINE STATISTICAL AUTHORITY PHOTO SOURCE: ABS-CBN NEWS ONLINE DinagatTextText Islands is dominated by Ecleo Clan, 2016 Election VILLAROSA, 2 LUIB, 2 ECLEO, LONGOS, 2 10 LLAMERA, 2 FERMILAN, 2 ELUDO, 2 Distribution of dynasties based on VARGAS, 3 ABIS, 2 number of elected clan members Source: Authors’ calculations based on data developed by Mendoza et al (2012;2016). Text Snapshot of Inequality – Ecleo Castle and fishing village in Dinagat Islands TextPolitical Dynasties Lead To Deeper Poverty "Political Dynasties and Poverty: Illustration of Measurement and Initial Evidence of Linkages in the Philippines" Oxford Development Studies 44(2):189-201. Mendoza, beja, Venida and Yap (2016) examine the link between poverty and dynasties, using a comprehensive database of political dynasties in Philippine local government covering 2000- 2013; CONCLUSION: More fat dynasties cause greater poverty, notably outside of Metro Manila. AligningText Resources with Accountability: A Proposal for a Public Finance Graduation Mechanism Debt instruments for HIGH INCOME LGUs; Municipal Bond Markets MIDDLE Unconditional / INCOME Matching Grants Conditional LOWER INCOME Transfers / Grants POOR BETTER BEST GOVERNANCE GOVERNANCE GOVERNANCE Source: Author’s elaboration drawing on Llanto (2012) and Manasan (2004). Text For further data and research visit: http://buildinganinclusivedemocracy.org.
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