NCR tops

The National Capital Region (NCR) continues to be the leading economic player among the country’s 17 regions.

From the 2007 Gross Regional Domestic Product (GRDP) released by the NSCB, NCR accounted for the biggest share of 32.6 percent of the total Gross Domestic Product (GDP), followed distantly by CALABARZON and Central Luzon with 12.1 percent and 8.3 percent shares, respectively. Fourteen of the 17 regions posted accelerated growths in 2007. MIMAROPA, with its small share of 2.7 percent to total GDP, recorded the highest growth of 9.4 percent from 1.6 percent in 2006. Central Visayas and Caraga followed suit, posting growths of 8.7 percent and 8.6 percent, respectively. NCR ranked fourth with 7.8 percent. On the other hand, Eastern Visayas, Autonomous Region of Muslim Mindanao (ARMM), and CALABARZON recorded the lowest growths of 3.2 percent, 5.4 percent, and 5.5 percent, respectively.

The unequal distribution of the level of regional economic activity in the country has been apparent through the years, as majority of the economic output is concentrated in NCR and the two adjacent regions of Central Luzon and Southern Tagalog (CALABARZON), with these three regions out of 17, producing about 53 percent of the total national output. This high level of economic disparity across regions has pushed our national policy makers to craft an economic agenda that builds on the comparative advantage of the geography of our regions and aims towards a better balance in regional and national development.

Investigating regional performances has been part of innumerable policy and development debates, as realizing the economic potential of the various regions could mean the difference between high growth and low growth, between progress and poverty. Mapping out income similarities and differences at the regional level would enhance the assessment of the performance of the total economy as well as the relative economic performances of our regions. The identification of key regional economic players and more importantly, of the regional economic “laggards” would be vital in the formulation and implementation of effective egional and national policies and strategies that would contribute towards the attainment of the goal of economic growth with equity.

Per capitaGRDP, as a measure of the level of economic development of a region, could be used to investigate the individual patterns of economic transition of our regions. Examining the growth rates of per capita GRDP of the regions could provide an overview of output similarities and differences through time and would serve as basis in determining whether a region is economically better off relative to the rest or lags behind the average performance of all regions. A steady long-term growth in per capita output of an economy would signify relative improvement in living standards and attainment of economic growth.

The concept of economic transition and convergence presents the likelihood for low-income regions to “catch up” with high-income ones and achieve sustained income growth in the long run. It deals with the examination of the possibility that income disparity between the average-earning regions and the wealthiest regions will decline, and that the poorest regions will progress and catch up with the rest over time. Essentially, we say that the regions are in economic transition when disparity exists in per capita GRDP⁸. Economic convergence occurs when this disparity disappears and the endpoint is equality of per capita GRDP across regions.

he transition patterns of per capita GRDP of the 17 regions over the period 1988 to 2007 clearly reveal the persistence of a significant output gap across time between the NCR and the rest of the regions, and even relative to the national per capita Gross Domestic Product (GDP). The following could be observed from the transition paths of per capita GRDP of the regions:

1. NCR remains as the most well off region and outperforms the national economy by a big margin. The region, in fact, attained the biggest average per capita GRDP of Php29,647.82 over the years 1988 to 2007, approximately 139.3 percent higher than the national average of Php12,390.22.

2. CAR, Southern Tagalog (Regions IVA and IVB), and Region X, apart from NCR, are the only regions that posted higher average per capita GRDP than the national average .

3. Since 1994, ARMM has posted the lowest per capita output among the regions. The region’s output path suggests long-run deviation from other regions’ paths and from the national benchmark .

4. CAR depicts the fastest increase in transition of per capita output.

By and large, the overall economic progress of the regions, as measured by per capita GRDP, suggests lack of convergence, as the paths of per capita GRDP of the regions do not indicate that their endpoints will meet at some point in the near future. Only CAR, Region 10 and Region IVA have some chances of catching up with the NCR; the rest of the regions follow a path that is still far too below the NCR path.

The relative patterns depicted by per capita GRDP of the regions are confirmed by other socio-economic indicators, which likewise suggest significant economic disparities among the regions.

1. In 2006, the poverty incidence in the NCR is only 10.4%; Central Luzon and CALABARZON have poverty incidences of 20.70% and 20.90%, respectively. On the other hand, ARMM has the highest poverty incidence of about 62%, while MIMAROPA (Region IVB) and Caraga both have 53%, and Bicol (Region V) 51%.

2. Also, in 2006, NCR recorded the lowest poverty gap of 1.5%, followed by Central Luzon and CALABARZON with poverty gaps of 3.9% and 4.1%, respectively. Again, ARMM has the highest poverty gap of 16.2%, followed by Caraga at 15.6%, Region IX at 14.3% and MIMAROPA at 14.2%.

3. Even in terms of population growth between 2000 and 2007, disparity surfaces with Regions I, II and VIII growing annually by 1.1%; while ARMM, CALABARZON and Region III posted 5.46%, 3.21% and 2.36%, respectively.

The growth rates of per capita GRDP of the regions and of the national per capita GDP suggest fluctuations that prevent convergence towards a common path in the near future. Northern Mindanao (Region X) recorded the highest average per capita growth rate of 3.59 percent for the period 1988 to 2007, but the average per capita growth rates of the regions do not display a trend towards convergence . If the poorest regions grow faster and the richest regions’ growth slow down in a sustained manner, eventually the differences in per capita output across regions would narrow, which could lead to convergence of the regions through time. However, although the growth rates of a few regions depict high instabilities, on the whole, the trends suggest the unlikelihood of convergence of the regions over time towards a common endpoint.

What will dictate the direction of the regions’ outputs and the speed of their growth will of course depend greatly on the economic policies that have been designed and implemented for each of our 17 regions. The patterns of the output paths presented in this article reiterate the need to improve the socio-economic infrastructure of regions other than the NCR. After all, economic development does not merely deal with output per se but should be viewed with due consideration to analyzing key economic, social and environmental factors in each region not only to maximize growth but also to attain overall growth with equity. For sure, assessment of output performance vis-a-vis population management must go together. The fact that NCR continues to be the most affluent region and that no region happens to transition towards its per capita GRDP, coupled with the dire economic and social situation in ARMM are reminders of the severe systemic imbalance in our national development and the staggering amount of untapped economic potential of our other regions. The unlikely convergence of the regions certainly calls for a sound review of existing regional economic policies and for the implementation of strategies to achieve the goal of economic growth that is not only sustainable but also equitable.

The development challenge, therefore, to our planners and decision makers is to be able to answer the following key questions: How would it be possible for a region to attain sustained growth, given its current poor economic situation, like in the case of ARMM? How would it be possible for the average regions to catch up with the major economic players in the long term? How could the wealthiest regions share their current levels of economic output with the rest of the regions? How would it be possible for our regions’ performances to converge to some common limit that would reduce disparity among regions, thereby enabling low-income regions and economic laggards to “catch-up” with high-income ones?

The answers are of course, more difficult than the questions. Happy National Statistics Month to all!