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Title Drivers of Economic Dynamism among Philippine Cities
Posted by Stephen Fajardo
Authors Teves, Maria Rizalia; D'lonsod, Lady Lou; Dumapias; Donnavic; Fajardo, Stephen
Publication date 2019
Abstract Cities and Municipalities Competitiveness Index (CMCI) is an annual ranking survey conducted to assess the competitiveness of cities and municipalities across the Philippines. The conduct of CMCI aims to improve local competitiveness among participating cities and municipalities leading to a business-friendly environment for investors. ( For the past 6 years, the number of participating cities and municipalities in the CMCI survey has continually increased, and the indicators intending to evaluate competitiveness have evolve in response to the need for an improved measure of competitiveness. Originally, three (3) pillars were used; and the 4th Pillar, Resiliency was added in the 2017 CMCI survey. This study intends to determine how the other pillars of the index, i.e, Government Efficiency, Infrastructure and Resiliency, can influence or explain the cities’ economic dynamism. Economic Dynamism score by itself is already indicative of how well the city has made itself attractive to investors and expanded business opportunities in the area. Specifically, it looks into which among the indicators of the significant pillar can well explain economic dynamism. Using the CMCI survey results for cities from the 2017 and 2018 surveys, the study utilized Panel Regression Analysis. After testing for possible econometric issues which can possibly influence the validity of the inference, the Panel-Corrected Standard Errors model was used for the pillar-level explanatory variables regression and the indicators level explanatory variables regression. In the first model, results indicated that economic dynamism is significantly explained by government efficiency and infrastructure pillars. The positive coefficients in both pillars indicate that the higher the city’s score for government efficiency and infrastructure, the higher would also be its score for economic dynamism. The effect of resiliency was not statistically proven significant. Of the individual indicators of government efficiency, the following are the significant drivers of economic dynamism: Business registration efficiency, LGU’s capacity to generate local resource, compliance to BPLS, peace and order, and social protection. For infrastructure, the significant drivers of economic dynamism are: road network, availability of basic utilities, health, accommodation capacity, financial technology capacity, and information technology capacity. Under resiliency, the significant drivers of economic dynamism include: the conduct of annual disaster drill, presence of sanitary system, budget for DRRMP, and size of employed population. 1 Given the peculiarity of the characteristics of local economies, there is no ‘one-size- fits-all’ policy reform. Hence, from the foregoing results, it is recommended that the LGU must assess itself along the indicators that are considered as significant drivers of competitiveness and should focus its development efforts, policies and programs to enhance the identified significant drivers of economic dynamism.
Index terms / Keywords Competitiveness Index