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Structural Changes and Interregional Income Inequality in the Philippines, 1975-2009

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Abstract

The Philippines has undergone gradual but substantial changes in industrial structure over the past few decades, and these have been associated with the change in the geographical distribution of economic activity. This study analyzes changes in the determinants of regional income inequality in the Philippines associated with these structural changes from 1975 to 2009. This is accomplished by using the bi-dimensional decomposition method. The reduction of the disparity between the National Capital Region (NCR) and the rest of Luzon is essential to decreasing Luzon's high within-region inequality and overall interregional inequality. But this is not easy to accomplish, since services sectors have enjoyed agglomeration economies that NCR has nurtured under economic liberalization and globalization. Decentralization has been one way to ameliorate the disparity, but its effects are ambiguous. Another option would be to relocate some manufacturing activities to areas outside NCR where they could enjoy localization economies.

Suggested Citation

  • Takahiro Akita & Mark Saliganan Pagulayan, 2013. "Structural Changes and Interregional Income Inequality in the Philippines, 1975-2009," Working Papers EMS_2013_14, Research Institute, International University of Japan.
  • Handle: RePEc:iuj:wpaper:ems_2013_14
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    1. Balisacan, Arsenio M. & Fuwa, Nobuhiko, 2003. "Growth, inequality and politics revisited: a developing-country case," Economics Letters, Elsevier, vol. 79(1), pages 53-58, April.
    2. Takahiro Akita & Puji Agus Kurniawan & Sachiko Miyata, 2011. "Structural Changes and Regional Income Inequality in Indonesia: A Bidimensional Decomposition Analysis," Asian Economic Journal, East Asian Economic Association, vol. 25(1), pages 55-77, March.
    3. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
    4. Arsenio M. Balisacan & Hal Hill & Sharon Faye A Piza, 2006. "Regional Development Dynamics and Decentralization in the Philippines: Ten Lessons from a 'Fast Starter'," Departmental Working Papers 2006-14, The Australian National University, Arndt-Corden Department of Economics.
    5. Balisacan, Arsenio M. & Mapa, Dennis S. & Briones, Kristine Joy S., 2007. "Robust Determinants of Income Growth in the Philippines," Philippine Journal of Development PJD 2006 Vol. XXXIII Nos., Philippine Institute for Development Studies.
    6. Takahiro Akita & Sachiko Miyata, 2010. "The bi-dimensional decomposition of regional inequality based on the weighted coefficient of variation," Letters in Spatial and Resource Sciences, Springer, vol. 3(3), pages 91-100, October.
    7. Manasan, Rosario G. & Mercado, Ruben G., 1999. "Regional Economic Growth and Convergence in the Philippines: 1975-1997," Discussion Papers DP 1999-13, Philippine Institute for Development Studies.
    8. Balisacan, Arsenio M. & Fuwa, Nobuhiko, 2004. "Changes in Spatial Income Inequality in the Philippines: An Exploratory Analysis," WIDER Working Paper Series 034, World Institute for Development Economic Research (UNU-WIDER).
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    10. Mapa, Dennis S. & Balisacan, Arsenio & Briones, Kristine Joy S. & Albis, Manuel Leonard F., 2009. "What really matters for income growth in the Philippines: Empirical evidence from provincial data," MPRA Paper 19449, University Library of Munich, Germany.
    11. Joseph J. Capuno, 2012. "Agglomeration And Sub-Regional Disparities Under Decentralization: Evidence Of Spatial Clustering Of Land Values In The Philippines," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 24(3), pages 106-120, November.
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    Keywords

    structural change; regional income inequality; the Philippines; bi-dimensional decomposition; weighted coefficient of variation;

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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