Monday, October 02, 2006

To the future through the cities from the farms

WE totally agree with the National Economic and Development Authority (Neda) that the country’s future depends on its urban areas. But we would like to add a little phrase to that line—only if the cities articulate well with the countryside.

Only if the farms are thoughtfully integrated into a well-defined hierarchy of urban systems that nurtures, instead of suppresses, the hinterlands’ development potentials. And only if the policy environment supports that kind of a growth strategy through infrastructure development and a competitive, if not totally deregulated, transport systems. Sad to say, we don’t have such right now.

Definitely, if we look at history, the way to the future is the journey to the cities. There is no escaping that fact. As the economy transforms from agriculture to industry and ultimately services, there’s no denying that truism that people will have to move from the countryside to the cities to take advantage of economic opportunities there as well as become catalysts of that transformation. A lot of activities that unleash economic development and progress will never be viable without the economies of scale that urbanization provides.

That’s the theory, of course, and it’s quite simple and neat as any practitioners of the dismal science would tell us. It’s as simple and neat as any country in the West has experienced. In the context of the developing world, however, the story is full of twists and turns and its details don’t normally fit in the econometric models of economists nurtured from the books of Adam Smith and Milton Friedman. Colonialism came and urbanization transmogrified as a structure to squeeze off surplus from the plantations, forests, and mines in the wilderness and bowels of the “third world,” and we never seemed to have totally got over it despite efforts to reverse the trend.

Wonder why cities like Davao and Cagayan de Oro do not seem to interact well with the interiors of Mindanao? It’s because Davao and the like were designed primarily as port cities to facilitate the flow of timber, gold, silver, pineapples, bananas and fishes from the inner core of Mindanao straight to Manila then Japan, US, and Europe. In Negros, the infrastructure system seems to reflect the same need to speed up sugar exports at the expense of the island’s need for diversification. The same trend could be observed elsewhere, a phenomenon called rural-urban dualism that explains much about the underdevelopment of rest of the country.

We are not against trade of these resource-based products per se. They are very important components of the Philippine economy. But it must be stressed that a well-integrated network of settlements and production areas connected by an efficient network of infrastructure would go a long way in diversifying the economy and spreading the benefits of trade and globalization to broader segments of society.

Slowly, government planners have come to realize this and are trying to undo the bad legacies of the past, but these efforts have always been a little too late.

Much of the solution is related to infrastructure development. None has been done on this aspect so far. In an archipelagic country such as ours, experts have been stressing the need for comprehensive multimodal transport network that would economically link production areas with the country’s urban systems. Yet the government’s record on this has been spotty, nothwithstanding its claim about the “nautical highway.” The government has been so lousy at collecting taxes that it has been convenient for economic planners to skip on economic infrastructure spending, if only to achieve fiscal consolidation.

The other task is simply rewriting the rules of the game to attract more players and put more competitive pressure on the country’s producers and service providers. You don’t expect banks, shipping companies, telecommunications providers to provide top-of-the-line services and technologies if they are complacent in their oligopolistic perches. The best thing the government could do is remove the remaining restrictions on full foreign participation. Again, the government has been reluctant to do this for fear of alienating the vested interests in these sectors. The Philippines has actually pioneered the policy of attracting private sector money to fund infrastructure development but corruption and scandals, the prototypical example of which is Piatco/Naia Terminal III, have practically killed that option.

This continuing failure to undertake these twin measures accounts for the messy rural-urban transition in the Philippines. In the Dismal Science’s neat theory on structural change, the transfer of people from the farms to the cities is always smooth and seamless. People from the farms, made redundant by technological innovation (e.g. farm mechanization, use of better crop science) got jobs in the ever-growing factories and service offices. In the Philipines, low farm productivity—again because of factors like lack of infrastructure and inadequate market information—are driving farm people to the cities, only for them to end up in the slums and the informal sector, thus stretching the cities’ economic and social services.

Economic opportunities in the factories and offices have been growing quite well—thanks to the boom in electronics, call centers, and other service-oriented activities— but they are not growing fast enough to absorb those who come from rural areas in droves for the same reason that we didn’t set the policy environment right. That explains the pervasive joblessness despite decent economic growth.

Yes, the way to the future is through the cities. Yet we will never get there for as long as we continue to ignore those who live in the farms.

No comments: