Philippine Industrialization

21081 Words Aug 25th, 2012 85 Pages
2 Industrial Agglomeration in the Philippines
Mari-Len Reyes-Macasaquit*
The Philippine Institute for Development Studies, the Philippines

Abstract The economic reform process in the Philippines was accelerated in the 1980s and 1990s. The reforms were found to have yielded positive results in terms of the nature of industrial agglomeration in the country as this was found to have occurred in the 1990s based on the results of the survey and econometrics analyses. The latter also identified the factors that influenced firms to agglomerate in the country, referring to economic fundamentals and deliberate policy and public action by government. However, industrial upgrading and innovation in the country was found to be weak. Expenditures
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However, this aspect can be facilitated more aggressively if these industrial clusters, whether concentrated by

geography or by specific industry, could attract not only huge domestic investments but foreign capital as well. The literature abounds with discussions on centripetal forces that influence decisions of firms to locate in the cluster, while there are also centrifugal forces that act as deterrent. These opposing forces lead to a “spatial structure of an economy that is a result of a tug-of-war between external economies and diseconomies, between the linkages and information spillovers that foster concentration, and between congestion and other diseconomies that discourage it” (Fujita et al, 1999 as cited in Tsuji et al, 2007, p. 3). The fundamental question therefore in the development of industrial agglomerations relates to the factors that influence firms to cluster or locate in a specific area. The answers to this question would allow decision makers to make informed policies and programs that could promote these factors while at the same time, addressing those issues that deter and cause these firms to divert and set up shop in other places instead. In addition, there is a need to identify the elements leading to the success of industrial agglomerations. Intuitively, one can point to the overall economic environment in a country that makes it conducive for firms
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