Wednesday, 8 December 2010

Metro Manila: One of the global best

John Mangun
Business Mirror

What do Los Angeles, London, Tokyo and Berlin have in common with Manila? Nothing. Those cities are not good enough to be ranked in the same category as Manila.

The Metropolitan Policy Program of the Brookings Institute just released a study entitled “Global MetroMonitor.” This is a report detailing an economic overview of 150 global metropolitan areas and their economies during the “Great Recession.”

The purpose of the study was to analyze and compare the 150 global metropolitan areas, including our own National Capital Region (NCR), in terms of their positive impact on their citizens.

GVA looks at income growth and employment growth. How much is employment growing in the metro areas and how much is personal income growing.

For the pre-recession period of 1993 to 2007, the No.1 metro area was Shenzhen, China. Manila was ranked No.34. At the time, Greater Manila had an income-growth rate of 3.4 percent and an employment-growth rate of 2.6 percent. As a comparison, Bangkok, Thailand, was ranked No. 150 with an income-growth rate of negative 1.2 percent and an employment-growth rate of 0.2 percent.

Jump ahead to 2010, and Manila is ranked No. 9, sharing the top rankings with Istanbul, Turkey; Shenzhen, Shanghai, Guangzhou and Beijing in China; Lima, Peru; Santiago, Chile; and Singapore. Manila’s GVA is now 5.3 percent for income growth and 4 percent for employment growth. Bangkok is ranked No. 35 with 3.3-percent income increase and 1.2-percent jobs growth.

Metropolitan areas are responsible for a major portion of a nation’s economic activity. Although only 12 percent of the world’s population lives in these 150 metropolitan areas, these areas account for 46 percent of global gross domestic product. What Brookings measures is what they call economic “Gross Value Added” (GVA). “Metro areas, which are economically integrated collections of cities, suburbs, and often surrounding rural areas, are centers of high-value economic activity in their respective nations and worldwide. Metros form the fundamental bases for national and international economies.”

This is interesting. “Their per-capita measures of Gross Value Added range widely, from under $1,000 in Hyderabad and Kolkata, India, to roughly $70,000 in San Jose, US; and Zurich, Switzerland. What is consistent about these metropolitan areas, however, is their function as locations for high-value economic activity in their respective nations and world regions.” Ultimately, the economic performances of the metro areas determine the economic health and potential future of the country. More important, it does not matter how comparatively poor a metro area is in comparison to others, the metro areas are a nation’s economic driver.

The Global MetroMonitor report makes this conclusion: “The Global MetroMonitor thus portrays a world economy whose continued transition will be driven in large part by the distinct experiences of its powerful network of major metropolitan economies. As metropolitan leaders worldwide confront the challenges and opportunities that accompany continued global economic integration, and many seek new growth models to replace old ones, the shifting metro map points toward an emerging array of productive metro-based economic relationships that could drive regional and national prosperity in the decades to come.”

The Philippines has struggled with two economic questions over the years; how to bring economic growth to the more provincial areas and how to insure that economic growth reaches all sectors of society.

The government as well as private policymakers have faced challenges as to what and where the allocation of resources should be made. For example, should a new branch sales outlet be established in the NCR with its large population or push to an outlying area and hope to build market share. Should infrastructure projects be placed in Metro Manila or be built in the province? Naturally there must be a balance between spending money in the metro areas and spending money in the more rural areas. However, there must eventually be a determination made where the biggest economic bang can be achieved.

The government probably should take its cue from the private sector that in many cases has successfully built its metro and provincial model. The successes that private enterprise has in the metro areas easily can translate to the non-metro areas. Look at Shoemart as the best example. The numerous successful malls in the NCR created its ability and capability to expand to the outlying areas. Only one- third of the SM department stores are in the NCR.

The cost to government for projects in the NCR is much higher than projects in the province. Yet if the economic impact on the country is higher from NCR projects, then that is where the money should be spent until such time that those projects have created excess funds to be used for more rural development.

This study does not address the concerns of metro areas, particularly in Asia, such as congestion and crowding. However, infrastructure projects that help mitigate these two issues also fall within the scope of being economically beneficial. Perhaps solving one problem—crowding—solves another, unemployment.

A balance must be sought and achieved. But to ignore the metro or place it as a lower priority than the provinces is to risk making wrong choices. As the Brookings report states, “National policies must invest in fundamental drivers of metropolitan economies; innovative institutions, infrastructure, and human capital.” But at least for the money, the NCR is one of the global leaders in these two important areas, income and employment, of economic activity.

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