Sophremiano B. Antipolo PhD in Urban-Regional Planning and Policy University of Sydney

1. GLOBALIZATION AND LOCALIZATION IN THE 21ST CENTURY: THE CASE OF MINDANAO REGIONS IN THE PHILIPPINES Sophremiano B. Antipolo PhD in Urban-Regional Planning and Policy University of Sydney Director, Mindanao Center for Policy Studies University of Southeastern Philippines Obrero Campus, Davao City

2. OUTLINE • Introduction • Spatial Implications and Challenges of Globalization and Localization • The Current Medium-Term Philippine Devt Plan: Responding to The Challenges of Globalization • Spatial and Urban Development in the Philippines • Mindanao Cities In the 21st Century • Decentralized Cities Under the 1991 Local Code • Conclusion and Implications to Education

3. Introduction • Globalization and Localization: to what extent will these paradoxical and co-existing forces determine the course of urban and rural planning? • What are the challenges they pose upon decentralized cities in the 21st century. • In this 21st century, matters concerning globalization present new challenges for urban and rural planners. • Indeed, increasing globalization of economic activities necessitates a critical re-evaluation of existing urban and rural development strategies which seek to improve the quality of life and to reduce spatial inequalities.

4. In the Philippines, with the enactment and on-going implementation of the Local Government Code, the central challenge becomes twofold: (1) facing global competition, and (2) improving local governance. • This is because globalization is accompanied with localization and, in the process, tends to erode the regulatory power of nation-states. • For one, globalization is closely related to the localization strategy of transnational corporations (TNCs). Under these circumstances, TNCs tend to integrate their business activities with the local economic environment where their establishments are located.

5. Thus, globalization and localization signal the need to emphasize the active role of spatial planning in determining regional and economic development policies. In this context, the performance of urban and rural economies are largely dependent on the capacity and capability of local government units (LGUs).

6. SPATIAL IMPLICATIONS AND CHALLENGES OF GLOBALIZATION AND LOCALIZATION • Lee and Kim (1998), alerted us of at least three (3) distinctive impacts of globalization on spatial configuration and regional (urban and rural) development: • First, the weakening of nation-states reduces their ability to control the movement of capital, products, and labor across national boundaries and to distribute resources to achieve territorial equalization. • They argued that this situation can lead to the intensification of competition among regions and localities and are likely to expand spatial inequalities.

7. There will be greater inequality between cities and rural areas and among cities of different sizes. • In addition, local units will become more important economic units operating on a global scale rather than the nation-states. • Thus, globalization will require a new approach to policy-making based on a “partnership“ with localities and regions, whose local knowledge is far superior to that of the central government (Dubford and Kafkalas, 1997). • Localization of the economy and decision-making mechanism are also closely related to the corporate globalization and localization strategy of business activities. • Transnational corporations have tended to seek expansion of their market and production spaces on a global scale but their transnational plants have tended to be integrated with local business environments to make maximum use of resources where their plants are located.

8. No wonder, Swyngedouw (1992), reiterated Andrew Mair (1991) who coined the term “GLOCALIZATION” to characterize this paradoxical co-existence of globalization and localization. • Also, the weakening of the nation-states has tended to expand the role of the private sector in local development. • Over time, the public sector is increasingly dependent on the private sector, even for the provision of infrastructure.

9. Second, the increase in the mobility of capital is likely to increase outflows of domestic capital to other countries and inflows of foreign capital. • The increase in outflows of capital may lead to a rapid decrease of production activities in industrialized areas, particularly in areas where labor intensive industries are concentrated and also a reduction in factory movements between industrialized and less industrialized areas. • Since the industrialization of less prosperous areas has greatly relied on the demand created by industrialized regions, the increase of capital outflows is likely to reduce the potentiality of industrial development in the less prosperous regions. • Furthermore, the increase of foreign capital inflows may undermine the self-sufficiency of the local economic base, since local economic activities controlled by foreign ownership is increasing.

10. Thus, one of the major challenges confronting future rural-urban development is to maintain stability and self-sufficiency in the local economy during the process of globalization. • Third, there is a global spread of a capitalist mode of production based on flexible production technology. • In economic sense, globalization was initiated by advanced economies as a response to the crises in post-war capitalist production system. • This system was based on capital intensity, standardization of production and unionized labor organization. • A new capitalist production system will move towards flexible specialization in high value-adding activities and specialized producer services.

11. Rapid changes in technology and market demands have created uncertainty and risk in investment climate. • To adapt to this changing environment, firms have increased vertical and horizontal disaggregation of their organizations and established linkages with other organizations. • Thus, in a flexible regime, firms favor business environments in which they can easily obtain professionals and scientists and establish cooperative production systems or networks with other organizations. • Also, in situations of greater decentralization of economic activities, decision-making tend to be tied and rooted in a particular place while they maintain immediate global contacts.

12. The Current Medium-Term Plan for Mindanao: Strengthening Cities for Global Competition • The Philippines recognizes the need to increase the capacities of Mindanao urban centers to be more competent for global competition. • Accordingly, the Development Plan has adopted the following strategies: (1) full physical integration of Mindanao into the global economy by infusion of the much needed infrastructure support that can consolidate the region’s potentials into a vibrant economic unit; and (2) strengthening Mindanao’s direct global trade and economic links with the rest of the world through the implementation of enabling policies.

13. Decentralized Form of Governance • The current Development Plan emphasizes that for the twin strategies of “people empowerment” and “global competitiveness” to work, policies flowing from these must conform to the guiding principles of decentralization, democratic consultation, and reliance on non-government initiatives (NEDA Board, 2005). • Specifically, the development Plan provides that: “In governance, a direct outcome of the strategy of empowerment is the principle of decentralization and subsidiarity. Lower levels of government (regional and local) must be allowed to set priorities and decide matters in their own spheres of competence.”

14. MINDANAO CITIES FOR THE 21ST CENTURY • The 21st century is, indeed, expected to be a world of cities. The UN projected that about half of the world’s population (or over 5 billion) will be living in urban settlements. • Under the current Local Code of the Philippines, urban centers are primed to serve as hubs for industrial development. • In Mindanao, most notable is the urban growth of General Santos City which has gained the status of a “boom city” with the influx of both population and economic activities. • This development may be attributed to the dynamism of its local government leadership and of the private business sector. • In addition, other cities such as Davao, Cagayan de Oro, Zamboanga, Cotabato, and Iligan, have shown significant economic activities.

15. And to further enhance the development in these city growth centers, a new dimension to interregional cooperation has been established – the BIMP-EAGA (Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area).

16. DEVELOPMENT POTENTIALS OF MINDANAO REGIONS • Located in the south, Mindanao is the second largest island in the Philippines. • It comprises about 102,043 square kilometers of land area. • Ideally situated outside of the typhoon belt, Mindanao enjoys a generally fair and tropical climate throughout the year, making it the nation’s leader in agriculture and agri-based industries. • Mindanao is composed of four administrative regions and one autonomous region comprising 27 provinces and 29 cities.

17. Mindanao is the site of one of the world’s richest nickel deposits, while accounting for three-fourths of the country’s iron reserves and a third of its coal resources. • Forests still cover two-thirds of the island. • Apart from the usual agri-based industries, there are heavy industries along the northern coast producing sintered iron and steel plates. • Mindanao remains to be the “fruit basket “ of the Philippines. • Coconut and banana exports contribute largely to the island’s income.

18. It registers a manpower reserve of over 10 million with a functional literacy rate of 94 percent. • Moreover, the island is an ideal blend of vast frontiers and highly urbanized centers of commerce and industry suitable for the development of viable tourism and a business climate for investors.

19. MINDANAO URBANIZATION AND URBAN DEVELOPMENT TRENDS • Mindanao has been urbanizing significantly in recent years. Pernia et al (2004) noted that the urbanization trends of Northern Mindanao and Southern Mindanao alone, doubled in the past three decades. • Outside of the primate city of Metro Manila and next to Central Luzon and Southern Tagalog, the above two regions posted the third and fourth highest urbanization levels at 60.3 percent and 51.1 percent, respectively. • Worth noting are the urban growth rates of all the four regions of Mindanao which posted higher than the national average.

20. MINDANAO CITIES AS FOCAL POINTS FOR INTERNATIONAL TRADE • Despite the global meltdown, Mindanao contributed 21.8 percent to the Philippine Gross Domestic Product (GDP) and registering a positive 2.7 percent real growth rate in 2009. • Such resiliency can be accounted for by its rapidly urbanizing cities, namely: Zamboanga, Cagayan de Oro, Davao, Cotabato, and General Santos. • The above-mentioned cities have grown dramatically in terms of population size and economy in the past three decades. • Except for General Santos, all four cities have been designated as regional centers, serving as focal points for administrative and trade relations, as well as centers for health service delivery and tertiary education.

21. In fact, all of these cities are equipped with infrastructure facilities viable for external linkages and exchanges such as airports, seaports, road network and telecommunication system. • Over the years, Mindanao experienced the influx of industries which are resource-based or oriented towards domestic consumption. • The top manufacturing activities include: (1) food and beverage manufacture; (2) wearing apparel; (3) wood and wood cork products; (4) furniture and fixtures repair; (5) industrial chemicals; (6) rubber products; (7) non-metallic mineral products; (8) iron and steel basic industries; (9) machinery except electrical; and (10) cement. • As the cities of Mindanao prove to be viable centers of trade and external linkages.

22. THE FISCAL OPPORTUNITIES FOR THE CITIES UNDER THE PHILIPPINES LOCAL CODE • Among the local government units, cities are in the best position to go beyond basic needs and undertake development projects because of their broader revenue base and revenue authority. • They can levy all impositions by municipalities and provinces; however, they can only exceed the maximum rates allowed for the provinces and municipalities by up to 50 per cent except in the case of professional and amusement taxes. • Cities have the power to raise and use their own income which include taxes, fees, and charges. • The biggest revenues are usually derived from real property tax and business taxes. • One of the newest local sources under the Local Code is the community tax, replacing the old national residence tax, which has to be paid by every inhabitant of eighteen years of age and over who is regularly employed on a wage or salary basis, or who is engaged in business or an occupation, or who owns real estate of an assessed value of P1,000 or more,

23. Fees and charges come from public utilities and enterprises owned, operated, and maintained by cities within their jurisdictions. • Aside from locally generated revenues, local government units are entitled to allotments coming from national internal revenue collections based on the third preceding fiscal year, computed at a maximum rate of 40 per cent by the third year of the effectivity of the 1991 Local Code. • The shares are allocated by the type or level of the local government unit in the following manner: provinces @ 23 per cent; cities @ 23 per cent; municipalities @ 34 per cent; and barangays @ 20 per cent. • The allocation formula includes: population (50 per cent); land area (25 per cent); and equal sharing (25 per cent). • Local government units also have a share in the proceeds derived from the utilization and development of the national wealth within

24. their respective areas. • These include shares from mining taxes, royalties, forestry and fishery charges, and other surcharges, interests, of fines in any co-production, joint venture, or controlled corporation (GOCC) engaged in the utilization and development of the national wealth is also required to share its proceeds with the local government units concerned.

25. CONCLUSION AND IMPLICATION • The implications of globalization outlined in this Paper called our attention to at least three sets of challenges: (1) the breakdown of national regulatory power is likely to lead to the devolution of government functions to local governments units; thus, there will be intensification of competition among regions and localities which are likely to expand spatial inequalities; (2) the increase of the mobility of capital and business activities will change the comparative advantage for industrial location as production space for domestic firms expand across national boundaries; therefore, it will be a challenging task for local governments units to maintain the stability and self-sufficiency of their local economies in the global economy; and (3) the spread of the capitalist mode of production has also significant impact on the changes of regional and local development because it will change the spatial structure of economic activities such as in production, financing, R&D, management and the like which will require a different set of location factors of production.

26. High-tech and information industries require not only advanced communication and information facilities and specialized service but also high quality residential environments. • Judging not only from the spatial and urbanization trends in Mindanao, but more so from its initiative in cross-border cooperation via the BIMP-EAGA, it is with optimism that the cities of Mindanao are poised to face up-front the forces of the globalization in the 21st century. • The issue concerning intensification of inter-regional competition and inequalities can be addressed by strengthening urban-rural linkages as demonstrated by the key development strategies as well as the three sub-strategies adopted in the medium-term development plan.

27. The implementation of the People’s Industrial Enterprises (PIEs) found parallel trends from the successful British “new towns experiences” and Japan’s “technopolis experiences” (Masser, 2005). • For practical purposes, however, it is best to be reminded of John Friedmann’s (1998) attempt to settle the issue of inequalities in the context of “balance growth” as there can never be an absolute balance in quantitative terms across space. • Our general agreement with this stance brings us to postmodern theory in politics and planning.

28. As Watson and Gibson (2008) emphasized, post-modern politics suggests many possibilities. • It defines an end to simplistic nations of class, alliances, or urban social movements. • It also defines an end to a politics which assumes linearity of progress or the inevitability of revolution. • No one political solution will emerge which will be universally just. • Power will be continually contested, and new and different strategic alliances will emerge at each point of resistance.

29. Postmodern politics recognizes that there never can be one solution which will benefit all people in all places for all time. Such an ideal can only lead to disappointment. • Rather, postmodern politics allows for – both marginal and mainstream – recognizing that victories are only ever partial, temporary and contested. • At the very least, what postmodern theory has done is to open up a plethora of ways of thinking and acting politically. • The challenges brought about by localization forces accompanying globalization could be contained by the local governments of Mindanao cities as substantiated by the overall success in the implementation of the Philippine Local Government Code.

30. Again, following postmodern theory, this “success story” narrative may be contested. • Therefore, the complexity of globalization and localization forces should continue to position the national government – but more strongly the regional and local government units in Mindanao regions of the Philippines to sustain exploration of progressive and rational spatial development strategies and policies that combine the concerns for the economic, social, political, environmental, and cultural dimensions of urbanization. • Finally, the role of improved education (both formal and non-formal systems) should remain as a continuous policy variable in order to sustain the viability of sub-national economies (rural and urban regions) in optimizing the benefits of, and positioning the Philippines against the perils of globalization.

31. THE END & THANK YOU!