Even before he threw his hat into the electoral ring last year, Rodrigo Duterte, then the mercurial mayor of Davao City, was a staunch believer of federalism. He spoke of it everywhere—in speeches, in press interviews, in his weekly television program. He said it was the nation’s panacea, if it wanted to climb out of the morass it was in. Yet, what’s the fine print beneath the lofty ambition? What are the brass tacks that one must contend with before even considering to pursue it? Economist Fermin D. Adriano takes a second look at the vaunted concept and offers helpful tips to...
Moving Forward the Federalism Agenda
It is sacrosanct among development practitioners that when pursuing a reform agenda, one must possess a “theory of change.” Google provides a long list of literature discussing what the “theory of change” is all about but in layman’s term it is simply a process of causality: that the pursuit of an activity or a certain set of activities results in the attainment of one’s objective or desired goal.
The theory of change behind the federalism agenda rests on the logic that federalism will result in a more balanced regional economic growth. It is argued that federalism will empower federal states to decide and pursue their own development path because under such a system, they will be given their just share of the country’s resources. Instead of decision making and resource allocation all done by the central government in Metro Manila, the federal states will have the power to decide on what policies to pursue to promote regional development and correspondingly, be allocated the required resources for that purpose.
Though the “theory of change” behind federalism appears logical and quite laudable, it is actually no different from the one poised upon us when the decentralization agenda was implemented with the passage of the 1991 Local Government Code. According to its proponents, decentralization was pursued primarily to: (a) attain fiscal decentralization (meaning that the share of national government expenditures to GDP should decrease as regions develop); (b) revenue decentralization (that local government would have greater incentive to generate revenues locally because these would be used for the development of their communities); and (c) regional development and improved quality of local governance (it would result in improving local welfare because of better matching between local needs and expenditures, greater accountability of local officials to their constituents, and more balanced local growth). Adriano (2010) showed, using time series data, that decentralization failed to attain all these goals. Curiously, despite the obvious failure of the 1991 LGC and the passage of 25 years, Congress has not conducted a review of it, though there are provisions in the same law that it authorized it to exercise oversight function on how the Code was implemented.
Decentralization to federalism
Ostensibly, the failure of the 1991 LGC has led to the federalism push. But at this early, even its proponents are worried that the agenda of empowering local people to improve their welfare will only be frustrated if (a) political dynasty remains a key feature of our political economy, and (b) widespread graft and corruption is not checked. They fear that federalism will only lead to further consolidation and perpetuation of the powers of political dynasty and their monopoly control over local resources. An active proponent even asserted that federalism should only be implemented once these twin problems of political dynasty and graft and corruption are effectively addressed.
Ideas from other advocates of the federalism agenda are no less convincing. There is the proposed 80-20 division of revenues between the federal state and the national government but nobody has done the arithmetic on the detailed configuration on how the revenue-sharing will look like in reality. Given that around 55% of the country’s gross regional domestic product (GRDP) is generated by NCR, and Regions III and IV-A, what will be left for the other regions to share? Will the residents of these three developed regions be willing to share their hard-earned internally generated revenues to poorer federal states/regions knowing that their taxes will only line up the pockets of the local politicians there?
What will be the final form of the federal government? Will it be parliamentary or presidential-parliamentary? What will be the powers vested to the national government vis-à-vis that of federal states? And will the powers vested to the national government basically retain the highly centralized policy-making process that has been a bane to promoting regional development? Do we need a strong central government given the threat of the drug menace though this might mean weakening of the powers of the federal state?
Most importantly, will this institutional change address the needs of the Filipino people? Will it be relevant to our current political economy? Will it guarantee the improvement of the overall welfare of our people?
More than a politician’s game
Having the answers to these questions will undeniably strengthen the case for federalism. But it is equally obvious that answering these questions will require the assistance of experts and scholars who have immersed themselves in understanding the nature of federalism and what it can realistically achieve. Federalism is too valuable a development agenda to be left alone to the discourse of politicians.
(Fermin D. Adriano, PhD., is a professorial lecturer at the Center Public Affairs (CPAf), UP Los Banos. He teaches development studies at CPAf’s PhD development studies program.)