Fiscal Fragmentation in Decentralized Countries

Fiscal Fragmentation in Decentralized Countries

Subsidiarity, Solidarity and Asymmetry

Edited by Richard M. Bird and Robert D. Ebel

Most countries, developed and developing, are fiscally decentralized with regional and local governments of varying importance. In many of these countries, some of these sub-national governments differ substantially from others in terms of wealth, ethnic, religious, or linguistic composition. This book considers how fiscal arrangements may strengthen or weaken national solidarity and the effectiveness with which public services are provided. In particular, the nation’s ability to cope with changes created by decentralization is explored.

Chapter 12: Subsidiarity and Solidarity: Fiscal Decentralization in the Philippines

Christine Wallich, Rosario Manasan and Saloua Sehili

Subjects: economics and finance, political economy, public sector economics, politics and public policy, political economy


Christine Wallich, Rosario Manasan and Saloua Sehili HISTORICAL BACKGROUND AND SETTING The 84 million people of the Philippines include at least 77 major ethnolinguistic groups with more than 500 dialects and inhabit around 1000 of the more than 7000 islands constituting the archipelago (see Figure 12.1 for a map of the Philippines). Most Filipinos are of Malayan descent. Those of mixed Malay, Chinese and Spanish descent make up the country’s business elite. Living in coastal and low inlands, Christian Filipinos are the largest and politically most powerful group, and account for 94 per cent of the population. The second largest group, which accounts for some 5 per cent of the population, consists of Muslim Filipinos or Moros, who live mainly in the southern islands. Both Christian and Muslim Filipinos include a number of major ethno-linguistic groups.1 In addition to being strongly defined along family, religious and ethnic dimensions, social ties are perpetuated by the Filipino tradition of debts of gratitude, whereby favours are extended and are expected to be reciprocated on demand. These personal relations have traditionally dominated both national and local politics, whereby officials are elected based on their family wealth and influence and the benefits of patron-client ties. Political loyalties are tied to specific politicians rather than to individual political ideologies. Local political alliances are often unstable and fraught with personal rivalries over votes and access to funding from the central government. These rivalries have sometimes translated into violent behaviour characterized as ‘warlordism’ or brigandage, which is still...

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