The Philippines’ urban-rural divide continues to widen despite the country’s remarkable economic growth. Development in the Philippine countryside continues to lag behind the country’s cities, which are among the fastest-growing in the Asia-Pacific region. As a result, the country’s record growth has disproportionately favored urban Filipinos who not only tend to have higher incomes but also more educational and professional opportunities compared to their rural counterparts.
Fortunately, the experiences of other countries provides the Philippines with templates for narrowing the economic and lifestyle gaps between urban and rural communities. In many other countries that had massive rural-urban divides, private sector entities proved key in creating the conditions needed to bring higher standards of living and business opportunities to people living outside of major cities.
There’s little reason to believe that private businesses could not do the same in the Philippines. Here are some ways the private sector might boost development in the Philippine countryside:
1) Better Infrastructure Development
The experience of most industrialized nations points to the private sector as having a critical role in building cost-effective rural infrastructure development services. In the Philippines, private companies such as Aboitiz InfraCapital have already made a huge impact in delivering the high-quality water infrastructure needed to improve health outcomes and living conditions in underserved communities, as well as the digital infrastructure necessary to enable wider participation in the global economy.
In places where leading private businesses have been given the go-ahead to develop vital infrastructure assets, effects on rural communities have been overwhelmingly positive. In particular, economic, environmental, and health outcomes have tended to improve wherever private enterprises have developed extensive rural infrastructure.
Recent improvements in the efficiency of water use are likely partially thanks to the wider entry of private companies in rural water services. The continuing expansion of wireless broadband services in the countryside, also partly attributable to the important role of private sector investments, is likewise bridging both digital and urban-rural divides throughout the Philippines, enabling more economic opportunities and providing alternatives to dangerous and environmentally damaging rural occupations.
2) Skill and Training Enhancement
The decades-long development of the Philippines’ comparative advantages in export manufacturing and business process outsourcing has led to massive interest in using the country as a global hub for these activities. To meet this demand, private developers have already looked away from built-up urban areas with high land costs, developing instead industrial parks and economic estates in the countryside, where real estate remains affordable.
These estates, of course, need people to generate value. This need has incentivized the creation of various local training programs that would enable employment in these estates. These training programs are often run and funded by the private businesses that have invested in these estates but they are also facilitated by local government units, schools, and other private entities eager to capitalize on the myriad trickle-down opportunities these estates bring.
As such, it’s not only skills directly related to manufacturing and business process outsourcing that locals are educated in but more general value-creating skills such as finance, management, entrepreneurship, process development, and others.
As a result, rural Filipinos that have been historically deprived of education and economic opportunities are being directly and indirectly capacitated by the influx of private investments. No longer tied to agriculture and other locally specific industries, better-educated rural Filipinos will have a better chance of spurring local innovations and creating additional value for the national economy.
3) Tourism Opportunities
The creation of infrastructure in the countryside is giving many locals a way to move away from extractive and often unsafe economic practices such as logging and mining to more sustainable jobs related to services and ecotourism. Better water infrastructure and internet connectivity are already laying the groundwork for better-paying and less-risky economic opportunities in some key areas.
The presence of high-speed internet in previously isolated areas has also spurred more types of economic opportunities. Digital nomads, in particular, are using the Philippines’ improved digital infrastructure to work closer to areas that exhibit the country’s natural beauty as well as its cultural uniqueness. In turn, their social media posts have led to a growth in local tourism as more Filipinos and foreigners become interested in experiencing the country’s various wonders.
Will More Private Sector Participation Close the Urban-Rural Development Gap?
Where present, countryside investments by private companies have already made a big impact on local communities. By and large, they have helped create more sustainable economic opportunities, helped incentivize and capacitate local entrepreneurs, and provided viable alternatives to unsafe and environmentally destructive livelihoods.
While the economic and lifestyle gaps between rural and urban Filipinos remain wide, additional private sector investments, particularly in infrastructure, should help close them significantly. With the help of conscientious private enterprises as well as public sector partners, we may see the makings of a more economically equitable Philippines well within our lifetimes.