Debate on federalism for the Philippines, theory and experiences

1. Synthesis of presentations,
Federalism forum
by RC Muntinlupa North,
PCCI-Muntinlupa,
Muntinlupa City Govt.
Feb. 02, 2017,
Vivere Hotel, Alabang
Bienvenido Oplas, Jr
Columnnist, BusinessWorld
President, Minimal Government Thinkers

2. Dean Pacifico Agabin, UP Law
• Federalism is not a new concept in the PH. Foreseen or initiated
since 1889 (Jose Rizal), 1898 (E. Aguinaldo), 1990 (Isabelo de los
Reyes)
• 2 models/experience: bottom up (states forming a federal govt, US),
top down (Belgium)
• Division of functions: Federal govt – national defense, foreign
affairs, fiscal policy. States – social and economic services
• No bright line/delineation bet decentralization and federalism,
except that the former is created by law, the latter is stated in the
Constitution.
• Main point of federalism is fiscal equalization. Poorer
regions/provinces will get equal amount of resources as richer
ones. Example – Germany unification. West subsidized poor East
Germany.

3. Jonathan Malaya, PDP-Laban Fed. Inst.
• Federalism is somehow an anti-colonial move; unitary system
imposed by colonial powers Spain, America, Japan.
• PH federalism will be move from a unitary state, not from
indep. States
• Goal: to build local initiatives, less reliance on natl. govt, more
innovation & flexibility by provinces and regions.
• Very centralized under current system. Ex. To get a new school
bldg, from principal to regional to DepEd to Congress… 2 years.
• Compare with asking for school bldg from the Mayor (from SEF)
or from the Congressman (PDAF, congress insertion), take only
months
• Proposals: Dual Executive, President (head of state) & PM
(head of govt); Bicameral Parliament, and desynchronized reg’l.
and Presidential elections.

4. Ronald Mendoza, Ateneo Sch of Govt
• Unitary system indeed resulted in huge inequality among
regions in the PH, more poverty in Mindanao than Luzon…
• But decentralization also resulted in more pol. dynasties,
consolidation of pol power in provinces, towards 70% dynastic
power by 2022; local warlords and pol. murders.
• Proposals : Lower income provinces should get conditional
transfers/grants; middle income to get unconditional/matching
grants. High income to get from loans.
• Focus on public finance, federalism might offer the solution.

5. Amb. Hermenigildo Cruz
• Goal of federalism is to address inequality but this did not
happen, worsened through time.
• Who should make the necessary adjustments
• Creating and duplicating more agencies and departments
(DPWH, DOH, DepEd,…) in various states outside of exclusive
federal functions (DND, DFA, NEDA…)

6. Prof. Gene Pilapil, UP Pol. Sci.
• Institutional design literature – explains differences in pol.
instns.
• 3 Cautionary insights
1. No consensus on superiority of 1 over the other (anti-
corruption, rule of law, inequality, human devt,…)
2. Reform, not overhaul. Unnecessary overhaul if there is no
superiority; unbelievable lofty goals; hyper-rationality
(excessive optimism leading to excessive disillusionment)
3. Institutional design is political design. There are no optimal
democ. institutions. And even if there were, won’t reach the
target due to: (a) weak pol culture, party switching; (b) high
level of barrier to entry.
• Easier, less messy to reform than overhaul.

7. Federal states and countries Big non-federal states
Country No. of states, provinces GDP Country GDP
United States 50 states, 1 territory, 1 fed. district, DC 18,562 China 21,269
India 29 states, 7 territories 8,721 Japan 4,932
Germany 16 states 3,979 Indonesia 3,028
Russia 46 oblasts, 22 republics, 9 krais, 4 okrugs, 3
fed. cities, 1 auton. oblast
3,745 United Kingdom 2,788
Brazil 26 states, 1 fed. district 3,135 France 2,737
Mexico 31 states, 1 fed. district: Mexico City 2,307 Italy 2,221
Canada 10 provs, 3 territories 1,674 S. Korea 1,929
Australia 6 states, 2 territories 1,189 Saudi Arabia 1,731
Nigeria 36 states, 1 territory: Federal Capital Territory 1,089 Spain 1,690
Pakistan 4 provs, 2 auton. areas, 2 territories 988 Turkey 1,670
Argentina 23 provs, 1 auton. city Buenos Aires 879 Iran 1,459
Malaysia 13 states, 3 territories 864 Thailand 1,161
U.A. Emirates 7 emirates 667 Taiwan 1,125
Iraq 18 governorates, 1 region: Kurdistan 597 Egypt 1,105
Belgium 3 regions, 3 ling. communities 509 Poland 1,052
Switzerland 26 cantons 494 Netherlands 866
Venezuela 23 states, 1 capital district, 1 dependency 469 Philippines 802
Austria 9 states 416 South Africa 736
Sudan 17 states 176 Colombia 690
Ethiopia 9 regions, 2 cities, 9 regions, 2 chartered cities 175 Bangladesh 628
Nepal 14 zones 72 Algeria 609
Bosnia and Herzegovina: 2 entities, 1 district 43 Vietnam 595

8. • Table title, “GDP sizes of federal and big non-federal states at purchasing
power parity (PPP) values, 2016, $ billions”
(from my Bworld article today)
• Sources: No. of states: wikipedia; GDP size: IMF, World Economic Outlook,
October 2016 database.
• Other federal states too small (GDP size less than $1 B) not included
above: Saint Kitts and Nevis, Comoros, Micronesia.
• So, while there are huge and rich federal economies like US, Germany,
Canada, there are also huge and rich non-federal economies like Japan,
UK, France.
• There are many poor federal economies like S. Sudan, Nepal, Ethiopia,
Sudan, Venezuela, Pakistan, India.
• Promise of “more development if we go federal” is “hyperrationality.”
Other factors more directly related to wealth and prosperity of countries
other than the forms of government. Like the rule of law, laws that apply
to both rulers and ruled, to both governors and governed.