ECONOMIC SECTOR
Updated: 19 February 2023 | 1700H PhST
LOCAL ECONOMIC DEVELOPMENT AND INVESTMENT PROMOTION refer to the efforts made by a municipality, such as Rosario, Batangas, Philippines, to grow its economy and attract investment.
Local Economic Development, in some respects, may refer to the process of improving the local economy by creating job opportunities, improving living standards, and increasing the revenue and prosperity of the community. This is achieved through the implementation of policies and programs aimed at promoting economic growth and development.
Investment Promotion, on the other hand, constitute the efforts made by the municipality to attract investment and create job opportunities. This is achieved through the promotion of the municipality's strengths, such as its natural resources, human capital, and economic activities, to potential investors. Investment promotion also involves the creation of a favorable investment climate, such as providing tax incentives, infrastructure development, and streamlined business processes, to encourage investment.
Size of the Local Economy. In describing the size of the local economy, we shall refer to the Department of Trade and Industry (DTI) Cities and Municipalities Competitiveness Index or CMCI for our source of information. The CMCI is an annual ranking of Philippine cities and municipalities developed by the National Competitiveness Council through the Regional Competitiveness Committees (RCCs) with the assistance of the United States Agency for International Development. The Municipality of Rosario, Batangas belongs to the category of a First Class Municipality. These are municipalities which have an average annual income of P55M or more during the previous four calendar years.
For context, here is the graph of the CMCI Size of the Local Economy Score for the Municipality of Rosario over the period 2015-2022:
Over the period 2015-2022, the CMCI score for the Local Economy Size of the Municipality of Rosario decreased from 0.49 in 2015 to 0.03 in 2022.
The DTI-CMCI score for the size of local economy is a metric used to rank cities and municipalities in the Philippines based on their competitiveness in terms of economic size. It is part of the overall DTI-CMCI, which measures the competitiveness of local government units (LGUs) in various aspects such as economic dynamism, government efficiency, infrastructure, and resiliency.
The size of local economy score evaluates the LGU's capacity to generate economic growth, measured by the size of its Gross Domestic Product (GDP) and the number of registered businesses in the area. A higher DTI-CMCI score for the size of local economy indicates a larger and more dynamic local economy, which attracts more investments and creates more employment opportunities.
The DTI-CMCI score serves as a tool for local government units to assess their competitiveness and identify areas for improvement. It also helps investors, businesses, and tourists make informed decisions about where to invest, do business, or visit.
Proxies for Local Economic Activity. The size of the economy approximates the level of economic activity in the LGU, which, at the national level, is measured by gross domestic product. At the local level, the proxies for local economic activity include gross sales, which can be a measure of local production, and the number of business registrants and total capitalization of newly registered business enterprises, which indicate the level of new investment in the locality.
Gross Sales of Registered Firms and Total Capitalization of New Businesses. Over the period 2017 to 2022, the gross sales of registered firms and total capitalization of new business grew from Php 5.03 billion to Php 8.18 billion representing an increase of 63% over the past six years, indicating an increase local production.
Source: Business Permits and Licensing Section and the Office of the Municipal Treasurer, Municipality of Rosario, Batangas
Total Number of Registered Firms and New Businesses. Over the period 2017 to 2022, the total number of registered firms and new businesses grew from 2,490 to 3,047 representing an increase of 22% over the past six years, indicating business expansion and increasing level of new investment in the locality.
Source: Business Permits and Licensing Section and the Office of the Municipal Treasurer, Municipality of Rosario, Batangas
Why the key to cityhood. While a low DTI-CMCI score for the size of local economy may indicate a relatively small and less dynamic local economy, it does not necessarily mean that the local businesses cannot generate significant increases in gross sales.
There are several reasons why this could be the case:
Local demand: The local businesses may be serving a large and growing market, with a high demand for their products and services. This can result in significant increases in sales, even if the overall size of the local economy is relatively small.
Niche market: The local businesses may be serving a niche market that is not adequately served by larger cities or municipalities. This can result in a higher level of customer loyalty and repeat business, leading to significant increases in sales.
Effective marketing and sales strategies: The local businesses may have effective marketing and sales strategies that enable them to reach their target customers and generate higher sales.
Strong relationships with customers: The local businesses may have strong relationships with their customers, who value the personalized service and attention they receive. This can result in higher customer loyalty and repeat business, leading to significant increases in sales.
Therefore, it is possible for a low DTI-CMCI score for the size of local economy to still generate significant increases in gross sales for local businesses, especially if they are able to effectively tap into local demand, serve niche markets, implement effective marketing and sales strategies, and maintain strong relationships with their customers.
The Takeaway. Local economic development and investment promotion are important for the local economy in Rosario, Batangas, as they contribute to the growth and development of the local economy by creating job opportunities, increasing revenue and prosperity, and attracting investment. These efforts also help to improve the standard of living for the local population and contribute to the overall growth and development of the local economy, and eventually, achieve the status of becoming a city over next few years.
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