should be carefully accounted for and managed; guarantees should be used judiciously, based on a clear rationale and appropriate risk allocation� (Executive summary, pages xxiv to xxv).
The government has recognized the constraining effect of poor infrastructure on economic growth and development and has prioritized the removal of this serious bottleneck.
The Medium Term Philippine Development Plan (2004-2010) provided
broad strategies and identified critical infrastructure that have to be completed or provided by the end of the Plan period. The Medium-Term Philippine Development Plan (MTPDP) 2004-2010 also recognizes private sector participation as key to infrastructure development in the country.
In a recent workshop organized by the Philippine
Development Forum, it was claimed that “public-private partnership (PPP) would be the only viable option for key infrastructure development in the short-term, given the fiscal conditions of the Philippine Government�7.
The Medium-Term Philippine Development Plan stressed the importance of connectivity of an archipelagic economy by good transport and communications network. The connectivity provided by good infrastructure facilities is expected to open new economic opportunities, reduce transportation and transaction costs of business, and increase access to social services. The interconnection will also strengthen the socioeconomic, cultural and political linkages between and among regions. Eventually, connectivity will decentralize progress and bring development to the countryside.
Efficient infrastructure is important for economic integration in the ASEAN and East Asia and for narrowing development gaps. The new economic geography considers two forces that work on economic integration among countries as well as domestic regions within a country: (a) agglomeration forces and (b) dispersion forces.
While
agglomeration forces widen disparities among countries and within country, countervailing dispersion forces motivate the relocation of economic activities, e.g., manufacturing to lagging countries or regions as congestion in the more developed countries or regions within country starts to constrain further growth.
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