The Relationship of Centralization and Good Governance in the Philippines

Abstract

This study contends that in the Philippines, Centralization is inversely related to Good Governance. It measures centralization in terms of the percentage of national government expenditures to total government expenditures (which is simply the sum of national and local government expenditures). It measures good governance as the average of an equity and efficiency index. The equity index is derived by deducting the average disparity percentage from 1. A region’s disparity is the absolute value of the difference of a region’s contribution to Gross Domestic Product (GDP) to the mean or average of all regional contributions to GDP. The efficiency index is derived by computing the actual yearly Gross National Product (GNP) growth rates and dividing it with the yearly growth rates envisioned in the Medium Term Philippine Development Plan (MTPDP). The good governance index is then plotted in a line graph. To make sense of the seemingly unrelated values, the method of least squares is applied to show a straight linear pattern. Results show that there is indeed an inverse relationship between Centralization and Good Governance. With this discovery, the author hopes to promote awareness of the vital importance of federalism to national unity development.