Role of the Davao City in the Economic Development of the Philippines


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Cities have played a large role in a country’s economic development. Cities usually play the role of being the house of corporations, small businesses, trade, and in politics. New York, where it houses the New York Stock Exchange and important financial institutions in Wall Street (Investopedia, n.d.). In the Philippine context, Davao City, considered to be one of the major cities that played a role in contributing to the country’s economic progress. As stated by PSA, Davao City grew by 10.9% in 2017 due to service sectors and industries (Colina, 2018). Furthermore, it has political achievements such as the place where President Rodrigo “Roa” Duterte the first Mindanaoan president in the Philippines became mayor for seven terms (Embassy of the Philippines, n.d.), making Davao City as one of the safest in Southeast Asia (Ray, n.d.), and the launching of the ASEAN summit in Davao and was said to be a “symbolic morale boost” (Gonzales, 2016). In addition, the city has been the center of developments in commerce and real estate. It has also been the center for the agricultural exchange of farmers and to pursue the tourism industry of the city. Also, infrastructure projects are also starting to rise up in the city. Cebu Landmasters and Lyceum of the Philippines University have teamed up to create a 17-hectare ‘world class’ township in Davao City (Abadilla, 2018). Also, the food terminal will help the small-scale farms to sell their produce (Doquila, 2018). Berkman International Incorporated is creating a 3D perspective for Barangay Mintal before it would implement the “Little Tokyo” plan.(Doquila, 2018). It is a pursuit of development to give the people a higher standard of living, education quality, and to attract more prospective investors. It can also be seen as a way of making the city and economic powerhouse and politically influential in the island of Mindanao. Furthermore, Davao City has housed two consulate generals, Malaysia and Indonesia; Japan upgrading its consular office to a consulate general and China will establish its consulate general (Cayon, 2018). Which indicates the growing political significance of Davao City in the country. Or so to say, the decentralization of foreign diplomatic importance of Manila to other cities.a

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The influx of migration is inevitable especially if the area gives job security for individuals, but it helps the local economy from taxing the workers. However, it would put a large strain on the resources of the city and the unemployment rate would start to rise if the city is not able to provide jobs for its population and migrants. Davao city has been a primary destination for migrants because of job and business opportunities, agricultural developments, and quality of education, however, it challenges the economic and social factors of the city such as housing and education(Remo, 2017). Being that said, despite large investments from different corporations and the government it still cannot satisfy the demand of the population. However, with the achievements stated and its downside, this paper will further its understanding of the significance of Davao City not only in the national stage but also its role in the global stage.

From a rural area and now an urban area, Davao City has come a long way, especially in its growth. The economic contribution of the city can be found a long way before when it was not yet a city. It became an exporter and producer of abaca which housed a lot of foreign investors and migrants such as the Japanese which became a major player in the city’s economy. With its economic progress and its political role which prompted the late-president Manuel Quezon to declare Davao as a city (see page 3 for references). However, there are also such movements to form a city and one example of it in London. London became a city due to its nearness towards the sea which makes it good for sea trade and its location to make a bridge and how it is politically advantageous for the Romans because there is no tribal political baggage (Keys, 2016). Base from the comparison towards London, some governments to consider the economic and political vantage point of an area to be able to form a city. However, to strengthen the idea, another example would be given. Toronto became a city due to its economic advantage because of its nearness towards the sea and the government buildings and garrison attracting merchants, craftsmen, and labourers; after the war of 1812, migrants start to live in Upper Canada which expanded Toronto’s farming frontiers making it a banking centre then incorporated it into a city (Careless, 2013). In the statement, government buildings and garrison clearly denote that these increased the political role of Toronto.

The growth of the city invites a lot of businessmen to expand their operations into it, but there are other entrepreneurs who want to grow in the local market to be able to compete globally. In exchange for that, it usually gives jobs to the people where the company is located. In the context of Davao City, firms such as Coca-cola, VXI Global Solutions, and Malagos Chocolate have its operations within the city. Coca-cola an Atlanta based company has bought 51 percent of the Coca-cola FEMSA stocks (Cabuag, 2018). Also, it starts to have a global environmental campaign through reshaping its packaging, with a goal to collect and recycle 100% of its packaging ( Brandroom, 2018). VXI, a Los Angeles based company that has 12,000 employees in Metro Manila and Davao combined (VXI, n.d.). It has also opened its 42nd official site in Guatemala to strengthen its capabilities to reach its clients (Kendall, 2017). Cacao beans produced in Davao City won the International Cocoa Awards in Paris, as said by Charita Puentespina, owner of the Malagos Agri-ventures Corporation and runs the Puentespina Farms in Malagos and Malagos Chocolate, that Philippine beans can compete with other top-producers of cacao (Basa, 2017). Coca-cola and VXI, these are transnational corporations that have opened up in Davao City and other parts of the world to satisfy the demands of the global market. However, Malagos Chocolate opened up in Davao City to compete with other renowned brands in the cacao and chocolate industry globally. Despite being locally produced, it is now gaining attention in the global market that there is a growing industry that is rising in Davao City. Aside from that the city has a rising cacao industry, there is also an interest leaning towards the “king of fruits”, durian. Also, a businessman in China is interested in importing durian from Davao to China and countries like Britain, Singapore, Japan, and other European countries have expressed their interests in importing durian from Davao City (Arado, 2017). It has clearly been shown that different countries have recognized the role of Davao City as an agricultural powerhouse that can pass the international standards in terms of food. And, it shows the increase in demand in the agricultural products to manufacture from what they have imported in Davao City. More to that, Davao City has also played a role in the efficiency of trade between Mindanao and Indonesia. President Rodrigo Duterte and Indonesia’s President Joko Widodo launched the M/V Super Shuttle that would facilitate the D-G-B route or Davao-General Santos-Bitung, Indonesia (EDC, 2017).

Being global or world cities requires cities to have economic, cultural, and political global significance which gains its superiority over other urban areas. As a result, these cities become a concentrated urban area for financial and banking centers, communications, and even tourist destinations. Basically, a global city has a competitive advantage and can serve as a hub in a globalized economic system (Charnock, n.d.). With the developments and the rise of Davao City’s export economy through corporations and its local producers also its growing political significance, it raises up some questions if Davao is capable of being a global city, is it growing to become a global city or can it be considered as a global city?

Base on the current situation of Davao City, it can be said that it is still far from becoming one. Despite that, the city is experiencing a sudden influx of corporate and business operations, tourism, and housing (Cayon, 2018). Furthermore, Dominguez said that with the ambitious Build, Build, Build Program of the administration, it would make Davao City a manufacturing and agro-industry hub (Rada, 2018). However, Davao City is losing its investors due to the lack of an industrial park and large swaths of land to be developed (Padillo,2018). Also, the lack of hotels and convention center hinders the potential of Davao City becoming a major tourist destination, hosting large events, and meetings. Furthermore, there is an unfair distribution of employment opportunities for women and the lack of social services (Colina, 2017). Unlike other cities, New York has placed as one of the world’s leading cities as its economic power, openness towards ideas and immigrants and the world-class cultural asset is still strong. Also, New York has nearly 60 million tourists who visited the city in 2015 and creation of a municipal card that makes it easier for immigrants to have access for city services (World Cities Culture Forum, n.d.). But, Davao also houses different tribes in the city. Still, it does not mean that Davao City is getting near towards the goal of becoming a global city. The city lacks different platforms for a foreign and local corporation for growth. Even there are developments in the city (see pages 8,9, and 10 for references), the city’s economic aspect, migration, and political influence towards the global community are still lacking. It can be said that the city is still not able to compete even with growing cities that are fighting for a place to become a global city.

At a national scope, Manila is the center of urban trends and the headquarters of few international economic centers in the Philippines. Just like New York and other global cities, Manila is a city, densely populated; and as described by Kwak (2017), as a hub linking global, cultural, and regional economies which Manila has already been for a long time. It was said that Manila was ranked 51st in the 2012 Global Cities Index (Santos, 2012) which evidently displays Manila as one of the premier cities of the 21st century. Furthermore, Kwak has highlighted how the concept of “informality” has defined everyday life in Manila. Conceptually, Kwak uses the term “informality” to refer to the absence of knowledge and government control over a specific area. It has been said that “informality” — the informal economies and businesses — keeps the urban economy functioning. Informality lets workers and employees cope up with their marginal incomes. Kwak uses the example of a shoe repairman fixing shoes of restaurant owners serving local and foreign investors and businesspeople in a makeshift roadside station. Another example used by Kwak are workers who live in informal settlements, waking up early to give inexpensive jeepney services to young call center agents in Makati. Davao as compared to Manila also have these kinds of “informality” all around it. However, it still does not mean that Davao can atop a list of global cities or even be a part of it. It is genuinely an important factor in becoming a global city to embody the said characteristics mentioned in the previous paragraphs. Again, Davao, unlike Manila and New York, lacks foreign and local corporation growth despite its recent booming in developments in infrastructure and other commercial sites.

As cities start to develop or are rapidly growing, there are parts of the population that would be left behind. Widening of the income gap is inevitable as the difference in literacy or educational attainment is a major factor for an individual’s lifestyle and income attainment. Furthermore, migration from rural areas to the urban areas affects the income equality within a city. Especially, as the capitalist class would concentrate its investments in a certain part of the city. Slums and the relocation of it are unavoidable in the city but on the other side of the city, large developments of suburbs and condominiums would also rise as the city continues to grow. In Davao City, there are large township developments all around the city. One of it is the Davao Park District that can be found in S.P. Dakudao Loop, Lanang Davao City, Ciudades Business park in Mandug, and Azuela Cove near the R. Castillo and J.P. Laurel intersection (Arado, 2018). Furthermore, as said by Councilor-Mr Al-ag, the developments in Davao and should be decentralized and he also said that Toril is ready to handle such growths because of its existing infrastructure, commercial establishments and sub-offices of some government agencies (Padillo, 2018). In addition, Bajada-Lanang area tops the most office spaces in the city which is 100,000 square meters in total with occupancy of 79 percent (Doquilla, 2018). Also, the development of the Abreeza Ayala Business Park that was spearheaded by the Ayala Land Inc. together with the Floreindo-owned Anflo Group; the SM Supermalls also built its own mall called the SM Lanang premier (Bagaforo, 2017). Based on the given sources, despite there is a disperse in the developments of the city, the Bajada-Lanang areas can still be said the “concentration point of the city’s development.” It is due to the future plans of the corporations it stored for the area and what are built so far in the area. This clearly showed how large corporations can highlight a certain part of the city. It created the opportunity for the area to develop and become the commercial hub for the city even though it used to be one of the underdeveloped areas. However, not all parts of the city are enjoying such an opportunity to develop. Ivan Cortez of City Planning and Development Office plans to build a wastewater management project called “sanitation embankment project” in an area where former 400 informal settlers live in Bucana on the first quarter of the year (Colina, 2018). Nevertheless, some of the slum areas such as Isla Verde would be developed. A group of Malaysian investors is interested to have a big transformation in Isla Verde a populous slum in Davao City (Colina, 2017). Even though businesses largely focus on the Bajada-Lanang area, there is still hope for the slum areas to develop but slower. This shows the wide gap between the rich and poor areas of a city. As the richer parts of the cities would possibly reach its “saturation point”, it is plausible that slum areas would be removed to create more opportunities for large businesses. This shows how the poor population can be easily relocated despite being the workers for lower income jobs. As the presence of corporations in a city continues to grow, knowledge-based jobs are growing, giving educated workers more opportunity and gives other corporations the incentives to build higher priced rentable or saleable properties, but the lower-income workers are left behind because of it being unaffordable. Also, there would be a lifestyle change in the city such as promoting international brands that it would probably the cause of decline to the MSMEs or the Micro, Small and Medium Enterprises. Additionally, it can promote top quality and prestigious schools to enter Davao City, but not all are able to enroll in these schools. Basically, the entire population cannot cope up with such rapid growth and the widening of the income gap would always be inevitable as demand for a better lifestyle still continues.

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