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Improved transport connectivity through the Philippines’ roll-on/roll-off network boosts business in port municipalities but nearby towns lose income as activity concentrates in transport hubs, according to a study by state-owned Philippine Institute for Development Studies
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The study found municipalities near RoRo ports experience a 6.5% decline in income after nearby ports became operational
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It found no statistically significant increase in total income in port municipalities, indicating that the RoRo network may be redistributing economic activity rather than expanding it overall
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Complementary policies are needed to ensure more communities benefit from improved connectivity
Improved transport connectivity through the Philippines’ roll-on/roll-off (RoRo) network boosts business in port municipalities but nearby towns lose income as activity concentrates in transport hubs, according to a study by state-owned Philippine Institute for Development Studies (PIDS).
Titled “Can Transport Infrastructure Reduce Inequality in Archipelagic Economies? Evidence from the Philippine Roll-on/Roll-off Network”, the study found that municipalities near RoRo ports experienced a 6.5% decline in income after nearby ports became operational.
Authored by PIDS senior research fellow Kris Francisco and former senior research specialist Kimberly Librero, the study examined municipal data from 2000 to 2020, PIDS said in a statement.
The study found firms and consumers shifted toward areas with direct transport access, reshaping where economic activity takes place. At the same time, municipalities hosting RoRo ports benefit from stronger commercial activity.
Business tax revenues in these areas increase by about 17% on average following integration into the network, reflecting higher levels of enterprise activity and investment.
The authors noted that improved connectivity creates favorable conditions for business development in port areas.
“In the case of RoRo ports, improved connectivity appears to create favorable conditions for business development and commercial activity,” the authors said.
However, these gains do not translate into broader income growth.
The study found no statistically significant increase in total income in port municipalities, indicating that the RoRo network may be redistributing economic activity rather than expanding it overall.
“Our findings reveal that maritime infrastructure creates clear spatial winners and losers at scale, generating concentrated economic benefits for a minority of municipalities while imposing welfare costs on the majority,” the authors noted.
Introduced in 2003, the RoRo Terminal System was designed to improve inter-island connectivity by integrating road and maritime transport.
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Vehicles can board ferries and continue travel across islands without unloading cargo, reducing transport costs and travel time, and making port locations more attractive for businesses.
Firms may relocate closer to ports to minimize logistics costs, while consumers may prefer to shop and trade in areas that are easier to access.
But this concentration effect can come at a cost to surrounding areas. According to the study, as activity shifts toward ports, nearby municipalities may experience reduced business activity and declining local revenues.
The findings of the study also highlight the importance of considering how infrastructure investments affect different communities.
While transport projects improve connectivity and economic integration, their benefits may not automatically spill over into surrounding areas.
Instead, improved transport access can create strong local growth centers that attract businesses and investment.
“Infrastructure remains essential for economic integration in archipelagic economies,” the authors said.
They added that complementary policies may help ensure that more communities benefit from improved connectivity.
These may include support for local businesses, regional development programs, and investments that help nearby municipalities take advantage of new transport links.
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