What drive the local incidence of crime, shadow economy and resource-related conflicts in Mindanao, Philippines? Evidence of spillover effects

Abstract

Together with Indonesia, Sri Lanka and Thailand, Philippines is among the Asian countries with long history of violent subnational or local conflicts. These conflicts have also exacted heavy tolls in terms of loss in human lives, economic welfare and public resources. Towards a better understanding of local conflicts in the Philippines, we estimate negative binomial regression models using a panel of cities and municipalities in the Autonomous Region of Muslim Mindanao for the period 2011–2016 to examine the pattern of spillover effects. We find strong evidence that for an average locality the incidence of conflicts related to crime, shadow economy or resource (and other unclassified) are influenced positively by the aggregate level of hostilities in its contiguous neighbors. The types of hostilities in the neighbors or the number of neighbors have no significant effects. The policy implication is to contain conflicts at once and where they happen to prevent spillover.

Keywords:

• Crime conflicts
• shadow economy conflicts
• resource conflicts
• local governments
• negative binomial model
• Mindanao

JEL CLASSIFICATION:

• O17
• O18
• R10
• H79

Acknowledgments

I gratefully acknowledge The Asia Foundation (Bangkok Office), the UPecon-Health Policy Development Program, and the Philippine Center for Economic Development for the institutional and financial support; International Alert Philippines for the data; Xylee Javier, Erlinda Ranchez, Sylvia Nachura and Angelo Gabrielle Santos for their excellent research assistance; and, for their generous comments and suggestions, an anonymous referee and the participants in a workshop held on June 1–2, 2016 in Bangkok, Thailand, and in a seminar at the UP School of Economics held on 28 September 2016. I remain responsible for any and all errors.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1 For example, see various case studies of rido feuds in Torres III (2014).

2 For example, a criminal may trade a looted resource (mineral, say) in the informal economy of a neighboring town.

3 Consistently since 1946, Asia and Africa top other regions in number of armed conflicts and battle-related deaths (Gleditsch et al. 2002; Pettersson and Wallensteen 2015; Themner and Melander 2016; Pettersson and Eck 2018).

4 The IRA is the share of the local governments in the revenues collected from income taxes and consumption taxes of the national government. It is apportioned based on a fixed formula that incorporates level of local government, the number of LGUs, population share, and land area share. (Diokno 2012). It is also the single most important central fiscal transfer and revenue source for most LGUs (Llanto 2012).

5 For news accounts, see, for example, “Maguindanao Massacre – How it happened” by Matikas Santos, dated November 21, 2014. http://www.inquirer.net/ 143183/maguindanao-massacre-how-it-happened. Or, “Maguindanao Massacre: One Year After” by Ed Lingao, dated December 28, 2010. http://pcij.org/tag/maguindanao-massacre/

6 For news accounts, see, “Lessons learned from Marawi siege, gov’t officials say” posted 24 May 2018. https://news.abs-cbn.com/news/05/24/18/lessons-learned-from-marawi-siege-govt-officials-say. Accessed 30 November 2018.

7 Before 2016, Conflict Alert was named simply as the Bangsamoro Conflict Monitoring System. https://conflictalert.info

8 As of 2 October 2018, the BCMS covers the period 2011–2017. The conflict data for 2017 is not used in the regression analysis here because the corresponding fiscal and election data for that year are not available.

9 Municipal-level population projections in ARMM may not be stable due to the displacement or migration arising from violent conflicts.

10 Italicized symbols are scalars, while those in bold are vectors.

11 Lagged explanatory variables, including the civil wars in neighbors (states), are also used in Sambanis (2001), Elbadawi and Sambanis (2002), and Carmignani and Kler (2014). See Sambanis (2002) for review of conflict studies that address the reverse-causality and endogeneity issues

12 See Bloomberg (2002) on temporal effects of conflicts.

13 According to Greene (2008, p. 209), the Hausman specification test “does not guarantee the differences of the two covariances derived from the fixed-effects model and random-effects model will be positive definite”. This is the certainly the case in all the estimates here.

14 If X₁ is a dummy variable, the change in X₁ is the change in its value from 0 to 1.

15 It is possible though that these non-ARMM neighbors are the sources of spillovers. However, this issue cannot be pursued here because there is no suitable or comparable conflict data for the non-ARMM LGUs.

16 For this variable alone, the surrounding LGUs include those that are outside ARMM.

Additional information

Notes on contributors

Joseph J. Capuno

Joseph J. Capuno is Professor at the University of the Philippines School of Economics, where he also obtained his PhD in 1997. He specializes in public economics, health economics and development economics. His most recent publications appeared in the Journal of the Asia Pacific Economy, Health Economics, Global Public Health and the Philippine Review of Economics.