While the Philippines’ Roll-on/Roll-off (RoRo) Terminal System has successfully streamlined inter-island travel, it is creating a landscape of “spatial winners and losers.”
A new study by the Philippine Institute for Development Studies (PIDS) reveals that while port-hosting municipalities see a surge in business activity, nearby towns suffer significant economic contraction.
The study, titled “Can Transport Infrastructure Reduce Inequality in Archipelagic Economies? Evidence from the Philippine Roll-on/Roll-off Network,” was authored by PIDS Senior Research Fellow Kris Francisco and former Senior Research Specialist Kimberly Librero.
Analyzing municipal data from 2000 to 2020, the researchers found that municipalities located near RoRo ports experienced a 6.5% decline in income after neighboring ports became operational.
The RoRo system, introduced in 2003, was designed to integrate road and maritime transport, allowing vehicles to board ferries without unloading cargo. While this has slashed logistics costs, the study suggests it has redistributed existing economic activity rather than generating new growth across the board.
Key findings include:
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Business Tax Surge: Municipalities hosting RoRo ports saw business tax revenues increase by an average of 17%, signaling a concentration of enterprise activity and investment.
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Income Stagnation: Despite the rise in business taxes, there was no statistically significant increase in the total income of port municipalities.
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The “Drain” Effect: Firms and consumers are increasingly migrating toward areas with direct transport access to minimize costs, effectively “draining” business activity from surrounding non-port towns.
“Our findings reveal that maritime infrastructure creates clear spatial winners and losers at scale,” the authors noted. “It generates concentrated economic benefits for a minority of municipalities while imposing welfare costs on the majority.”
The Philippines’ geography, comprising over 7,000 islands, presents a natural barrier to economic integration. While transport infrastructure is a widely accepted tool for stimulating growth in lagging regions, the PIDS study cautions that connectivity does not automatically guarantee inclusive development.
“Infrastructure remains essential for economic integration in archipelagic economies,” the authors stated. However, they emphasize that the current model may be favoring transport hubs at the expense of regional equity.
To ensure that the benefits of the RoRo network extend beyond the immediate port perimeter, Francisco and Librero urge policymakers to adopt “complementary policies.” These include:
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Targeted support for local businesses in non-port municipalities.
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Regional development programs designed to link outlying towns to the value chains of transport hubs.
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Strategic investments that help nearby municipalities leverage new transport links rather than being bypassed by them.
The full study highlights the importance of looking beyond connectivity statistics to understand the real-world impact of infrastructure on community welfare.
