The fundamental development challenge for CAR remains to be the achievement of optimal economic efficiency within the framework of sustainable development. This ensures inter-generational equity and the economy’s operation at levels compatible with the carrying capacities of its resources. The current plan pursues this direction by adopting Key Focus Areas (KFAs) of development as strategy to attain efficiency in resource-use, capitalizing on the regionu2019s comparative advantages.

Gross Regional Domestic Product (GRDP), at constant 1985 prices, expanded by 3.5 percent in 2006, 5 times over the 2005 performance but still below the target originally set. Growth attained by the agriculture and services sectors approximated their 2006 targets. Agricultural output could further improve through organic farming and with a fair share in the national distribution of post-harvest facilities. On the expenditure side, growth was driven by strong capital formation and personal consumption which grew by 11.6 percent and 5.1 percent, respectively. Capital formation was spurred by fix capital expenditures in construction and durable equipment. Additionally, government consumption expenditures accelerated forty times from the 2005 level.

Low income and widening inequality pervade in the region, thus poverty remains a major concern. As of 2003, there were 72,084 or 25.8 percent of total families in CAR living below poverty threshold, and CAR was ranked third lowest in income among seventeen regions of the country, a situation prevailing until 2005 – 2006. Ironically for the same period, CAR ranked the second highest in GRDP per capita at P17,919 in 2005, at constant 1985 prices, second only to NCR’s P35,742. This indicates that the overall CAR economic growth hardly filtered to the population. Likewise in July 2007 the CAR has an employment rate of 94.4 percent, higher than the national average of 92.2 percent; but unemployment and underemployment remained high at 5.1 percent and 18.3 percent, respectively. Thus, while the regional economy grew, it did not generate enough employment opportunities to respond to the region’s expanding labor force, and that the growth achieved had limited welfare effect. The 2005 low achievements in health and education may result to low or medium attainment of regional targets on the Millennium Development Goals (MDGs) by 2015, unless more aggressive intervention measures will be instituted.

Responses to the following specific issues could enable the region to achieve sustainable growth and development, viz.:

Addressing the Competing Demands on the Use of Watersheds. CAR is a watershed region. Its water resources supply the domestic and economic requirements even of regions within the watershed’s influence area. Other than CAR’s agricultural requirement for water and that of benefactor regions, there are other competing demands on the use of watersheds: as sources of irrigation, potable water, and hydroelectric power. Water compensation arrangements between CAR and benefactor regions need to evolve to further encourage proper maintenance of ecological balance in the watersheds.

Responding to Environmental Degradation and Problem on Social Acceptability of Mining. CAR is endowed with both metallic and non-metallic mineral reserves which have potentials for commercial extraction. The use of government-prescribed mining technologies coupled with mining venture arrangements with local communities could ensure social support to mining. The creation of local mining corporations in the commercial exploration of mineral reserves would be a turn-key to the mining industryu2019s growth in CAR.

Addressing the Poor Regional Transportation and Communication Infrastructure. CAR continues to suffer from poor communication infrastructure and the worst regional transportation network in the Luzon area. Only about 24 percent of the region’s national road network is paved with either concrete or asphalt. There are still municipal centers and quite a number of barangays that are not yet connected to the main road network because of remoteness and difficult terrain. Meager funding is allocated to CAR for infrastructure development that even government-operated telecommunication facilities had been dwindling in number and becoming non-operational. Private investments are discouraged due to the increasing cost of doing business resulting to unbalanced development across areas in the region and the slowing down in the provision of services to the rural areas.

Cultural Diversity and the Need to Address Indigenous Peoplesu2019 Concerns.

The recognition of the IPs basic rights on ancestral lands and domains, self governance, and social justice and human rights is essential to CAR development. However, the sluggish issuance of ancestral domain and land titles has deflated entrepreneurial enthusiasm among the population. Immediate harmonization of differing and sometimes conflicting processes among agencies implementing land-related laws could fast track CADT/CALT processing and issuance. Likewise, there is a need to address cultural diversity within and among ethno linguistic groups to ensure cohesiveness in finding solutions to common development concerns. Efforts are needed to integrate indigenous knowledge, systems and practices (IKSPs) into the development stream.

Uncompetitive and Slowly Progressing Regional Innovative System. The regional innovation system continues to lag over the years which make the CAR generally a user of barely new and state-of-the-art know-how or technologies. The gravely slow adoption by local firms and the dissemination of these technologies is compromising competitiveness of producers and products/services of the region. Current situation indicate that CAR churns out low value-added products and services, e.g., SMEs, agri-businesses, and the government sector; that resulted to low total factor productivity causing economic growth unsustainable. Observable is the weak and measly support to the technology sector hampering development of mature and competitive know-how or technologies.



 CAR is an upland area with temperate climate varying across elevations within the mountain ranges. It boasts of historical, cultural and ecotourism sites. The region is endowed with vast potentials for mineral development and hydropower generation. The physiographic character of CAR is ideal for high-technology manufacturing industries, including research and development activities. The BLIST Metro Area (Baguio-La Trinidad-Itogon-Sablan-Tuba) is fast becoming a globally competitive educational center in the Philippines and can supply the manpower needs and skills requirement of IT industries.

Another opportunity is the inclusion of CAR in the North Luzon Cluster of regions. The cluster – known to have explored economic cooperative arrangements with leading Asia-Pacific Economies like Taiwan, Southern China, Hong Kong, Japan, and Korea – can bring agribusiness, manufacturing industry and tourism investments to CAR. In particular, the Baguio Export Processing Zone in Baguio City can be the site for foreign direct investments (FDIs) on these various types of industrial activities. Moreover, under the super regions strategy, the government’s pursuit of developing a Cyber Corridor-ICT knowledge economy with Baguio City as its northern node, could bring to CAR expanded operation of business process outsourcing / information technology devices industry within the plan period ending 2010. Further, the government’s renewed thrust on mining could cause the region to venture on mineral exploration and mining industry development.


Table 1.1 Assessment of Macro-Economic Performance, CAR : 2004-2006

*Source for 2004 and 2005 exports data : 2006 PSY
Source for 2006 PEZA data : Baguio PEZA
* 2003 FIES data

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