What Motivates Local Governments to Be Efficient? Evidence from Philippine Cities

Abstract

This study sought to identify the drivers of local government efficiency by investigating three key motivations: internal capacity, rewards for good performance, and compliance with the national government. This paper studied the business registration efficiency cases of 141 highly urbanized and component cities in the Philippines using the cities and municipalities competitiveness index dataset from 2017 to 2019. It was found that capacity-related factors are the most influential in motivating Philippine cities to be more efficient in their business registration processes. Having a higher institutional capacity, higher public service experiences, and good technology infrastructure contribute immensely to better service delivery. Compliance with the national government’s directions on public service standards also positively influences efficiency. In addition, it was confirmed that these factors may appear differently, depending on cities’ size statuses. Other policy implications and recommendations for future research are discussed.