The Impacts of Roll-On/Roll-Off Transport System in the Philippines

Abstract

It is well recognized in the literature that a country’s transport system plays a central role in its development. In this paper, we show the economic impacts of improvements in the transport system by studying experience of the Philippines with the Roll-on/Roll-off (Ro-Ro) policy that promotes the use of Ro-Ro ferry terminal system. Using difference-in-difference strategies in analyzing agricultural household income and children’s education, we find that the operation of Ro-Ro ports largely benefitted the households living near the Ro-Ro ports. More specifically, our estimates suggest that agricultural households gained higher income from the operation of these ports because both agriculture and non-agriculture related activities were stimulated. Our results also imply the boost in non-agriculture related activities on the islands where the Ro-Ro ports are located. Meanwhile, our analysis on children’s education reveals an increase in school attendance of males and females in municipalities near the Ro-Ro ports. We likewise confirm that there was an increase in family income in these areas, thereby suggesting the increased capacity of households to send children to school. As a whole, our study demonstrates some examples of short-run and long-run impacts of improving a country’s transport system. Likewise, it highlights the importance of an efficient and affordable transport system in an archipelagic country like the Philippines.