Economic and Political Factors Affecting Local Firm Productivity Among Philippine Cities

While firm productivity is largely driven by economic factors such as availability of labor, capital, resources, and markets, local governments play a crucial role in enhancing productivity within their respective jurisdictions. Their influence extends across various sectors and functions, making them indispensable to economic development. However, limited studies were done in the context of developing economies, including the Philippines; hence, this study offers the novelty of being one of the few to examine the effect of selected economic and political factors on local firm productivity among cities in the Philippines. Using a panel data covering five years from 2019 to 2023, among the economic factors, the size of the local economy and the level of financial deepening significantly affect local firm productivity, while among the political factors, the city’s degree of autonomy significantly affects local firm productivity. This study aims to help local government units create and implement crucial economic and governance policies as an enabling mechanism for sustainable economic development.