Economic accountablity in the context of local governance in the Philippines: a structural equation modelling approach

The study's thesis posits that by virtue of the enabling role of local governments, at the core of their public accountability must include the local economic development of their locality, which is termed in this study as 'economic accountability'. Grounded on the model of accountability, enabling theory and institutional theory, the study presents empirical evidence supportive of this argument such that this enabling role, as manifested by the local governments' capacity to set up formal institutions, has direct impact on the entrepreneurial strategic posture and performance of local small and medium enterprises (SMEs) which are key players in local economic development. The results of the structural equation modelling support the view that the formal institutions as manifestations of the enabling role of city governments are positively associated with an entrepreneurial strategic posture of local firms, which consequently improves the firms’ overall economic performance. Therefore, SME development in particular and local economic development in general, should be part of the economic accountability of local governments in the Philippine context of local governance.