uro°, o, ph.,.e,.° oovo, o.m°°, lis Number Twenty-Four, Volume XlV, No, 1, 1987 FACTORS AFFECTING THE CHOICE OF LOCATION: ASURVEY OF FOREIGN AND LOCAL FIRMS IN THE PHILIPPINES Alejandro N. Herrin and Ernesto M. Pernia I. introduction Despite perennial migration to better places, a great many people in a typical developing country still livein the lessdeveloped regions. These regions are poor becausein most casesthey are not functional- ly integratedinto the national space-economy. Often, theflows of resourcesare unidirectional - from theouterregions to the core region. Trueeconomic integration, however, entails a two-way geo- graphic and sectoral mobility of factors. This hasbeen recognizedas essential for the efficiency and equityobjectives of development policy. The manifestation of imperfect spatial economic integration has been characterized in various waysby such terms as polarization, urban primacy, unbalanced urbanization, and spatial concentration of population and industrial activity. Problems ofregional develop- ment and considerations relating to the location of industry involve scarcitiesoftechnical and managerial inputs, antiquated social insti- tutions and practices, uncertainties, imperfect information, and lack of infrastructure and basic social services(Alonso 1968). Many of these problems have their roots in the colonial history of developing countries and often are perpetuated by ill-conceived industrialization and general development policies. University of the Philippines Schoolof Economics andEconomist, Asian Development Bank, respectively. Research underlying this paper•originated inthe East-West Population Institute, East-West Center, andwassubsequent_ly carried on at the University of thePhilippinesandthe InternationalLabourOffice, Bangkok.Financial support from the East-West Centerand thePhilippine Insti- tute for Development Studies isgratefully acknowledged. 89