Impact of Foreign Aid on Local Institutional Systems: Case Study of Institutional Spillover Effect on the Batangas Port Development Project in the Philippines

This paper examines the institutional spillover effect observed in a port development project funded by foreign aid by using the Batangas Port Development Project in the Philippines as a case study. The project's purposes, processes, and results were examined by reviewing the literature and interviewing local actors. Next, the focus was on the key single event—demolition—to identify the institutional impact. In the project planning process, the local executing agency experienced difficulty in finding suitable relocation sites for affected residents. Together with some nongovernmental organizations, local residents started to oppose the project. The donor requested that the executing agency find a peaceful solution in negotiations with opposition groups. Although the executing agency made great efforts—including the introduction of an interagency committee—to build a consensus with the local opposition groups, the group finally demolished residential structures without notifying the donor to make way for the port development. The behaviors of the donor and recipient were examined in detail to understand the reasons why the demolition happened as it did.