162 Chasing the Wind: Assessing Philippine Democracy expected connection between local governance and local development in a decentralized environment. Figure 4. Linkage between local governance and local development Source: Capuno (2005) In this illustration, Capuno argues that “the quality of local governance bears on the efficiency and equity of local public services, and therefore on local development.” He drew the connections between the three variables from a theory of fiscal federalism that emphasizes efficiency gains when responsibilities and resources are transferred from national to subnational/local governments. The basic belief in the theory of fiscal federalism is that subnational governments would be competing with one another and this competition: …provides an incentive to foster local economic prosperity rather than costly market intervention, service to interest groups, and corruption…Governments that fail to foster markets risk falling land values and the loss of capital and labor–and hence valuable tax revenue. Put another way, interjurisdictional competition provides political officials with strong fiscal incentives to pursue policies that provide for a healthy local economy. (Weingast 2009:280) The theory of fiscal federalism suggests that the decisions of local officials at the local government level will be guided by the need to be more competitive. The local government's competitiveness ensures that it is able to keep its constituents from moving elsewhere as the theory in itself believes that citizens in a decentralized arrangement could “vote with their feet.” However, this idealized competition and the possibility of citizens migrating to better