Spatial disparities, regional dynamics and centre–region relations are the focus of much attention in the developing world, owing to growing analytical and policy interest, concern over deeply entrenched spatial inequality, transitions from economic crises or command economies, and the uneven effects of rapid global integration. Many countries are embarking on major decentralization programmes. This paper examines regional dynamics and decentralization with reference to the Philippines, a country well suited to such a study and from which other developing countries can learn lessons. The Philippines initiated a major decentralization programme relatively early (1991), and it is one of the most spatially diverse countries in the world. The reforms occurred in the wake of a deep economic crisis, and were accompanied by a major liberalization programme.