This paper attempts to test empirically whether a five percent additional capital infusion to land transport services sector in the National Capital Region reinforces centerperiphery spatial configuration in a developing economy like the Philippines. The study captures the impact of such capacity build-up in terms of changes in interregional flows, regional welfare and output. The financing of such transport capacity enhancement is through an equivalent amount of government expenditure which is funded by foreign transfer payments like official development assistance funds. A transport-oriented spatial general equilibrium model is presented based on a five region social accounting matrix. Results indicate that while absolute gains in welfare and output still go to National Capital Region, the enhanced interregional flow of goods and services creates significant spillover effects in periphery regions which are located in
Southern Philippines namely, Visayas and Mindanao.