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News: Innovation and Entrepreneurship

More investments in R&D needed

Sunday, 14 October 2018   (0 Comments)
Posted by: Administration
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More investments in R&D needed


IN the Global Competitiveness Report 2016-2017 published by the World Economic Forum (WEF), the Philippines was ranked 83rd out of 138 countries in terms of technological readiness. The WEF report assessed the competitiveness of countries based on a number of key indicators categorized under the so-called 12 pillars. For the ninth pillar, or “technological readiness”, the country’s ranking slid to 83rd in the latest edition of the WEF report, from 68th in the 2015-2016 edition. The Philippines’s ranking in the 11th pillar, or “innovation,” also declined to 62nd in the 2016-2017 edition, from 48th in the previous report.

These numbers don’t bode well for a country aspiring to significantly increase the income of its citizens and reduce poverty. The National Economic and Development Authority (Neda) said investments in science and technology (S&T), including research and development (R&D), must expand to around 2 percent of the country’s GDP annually if the government is to pole-vault the Philippines into First-world status. Former Neda Secretary and now Philippine Competition Commission chief Arsenio M. Balisacan said 2 percent of the GDP would translate to around P240 billion annually. In making his case for higher S&T spending, Balisacan said technological change is what usually drives long-term economic development.

Unfortunately, government data showed the country’s S&T spending is considered the lowest in Southeast Asia. Neighbors, like Thailand, Vietnam, and Indonesia, usually invest close to 2 percent of their GDP for their R&D efforts. Based on the report “Compendium of Science and Technology,” prepared by the Department of Science and Technology, the government said R&D expenditures of both the private and the public sectors have not even reached 1 percent. While the absolute values grew over the years, the equivalent shares to GDP remained constant at 0.14 percent. Among the countries in Asean, Singapore had the highest ratio of gross R&D expenditures (GERD) to GDP and number of researchers per million at 2.1 percent and 7,252 researchers, respectively. Malaysia came second with a GERD-to-GDP ratio of 1.13 percent and 2,593 researchers per million.

The Duterte administration had earlier promised to include the promotion of science and technology in its economic agenda. While he did not disclose the amount the Duterte administration wants to allocate for R&D spending, Neda Secretary Ernesto M. Pernia said it is imperative for the Philippines to ensure expenditure for R&D activities should be raised at a level on a par with its Asean neighbors. Pernia said this is in keeping with the government’s goal of becoming an “active player” in the global-knowledge economy.

But “business as usual” will not help the country’s bid to take full advantage of the opportunities presented by the global knowledge economy. The draft Investment Priorities Plan prepared by the Department of Trade and Industry had included “innovation drivers” (which include R&D activities) in preferred activities eligible for incentives. This is a good first step to encourage more companies to increase their R&D spending. The government, however, must also do its part to make the Philippines more conducive for R&D activities. For one, it should encourage innovation among Filipinos by helping inventors mass produce and promote their creation. The government should also take care of local scientists and researchers, especially those in state-run institutions, by providing them a compensation package that is on a par with the country’s Asean neighbors. The focus on S&T, coupled with an improvement in the country’s infrastructure, would help boost Philippine competitiveness and allow the government to attain its goal of wiping out poverty by 2040.