25 Years of Continuing Diaspora and Hope

Last Tuesday, 22nd of February 2011, Senator Ferdinand Marcos Jr. said that the Philippines would not be experiencing the problems it has today if his father was not ousted from power by the first EDSA People Power Revolution. Asked what the country's situation would be if the late former President Ferdinand Marcos remained in the presidency, the senator replied, "Eh siguro Singapore na tayo ngayon" (We would probably be like Singapore today).

Senator Marcos has obviously prided himself on what would have been of the Philippines today if not for the 1986 event that he wished it did not happen. Apparently, nobody, even the best economists in the country or the senator himself, would surely predict its outcome. Yet for the past 25 years, the country has evidently witnessed the diaspora of Filipinos that continuously seek for jobs overseas. The impact in the country’s economy has its positive effect in terms of inflows on dollar reserves due to remittances, yet has its consequences on the knowledge-based capital or brain drain. The emigration of Filipinos whose talents and intelligence are being used or exploited for the economic gain of the host country instead of its own has its long-term effect on the competitiveness, prospects on Foreign Direct Investments (FDI), as well as the availability of highly-skilled personnel. Likewise, some local entrepreneurs taking their investments in China or other neighboring countries, misses the opportunity on the creation of wealth, local employment, and tax revenue, but that's another story.

The data on Chart 1 represents that from year 2000 to 2009, the total number of overseas Filipinos in various fields (mixed of professionals, skilled and service workers) has increased by 16.2 percent. The US, the Middle East (Asia, West), and South East Asia as shown in Chart 2 are the top three regions who have the highest concentration of Filipino workers1.

Chart 1

Chart 2

In the industry of Science and Technology (S&T) alone, the number of its outbound workers has increased by 148 percent, from 9,877 in 1998 to 24,505 in 2009 based on the initial findings of the Science Education Institute (SEI) on the migration of S&T workers. Dr. Leticia Catris, Officer-in-Charge and Deputy Director of the DOST-SEI said that, “though it is laudable that our S&T professionals seem to be really sought after, it is a sad fact that we are losing them. We hope that we could find ways to make more of them stay in the country and use their talent here2.” Most of the S&T professionals were nurses and midwives with the biggest percentage in 2001 at 53.23 percent or 9,452 personnel. Engineers came in second with as many as 21.82 percent, or around 5,308 engineers. Health professionals like medical doctors, dentists, veterinarians, and pharmacists came in third with as many as 6.28 percent of the OFWs in 2004 or around 838 health professionals. The study represents that with the steady outbound of these S&T professionals, the Research and Development (R&D) sector of the country would definitely be affected in which, the country's current stand is at 165 R&D personnel per million Filipinos which is way below the UNESCO recommendation of 380 needed for economic development.

The causes of the flight among these highly trained S&T personnel, specifically the researchers and scientists, are the continuous decline in the quality of scientific research institutions, company spending in R&D, and the procurement of the government in advance technology products. Since 2009, the rankings out of 139 economies in the latest World Economic Forum Report have been reduced to -6, -24, and -10 places respectively3. The consequences are serious as these personnel continue to seek for higher wages and better working conditions abroad.

Since 1986, the adoption of technoliberalism* has kept the country’s economy and S&T underdeveloped. It has prevented the Philippines from industrializing, making the country lag behind its neighboring countries, i.e. Malaysia, Thailand, Indonesia, and China4. According to Dr. Roger Posadas, one of the eminent physicists in the country, in his report on S&T capabilities and economic catch-up, most Filipino-owned firms such as the National Power Corporation (NPC), have remained technologically backward and dependent, that have continued to be mere users and importers of foreign technology. Instead of designing and producing its own power plants and power equipment, it just imports power plants through turnkey projects. In fact, the late industrializing countries such as Japan, South Korea, Taiwan, China, and Malaysia have rejected technoliberalism and deliberately defied the principles of comparative advantage to create globally competitive industries such as steel-making, shipbuilding, transport vehicles, IC fabrication, etc4. These industries would definitely provide local employments as well as encourage technological innovation and entrepreneurship that would have minimized the said continuing outbound of the Filipinos.

With today’s Philippine celebration of the 25th anniversary of the EDSA People Power Revolution, the country should look back and learn. What become of the nation, that has liberated its people from oppression through its unified cooperation and objective, perhaps this can again be replicated, as one people moving forward and as builders of its own future.

References:
1 Commission on Filipino Overseas, Stock Estimate of Overseas Filipinos as of December 2009
2 ABS-CBN News, abs-cbnNEWS.com, Big leap in 'brain drain' of Filipino science workers, 15 February 2011
3 The Global Competitiveness Report 2010-2011
4 S&T Capabilities and Economic Catch-Up, by Dr. Roger Posadas, Ph.D., February 3, 2010

*Technoliberalism holds that a firm should not design and produce its own technology if it does not have the comparative advantage to do so or, in other words, when it is easier and cost effective to buy or lease the technology.

Innovation and Enterprise in Singapore Education

Three months ago, the Government of Singapore has announced that it will improve its entrepreneurship program in schools as posted at GovMonitor1 last 15th of November 2010. It is an effort by the government to promote the spirit of Innovation and Enterprise (I&E) in all schools in Singapore in order to prepare the students meet the demands of the competitive global economy2.

The movement that involves both the private and public sectors to create a more entrepreneurial environment in Singapore, called Action Community for Entrepreneurship (ACE), has recently conducted a survey among its youth. The report said that 26 percent of the respondents aged below 26 strongly agree that their barrier to entrepreneurship is the fear of losing their jobs and income. The percentage rises to 35 percent for those aged 26-30, and 44 percent for those aged 31-35. Another findings also found that youths are more likely to be inspired by successful entrepreneurs, with 75 percent of 267 young respondents agreed. The said findings reinforce ACE’s belief in focusing on youths in its effort to foster an entrepreneurial culture and mindset, which are encouraged to start a business while they are still young. This framework motivated the revision of its national school curriculum to inject innovation and enterprise in Singapore’s education system. According to Dr. Vivian Balakrshnan, Minister for Community Development, Youth and Sports that, for Singapore to succeed in the future, it will not be enough to have first world infrastructure, nor having the rule of law with honest civil servants and consistent reliable regulatory frameworks, nor enough to improve productivity to be cheaper, better, or faster. These are necessary so as to make steady progress yet risky being overtaken by global competition. The only way to generate exponential growth is for innovation and enterprise to flourish3. This is part of Singapore’s strategy, since its near-saturated domestic market means that the country has to create external economies with strong links with domestic ones. Thus, its government’s mindset is to start the entrepreneurial culture within its academic institutions.

Education in Singapore is both underpinned by Realism-Pragmatism ideology. Realism generally see its academic institutions develop the students‘ abilities in reasoning, observation and experimentation. Pragmatism on the other hand, generally see schools as more than academic institutions, but also aims to develop the students’ cognitive capabilities4,5. From self-government in 1959 until the mid 1990s, the government has used Realist method of education. Its system is highly centralized and structured, and students were streamed into different tracks based on their academic performance. All the schools adopted a uniform of curriculum where subjects such as English language, indigenous languages such as Chinese, Malay and Tamil, and moral and civics education were compulsory for all students. The schools also used standardized textbooks, and prepared students for centralized national examinations. Its method of teaching was mainly teacher-centered and the role of the teacher was to teach essential skills for their students to find jobs later in life. However, since 1997, the government has increasingly adopted the Pragmatist method of education under the Thinking Schools, Learning Nation (TSLN) vision. It is a move from a unified, hierarchical educational system to one which offers different types of schools and programs in Singapore. The curriculum has also been revised to promote customized and interdisciplinary study, rather than a curriculum that is common, standardized and classified under different subject-matter disciplines. The role of the teachers has also changed as it no longer just experts and dispensers of content knowledge, but also as resource persons to facilitate the students‘ learning through creative and student-centered activities. Both of these methods - the Realist and Pragmatist approaches are applied into the system of Singapore’s education2.

The Thinking Schools, Learning Nation is an umbrella vision introduced in 1997 by Mr. Goh Chok Tong, then Prime Minister of Singapore, as part of its national strategy. According to the Singapore Ministry of Education (MOE), Innovation and Enterprise (I&E) is not new in the system but a strategic part of TSLN. Clarified by then Acting Education Minister, Tharman Shanmugaratnam, that what they are trying to achieve in I&E is not a new set of activities or programs, but a set of mental attitudes amongst their young, a new culture or outlook on life. What they wanted to nurture are the mental traits that will serve these students well in the future full of challenge and opportunity - a robust spirit of inquiry, a willingness to take untried paths, and a certain ruggedness of character. These are the intangible factors that will make the difference for Singapore in the future, the minister said.

References:
1 GovMonitor
2 From School to Economy: Innovation and Enterprise in Singapore by Pak Tee Ng and Charlene Tan Assistant Professors for Policy and Leadership Studies Academic Group, National Institute of Education, Nanyang Technological University, Singapore
3 Search SMB Asia, searchsmbasia.com
4 Ozmon, H.A., & Craver, S.M. (2003). Philosophical Foundations of Education, 7th Edition, New Jersey: Pearson Merill Prentice Hall
5 Gutek, G.L. (2004). Philosophical and Educational Voices in Education. Boston: Pearson Allyn & Bacon

Lessons from India's National Innovation System

India is emerging as Research and Development hub for foreign firms mainly owing to the availability of skilled labor produced in world-class elite institutions and cost advantages, e.g. in the form of low wages and low operational costs as it continues to increase in both domestic and foreign market potential, ranked 4th worldwide according to the Global Competitiveness Report 2010-11. Necessitated by different cultural background and tastes, there is also a large demand for localized product, which encourage R&D innovation activities. Their government has historically played a major role in the formation of its National Innovation System ever since its independence from the British rule. India’s government has invested much time, money and efforts in creating a knowledge society and building institutions of research and higher institutions1, consciously and consistently promoted the spread of science and technology in the country. Moreover, it has created and sustained an institutional infrastructure that ensures functioning of a market economy and allows its citizens to invent creative ideas and implement them. Since it began the process of economic liberalization in 1991 it has also supported selected high-tech industries to reach international standards. Its government has constituted fiscal incentives and support funds for spreading R&D in the industry.

Nevertheless, India, still a developing country, is faced with major problems related to infrastructure, e.g. shortage of power supply or transportation problems due to bad logistical infrastructure. In many instances firms and other innovators are faced with bureaucratic and procedural hurdles which often result in corrupt practices and time delays. The quality of education in many institutions does not reach the standards required for (cutting-edge) R&D efforts. Moreover, a booming economy is leading to shortage of qualified and experienced skilled labor – which result in inflationary wage growth and high attrition rates. With the government maintaining a pro-active role in both policy and fiscal arena many of these problems may be expected to get resolved to a manageable extent. The government has announced massive investments in infrastructure and education sectors to enhance both the quantity and the quality. Also, firms in the industrial sector in India – whether domestically or foreign-owned – have recognized their chances and are investing heavily in R&D capacities. These developments raise hopes for a further improvement in the conditions of a National Innovation System, which is unique in the sense that probably no other poor country, starting from a low literacy base of less than 20 percent in 1947, has ever since its political birth, so consistently and systematically tried to create, nurture and enhance its scientific capabilities and has achieved impressively positive results within such short span of time.

The Philippines would definitely get a lot of lessons from India starting from the government support in the National Innovation System to the creation of such policies that would make the system work in the country. Though the Philippines have already passed India in the business process outsourcing in terms of revenues with US$5.5 billion as compared to India’s US$5.3 billion, according to the October 2010 report released by IBM2, this is just one sector of the industry that relies heavily on skills due to the country’s competency of the english language and its adaptability to the Western culture. Yet, dependence on the communication skills alone as well as its reliance on the remittances of the overseas Filipinos are not enough for the economy to catch up with its fast-developing Asian neighbors. Like India, knowledge-based creation or the development of its R&D, should also be prioritized. Based on the Global Competitiveness Report 2010-2011 by the World Economic Forum (WEF) showed that the Philippines placed 85th out of 139 economies for its global Competitiveness, slightly better than 87th place out of 133 economies in the year before report. Even though the country’s competitiveness has slightly improved from last year, it still continues to lag behind in most of its Southeast Asian neighbors. In terms of technological readiness, it ranked 88 out of the 139 economies, for the Foreign Direct Investment and technology transfer. As a continuing challenge for the country to attract FDI particularly in research, the government, business sectors as well as the universities should prioritize the development of its own national innovation system, drafting policies that it can apply from the lessons that may learn from India.

References:
1 Herstatt, et al., Working Paper, April 2008, India’s National Innovation System: Key Elements and Corporate Perspectives
2 IBM Global Location Trends Annual Report, October 2010, Trends by Business Function FC6, Copyright IBM Corporation 2010

Technological Readiness and Innovation of the Philippines (Part 2)

The Global Competitiveness Report, developed for the World Economic Forum (WEF) is based on the latest theoretical and empirical research where two thirds come from the Executive Opinion Survey (EOS) and one third comes from the publicly available sources such as the United Nations. These gathered informations account for more than 90 variables and was completed by over 13,500 business leaders from the featured 139 economies. In the Philippines, WEFʼs partner institute is the Makati Business Club (MBC) in association with the Management Association of the Philippines (MAP) who provides the qualitative assessment on the competitiveness of the country.

Compared to 2009-2010 performance, the Philippines is slightly two places better from 87th to 85th in the Global Competitiveness Report 2010-2011 rankings. Of the twelve pillars, five exhibited improvements in rankings and seven declined (See Table 1). Included in the said declines are the technological readiness and innovation of the country.

Table 1

The positive outcome of the Philippines according to the report was in the area of Financial Market Development, with a rank of 75th (or an improvement of +18 places), over 2009-10. This is primarily due to the countryʼs soundness of banks and the availability of financial services, where the executives registered a higher score by 5.57 and 5.06 respectively.

As mentioned, the Technological Readiness and Innovation categories shown in Table 2, were among the seven pillars that have respective declines of -11 places (from 84th to 95th) and -12 (from 99th to 111th). Slight improvement among the sub-categories of technological readiness is in the broadband internet subscriptions which demonstrated an increase of +5 places (from 89th to 84th). However, there are significant reductions of -5, -5, -16 and -6 in the areas of availability of latest technologies, firm-level technology absorption, FDI and technology transfer, and internet users, respectively.

Table 2

The 12-place reduction in rankings for Innovation was largely due to the significant deterioration in key areas. In particular, company spending on R&D (-24 places), government procurement of advance technology products (-10 places), and quality of scientific research institutions (-6 places). Marginal decline is in the availability of scientists and engineers of -1 place (from 95th to 96th), in which the countryʼs current stand is at 165 R&D personnel per million Filipinos which is way below the UNESCO recommendation of 380 needed for economic development according to the Department of Science and Technology (DOST) report. Showed increase are in the number of utility patents, which improved by +7 places (from 78th to 71st) and in the university-industry collaboration in R&D by +4 places (from 89th to 85th).

Highlighted in Table 3 is the summary of GCI performance in terms of Technological Readiness and Innovation of the twelve countries who participated in the GCR 2010-2011. Compared to its regional counterparts, the Philippines ranked 12th and one of the four countries that registered a reduction in both categories. Noted improvements in the technological readiness are Hong Kong SAR (+4 places), China (+1 place), Brunei Darussalam (+11 places), and Vietnam (+8 places). On the other hand, significant improvements in the innovation categories are countries of Brunei Darussalam (+6 places), Thailand (+5 places), and Indonesia (+3 places). Of the twelve countries, noted increase in both categories is Brunei Darussalam. Although, based in the GCI overall ranking of 139 economies, Singapore is still ahead (3rd place), followed by Japan (6th place), and Hong Kong SAR (11th place).

Table 3

Presented in Table 4 is the change of the GCI ranking for the past 5 years and the Philippines has notably experienced a deep decline of -16 places, from rank 71st in 2008-09 to 87th in 2009-10. Some of the factors that have affected its decline were due to the global economic recession followed by issues on corruption pertaining to the infrastructure projects of the Arroyo administration, i.e. the controversial National Broadband Network and the Northrail projects. The countryʼs Foreign Direct Investments were also affected due to the transfer of its companies to neighboring countries such as China. Low profitability and slow market demand have led to closure of semiconductor plant Intel Corporation in Cavite as well as US delivery giant FedEx in Subic last 2009.

Table 4

Currently, the Philippines has made its improvements in ranking of +2 places (from 87th to 85th), due to the strong business confidence and the peopleʼs faith to its new administration. Perhaps, with the implementation of the policies of the Aquino government against corruption, the image of the Philippines will improve as well as the budget support in science and technology, may help continue its trend into the positive quadrant.


References:
The Global Competitiveness Report 2010-2011 
The Global Competitiveness Report 2009-2010

Technological Readiness and Innovation of the Philippines (Part 1)

The Philippines continue to fall behind our neighboring countries in terms of Technological Readiness and Innovation based on the Global Competitiveness Report 2010-2011, released during its World Economic Forum in Geneva, Switzerland last year.


According to the index, the country has slipped from rank 99 in 2009 to rank 111 in 2010 under the innovation category, as well as significantly eleven notches lower in terms of technological readiness, from rank 84 in 2009 to rank 95 in 2010. Although, its overall ranking based on the twelve pillars of competitiveness: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market development, technological readiness, market size, business sophistication, and innovation, the country has slightly improved at two notches rank higher at 85 out of 139 countries. In 2009, the Philippines ranked 87 out of 133 countries.

Its Southeast Asian counterparts - Singapore, Malaysia, Brunei Darussalam, Thailand, Indonesia, Vietnam and Cambodia, have fair improvements, as well as declines in both categories albeit significantly ranked higher than the Philippines. It is only in the category of technological readiness, where the Philippines is twenty notches higher than Cambodia. However, among its Southeast Asia neighbors, it was Brunei Darussalam who has significantly improved in both categories. It has climbed eleven notches from rank 60 in 2009 to rank 49 in 2010 in terms of technological readiness as well as improvements in the innovation, which is also significant at rank 75 in 2009 to rank 69 in 2010.

The variables considered in the technological readiness are the countryʼs technological adoption, i.e. the availability of latest technologies, firm-level technology absorption, FDI or foreign direct investment, and technology transfer. Also included under the said category is the countryʼs position in terms of Information and Communication Technology, i.e. the number of internet users, broadband internet subscriptions, and improvements on the internet bandwidth. On the other hand, variables in the innovation category are based on the capacity of the country to innovate, which includes the quality of scientific research institutions, company spending on R&D, university-industry collaboration, government procurement of advanced technological products, availability of scientists and engineers, and the utility patents per million population.

Published annually by the World Economic Forum (WEF), the Global Competitiveness Report 2010-2011 seeks to measure and compare the competitiveness level of 139 countries worldwide. The WEF defines competitiveness as the set of institutions, policies and factors that determine the level of productivity in a country. This definition forms the basis of a comprehensive framework comprised of key constructs commonly referred to as the 12 pillars of competitiveness. The weighted aggregate of these 12 pillars constitute the Global Competitiveness Index (GCI), which in turn is used to measure the performance of each country. The GCI score has a minimum value of 1 and a maximum of 7. Countries are then ranked based on these scores, where higher scores are accorded higher rankings.

References:

The Global Competitiveness Report 2010-2011 

The Global Competitiveness Report 2009-2010 

Global Research Investments and the Philippines

In relation to the paper1 presented by Dr. Robert Atkinson, president of the Information Technology and Innovation Foundation (ITIF) last October 2007 before the Committee on Science and Technology, Subcommittee on Technology and Innovation, and the U.S. House of Representative.

Shown in Dr. Atkinsonʼs research, that in the last decade, 65 percent of U.S. companies increased their R&D investment in Asia, and that includes China, India, Malaysia, Singapore, and Korea.

With the news report dated, 20 January 2011, Dr. Atkinson's presentation becomes significant which stated that several of our neighboring countries enjoyed the 5-fold increase in foreign direct investments (FDI) last year while the Philippines has a recorded decline. The said report was based on the data released by the United Nations dated, 17 January 2011. Its beneficial effect is very obvious as FDI would definitely help in the long- term economic development and faster economic recovery for our country and not just relying in the short-term remittances of our OFWs. The R&D support and transfer of technology that comes with the FDI would definitely provide employment particularly to our researchers as this would also stimulate support and possible partnerships with our universities and private institutions. The factors that have affected its decline are the hesitation of the investors that adopted a wait-and-see attitude from our May 10, 2010 national election and the ensuing government transition, added by our countryʼs allegedly unattractive business climate.

According to the Global Investment Trends Monitor data provided by the UN Commission on Trade and Development (UNCTAD), Malaysia was projected to have grown its FDI by 410 percent to US$7 billion while Indonesia similarly enjoyed a 163 percent rise to US$12.8 billion. Singapore on the other hand, likely saw FDI level grow by 123 percent to US$16.8 billion. These improvements allowed inflows to South, East and Southeast Asia to rise by 17.8 percent to US$274.6 billion while the global average flattened to US$1.122 trillion last year, according to UNCTAD. With these high level of investments, our neighboring countries enjoy the benefit of faster economic recovery. For the Philippines, full-year estimates were not included in the report but the country, according to latest central bank data, recorded an annual 36.5 percent decline in FDI as of October 2010.

Based on the statement from the foreign business group officials, our countryʼs competitiveness was to blame. It is obligatory for our new administration, from the executive, legislative and judiciary to work together in order to improve our countryʼs investment image.

The paper of Dr. Atkinson would serve as a reference point that our country may adopt particularly on the R&D policies on tax incentives, subsidized research facilities, improvement on the infrastructure, and the availability of highly-qualified researchers, that other nations aggressively market, such as China and India, in order to attract global research investments.

Reference:

1 The Globalization of R&D and Innovation: How Do Companies Choose Where to Build R&D Facilities? by Dr. Robert D. Atkinson, 04 October 2007, itif.org/files/AtkinsonHouseRDOffshoreTestimony.pdf