Long-term national development relies on innovation. Progress in science and technology, and innovation is necessary to achieve sustained economic growth. Innovation improves firm competitiveness and enables access to global markets. Simultaneously, innovation helps expand job opportunities and introduce new industries to the economy.

Although the Philippines has recorded a high-growth path in the past years, many analysts contend that the country could achieve more if it can improve its innovation capacity, which unarguably remains wanting. In the 2014 Global Innovation Index (GII) Report, co-published by Cornell University, INSEAD, and the World Intellectual Property Organization, the Philippines ranked 100th among 143 countries. Compared with its Southeast Asian neighbors, it is trailing behind Singapore (7th), Malaysia (33rd), Thailand (48th), Viet Nam (71st), and Indonesia (87th).

This lackluster performance can be linked to poor investment in research and development (R&D). Philippine investment in R&D hovers at a level of 0.11 to 0.14 of the gross domestic product (GDP), one of the lowest in Asia. In contrast, other developing countries invest nearly two percent of their GDP for science and technology (S&T). A pressing concern is also increasing the country’s S&T human resource pool to offset the continuing migration of S&T graduates abroad owing to more lucrative economic and professional opportunities.

PIDS studies have delved on the reasons that impede firms to innovate. A case study on the automotive manufacturing industry by Francis Quimba and Maureen Ane Rosellon, PIDS research associates, reveal that the difficulty lies in translating the awareness of the importance of knowledge and technology into actual firm innovation. Meanwhile, a volume of work by Epictetus Patalinghug, Jose Ramon Albert, Rafaelita Aldaba, and Fatima del Prado, shows a range of factors that determine or impede decisions to innovate. These factors include incentives, firm capabilities and resources, market factors, and the investment environment. Patalinghug, a PIDS consultant, notes that policymakers must create incentives like a stronger intellectual property rights law, standardized quality system, and the availability of technology transfer programs. Meanwhile, Albert and Aldaba, both PIDS senior research fellows, and del Prado, a PIDS research specialist, emphasize the need to ease barriers to trade. The government has to be vigilant about stamping out anticompetitive practices. At the same time, it needs to address issues of inadequate physical and institutional infrastructure.

Currently, R&D investments are shouldered by a large margin by the Filipino taxpayers. Troublingly, despite government efforts to encourage firm innovation through initiatives like the Small Enterprises Technology Upgrading Program, Albert and his co-researchers note that the influence of government R&D and technology resource centers is still very weak.

The case for building an innovation-centered mindset does not rest alone on the cooperation between the private and public sectors. Strong linkages and coordination between research institutions and universities, and industry associations should be established, and collaborations to share knowledge and translate that knowledge into useful technologies should be encouraged. These should be complemented by well-crafted and implemented technology promotion and utilization programs that facilitate easy access to technology for the majority of the population.

You may access these and other PIDS studies on Innovation from the SocioEconomic Research Portal for the Philippines. Simply type the relevant keywords in our Search box.

1. Does Innovation Mediate Good Firm Performance?
2. Innovative Behavior of Local Firms Results of the 2009 Pilot Survey of Innovation Activities Conducted under the DOST-IDRC Project: Towards an Innovation-Led Development Path in the Philippines
3. The Philippine National Innovation System: Structure and Characteristics
4. A Century of Rice Innovations
5. Determinants of Locating R&D Activity in the Philippines: Policy Implications
6. Innovation in the Automotive Sector of the Philippines
7. Trade Reforms, Competition, and Innovation in the Philippines
8. Strengthening Sources of Knowledge/Technology to Promote Innovation: The Case of CALABARZON
9. Why Some Firms Innovate and Why Others Do Not?

PIDS to host annual conference of APEC study centers in May

The Philippine Institute for Development Studies (PIDS), lead convenor of the Philippine APEC Study Center Network (PASCN), is organizing the 2015 APEC Study Centers Consortium (ASCC) Conference which will be held on May 12-13, 2015 in Boracay Island, Philippines. The conference is part of the Second Senior Officials Meeting (SOM 2) and related activities.

The conference session will follow the priority areas of APEC 2015, namely: enhancing regional economic integration; fostering SMEs' participation in the regional and global economy; investing in human capital development; and building sustainable and resilient communities.

The annual ASCC Conference provides an excellent opportunity for academics and scholars to discuss and exchange ideas on the APEC themes and to identify areas for regional collaboration among other APEC Study Centers (ASCs). Outcomes of the conference may serve as inputs to the different APEC working group discussions and may be integrated in the Leader's statements.

VISIT WEBSITE

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12-13 May 2015
2015 APEC Study Centers Consortium (ASCC) Conference
Venue: Boracay Island, Aklan

23 April 2015
Pulong Saliksikan on Recent Development Relating to the Eurozone (With special reference to the aftermath of the Greek elections)
Presenter: by Prof. Lino Briguglio
University of Malta
Venue: C.P. Romulo Hall, NEDA sa Makati Bldg., Makati City

Call for Papers: Philippine Journal of Development

The Philippine Institute for Development Studies (PIDS) is inviting submissions to the Philippine Journal of Development (PJD). The PJD is a peer‐reviewed journal published twice a year by PIDS. Now on its 40th year, PJD considers original, unpublished papers on economic development, political economy, public administration, foreign relations, and other fields/topics, which are policy oriented and may or may not explicitly have a bearing on the Philippines. Book reviews are also accepted. The theme or topic of the book should fall within the scope of the articles accepted for publication. The target readers of PJD include researchers, educators, policymakers, and development planners. For guidelines in the preparation of articles, please refer to www.pids.gov.ph/ris/publications /pjd/pjd_guidelines.html. Inquiries and submissions should be forwarded to the Managing Editor at ssiar@mail.pids.gov.ph.

POLICY NOTE

• PN 2015-05: Promoting Women’s Participation in the APEC Economies: Some Recommendations
  by Lucita Lazo
  

Increasing women’s economic participation is not yet universally accepted despite three decades of global advocacy; and women empowerment and gender equality are still a work in progress. A mechanism that can be tapped to promote women’s economic participation is the Asia-Pacific Economic Cooperation (APEC). This Policy Note outlines some recommendations on how to enhance women’s participation in the APEC economies. The recommendations are organized into two strands: at the level of the national economy and at the regional level.

At the level of the national economy, efforts must now be taken to ensure that women’s economic opportunities are not eroded and that women are prepared to cope with the challenges of the new order. Women enterprises should be strengthened to prepare them to compete in the global marketplace amid environmental and business challenges. At the regional level, close collaboration with the business sector should lead to the formulation of initiatives that would promote women’s economic empowerment and enterprise growth. It is also important for APEC economies to continuously conduct labor market intelligence studies and monitor as far as possible the opportunities for women’s greater economic involvement in the APEC region and all over the world. Click here for the full article

• PN 2015-04: Is Poverty Really Decreasing, and If Not, Why Not?
  by Jose Ramon G. Albert and Arturo Martinez, Jr.

The Philippines has recently experienced economic growth despite the global economic slowdown. But economic growth has not translated into poverty reduction. The levels of income inequality have also barely changed, a pattern that could mean new opportunities created by economic growth do not allow the income of the poor to catch up with the rest. Inequality is a natural outcome of economic growth since people with access to capital are more likely to reap the benefits of growth first. What is critical is to make economic growth truly inclusive.

This Policy Note examines trends in official (monetary) poverty statistics. It also looks into why poverty reduction has been historically lackluster in the Philippines using available panel data that provide information on dynamics of household welfare and living conditions in the country. It pointed out that in the period 2003–2009, poor Filipinos were more likely to experience higher income growth but some nonpoor have also been vulnerable to slide into poverty. This suggests that government should not only be concerned with the poor, but should also have policy instruments to assist those who are nonpoor but plagued by economic risks. Click here for the full article

• Challenges in the Economic Participation of Women as Entrepreneurs
  by Lucita Lazo

Filipino women are active as entrepreneurs. A Department of Trade and Industry (DTI) data in 2009 show that 54 percent of enterprises are owned by women. This Policy Note discusses the challenges faced by women entrepreneurs. To achieve inclusive growth in the Asia-Pacific region, it is critical to increase the economic opportunities of women in the APEC economies. APEC members must take national-level and regional actions toward creating enabling environments for women enterprises and empowering women entrepreneurs. The significant number of women entrepreneurs reflects the huge potential of women to make substantial contributions to the national economy. For this to be realized, they need to be supported through appropriate and timely interventions toward growing and scaling up their business. Click here for the full article

 

DISCUSSION PAPERS

• DP 2015-21: Deepening Regional Cooperation for Disaster Recovery and Reconstruction: A Proposal for Proactive Approach to Risk Financing
  by Cathy G. Vidar and Erlinda M. Medalla

Studies find increasing frequency, intensity, and impacts of natural disasters, especially as they interplay with the negative effects of climate change, environmental degradation, and rapid urbanization. The financial implications could be massive, especially in terms of damages on private assets, public infrastructure, and on the productive agents of the economy. There is a need to improve the current system of financing the cost of disasters in a manner that would enhance the roles of the domestic private sector and international financial market.

In addition, in this age of globalization and close interconnectedness, disasters tend to carry risks that cross borders, calling for a greater and more concerted global/regional effort. The paper proposes to expand the prevailing regional cooperation within APEC toward improving access to finance for disaster recovery and reconstruction and taking a more proactive approach to risk financing. Regional cooperation is seen as a mechanism to promote the development of financial systems and products to effectively reduce the fiscal burden arising from disasters, as can be gleaned by looking at the experiences of other economies in this regard. Click here for the full article

• DP 2015-20: Building Philippine MSMEs Resilience to Natural Disasters
  by Marife M. Ballesteros and Sonny N. Domingo

Disasters are bad for business specifically for micro, small, and medium enterprises (MSMEs). These catastrophic events can compromise capital, supply chains, product market, and labor, which compromise business continuity and recovery. Physical damage and disruptions in supply and labor can cause temporary business closure while structural repairs to buildings and recovery or replacement of damaged equipment needed to restore operations require large amount of resources. The adverse impact may not only be short term but can have medium to long-term effects. Unfortunately, the disaster risk reduction and management (DRRM) framework of government has not been effectively translated into local and sectoral (or business) plans. Philippine MSMEs thus are highly vulnerable, have weak adaptability and limited access to a broader set of coping strategies. This paper recommends strategic policies to embed DRRM into the business sector and the role of APEC in promoting MSMEs resilience in the region. Click here for the full article

• DP 2015-19: Inputs for Philippine Hosting of APEC 2015: Food Security
  by by Roehlano M. Briones, Ivory Myka R. Galang, and Danilo C. Israel

Initiatives toward the attainment of global food security have been done not just unilaterally but also regionally and globally. Among the platforms that have made great efforts in this aspect is the APEC. In 2015, the Philippines will host the next APEC Summit. Food security shall be high on the agenda of the summit and of various meetings. To provide advice to the Philippine Government on the possible Philippine position on food security during its hosting, this paper recommends that the Philippines should adopt agribusiness development based on sustainable food supply chains as its priority advocacy, while continuing to promote elements of food security as expressed in the APEC road map. This "branding" integrates a strong position on blue economy with the agribusiness development and road map thrusts of the Department of Trade and Industry and the Department of Agriculture. Click here for the full article

• DP 2015-18: Increasing Economic Opportunities of Women in the APEC
  by Lucita Lazo

The paper argues for increasing women’s economic opportunities in the APEC region and states that women’s participation in the economy is skewed toward micro and small enterprises and they are mostly self-employed entrepreneurs in the informal economy. It summarizes the challenges commonly encountered by women entrepreneurs in the APEC economies and recommends actions to address these at the Philippine economy level and at the APEC regional level. Click here for the full article

• DP 2015-17: Supporting WTO and Pathways to the Free Trade Area of the Asia Pacific
  (FTAAP)
  by Erlinda M. Medalla and Angelica B. Maddawin

The discussions on the Free Trade Area of the Asia Pacific (FTAAP) have evolved in the APEC meetings since 2004 when the APEC Business Advisory Council (ABAC) presented a study suggesting a possible integration of the Asia-Pacific region. The most recent development in this regard is the support of China during its hosting and the formulation of a road map about the APEC’s Contribution to the Realization of the FTAAP. The paper revisits the factors that could shape the way forward, and some implications on what position the Philippines should take. In particular, it looks at the emerging mega blocks in the APEC region--the Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP), and possible scenarios. It highlights the important role of APEC as venue for discussions to steer the region toward regional integration that is supportive of the WTO and APEC goals, and act as a mechanism for enhancing ECOTECH and capability-building efforts to prepare less developed countries in deeper and wider areas of liberalization. Click here for the full article

• DP 2015-16: People-to-People Tourism in APEC: Facilitating Cross-Border Entry and Exit,
  with Special Focus on ASEAN
  by Oscar F. Picazo, Soraya Ututalum, and Nina Ashley O. dela Cruz

This paper discusses the promotion of person-to person (PTP) tourism in the APEC member-countries, focusing on the 10 countries of the Association of Southeast Asian Nations (ASEAN). PTP can be defined as the cross-border movement of people from one country to another on a repeated basis for (a) educational, training, or related capacity building; (b) research and development cooperation; (c) police, constabulary, military, security, or anticrime assignments; (d) responding to health epidemics or outbreaks; (e) medical tourism; (f) responding to disaster or calamity; (g) management of environmental parks and natural resource assets; (h) local border traffic; and (i) other valid reasons that APEC countries will deem important. The paper situates PTP tourism in the context of intra-ASEAN and APEC tourism, discusses the rationale for increasing PTP tourism, and the current obstacles of doing this. It reviews recent international practices in promoting PTP tourism through entry and exit facilitation, identifying general as well as specific programs and policies in a number of innovating countries. The paper ends with recommendations to facilitate PTP tourism in ASEAN and APEC. Click here for the full article

• DP 2015-15: Philippine Priorities in Expanding APEC-Wide Connectivity through Infrastructure Development
  by Adoracion M. Navarro

Well-developed infrastructure systems and services are vital means of enhancing the connectivity of APEC member-economies. In essence, efforts by APEC to enhance connectivity through infrastructure should be considered regional public goods since these create positive spillover effects for each member of the region, or net benefits for a member that are greater than what it could achieve if it were to produce the by-products of regional cooperation on its own. To contribute to APEC efforts and at the same time help meet the infrastructure development needs of the Philippines, this study recommends that the Philippine government elevate cross-cutting topics and sector-specific concerns as priorities for discussion during its hosting of APEC 2015. Click here for the full article

• DP 2015-14: Supply Chain Connectivity: Enhancing Participation in the Global Supply Chain
  by Epictetus E. Patalinghug

Supply chain connectivity is vital for the efficient flow of trade among APEC economies. This paper reviews the literature and supply chain management, describes the barriers to enhancing participation in global supply chain, analyzes the various measures of supply chain performance, and suggests steps for the Philippines to fully reap the benefits of the global value chain. Click here for the full article

• DP 2015-13: Establishing the Linkages of Human Resource Development with Inclusive Growth
  by Tereso S. Tullao, Jr., Christopher James Cabuay, and Daniel Hofileña

This study is one of the component papers in the priority area on inclusive growth of Project APEC 2015. This paper aims to establish the linkages of enhancing human capital and human resource development in an economy in attaining inclusive growth. Inclusive growth refers to economic growth performance that encompasses equity, equality in both income and opportunities, and protection in market and employment transitions. Because of the link between education and earning capacity, improving education will lead to inclusive growth as educated individuals enhance their employment opportunities, improve their income, and pursue entrepreneurial options. This study also enumerates several actionable recommendations to help the region develop its human resources and ultimately attain inclusive growth through cooperation among the economies in bridging the development and human resource gaps in the Asia-Pacific region. Click here for the full article

• DP 2015-12: Toward and Beyond APEC Summit 2015: Key Issues and Challenges of Professional Service Mobility
  by Stephanie Rose E. Flores, Kathrina G. Gonzales, and Aniceto C. Orbeta, Jr.

Labor mobility or professional service mobility, in particular, has become increasingly important. Its prevalence (in terms of volume of jobs) in trade in services and its economic contribution to the APEC and other regional trading blocs is increasing. However, as appropriately noted in the General Agreement of Trade in Services, the movement of natural persons continues to have barriers due to misconceptions and political issues. In this study, the importance of and barriers to professional service mobility are explained and emphasized in the hopes of making this a priority issue in the upcoming APEC Summit in 2015. The study recommends that a comprehensive discussion related to professional service mobility be one of the priorities in the APEC 2015 summit, in particular covering topics such as the APEC-wide Qualifications Referencing Framework, guiding principles in country-to-country labor policies, human capital management, and the systematic collection of good labor statistics. Click here for the full article

• DP 2015-11: APEC 2015: Global Value Chains and Services
  by Ramonette B. Serafica

APEC 2015 provides an opportunity for the Philippines to advance its economic interests in services and contribute to regional integration by focusing on global value chains (GVCs) that are now believed to account for more than 50 percent of global trade. This paper looks at the GVC phenomenon and presents measures of GVC participation at the aggregate level. It then discusses the role of services in GVCs and proposes that further analytical work on services value chains in the Asia-Pacific region be undertaken. This will contribute to a better understanding of how individual economies can maximize GVC participation and how APEC can create the appropriate policy environment conducive to the growth of services value chains. Click here for the full article

• DP 2015-10: Development Finance and Aid in the Philippines: Policy, Institutional Arrangements, and Flows
  by Gilberto M. Llanto, Adoracion M. Navarro, and Ma. Kristina P. Ortiz

The Philippines’ recent economic performance has been remarkable amid the lingering slowdown in the global economy and the devastation brought about by recent natural disasters. The economy grew by 7.2 percent in 2013, substantially higher than its 6.8 percent growth in 2012. With GDP growth averaging at 5.9 percent in the last three years, the Philippines is one of the better performers among the developing economies. However, the economy faces problems of high poverty incidence and income inequality. The main challenge is how to sustain rapid and inclusive growth.

It is important for the government’s inclusive growth strategy and development agenda to be supported by responsive development finance. This Development Finance and Aid Assessment prepared for the National Economic and Development Authority takes stock of current development finance in the Philippines. It provides a comprehensive survey of development finance and aid scenario in the Philippines in the next 5 to 10 years. It offers policy recommendations and proposals for enhancements on development financing in the country. Click here for the full article

• DP 2015-09: Assessment of the DSWD SEA-K Strategy
  by Marife M. Ballesteros, Aniceto C. Orbeta, Jr., Gilberto M. Llanto, Maureen Ane D. Rosellon, Jasmine E. Magtibay, Larraine Bolanos, Christine Ruth Salazar

This study looks at the effectiveness of the strategy and the complementary interventions of the Sustainable Livelihood Program’s Self-Employment Assistance Kaunlaran (SLP SEA-K). The SLP SEA-K uses a microcredit strategy that intends to provide credit access to the poor, improve the ability of the group to borrow, and enable it to engage in income-generating activities. Microcredit services are generally believed to have a positive socioeconomic impact; however, the success of projects may depend largely on the management of the program. The authors found out that the government lacks the capacity to handle microcredit programs. Additionally, they see the one-size-fits-all strategy of the program as a problem because of the diverse range of beneficiary profiles. Click here for the full article

National Government Cash Operations

The national government revenue collections reached P158.2 billion for the month of November 2014. It is lower by P6.8 billion compared to that of the same period of 2013 at P165 billion. The total revenue collections for January to November 2014 reached P1,735.5 billion; the deficit was registered at P26.8 billion.

Source: Bureau of Treasury

VIEW TABLE for the time-series data on National Government Cash Operations.

Stock Exchange Index

The Philippine Stock Exchange Index (PSEi) ended at 7,689.91 in January 2015. This is higher by 27.29 percent compared to 6,041.19 for the same period last year.

Source: Philippine Stock Exchange

VIEW TABLE for time-series data on Philippine Stock Exchange Index.

Headline Inflation

The year-on-year headline inflation rate continued to go down to 2.4 percent in January 2015, from 2.7 percent in December 2014. The decline was mainly due to the annual movement of the indices of housing, water, electricity, gas and other fuels and transport. Likewise, core inflation rate slightly declined to 2.2 percent, from 2.3 percent of last month of 2014.

Source: Philippine Statistics Authority - National Statistics Office (PSA-NSO)

VIEW TABLE for time-series data on inflation rate.

Exchange Rate

The average peso-dollar exchange rate continued to go down to Php 44.221 in February, from Php 44.604 in January 2015. It shows that the peso remained stronger compared to the US dollar since the first month of 2015. Meanwhile, this figure is lower compared to Php 44.895 in the same period last year.

Source: Bangko Sentral ng Pilipinas

VIEW TABLE for time-series data on monthly average peso-dollar exchange rate.

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