THURSDAY / 27 SEPTEMBER 2018
IN FOCUS: The Fourth Industrial Revolution: What It Means for Philippine Firms
The Fourth Industrial Revolution (FIRe), or Industry 4.0, has urged firms globally to capitalize on innovation to improve their productivity and competitiveness. In the Philippines, however, more than half of firms are still considered noninnovators.
In a 2015 Survey of Innovation Activities (SIA) of Establishments led by Philippine Institute for Development Studies (PIDS) senior researcher Jose Ramon Albert, only 42.9 percent of the local firms were found to be innovation active, with larger-sized firms innovating more than micro, small, and medium enterprises (MSMEs). Among local firms, innovation activity was lowest among microenterprises at 33.9 percent. MSMEs account for 99.6 percent of the total establishments in the country.
The same survey also identified lack of funds as the most significant barrier hindering firms from engaging in innovation to upgrade their businesses. This was true for the 28.1 percent of non-innovating MSMES and even among 25 percent of large firms that are innovation active.
Innovation, however, does not have to be bounded by cost factors. PIDS researchers Connie Dacuycuy and Lora Kryz Baje noted that firms that are limited in resources can opt to implement one type of innovation at a time to improve business productivity at a lesser cost. Meanwhile, the authors suggested that larger firms venture into more complex innovation strategies to reap greater returns.
Aside from cost factors, there is also insufficient technologically-literate workforce among firms in the country. In the PIDS survey, more than 1 in every 8 MSMEs lacks qualified personnel to perform technology-related jobs.
In another study, PIDS consultant Elmer Dadios and his research team confirmed this, citing the Philippines' low ranking in terms of available human resources engaged in science and technology (S&T) globally. This is despite being the top exporter of information and communications technology services among members of the Association of Southeast Asian Nations.
While larger firms establish formal research and development (R&D) divisions to address their innovation needs, this is a major concern for MSMEs as they do not have the capacity to conduct their own R&D due to lack of funds.
In a 2017 PIDS study that examined the innovation activities of Philippine garment firms, however, authors Fatima del Prado and Maureen Ane Rosellon observed that local firms have developed a mechanism to carry out innovation activities even without a formal R&D unit. According to the study, these firms thrive by hiring skilled individuals for specific product development activities, particularly requested by their clients.
These issues on funding for innovation and the shortage of qualified S&T manpower to perform technology-related jobs are only some of the factors that should be addressed to improve the country’s global technology adoption rate—currently at 40th among 139 countries in the 2016 Global Information Technology Report of the World Economic Forum.
The FIRe, although creates opportunities for growth, also presents new threats to the Philippine business landscape. It is imperative that the government, the academe, and the industry work synergistically to resolve uncertainties as the country embraces the changes emerging from this revolution. The government, for instance, must focus on accumulating various types of capital and investments to support rapid technological changes, particularly for the noninnovators including the MSMEs. Education and training systems must also be strengthened to develop a better educated workforce and to build a trainable human resource. PIDS studies also suggest establishing universal social protection programs to safeguard those that may be adversely affected by business and employment disruptions. Strengthening linkage between the industry and the academe is also found to be valuable in addressing technological gaps. Given the changing technological landscape, the government also needs to rethink its regulatory framework. It should make it more open, flexible, and less burdensome for new businesses and investments.
PIDS dedicates this year’s Development Policy Research Month (DPRM) to the discussion of the opportunities and issues surrounding the FIRe in the Philippines. With the theme “Harnessing the Fourth Industrial Revolution: Creating Our Future Today”, the Institute aims to shed light on the potential impacts of automation and other innovations in science and technology on the country’s economic competitiveness and growth. The 4th Annual Public Policy Conference (APPC)—the main and culminating activity of the DPRM—focuses on the same theme to promote awareness and understanding of the FIRe and encourage everyone to be proactive in preparing for and adapting to the changes that come along with this fourth major industrial era. Visit the DPRM website (https://dprm.pids.gov.ph/) and the 4th APPC website (https://appc.pids.gov.ph) for details.
You may also access PIDS studies on technology and innovation from the Socioeconomic Research Portal for the Philippines. Simply type ‘innovation’, ‘technology’, ‘fourth industrial revolution’ ‘digital economy’, and other relevant keywords in the Search box.
September 4, 2018, 10AM–1PM
Press Conference on the 16th Development Policy Research Month (DPRM) Celebration
- Quezon City
Venue: Luxent Hotel, Quezon City
September 11, 2018, 8AM–5PM
4th Mindanao Policy Research Forum - Harnessing the Fourth Industrial Revolution in Mindanao: Creating Our
Venue: Performing Arts Theater, University of Science and Technology of Southern Philippines, Cagayan De Oro City
September 19, 2018, 9AM–5PM
4th Annual Public Policy Conference - Harnessing the Fourth Industrial Revolution: Creating Our Future Today
Venue: EDSA Shangri-La Manila, Ortigas Center, Mandaluyong City
The Philippine Journal of Development is a professional journal published by the Philippine Institute for Development Studies. It accepts papers that examine key issues in development and have strong relevance to policy development. As a multidisciplinary social science journal, it accepts papers in the fields of economics, political science, public administration, sociology, and other related disciplines. It considers papers that have strong policy implications on national or international concerns, particularly development issues in the Asia-Pacific region.
CLICK HERE for the guidelines in the preparation of articles. Submissions and inquiries may be sent to PJD@mail.pids.gov.ph.
PIDS Book 2018-02: Critical Perspectives on Federalism for Regional Development
(Proceedings of the Third Annual Public Policy Conference 2017)
by the Philippine Institute for Development Studies
Since the beginning of the Duterte administration, federalism has been espoused as an alternative to the centralized system of governance in the Philippines. To promote an intelligent discourse on this issue, the Philippine Institute for Development Studies (PIDS) dedicated the Third Annual Public Policy Conference (APPC) 2017 to the discussion of federalism. The 2017 APPC specifically focused on the fiscal design and political feasibility of federalism in the country, as well as state boundaries under a federal republic.
In this volume, which is a compilation of the papers presented during the Third APPC, the PIDS hopes that the recommendations raised in these proceedings will serve as a practical resource for the public and policymakers alike, especially as they make informed decisions regarding the adoption of federalism in the Philippines. Click here to download the book.
RESEARCH PAPER SERIES
RPS 2018-02: Measuring and Examining Innovation in Philippine Business and Industry
by Jose Ramon G. Albert, Francis Mark A. Quimba, Ramonette B. Serafica, Gilberto M. Llanto, Jana Flor V. Vizmanos,
and Jose Carlos Alexis C. Bairan
Innovation involves implementing new or significantly improved goods and services, production processes, marketing, or organizational methods for adding value. The measurement of innovation provides a mechanism for benchmarking national performance, as well as allows a better understanding of its relation to economic growth. Further, examining determinants and bottlenecks to innovation among firms provides inputs to mainstreaming of policies on innovation. In this paper, the results of the 2015 Survey of Innovation Activities conducted by the Philippine Institute for Development Studies are described and discussed. Survey results suggest that less than half of the firms in the country were innovators, with larger-sized firms innovating more than the micro, small, and medium establishments. The most common innovative behavior among firms was process innovation. Effects of innovation were observed to be largely customer-driven. Firms identified cost factors as the most important barrier to innovation. Knowledge and cooperation networks for innovation need strengthening. Government support and its role on innovation was also limited. Firms hardly accessed technical assistance from the government and research institutions. Similarly, firms have limited cooperation with the academe in terms of innovation activities. Firms cooperated more internally with establishments within their enterprise, their customers, and suppliers for their innovation activities. Given these issues, the government needs to have a champion for developing stronger policies and interventions to support and encourage innovation. It is also important to improve information dissemination regarding public programs available to assist firms to pursue innovation. Networking, linkages, and collaboration among the government, industry associations, and universities and research institutions also require further enhancement. Click here to download the publication.
DP 2018-13: Effect of Supply Chain Integration on the Business Performance and Competitiveness
of the Philippine Small and Medium Enterprises
by Elaine Q. Borazon and Vivien T. Supangco
This study aims to determine the effect of supply chain integration on the business performance and competitiveness of Philippine small and medium enterprises. A survey of 384 small and medium enterprises was done and structural equation modeling was used to test the hypothesis. Results show that internal integration strongly influences (p<0.001) both business performance (growth) and competitiveness of small and medium enterprises. Moreover, customer integration influences business performance (growth). It also mediates the effect of supplier and customer integration in business performance (growth) and competitiveness of small and medium enterprises. Click here to download the paper.
DP 2018-12: Duration of Export Relationships of Philippine MSMEs
by Mark Edison Bautista and George Manzano
Within the framework of the Asia-Pacific Economic Cooperation (APEC) Boracay Action Agenda and the ASEAN Strategic Action Plan developed by its members to assist micro, small, and medium enterprises (MSMEs) to reach internationalization, the study examines the survivability of Philippines MSMEs' exports to select countries. The analysis is based on the survival analysis model of Besede and Prusa (2006a; 2006b) and Besede and Prusa (2008). Using the Kaplan Meier estimator model in both the MSME exports and the total trade data in documenting the survival rate of goods and duration of Philippine exported products, the study finds that most export relationships of the Philippines are brief, contrary to conventional trade theories which suggest that most trade relationships will be long-lived. Also, MSMEs, on average, account for a more significant number of export relations than large establishments. Furthermore, among MSMEs, it is the medium-sized firms that constitute the majority of export relations over different durations. Click here to download the paper.
DP 2018-11: Preparing the Philippines for the Fourth Industrial Revolution: A Scoping Study
by Elmer P. Dadios, Alvin B. Culaba, Jose Ramon G. Albert, Vicente B. Paqueo, Aniceto C. Orbeta Jr., Ramonette B. Serafica, Argel A. Bandala,
and Jose Carlos Alexis C. Bairan
Technological breakthroughs and the interplay of a number of fields, including advanced robotics, artificial intelligence, nanotechnology, neurotechnology, data analytics, blockchain, cloud technology, biotechnology, Internet of Things, and 3D printing, have ushered in the Fourth Industrial Revolution (FIRe). Philippine industries have already been adopting these technologies, although in varying degrees of diffusion. The extent of the potential benefits that may be realized from the FIRe will depend on the country's ability to adapt to the global disruptions that come along with the industrial revolution. The country needs to establish a solid foundation for sustained learning and to accumulate various types of capital, while progressively and systematically closing existing technological gaps. Both the public and private sectors need to pay attention to the minuscule investment going to research and development. Concomitantly, the government must have an informed view on how to improve its deployment efficiency. Trade openness, competition in key industries, labor market flexibility, human capital development, and an established social protection system, among others, must also be ensured to catch up with and benefit from the technological revolution. Click here to download the paper.
Gov't must encourage not 'stifle' innovation—NEDA chief
Socioeconomic Planning Secretary Ernesto Pernia highlighted the importance of redefining the role of government in the Fourth Industrial Revolution (FIRe) or Industry 4.0 era so that innovation activities are encouraged and not stifled.
In his keynote address at the Annual Public Conference (APPC) organized by state think tank Philippine Institute for Development Studies (PIDS), Pernia cautioned about the social disruptions that FIRe may bring, which in turn, could compromise the country’s economic growth. READ MORE
Fear not innovation, automation, PH told
The Philippines should not be afraid to embrace both innovation and automation in the face of the Fourth Industrial Revolution (FIRe).
This was according to Dr. Yasuyuki Sawada, chief economist at the Asian Development Bank (ADB), and Dr. Stephen Ezell, vice president of the Washington DC-based Information Technology and Innovation Foundation (ITIF), who served as speakers during the Annual Public Policy Conference (APPC) led by the Philippine Institute for Development Studies (PIDS). READ MORE
State think tank all set to hold annual conference in September
Every September, the Philippine Institute for Development Studies (PIDS) holds the Annual Public Policy Conference (APPC) as the main and culminating activity of the Development Policy Research Month (DPRM), a nationwide celebration to promote the importance of policy research in the formulation of policies, programs, and projects
The APPC aims to gather experts and researchers in the social sciences to discuss and recommend policies on current and emerging issues that need the attention of policymakers. READ MORE
PIDS, MinDA, and local university partner for a policy forum
on Fourth Industrial Revolution
State think tank Philippine Institute for Development Studies (PIDS), Mindanao Development Authority (MinDA), and the University of Science and Technology of Southern Philippines (USTP) held a policy research forum on September 11 that focused on the Fourth Industrial Revolution (FIRe) and its potential impacts on Mindanao.
The theme of this year’s Mindanao Policy Research Forum centers on “Harnessing the Fourth Industrial Revolution in Mindanao: Creating our Future Today”. READ MORE
Automation poses gender problem in PH
More women than men are at risk of being affected by the rise of the fourth industrial revolution (FIRe) in the Philippines.
This was revealed by Dr. Jose Ramon Albert, senior research fellow at the Philippine Institute for Development Studies (PIDS), during a press conference held Tuesday in connection with the celebration of the Development Policy Research Month (DPRM).
Citing a 2018 study of the International Labour Organization (ILO), Albert explained this may be because female workers usually assume low-skilled, routine tasks, which are expected to be adversely affected by automation. READ MORE
PH agri lags behind in use of FIRe techs
The Philippine agriculture is already revolutions behind the absorption of technology, turning it into a laggard in a number of ways, especially in terms of productivity.
During a press conference led by the Philippine Institute for Development Studies (PIDS) on Tuesday, Dr. Rafaelita Aldaba, assistant secretary at the Department of Trade and Industry, revealed the sector is still in the mechanization phase, generally considered part of the second industrial revolution. READ MORE
Address literacy, infra woes before advancing FIRe in Bangsamoro
Where is Bangsamoro in the Fourth Industrial Revolution (FIRe)?
This was the daunting question raised by Amina Rasul-Bernardo, president and founder of the Philippine Center for Islam and Democracy (PCID), during a press conference led by the Philippine Institute for Development Studies (PIDS) on Tuesday.
“We are not into the Fourth Industrial Revolution; we are into the actual revolution,” Rasul-Bernardo said. READ MORE
PH has low level of readiness for the Fourth Industrial Revolution, says WEF
How prepared is the Philippines for the Fourth Industrial Revolution (FIRe), also known as Industry 4.0? Based on the World Economic Forum’s (WEF) Readiness for the Future of Production Report 2018, the Philippines has a low level of readiness for future production, characterized by weak performances in terms of technology and innovation, human capital, and institutional framework, among others.
According to the WEF, a country must have the ability to capitalize on future production opportunities, mitigate risks and challenges, and be resilient and quick in responding to unknown future shocks brought by FIRe. READ MORE
PIDS aims to spark discussions about the Fourth Industrial Revolution
If the Philippines wants to sustain its economic growth in the past years, it should be able to keep up with the age of disruptive technologies or the so-called “Fourth Industrial Revolution (FIRe)”, also known as Industry 4.0.
This topic will be highlighted during the observance of the 16th Development Policy Research Month (DPRM) in the country this September. Led by the Philippine Institute for Development Studies (PIDS), pursuant to Malacanang Proclamation 247 signed in 2002, the DPRM is an annual nationwide celebration that aims to emphasize the role of evidence-based research in government’s policymaking. READ MORE
PIDS leads policy research month celebration focusing on Industry 4.0
To keep up with the rapid pace of technological advancement, state think tank Philippine Institute for Development Studies (PIDS) enjoins legislators in the country to prioritize policies that will harness the benefits as well as reduce the adverse effects of the Fourth Industrial Revolution (FIRe).
This year’s theme for the 16th Development Policy Research Month (DPRM) is about the FIRe, otherwise known as Industry 4.0. The DPRM is a nationwide celebration held every September to promote awareness of the importance of policy research in the formulation of development policies, programs, and projects. READ MORE
POLICY ISSUE AT A GLANCE
How Effective are Targeted Education Assistance Programs?
Making higher education more accessible for the poor serves the equity objective. Until today, the main policy tool to achieve this objective is funding public higher education institutions. In 2012, the government introduced the Students Grants-in-Aid Program for Poverty Alleviation (SGP-PA), which is targeted to children of beneficiaries of the Pantawid Pamilyang Pilipino Program (4Ps). A PIDS study that evaluated the early years of the SGP-PA found that aside from financial support, additional services are necessary to increase the program's effectiveness. Enforcement of admission exams to determine the grantees ability and likelihood to complete their studies, monitoring of their school performance and completion rates, and conduct of graduate tracer studies are likewise highly recommended.
This infographic is based on PIDS Research Paper Series No. 2017-02 titled Review and Assessment of Students Grants-in-Aid Program for Poverty Alleviation (SGP-PA) and Expanded SGP-PA: Evidence of Performance in the First Two Years written by Dr. Aniceto C. Orbeta Jr. and Ms. Denise Valerie R. Silfverberg, PIDS senior research fellow and consultant, respectively.
To view in actual size, visit the PIDS website or the PIDS Facebook page.
Every Friday, PIDS releases nuggets of research results culled from different PIDS studies. Here are the latest #PIDSFactFriday issues.
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The Fourth Industrial Revolution (FIRe) is gaining ground in different parts of the world. It is time for the Philippines to embrace it. To harness the opportunities and mitigate the risks emerging from the FIRe, cross-sectoral collaboration and a whole-of-government approach, guided by policy research and inputs from stakeholders, are what we need to CREATE OUR FUTURE NOW.
On September 19, 2018, the Philippine Institute for Development Studies conducted the 4th Annual Public Policy Conference with the theme "Harnessing the Fourth Industrial Revolution: Creating Our Future Today". Click here to watch the highlights and sidelights of the conference.
Policies can either make or break a country and its people. Hence, they should be anchored on sound research evidence. Through Malacañang Proclamation 247 in 2002, the government declared the month of September as Development Policy Research Month (DPRM) to highlight the importance of policy research in
Click here to know more about the DPRM in this video.
Created by virtue of Presidential Decree No. 1201, the Philippine Institute for Development Studies (PIDS) serves as the country's primary socioeconomic policy think tank. Through the years, PIDS has been engaged in the conduct of policy-oriented studies to guide policymakers in crafting development policies, plans, and programs that are based on sound research evidence.
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