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Socioeconomic Issues on Spotlight


As a driver of productivity and competitiveness, innovation is necessary to achieve sustained economic growth. The Philippines recognizes this and even devotes an entire chapter in its Philippine Development Plan to the advancement of innovation in the country.

Despite this recognition, the country’s investments in innovation have remained below the prescribed benchmark of the United Nations Educational, Scientific, and Cultural Organization for research and development expenditures, according to Albert et al. (2018). Coupled with other issues, such as inadequate infrastructure and restrictive regulations, these poor investments have resulted in the country’s low performance in the Global Innovation Index rankings.

Local firms also tend to shy away from innovation, despite its role in facilitating their good performance (Llanto and Prado 2016). In 2015, for instance, only 2 in every 5 firms were innovation-active in the Philippines, according to Albert et al. (2018). This figure further plummets among micro firms, with merely 1 in every 3 of them considered innovation-active that same year. When asked about public intervention, only 1 in 30 firms reported public support for their innovation activities.

Albert et al. (2018) also noted the government’s failure to mainstream innovation policies. They argued that the country often views innovation only within the context of science and technology and tends to implement it without a whole-of-government approach.

To address these issues, the authors recommended the crafting of a time-bound national innovation plan. The said plan should ideally consider sector-specific needs of firms and complementary factors for their innovation, as well as the soft and hard infrastructures needed to improve their capacities and drive to innovate. The study also urged the government to ease barriers to trade, stamp out anticompetitive practices, and address issues of inadequate physical and institutional infrastructure.

On the part of the firms, Llanto and del Prado (2016) said they should reconsider investing in innovation. Patalinghug (2003) argued the government must assist them in this pursuit by creating incentives, such as stronger intellectual property rights law, standardized quality system, and the availability of technology transfer programs.

In the end, innovation does not only depend on the cooperation between the private and public sectors. The government should also establish strong linkages and coordination among research institutions, universities, and industry associations. It should also find cost-effective ways of improving standards while at the same time minimizing restrictions and encouraging innovation.

The Socioeconomic Research Portal for the Philippines (SERP-P) has a collection of studies on innovation, including those of Albert et all (2017) on the measurement and examination of innovation in business and industry, Macasaquit (2011) on strengthening of sources of knowledge to promote innovation in CALABARZON, Little and Fabella (1997) on the technological change as a determinant of economically sustainable growth, globalization, and innovation systems, and Conroy and McGuire (1997) on the financial innovation for the poor.

SEARCA MONO 2002 6  Globalization, Innovation Systems, and AFTA: Emerging Trends and Challenges
DRN 2017 Vol. XXXV No. 4  PIDS Prods Government to Regulate Digital Economy
DP 2017-46  Impact of Foreign Linkages on Innovation Activity of Manufacturing Firms in CALABARZON
DP 2017-44  Innovation Activity of Firms in the Philippines
DP 2017-28  Measuring and Examining Innovation in Philippine Business and Industry
DP 2017-09  Achieving Innovation Without Formal R&D: Philippine Case Study of Garment Firms
RPS 2016-02  Does Innovation Mediate Good Firm Performance?
DP 2016-20  Service Innovation in Philippine Industries
PIDS Book 2014-01  Innovative Behavior of Local Firms: Results of the 2009 Pilot Survey of Innovation Activities - Towards an Innovation-led Development Path in the Philippines
Asian Institute of Management Working Paper No. 13-005  Strategies to Promote Stronger Technology Spillovers From Trade and Investments: Tapping Production Networks, Promoting Services and Linking SMEs
PN 2013-09  Opportunities for Making Health Financing and Services More Inclusive in the Philippines
DRN 2011 Vol. XXIX No. 6  The Paradox of Local Economic Enterprises: A Look at the Philippine Setting
RPS 2002-04  Technological Innovations in Japan and S&T Experiences in the Philippines: Drawing Policy Lessons for the Philippines
JPD 1989 Vol. XVI No. 2-e  Science and Technology Development and Promotion in the Private Sector: Some Issues and Recommendations for Policy Research