09 S&T Capabilities and Economic Catch-Up - Dr. Roger D. Posadas

8/9/2019 09 S&T Capabilities and Economic Catch-Up - Dr. Roger D. Posadas

1/74

SCIENTIFIC AND TECHNO-

LOGICAL CAPABILITIESAND ECONOMIC CATCH-UP

by

Roger D. Posadas, Ph.D.Professor, Technology Management Center

University of the Philippines Diliman

February 3, 2010


2/74

Topic Outline

1. Introduction and Overview of the Economic Under-

development of the Philippines

2. The Extent of the Countrys S&T Underdevelopment

3. The Science-Push Approach to the Development ofthe Countrys S&T and Economy

4. The Market-Pull Approach to the Development ofthe Countrys S&T and Economy

5. The Countrys Vicious Circle of S&T Underdevelop-ment and Dependence

6. The Alternative, Technonationalist, Capability-Based, Catch-up-Oriented Approach to theDevelopment of the Countrys S&T and Economy

7. Proposed National S&T Catch-up Agenda


3/74

Overview of the Economic

Underdevelopmentof the Philippines


4/74

OVERVIEW OF THE COUNTRYS ECONOMIC UNDERDEVELOPMENT

In the early 1960s the Philippines was acknowledged tobe 2nd only to Japan in Asia in terms ofindustrial, educational, technological, and economicdevelop- ment.

Today or about 50 years later our country has been leftbehind by SouthKorea, Taiwan, Singapore, Malaysia, Thailand, China, a

nd Indonesia as they became newly industrializedcountries.

And now Vietnam is about to overtake our country in

the next few years as the next slides will show.


5/74

Table 1: THE GROWTH IN GDP PER CAPITA BY PPP$ OF THE PHILIPPINESAND OF ITS NEIGHBORS

Country 1950 1960 1970 1980 1990 2000 2008

Singapore 3,533 3,426 6,994 14,104 23,143 36,835 45,295

Japan 2,645 5,489 13,375 18,488 25,870 28,559 31,823

Taiwan 1,064 1,679 3,300 6,995 13,361 23,094 28,560

Korea, Rep. 1,054 1,513 2,674 5,076 10,739 17,543 23,824

Malaysia 1,940 1,904 2,587 4,550 6,386 10,161 12,794

Thailand 712 940 1,477 2,227 4,039 5,578 7,776

China 418 592 665 868 1,465 2,564 5,520

Indonesia 704 834 986 1,549 2,097 2,715 3,708

Philippines 1,149 1,584 1,893 2,549 2,386 2,598 3,279

Vietnam 579 696 641 660 894 1,577 2,576

Source: Gapminder.


6/74

Figure 1: GRAPH OF THE GROWTH IN GDP PER CAPITA BY PPP$ OF THEPHILIPPINES AND OF ITS NEIGHBORS

0

5000

10000

15000

20000

25000

30000

1950 1960 1970 1980 1990 2000 2008

Taiwan

Korea, Rep.

Malaysia

Thailand

China

Indonesia

Philippines

Vietnam


7/74

The Table and Graph actually show that in terms of

GDP per capita PPP the Philippines was No. 4 in 1950behind Singapore, Japan, and Malaysia.

Nevertheless, in 1950 the Philippines was slightlyahead of South Korea and Taiwan and its per capitaGDP was about 1.5 times higher than those of Thai-land and Indonesia and more than 2.5 times that ofChina.

The Philippines, however, was overtaken by Taiwan in1960, by South Korea in late 1960s, by Thailand in theearly 1980s, by Indonesia in the late 1990s, and byChina in 2000.

OVERVIEW OF THE COUNTRYS ECONOMIC UNDERDEVELOPMENT


8/74

The Extent of the CountrysS&T Underdevelopment


9/74

SUPPLY LINKAGE DEMAND

NATIONAL S&TSUPPLY SYSTEM

NATIONALTECHNO TRANSFER

SYSTEM

NATIONALPRODUCTION

SYSTEM

S&T Education andTraining

Basic Research Applied Research

and Invention S&T Services

TechnologyIncubation

Technology Transfer Technology

Commercialization Technology

Diffusion

TechnologyImplementation

TechnologicalLearning

TechnologicalCapability Building

THE STRONG INTERACTIONS AMONG THE SYSTEMS OF RESEARCH, TECH-NOLOGY TRANSFER, AND PRODUCTION IN ADVANCED COUNTRIES

AN INTEGRATED FRAMEWORK FORASSESSING THE STATE OF PHILIPPINE S&T


10/74

ASSESSMENT OF THE NATIONAL S&T SUPPLY SUBSYSTEM...1

PRINCIPAL INPUT INDICATORS OF THE NATIONALS&T SUPPLY SUBSYSTEM:

THE COUNTRYS NO. OF FULL-TIME EQUIVALENT

(FTE) RESEARCHERS PER MILLION INHABITANTS

THE COUNTRYS GROSS DOMESTIC EXPENDI-TURES ON R&D (GERD) AS A PERCENTAGE OF

ITS GROSS DOMESTIC PRODUCT: GERD/GDP

THE COUNTRYS PER CAPITA GERD BYPURCHASING POWER PARITY (PPP)


11/74

PRINCIPAL OUTPUT INDICATORS OF THE NATIONAL

S&T SUPPLY SUBSYSTEM:

PERCENTAGE SHARE OF THE COUNTRYS ISIPUBLICATIONS IN THE TOTAL ANNUAL NO. OF ISI

PUBLICATIONS

NO. OF ISI PUBLICATIONS PER FTE RESEARCHER

PERCENTAGE SHARE OF THE USPTO PATENTSGRANTED TO RESIDENT INVENTORS OF THECOUNTRY IN THE TOTAL ANNUAL NO. OFPATENTS GRANTED BY THE USPTO



12/74

According to UNESCO, the Philippines has very fewresearchersonly 81 FTE researchers per millioninhabitants in 2005 which is the lowest among theoriginal ASEAN-5 and way, way below the UN standardof 380 that had been set as a 1980 target for deve-loping Asian countries.

In absolute numbers, the Philippines in 2005 had atotal of 6,896 FTE researchers and a headcount of

10,690 researchers.

How the Philippine figures compare with those ofother countries is shown in Table 2.



13/74

Table 2: THE NUMBER OF RESEARCHERS IN THE PHILIPPINES ASCOMPARED TO THOSE OF ITS NEIGHBORS

Country No. of FTEResearchers per

Million Population

Total No. of FTEResearchers

Total Head Countof Researchers

Singapore 6,088 a 27,301 a 31,657 a

Japan 5,573 a 709,974 a 883,386 a

U.S.A. 4,663 b 1,425,550 b - - -

Korea, Rep. 4,627a

221,928a

289,098a

China 1,071 a 1,423,380 a - - -

Malaysia 372 b 9,694 b 19,021 b

Thailand 311 c 20,506 c 34,084 c

Indonesia 205 e 42,722 e - - -

Vietnam 115 d 9,328 d 41,117 d

PHILIPPINES 81 c 6,896 c 10,690 c

Source: UNESCO Institute for Statistics.

Superscripts: a = 2007, b = 2006, c = 2005, d = 2002, e = 2001


14/74

The UNESCO also reports that the Philippines had a

GERD/GDP of only 0.12% which is second to thelowest among the original ASEAN-5, a big drop fromits value of 0.22% in the 1990s, and again way, waybelow the UN standard of 1% that had been set as a

1980 target for developing countries.

The Philippines also spent a per capita GERD of only$3.40 PPP in 2005, which is next to the lowest among

the ASEAN-5 and way below the per capita GERD of$500-$1000 PPP spent by developed countries.

Table 3 compares the Philippine figures with those ofother countries.



15/74

Table 2: THE PHILIPPINE EXPENDITURES ON R&D AS COMPARED TOTHOSE OF ITS NEIGHBORS

Country GERD as % GDP GERD Per Capita

PPP$Japan 3.45 a 1,158.50 a

Korea, Rep. 3.47 a 868.50 a

U.S.A. 2.67 a 1,194.80 a

Singapore 2.61 a 1,341.80 a

China 1.49 a 78.90 a

Malaysia 0.64 b 79.90 b

Thailand 0.25 b 18.10 b

Vietnam 0.19 d 3.10 d

PHILIPPINES 0.12 c 3.40 c

Indonesia 0.05 c 1.60 c

Source: UNESCO Institute for Statistics.

Superscripts: a = 2007, b = 2006, c = 2005, d = 2002


16/74

Table 4: PHILIPPINE EXPENDITURES ON R&D UNDER THE GMAADMINISTRATION

2002 2003 2005

GERD as %GDP

0.15 0.14 0.12

GERD PerCapita PPP$

3.60 3.50 3.40


17/74

From the ISI-WOS Citation Databases, one can findthat the Philippines in 2005 had only 520 ISI publica-tions which constituted only a tiny share0.04% ofall ISI publications that year and gave the country aworld ranking of 72.

In comparison, as shown in Table 5, Indonesia had 586publications, Vietnam 590, Malaysia 1,596, Thailand2,615, Singapore 6,528, Taiwan 16,147, South Korea

26,434, and China 70,962, Japan 77,263, all in 2005.

Table 6 then shows the growth in ISI publications ofsome ASEAN countries during the period 1999-2005.



18/74

Table 5: COMPARATIVE STATISTICS ON WORLD SHARE OF ISI-WOS PUBLICATIONSAND NO. OF ISI-WOS PUBLICATIONS PER FTE RESEARCHER

Rank CountryNo. of

Publications

%

Share

No. of FTE

Researchers

No. of

Publications

per Researcher

1 U.S.A. 304,670 25.60 1,393,520 a 0.22

2 Japan 77,263 6.40 677,206 a 0.11

5 China 70,962 5.96 926,252 a 0.08

11 South Korea 26,434 2.22 156,220 a 0.17

18 Taiwan 16,147 1.36 - - - - - -

30 Singapore 6,528 0.55 21,359 a 0.30

43 Thailand 2,615 0.22 18,114 b 0.14

50 Malaysia 1,596 0.13 12,670 a 0.12

66 Vietnam 590 0.05 9,328 c 0.06

68 Indonesia 586 0.05 42,722 d 0.01

72 Philippines 520 0.04 5,860 b 0.09

Sources: ISI-WOS Citation Database and UNESCO Institute for Statistics Data.

Superscripts: a = 2004, b = 2003, c = 2002, d = 2001


19/74

Table 6: ANNUAL NO. OF ISI-WOS PUBLICATIONS FROM THE PHILIPPINESAND ITS ASIAN NEIGHBORS DURING THE PERIOD 1999-2005

Country 1999 2000 2001 2002 2003 2004 2005 TOTAL1999-2005

Singapore 3,129 3,732 4,249 4,620 5,218 5,955 6,528 33,431

Thailand 1,076 1,272 1,466 1,766 2,100 2,299 2,615 12,604

Malaysia 889 860 997 1,039 1,213 1,412 1,596 8,006

Indonesia 389 457 506 481 497 540 586 3,456

Philippines 343 387 366 451 467 475 520 3,009

Vietnam 271 328 377 376 510 464 590 2,916

Source: ISI-WOS Citation Database.


20/74

The supposed Filipino inventiveness, often touted by

Philippine media, is belied by the patent databases ofthe USPTO which show that the total no. of utilitypatents granted by the USPTO to Philippine-basedinventors during the period 1988-2008 was only 355.

This was more than Indonesias 178 and Thailands 303but much less than Malaysias 947, Singapores 4,097,Chinas 8,975, South Koreas 57,968, Taiwans 70,643,and Japans 725,866, as shown in Table 7 and Fig. 2.

What is worse is that most of these seemingly Filipinoinventions turn out to be inventions filed by Philippinesubsidiaries of foreign multinational corporations,



21/74

Table 7: THE PHILIPPINES SHARE OF USPTO PATENTS AS COMPARED

TO THOSE OF ITS NEIGHBORS

Country Total No. of Patents

1963-1987

% Share Total No. of Patents

1988-2008

% Share

U.S.A. 1,091,416 66.5 2,538,250 57.94

Japan 148,024 9.01 725,866 16.57

Taiwan 1,306 0.08 70,643 1.61

Korea, Rep. 343 0.02 57,968 1.32

China 519 0.03 8,975 0.205

Singapore 76 0.005 4,097 0.093

Malaysia 34 0.002 947 0.022

PHILIPPINES 132 0.008 355 0.008

Thailand 19 0.001 303 0.007

Indonesia 75 0.004 178 0.004


22/74

Figure 2: INCREASE IN THE NO. OF USPTO PATENTS GRANTED TONATIONALS OF SELECTED ASIAN COUNTRIES

75 178 19303 132 355 34

947

76

4,097

519

8,975

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

Indonesia Thailand Philippines Malaysia Singapore China

1963-1987

1988-2008


23/74

The National Technology Transfer Subsystem of thePhilippines is still in the embryonic stage as indicatedby the following:

The counterpart of the Bayh-Dole Act of the U.S. hasnot yet been enacted.

Technology-business incubators and technology

parks are still in the development stages.

Activities involving technology entrepreneurship, oruniversity spin-offs have not yet taken off.

ASSESSMENT OF THE NATIONAL TECH TRANSFER SUBSYSTEM...1


24/74

The National Technology Transfer Subsystem: (contd)

The Philippine venture capital industry is still in itsinfant stage.

A Triple Helix of Government Academia -Business interactions has not yet been formed.

Technology commercialization activities leading tonew or improved technology-based products,processes, or services are scarce among domesticfirms.

ASSESSMENT OF THE NATIONAL TECH TRANSFER SUBSYSTEM...2


25/74

The nature and direction of technology demand in the

Philippine production system can be gauged from whatit exports and imports:

The Philippines exports mostly low value added prod-ucts such as garments; assembled integrated circuits or

ICs; fashion accessories; gifts, toys, and houseware;fresh and processed fruits; tuna, shrimp, and seaweed;furniture; and low-end software.

The country imports high-tech products such as power-generating machineries, specialized machineries, trans-port equipment, telecommunications equipment, com-puting equipment, heavy equipment, machine tools,chemicals, bulk pharmaceuticals, IC wafers, etc.

ASSESSMENT OF THE NATIONAL PRODUCTION SUBSYSTEM...1


26/74

THE EXTENT OF TECHNOLOGICAL DEVELOPMENT OF A

FIRM, INDUSTRY, OR COUNTRY CAN BE GAUGED INTERMS OF TWO DIMENSIONS:

1. TECHNOLOGICAL CAPABILITY --- LEVEL OF THE

TECHNOLOGICAL SKILLS AND KNOW-HOW OF AFIRM, INDUSTRY, OR COUNTRY.

2. TECHNOLOGICAL SOPHISTICATION --- MEASURE OF

PROXIMITY TO THE STATE-OF-THE-ART OF THE KEYTECHNOLOGIES BEING USED BY A FIRM, INDUSTRY,OR COUNTRY.

ASSESSMENT OF THE NATIONAL PRODUCTION SUBSYSTEM...2


27/74

FIRM-LEVEL TECHNOLOGICAL CAPABILITIES...1

ACQUISITIONAL CAPABILITY -- the ability to assess,select, and acquire appropriate technologies fromexternal sources.

OPERATIVE CAPABILITY -- the ability to implement,operationalize, and repair an externally acquiredtechnology.

ADAPTIVE CAPABILITY -- the ability to adapt an ex-ternal technology to local conditions through the mod-ification of its scale, capacity, inputs, and peripheralcomponents.


28/74

INTEGRATIVE OR INVESTMENT CAPABILITY -- theability to assemble a complex technological system orcommission a production facility on a self-reliantbasis.

DUPLICATIVE CAPABILITY -- the ability to reverseengineer and make a duplicate of an externallyacquired product or process technology.

IMPROVED-DESIGN CAPABILITY the ability to im-prove the design of an existing product in terms ofperformance, architecture, or aesthetics withoutchanging the technology.



29/74

REPRODUCTIVE CAPABILITY -- the ability to repro-duce the core component of an externally acquiredproduct technology

INNOVATIVE CAPABILITY -- the ability to design and

commercialize an incremental but significant im-provement of the core or basic technology of anexisting product or process.

CREATIVE CAPABILITY -- the ability to create a radi-cally novel, breakthrough technology through endo-genous research and development and to commer-cialize it into a new-to-the-world product or process.



30/74

The Philippines has remained a mere importer and con-

sumer of industrial and high technologies and has not

yet learned to become a producer and exporter of

advanced technologies.

Philippine technological capabilities are still largely

backward and dependent, being largely adaptive

relative to industrial technologies, and merely theore-tical or at most operative relative to high technologies.

STATE OF PHILIPPINE TECHNOLOGICAL CAPABILITIES...1


31/74

The technological capability of the National Power

Corporation (NPC or NAPOCOR) is a typical, egregious

example of the low level of technological capabilities

found in most Filipino-owned firms.

For the past 38 years NPC has never learned how to

design and construct power plants and has remained

dependent on the expensive importation of power

plants through turnkey projects. Thus, NPC is stillstuck at the adaptive level of technological capability.

Contrast NPCs poor track record with that ofKEPCO.

STATE OF PHILIPPINE TECHNOLOGICAL CAPABILITIES...2


32/74

The Philippine production system can be characterized as

Having low levels of technological capabilities.

Being highly dependent on the importation of technolo-gies though various forms of international technologytransfer from technology purchase, licensing, and sub-contracting to FDI and joint ventures.

Having no motive or effort to learn and master theimported technologies or to move up the ladder oftechnological capabilities.

CHARACTERISTICS OF THE PHILIPPINE PRODUCTION SYSTEM...1


33/74

The Philippine production system can be characterized as(contd):

Being averse to local technology sourcing or technolo-gy transfers from domestic domestic institutional

inventors.

Lacking competence in technology management andmaking do with poor product and process technolo-

gies.

Being wanting in technology-based global competitive-ness.

CHARACTERISTICS OF THE PHILIPPINE PRODUCTION SYSTEM...2

AN INTEGRATED FRAMEWORK FOR


34/74


NATIONAL S&TSUPPLY SUBSYSTEM

EMBRYONICNATIONAL TECHNOLOGYTRANSFER SUBSYSTEM

NATIONALPRODUCTIONSUBSYSTEM

VERY WEAKSUPPLY

CONDITION

ALMOSTNON-EXISTENT

LINKAGES

VERY WEAKDEMAND

CONDITION

VERY FEWRESEARCHERS

VERY FEW ANDVERY POORLABORATORIES

VERY LITTLEFUNDING FORRESEARCH

VERY FEW S&T LINKAGESAMONG ACADEMIA, GOVT

AND INDUSTRY

VERY FEW VERTICALTECHNOLOGY TRANSFERS

VERY FEW TECHNOLOGYCOMMERCIALIZATIONPROJECTS

VERY LITLE DEMANDFOR LOCAL TECHNOLOGY

STRONG ADDICTIONTO TECHNOLOGYIMPORTATION

LACK OF EFFORTS TOLEARN AND IMPROVEIMPORTED TECHNOLOGIES

THE CONDITIONS AND RELATIONSHIPS OF THE SYSTEMS OF RESEARCH,TECHNOLOGY TRANSFER, AND PRODUCTION IN THE PHILIPPINES


35/74

The Science-PushApproach


36/74

The Science-Push approach holds that the solutionto the underdevelopment of the countrys S&T andeconomy is to pour more resources (human, financial,etc.) into the national S&T supply subsystem.

First expounded by Vannevar Bush in his 1945 Reportto President Truman, Science The Endless Frontier.

Pushed by most foreign and local scientists. E.g., Dr.Flor Lacanilao thinks that S&T development is just amatter of doing research properly and publishing ones

research outputs in ISI journals.

THE PERSPECTIVE OF THE SCIENCE-PUSH APPROACH...1


37/74

Also advocated by Dr. Camar Umpa of MSU who saidthat since GERD/GDP is correlated with per capita GDPthen the Philippine government should increase itsGERD/GDP to first world levels of at least 1.0% in orderto attain first world per capita GDP levels

This approach is, of course, based on the naive,simplistic view of the technological innovation processas a linear, pipeline model:

basic research applied research inventiontechnology transfer technology commercialization



38/74

This Linear Model of the innovation process has twomain pillars:

The Bush belief that basic research is the pace-maker of technological progress

The Bush assumption that those who invest inbasic science will capture its return in technology asthe advances in science are converted into technolo-gical innovation

These seem to imply that all basic research results willsooner or later find an application and become a prod-uct or process innovation.



39/74

These beliefs, however, either ignore or are ignorant ofthe realities, difficulties, and frustrations of the techno-logical innovation process that students of TechnologyManagement are very familiar with.

The reality is that only around 10% of inventions passthe tests of technical and commercial feasibility to beconsidered as possible product ideas, only about 10%of product ideas are successfully commercialized into

product innovations, and only about 10% of commer-cially launched products become successful in themarket.



40/74

In the Philippines, the Department of Science and

Technology (DOST) is the principal governmentagency that has implementing the Science-Pushapproach for the past 51 years through its focus on thedevelopment the National S&T Supply Subsystem.

Of course, the DOST has also been striving to addressthe problems and needs of the National TechnologyTransfer Subsystem and the National Production Sub-system (as demonstrated, for example, by its Techno-

logy Incubation for Commercialization Program orTECHNICOM), but it has not made much headway intransforming the other parts of the national S&Tsystem.



41/74

In early 2007, a joint Congressional Commission on

Science and Technology and Engineering (COMSTE)was created for the purpose of creating or repealinglaws so as to make the country competitive in S&T.

COMSTE, however, has also been focusing on ways of

developing the National S&T Supply Subsystem andthe National Technology Transfer Subsystem withoutintending to change the economic ideology and poli-cies of the National Production Subsystem.

Thus, COMSTE is another example of a Supply-Pushagency that can easily be predicted to be anothersuperfluous exercise in futilty.


THE PERSPECTIVE OF THE SCIENCE PUSH APPROACH


42/74

Studies of Brazil and Mexico by Eduardo Viotti show

that a country can have a high world share of ISI publi-cations and a small share of USPTO patents, contraryto what would be expected from the Science-Pushapproach.

South Korea provides a good counterexample to theScience-Push approach because, as pointed out byLinsu Kim, research was not relevant to KoreasIndustrialization through the 1970s.

The Science-Push approach can at most be wasteful ofresources but it is not as pernicious as the Market-Pullapproach that I will discuss next.



43/74

The Market-PullApproach

THE PERSPECTIVE OF THE MARKET PULL APPROACH 1


44/74

The Market-Pull approach holds that the solution tothe underdevelopment of our countrys economy and

S&T is to make all economic, business, and technologydecisions conform to market needs, problems, andopportunities and to comparative advantages.

This is the approach advocated by mainstream (neo-classical, neoliberal) economists and favored by mostbusinessmen and merchants.

It is also the basic approach that has been adopted bysuccessive Philippine governments for the past 24years since 1986.

THE PERSPECTIVE OF THE MARKET-PULL APPROACH...1



45/74

The Market-Pull approach is based on two pillars of

neoclassical economics:

The Principle of Comparative Advantage, whichholds that a firm, industry, or country should

specialize on production systems that can makemaximum use of its current endowments or itscomparative advantage

Neoliberalism or the Washington Consensus, whichadvocates free trade, free enterprise, free markets,FDI liberalization, deregulation, privatization, andminimal government intervention in the market.




46/74

The application of these two pillars of neo-classical economics to the selection, acquisi-tion, and exploitation of technology is knownas technoliberalism.

Technoloberalism holds that a firm should notdesign and produce its own technology if itdoes not have the comparative advantage to

do so or, in other words, when it is easier andmore cost-effective to buy or lease the techno-logy.




47/74

Technoliberalism is the reason behind the NPCs un-willingness to emulate KEPCO and to design andproduce its own power plants and power equipmentand its continuing addiction to the importation ofpower plants through turnkey projects.

Technoliberalism is the reason why most Filipino-owned firms have remained technologically backwardand dependent, have continued to be mere users and

importers of foreign technology, and have not attainedtechnology-based global competitiveness.




48/74

It is technoliberalism that has been preventing our

economy from industrializing, making our economystagnant, and allowing our neighbors overtake us.

But Dr. Bernardo Villegas, one of the chief proponents

of neoliberalism in the Philippines, has blamed ourcountrys continuing underdevelopment on the anti-market, protectionist, import-substituting policiesadopted by the government for 30 years since 1945.

Yet he ignores the fact that neoliberalism has heldsway in our country for the past 24 years since 1986which was also the period when we were overtaken byMalaysia, Thailand, Indonesia, and China.




49/74

Technoliberalism is confuted by the fact that its adop-tion by our country has kept our economy and S&Tunderdeveloped while its rejection by Japan, SouthKorea, Taiwan, China, Malaysia enabled thesecountries to achieve rapid industrial, technological,

and economic catch-up.

In fact, these late industrializing countries deliberatelydefied the principles of comparative advantage to

create globally competitive industries in steel-making,shipbuilding, transport vehicles, IC fabrication, mobilecommunications, machine tools, heavy equipment,power generation, etc.




50/74

The ideological hegemony of Neoliberalism itself hasbeen undermined by the consensus, among critics andproponents (e.g. J. Stiglitz, 2004, and Dani Rodrick,2006), that the Washington Consensus is a failed recipefor economic development.

Development economists are now working out a post-Washington Consensus that appears to be more opento the rising alternative economic paradigm known as

innovation economics and to the East Asian Consen-sus or what Lee and Mathews (2009) prefer to call theBeST Consensus, after Beijing, Seoul, and Tokyo.



51/74

The Vicious Circle of

S&T Underdevelopmentand Dependence



52/74


NATIONAL S&TSUPPLY SUBSYSTEM

EMBRYONICNATIONAL TECHNOLOGYTRANSFER SUBSYSTEM

NATIONALPRODUCTIONSUBSYSTEM

VERY WEAKSUPPLY

CONDITION

ALMOSTNON-EXISTENT

LINKAGES

VERY WEAKDEMAND

CONDITION

VERY FEWRESEARCHERS

VERY FEW ANDVERY POORLABORATORIES

VERY LITTLEFUNDING FORRESEARCH

VERY FEW S&T LINKAGESAMONG ACADEMIA, GOVT

AND INDUSTRY

VERY FEW VERTICALTECHNOLOGY TRANSFERS

VERY FEW TECHNOLOGYCOMMERCIALIZATIONPROJECTS

VERY LITLE DEMANDFOR LOCAL TECHNOLOGY

STRONG ADDICTIONTO TECHNOLOGYIMPORTATION

LACK OF EFFORTS TOLEARN AND IMPROVEIMPORTED TECHNOLOGIES

THE CONDITIONS AND RELATIONSHIPS OF THE SYSTEMS OF RESEARCH,TECHNOLOGY TRANSFER, AND PRODUCTION IN THE PHILIPPINES



53/74

PHILIPPINE S&TSUPPLY SYSTEM

EXTERNAL BRAIN DRAIN

FIRST WORLDS&T SUPPLY

SYSTEMSCIENTIFIC DEPENDENCE

EMBRYONICPHILIPPINE

TECHNO TRANSFERSYSTEM

FIRST WORLDTECHNO TRANSFER

SYSTEM

PHILIPPINEPRODUCTION

SYSTEM

LOW VALUE-ADDED EXPORTS

FIRST WORLDPRODUCTION

SYSTEMTECHNOLOGICAL DEPENDENCE

THE DEPENDENT STATE OF PHILIPPINE S&T



54/74

THE CENTRAL PROBLEM OF S&T IN THE PHILIPPINES...1

The adoption of technoliberalism has made our na-tional production subsystem dependent on the importof foreign technologies and eliminated demand fordomestically created technologies.

This almost zero demand in turn has reduced pres-sure on the government and industry to make sub-stantial investments in S&T development.

The underinvestment in S&T in turn has renderedlocal S&T underdeveloped and unable to meet theneeds of local industry.


55/74

WEAK S&T

RESOURCES &CAPABILITIES

CONTINUING SCIENTIFIC

& TECHNOLOGICALDEPENDENCE

WEAK EFFECTIVE

DEMAND FORLOCAL S&T

LOW LEVEL OFPUBLIC & PRIVATESUPPORT FOR S&T

MACRO VIEW OF THE VICIOUS CIRCLE OF PHILIPPINES&T UNDERDEVELOPMENT AND DEPENDENCE


O O


56/74

LOCAL FIRMS LACK OF

DRIVE TO CONDUCT MOT,R&D AND TECHNOLO-

GICAL INNOVATION

LOCAL FIRMS BACKWARD

TECHNOLOGIES ANDLOW-LEVEL OF TECHNO-LOGICAL CAPABILITIES

LOCAL FIRMS

IMPORTATION OFTECHNOLOGIES FROM

ABROAD

LOCAL FIRMS

INABILITY ORUNWILLINGNESS TO

MASTER THE IMPORTEDTECHNOLOGIES

LOCAL FIRMS

CONTINUINGADDICTION TO THEIMPORTATION OF

MATURE TECHNOLOGIES

LOCAL FIRMS

LACK OF GLOBALTECHNOLOGY-BASED

COMPETITIVENESS

LOCAL FIRMS

SATISFACTION WITH DOINGBUSINESS IN THE

DOMESTIC MARKET

LOCAL FIRMS LACK OF

DRIVE TO UPGRADE ITSTECHNOLOGIES TO

GLOBAL STANDARDS

MICRO VIEW OF THE VICIOUS CIRCLE OF PHILIPPINES&T UNDERDEVELOPMENT AND DEPENDENCE


THE CENTRAL PROBLEM OF S&T IN THE PHILIPPINES 4


57/74


This has perpetuated a vicious circle of S&T under-development and dependence, which is the centralproblem of national S&T development in the Philip-pines.

This enables us to explain why the DOSTs

thrusts, policies, and programs have turned out to be

seemingly ineffective and futile up to now.

THE CENTRAL PROBLEM OF S&T IN THE PHILIPPINES 5


58/74

For the past 51 years the DOST has been mainly andvainly trying to address the National S&T Supply Sub-system instead of simultaneously and holistically tack-ling the supply side, demand side and linkage part of

the national problem of S&T underdevelopment.

Despite well-intentioned efforts, the DOST has beenstymied by the governments neoliberal policies from

effecting changes in the S&T demand subsystem andlinkage subsystem and breaking the countrys vicious

circle of S&T underdevelopment and dependence.



59/74

The Technonationalist

Catch-up OrientedCapability-Based Approach

THE TECHNONATIONALIST CAPABILITY-BASED APPROACH...1


60/74

The alternative approach that I have been advocating

to solve our countrys central S&T problem the vici-ous circle of S&T underdevelopment and dependenceis a technonationalist, capability-based, and catch-up-oriented approach.

It is based on technonationalism which seeks toadvance a countrys technological capabilities to the

highest levels, achieve S&T self-reliance and competi-

tiveness, and uphold long-term national interests overcomparative advantages on matters involving techno-logy selection, acquisition, and exploitation.

THE TECHNONATIONALIST CAPABILITY BASED APPROACH...1



61/74

It is capability-based because it gives first priority to

building up the technological capabilities of Filipino-owned firms to global competitiveness and secondpriority to developing the research and inventivecapabilities of academic and government laboratories.

It is catch-up-oriented because it seeks to achieveeconomic and S&T catch-up, if not leapfrogging.

Moreover, it follows more or less the East Asian Con-sensus or the BeST Consensus which has enabledEast Asian countries to achieve rapid industrialization,technological catch-up, and economic progress.




62/74

As expounded by Keun Lee and John Mathews (2009),

the basic components of the East Asian Consensus are

A. Creating the two principal agents of economicgrowth

1. Creating firms and building their capabilities

2. Creating and relying upon the pilot or coor-dinating State agencies guide industrialization




63/74

Basic components of the East Asian Consensus (2)

B. Setting into motion the process of capabilityenhancement

3. Arranging firms to access and leverage advanced

knowledge

4. Promoting export-based engagement with the globaleconomy to discipline firms and expand markets

5. Targeting industries/technologies for (initially import-substituting) development

6. Sequential upgrading of the leading sectors andactivities to secure dynamic comparative advantages

C O O S C S O C



64/74

Basic components of the East Asian Consensus (3)

C. Creating an economic environment in which capabili-ty development will proceed

7. Building broad-based education, from primary

education to tertiary education

8. Creating a financial system that is catch-upfriendly but cautious about external financialliberalization

9. Establishing stable macroeconomic settings

10. Gradual phasing out of non-market interventions



65/74

Therefore, in my view what our country needs to achieve

rapid national economic and S&T catch up is for thegovernment

to discard its failed and discredited economic ideo-logy of neoliberalism and the Washington Consensus,

to adopt the capability-based, catch-up-oriented pre-cepts of the East Asian Consensus, and

to use the principles of technonationalism and techno-logy management to transform our countrys viciouscircle of S&T underdevelopment and dependence intoa virtuous circle of world-class S&T self-reliance,excellence, innovativeness, and competitiveness.


66/74

The TechnonationalistCatch-up Agenda

OUTLINE OF THE TECHNONATIONALIST CATCH-UP AGENDA 1


67/74

The technonationalist catch-up agenda aims to trans-

form the vicious circle of S&T underdevelopment anddependence into a virtuous circle of world-class S&Tself-reliance, excellence, innovativeness, and competi-tiveness through the adoption of a national S&Troadmap which intends to

Build up the National S&T Supply Subsystem toworld-class levels in terms of human, financial, andinfrastructural resources

Create a strong demand for local S&T within theNational Production Subsystem

Develop a dynamic National Technology TransferSubsystem

OUTLINE OF THE TECHNONATIONALIST CATCH UP AGENDA...1

OUTLINE OF THE TECHNONATIONALIST CATCH-UP AGENDA...2


68/74

ACTIONS TO INCREASE THE DOMESTIC S&T DEMAND (1):

ESTABLISH AND DEVELOP INDUSTRIAL CLUSTERS INEVERY DISTRICT AND PROVINCE OF THE COUNTRY.

LINK THESE CLUSTERS WITH GLOBAL VALUE CHAINS

ESTABLISH CLUSTER-BASED/CLUSTER-DEDICATEDR&D INSTITUTES

FORMULATE AND IMPLEMENT A NATIONAL TECHNOLOGYSTRATEGY AND A NATIONAL TECHNOLOGY ROADMAPAND INSTITUTIONALIZE THE PRACTICE OF TECHNOLOGYMANAGEMENT AT MACRO AND MICRO LEVELS




69/74

ACTIONS TO INCREASE THE DOMESTIC S&T DEMAND

(2):

USE STATE PROCUREMENT AND REGULATORYPOWERS TO PROMOTE INTERNATIONAL STAN-

DARDS FOR DOMESTIC PRODUCTS, PROCESSES,AND SERVICES

ADOPT A SYSTEM OF INCENTIVES TO INDUCE THEMODERNIZATION AND CONTINOUS UPGRADINGOF TECHNOLOGIES IN SMEs AND THE CONDUCT OFR&D IN LARGE FIRMS




70/74

ACTIONS TO IMPROVE THE DOMESTIC S&T SUPPLY (1):

IMPLEMENT A NATIONAL CRASH PROGRAM TOUPGRADE PHILIPPINE EDUCATIONAL INSTITUTIONSAND CURRICULA (ESPECIALLY IN SCIENCE AND

TECHNOLOGY)AT ALL LEVELS TO GLOBALSTANDARDS

IMPLEMENT A MASSIVE CRASH PROGRAM TO

INCREASE THE QUANTITY AND QUALITY OFPHILIPPINE R&D SCIENTISTS, ENGINEERS ANDTECHNICIANS TO MINIMUM INTERNATIONALSTANDARDS.




71/74

ACTIONS TO IMPROVE THE DOMESTIC S&T SUPPLY (2):

DEVELOP THE NATIONAL UNIVERSITY TO A WORLD-CLASS RESEARCH UNIVERSITY AND CREATE AT LEASTONE WORLD-CLASS DEPARTMENT IN EVERY MAJORDISCIPLINE OF SCIENCE AND ENGINEERING

ENSURE MASSIVE PUBLIC AND PRIVATE INVESTMENTSIN R&D TO MEET THE U.N. TARGET OF 1% OF GDP FORGERD

DEVELOP A NATIONAL R&D SYSTEM THAT IS INTE-GRATED WITH THE NATIONAL TECHNOLOGY ROADMAPAND THAT IS WORLD-CLASS IN TERMS OF PUBLICA-TIONS AND INVENTIONS GENERATED.



72/74

ACTIONS TO IMPROVE THE DOMESTIC S&T LINKAGES (1):

CREATE GOVERNMENT-ENDOWED CONTRACT R&D COR-PORATIONS (SIMILAR TO GERMANYS FRAUNHOFER

SOCIETY) AND GRANT CORPORATE POWERS TO SOMEOF THE EXISTING GOVERNMENT R&D INSTITUTES

ENACT LAWS CREATING VENTURE CAPITAL FIRMS ANDENCOURAGING ACADEMIC INSITUTIONS AND GOVERN-MENT R&D INSTITUTES TO TRANSFER THEIR RESEARCHOUTPUTS TO THE PRIVATE SECTOR

ESTABLISH UNIVERSITY-LINKED TECHNOLOGY BUSI-NESS INCUBATORS AND TECHNOLOGY PARKS



73/74

ACTIONS TO IMPROVE THE DOMESTIC S&T LINKAGES (2):

ENCOURAGE TECHNOLOGY ENTREPRENEURSHIPAMONG HIGH SCHOOL AND COLLEGE STUDENTS

ESTABLISH AN EXTENSIVE NATIONAL NETWORK OFINSTITUTIONS FOR TECHNOLOGY DIFFUSION,TECHNICAL EXTENSION SERVICES, AND ONLINES&T INFORMATION SERVICES

ENCOURAGE AND SUPPORT COLLABORATIVE S&TPARTNERSHIPS AMONG GOVERNMENT, BUSINESS,

AND ACADEMIA


74/74

THANK YOU!

AND

GOOD DAY!

Documents

09 S&T Capabilities and Economic Catch-Up - Dr. Roger D. Posadas