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PIDS Updates


IN FOCUS: Improving economic productivity through innovation

Long-term national development relies on innovation. Progress in science and technology (S&T) infused with 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, inarguably, remains wanting. In the 2016 Global Innovation Index (GII) Report, co-published by Cornell University, INSEAD, and the World Intellectual Property Organization, the Philippines ranked 74th among 128 countries. Compared with its Southeast Asian neighbors, it is trailing behind Singapore (6th), Malaysia (35th), Thailand (52nd), and Viet Nam (59th). Indonesia and Cambodia ranked 88th and 95th, respectively.

Amid its growing potentials, the Philippine innovation sector continues to lag behind due  to poor investment in research and development (R&D). Philippine investment in R&D hovers at a level of 0.12 to 0.14 of the gross domestic product (GDP), which is one of the lowest in Asia. In contrast, other developing countries (e.g., Japan, United States, Republic of Korea, and Germany) invest more than 2 percent of their GDP in R&D activities. 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.

State think tank Philippine Institute for Development Studies (PIDS) has conducted numerous studies on the close link between innovation and productivity. According to Gilberto Llanto and Fatima Lourdes del Prado, PIDS president and former research specialist, respectively, aside from physical and human capital, firms need to invest in innovation. They also argue that in designing development agendas, policymakers, donors, and the stakeholder community usually consider the promotion of innovations as a tool to develop the capacity of small and medium enterprises to generate higher value addition and greater job opportunities. Their research also shows that firm size, age, and foreign equity are important factors leading firms to innovate.

Moreover, a case study on the automotive manufacturing industry by Francis Quimba and Maureen Ane Rosellon, PIDS research associates, reveals 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, Aldaba, and del Prado emphasize the need to ease barriers to trade. According to them, 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 among research institutions, 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.


March 30, 2017
Roundtable on "The Future of the ASEAN Community:
Unlocking ASEAN’S Next Chapter"

Venue: Shangri-La Makati, Makati Business District, Makati City

February 28, 2017
PIDS-CPBRD Forum on Expiration of the Waiver for Quantitative Restrictions on Rice Importation by June 2017: Options for Food Policy
Venue: House of Representatives, Quezon City

February 21, 2017
Seminar on Social Welfare Functions and Development: Measurement and Policy Applications
Venue: PIDS Conference Room, 18th Floor Three Cyberpod Centris - North Tower, EDSA cor. Quezon Ave., Quezon City

February 9, 2017
Seminar on Global Uncertainty: Regional Headwinds and the Philippines' Economic Promise
Venue: PIDS Conference Room, 18th Floor Three Cyberpod Centris - North Tower, EDSA cor. Quezon Ave., Quezon City



PIDS ranked among world's best think tanks for fifth consecutive year


For the fifth time since 2012, state think tank Philippine Institute for Development Studies (PIDS) has been ranked one of the world's top think tanks. In the 2016 edition of the Go To Think Tank Index Report released by Think Tanks and Civil Societies Program (TTCSP) of the University of Pennsylvania, PIDS ranked 38th among the 100 top think tanks in Southeast Asia and the Pacific. It has also retained its rank as number one social policy think tank in Southeast Asia and 37th among the top 100 in the world under this category.

PIDS also performed well in five other categories. It maintained its rankings as among the top international development think tanks (70th among the top 130) and among the top education policy think tanks (33rd among the top 65). PIDS also made it to the list of best government-affiliated think tanks and think tanks with the best external relations/public engagement program.





Aside from physical capital and human resource, private firms are also advised to invest in innovations to be more productive and profitable. However, it is important to ensure such investment is well-spent. This study found that product and process innovations do lead to increase in sales and profits, and improve labor productivity. It also showed that firm size, age, and foreign equity are important factors leading firms to innovate. Click here for the full article.



This Economic Issue of the Day provides an overview of the concept of the blue economy and explores how different groups view and apply it to their sustainable development efforts and businesses. There is still no widely accepted definition of blue economy despite the growing interest in it. The article thus calls for the international community to work together in developing a common understanding of the concept and in laying down a set of clear policies and framework for creating a sustainable blue economy. Click here for the full article.



  • PN 2017-04: How Do Official Statistics in the Philippines Fare?
    by Jose Ramon G. Albert

    The Philippine Statistics Authority (PSA) produces the country's official statistics, covering substantial set of socioeconomic statistics and other measures of economic performance. This Policy Note discusses international and local assessments of the national statistical system based on various frameworks. It found, among others, that PSA has yet to fully achieve the improvements envisioned in the Philippine Statistical Act of 2013, such as increase in its budget and strengthened human resource. It calls on the national government to continue investing in statistics, in statisticians, and in the statistical system to ensure that the official statistics of the country will continue to be viewed well and will fare even much better than its current standing. Click here for the full article.

  • PN 2017-03: Who Benefits and Loses from an Untargeted Tuition Subsidy for Students in SUCs?
    by Aniceto C. Orbeta Jr. and Vicente B. Paqueo

    The proposed policy to provide free tuition for students enrolled in state universities and colleges (SUCs) looks appealing. The question, however, is whether it can better implement the constitutional mandate of the state to protect and promote the right of all citizens to quality education compared to other alternatives. This Policy Note finds that free tuition in SUCs can do more harm than good for a number of reasons. Because free tuition involves only partial financing and tuition fee is just a fraction of the total cost of higher education, those who will likely benefit from it are students from richer households as they have the resources to finance the rest. Free tuition fee in SUCs can also tilt the enrollment in favor of them because of the cheaper cost of education. In lieu of the free tuition in SUCs, this Policy Note recommends fully funding the Unified Student Financial Assistance System for Tertiary Education, which has ample avenues for democratizing access to tertiary education through various student financial assistance programs and provides full financing of tertiary education. Click here for the full article.

  • PN 2017-02: Australian SME Micro-Offshoring in the Philippines: Opportunities and Challenges
    by Peter K. Ross and Mike O’Hagan

    An increasing number of Philippine-based business process outsourcing (BPO) centers are targeting Australian small and medium enterprises by offering micro-offshoring services that reduce their costs. This Policy Note examines the sector and considers the potential economic and social gains of this expanding market. This study found it still has to address several challenges, such as government red tape, poor infrastructure and traffic management, and biased adjudication of labor cases before the National Labor Relations Commission. It calls on the BPO sector to move up the value-added chain and provide more sophisticated services to generate greater labor productivity growth and longer-term lift in living standards. Click here for the full article.

  • PN 2017-01: Is the Agricultural Insurance Program of the Philippines Serving the Poor?
    by Romulo A. Virola

    The need for an effective insurance program for the Philippine agricultural sector cannot be overemphasized enough given the effects of calamities and other perils. This Policy Note seeks to assess the coverage, product lines, and premium structure of the current Agricultural Insurance Program (AIP), a government-managed insurance that provides protection to various agricultural producers against production losses. Among other results, the study found the penetration rate of the AIP to be low. It likewise noted several instances that raise question on the capacity of the program to prioritize the needs of marginalized rice and corn farmers. It recommends the streamlining of the program processes to enhance efficiency and to minimize leakages, and the crafting of policies and support mechanisms to strengthen the coverage of marginalized subsistence farmers and the underserved regions. Click here for the full article.




Social enterprises need enabling business environment to thrive—PIDS study

The Philippines needs to develop an enabling "ecosystem" of policies and institutions to scale up social enterprises.

In a recent study released by state think tank Philippine Institute for Development Studies, authors Marife Ballesteros and Gilberto Llanto remarked that social enterprises can be an important force in addressing the gaps between the country's paradoxical experience of positive growth and persistent poverty. READ MORE


PIDS study sees positive impact of greening program on economy and environment

If properly implemented, the government's National Greening Program (NGP) can help in reducing poverty and preserving the environment.

In a policy note released by state think tank Philippine Institute for Development Studies, Senior Research Fellow Danilo Israel said there is high probability the expected outcomes of the NGP will be attained, if it is implemented efficiently and effectively and as planned.

The NGP was a priority program of the Aquino administration aimed at poverty reduction, food security, environmental stability and biodiversity conservation, and enhancement of climate change mitigation and adaptation. READ MORE


Opposition to sex education unfounded—PIDS study

State think tank Philippine Institute for Development Studies disproved arguments against the sex education provision of the Reproductive Health (RH) Bill in a paper written by Michael Abrigo and Vicente Paqueo.

Critics of the RH bill have lobbied that age-appropriate health and sex education in schools will lead young people to have sex much earlier and will increase rates of sexual activity.

Abrigo and Pacqueo cited studies showing not only the lack of evidence for these claims but also the evidence for the opposite. READ MORE


Adverse effects of open access fishing in the PH must be addressed—PIDS

A study by state think tank Philippine Institute for Development Studies disclosed the unintended consequences of open access fishing and fishing ban policies in the Zamboanga Peninsula, the country's sardine capital.

Authors Danilo Israel, Milva Lunod-Carinan, and Vicente Paqueo said the Philippines has reached its maximum economic yield (MEY) as early as the 1960s. For instance, fish stock harvest from 1998 to 2001 was 30 percent higher than they should be. Having gone beyond the MEY, the fishery sector has not only depleted the economic value of its livelihood source but has also caused alarming damage to the environment. The economic losses from overfishing are estimated at PHP 6.25 billion. READ MORE


PIDS study proposes oversight agency for 'catastrophic' health financing

A recent paper released by state think tank Philippine Institute for Development Studies recommends the setting up of a dedicated organization that will oversee the development of policies and implementation of strategies regarding catastrophic health.

At present, various forms of financing for catastrophic expenditures are being provided by different public and private institutions, each of them having its own rules and procedures on how to avail them. The Philippine Health Insurance Corporation, Philippine Charity Sweepstakes Office, Department of Social Welfare and Development, Philippine Gaming Corp., and some members of Congress are among the government entities that provide financial support to patients faced with catastrophic health problems. READ MORE


Future government water and sanitation programs must learn from previous projects—PIDS study

The government has been able to provide water and sanitation to communities that needed them the most. According to a new study by state think tank Philippine Institute for Development Studies, the expansion of water supply and sanitation services has benefited more than 3 million people under both the Arroyo and Aquino III administrations.

However, authors of the study, Alma Porciuncula, Doreen Carla Erfe, and Adoracion Navarro, noted that there is still room for improvement in terms of policy and program design of the government's water supply and sanitation programs. Thus, they argued that it is important to revisit the old programs and evaluate them to ensure the success of similar projects in the future. READ MORE




The annual employment rate for 2016 was reported at 94.5 percent, while the unemployment rate was 5.5 percent, based on the 2016 Labor Force Survey. The labor force participation rate was estimated at 63.4 percent while the proportion of underemployed persons (or those employed persons who expressed desire to have additional hours of work in their present job, an additional job, or a new job with longer working hours) was estimated at 18.3 percent. (Note: Estimates based on the average of the four rounds—January, April, July, and October.)

To download the time-series (quarterly) data on employment, please click this link: http://econdb.pids.gov.ph/tablecategories/index/82.

Source of data: Philippine Statistics Authority


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