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Science and Technology in Economic Development
I. Science and technology and economic growth
Increases in capital and labor are important to the growth of an economy.
But that is only part of the real story. Robert M. Solow, Nobel laureate in
economic science (1987), showed that capital and labor accounted for only a part
of the long-term economic growth of the United States; a substantial part was
attributed to advances in the general state of knowledge.
Numerous studies on the economic growth of nations ascribe a significant
role to specific factors, such as education, improvements in efficiency, and shifts
in the allocation of labor from less productive to more productive activities.
More recent studies -- resulting in what is now known as endogenous
growth theory -- find that technological innovation and economic growth are
mutually reinforcing; that is, economic growth can be best sustained through
technological innovation, and technological innovation can come about from
research and development (R&D).
But who is to lead R&D? In most of the highly developed countries today,
the government led in R&D. That is because R&D has generally been regarded
as a public good. The private sector in developing countries has neither the
resources nor the incentive to generate an optimum level of R&D as it is a costly
and risky undertaking. The private sector lacks the incentive to lead in R&D
because it cannot fully own or exclude others from the ensuing benefits, and the
private rate of return to R&D is typically lower than the social return.
The Philippines’ long neglect of science and technology (S&T), besides
weak governance, has resulted in its poor economic performance for decades.
Figure 1 shows that our Asian neighbors that have had high rates of capital
formation, including R&D, have enjoyed higher productivity and economic
growth. The clear laggard is the Philippines, where the government’s budget for
S&T has been on the order of 0.12% of GDP on average in the last several
years. By contrast, our Asian neighbors have been investing at least 0.5% in
S&T.
Clearly, we need a substantial increase in our budget for S&T if we want
to achieve rapid and sustained economic growth, increase job creation,
dramatically reduce poverty, and significantly improve standards of living for all
Filipinos.
We would, therefore, urge this administration and lawmakers to give
serious attention to the development of S&T by providing the necessary
budgetary allocation. The minimum targets (relative to GDP) should be as
follows: 0.2% in 2007, 0.3% in 2008, 0.4% in 2009, and 0.5% in 2010. These are
very modest targets that would not even bring us at par with our Asian neighbors.
By 2020, the aim should be to allocate at least 1% of our GDP for S&T.
We propose that the increased budgetary support be invested in a
massive, sustained program of capacity building where world-class S&T centers
of excellence linked to regional R&D institutes can provide the right environment
to attract the brightest young minds in the country to become PhDs - expert
scientists and engineers. The priority R&D programs under the DOST’s National
Science and Technology Plan would then be implemented by the most
competent researchers in the country. We also propose a system of regular
external peer review that will ensure optimum efficiency of this S&T investment.
Thailand
Singapore
Philippines
1991-2003
Malaysia
Korea, Rep. of
1981-1990
Indonesia
Hong Kong, China
China, People's Rep. of
-2
0
2
4
6
8
10
%
Figure 1: GDP per capita growth rates: selected Asian countries.
II. Capacity building in S&T
The building up of S&T capacity is urgently needed for increased
productivity, competitiveness and problem-solving skills. There are many areas
for capacity building.
 S&T centers of excellence should be established and maintained in the
various areas of need. At present, some core areas already exist, but they
require completion and additional input of resources.
 We need more focused manpower and institutional development programs,
such as the Engineering and Science Education Program (ESEP). ESEP had
prioritized the training of PhDs in science and engineering and provided
needed facilities and equipment.
 Regional centers of R&D should be established to support specific industries,
but these should be closely linked with the S&T centers of excellence which
will lead the country in different areas of R&D.
 We need to establish S&T-business centers, near the S&T centers of
excellence, which will assist, advise and incubate technopreneurship
ventures.
 We need to invest more resources to strengthen science education at an
early stage through the existing Philippine Science High School system.
 We need to supplement science education in the primary and secondary
levels with up-to-date learning strategies and materials that will encourage
our youth to appreciate the value of science to life.
Our proposals pertaining to capacity building in S&T are found in Appendix 1.
III. S&T Priorities
The DOST’s National Science and Technology Plan (NSTP) has identified
priority areas of R&D that would enhance national productivity and
competitiveness. This we support fully. In Appendix 2, we present specific
proposals prepared by PAASE members and other local researchers for
consideration by DOST and other government funding agencies in the following
areas: agriculture and livestock, food and nutrition, fisheries and aquaculture,
natural products, health and medicine, biodiversity and environment, ecotourism
and livelihood, engineering, material science, energy and ICT. These proposals
represent only a few of the many projects that Filipino scientists and engineers
would like to pursue.
The NSTP further recognizes that in order to maximize its impact, S&T
priorities should be tied to both national and local needs to create trust, linkages
and services for the long term. The benefits from increased S&T support should
reach the sectors which the majority of our people depend on. Consider the
following:
 Over 70% of Filipinos depend on agriculture and aquaculture. The land and
the sea provide the only sustainable sources of livelihood in the Philippine
countryside. More support is needed for agricultural/aquaculture
biotechnology which can produce innovative products and services with high
technology input and reduced environmental risks.
 About 95% percent of business enterprises in the Philippines are small and
medium enterprises (SMEs). This sector is virtually bereft of scientific and
technological advances because SMEs generally do not have the capability
to undertake research and development. There is very little support for S&T
that SMEs critically need.
Investments in R&D in agro/aqua-biotechnology and related areas in the
various regions of the country have a significant multiplier effect because of their
strong local linkages. Unfortunately, there are so many examples of opportunities
that we are losing out on because we do not have sufficient S&T capabilities to
initiate and support research and development.
Government commitment to fund S&T development can catalyze
investments by overseas Filipinos and participation by expatriate Filipino
scientists and engineers to help the country. In 2005, OFWs reportedly remitted
over US$10 billion to their families. Filipino S&T groups with expatriates such as
PAASE stand ready to provide their expertise for worthwhile projects. We should
intelligently harness these diffuse but valuable opportunities into investments for
the future. A clear commitment from the government to support key S&T
development will serve as the catalyst for this unique opportunity for Filipinos
from all over the world to come together to invest in their country’s development.
IV. Ensuring Effectiveness of Science and Technology R&D
Even while an increase in budgetary allocation for S&T is needed, we
must institute a review process that will ensure the effectiveness of the R&D
process based on internationally accepted measures of performance. We
propose that the review process take the following form:

Regular review of scientific and technical output by a panel of
internationally-recognized experts. For this we can tap the expertise of
expatriate Filipino scientists and engineers of PAASE. This panel can
serve as an advisory group under the Legislative Committees on S&T.

The S&T output of our R&D institutes should be up to international
standards. While the primary role of the R&D institutes is to support
specific sectors, e.g., agriculture, health and industry, they are also
expected to publish in reputable ISI-recognized journals. This will help
ensure a high level of research, and it is also an important means of
establishing the international reputation of Philippine scientists and
Philippine products.

R&D targets should be clearly set through a process of consultation which
should include the S&T community, national agencies and local
governments, and the private sector (industry and local SMEs).
This paper was prepared by Philippine-based members of the Philippine-American
Academy of Science and Engineering (PAASE), including Drs. Rhodora V. Azanza,
Gisela P. Concepcion, Alvin Culaba, Fabian M. Dayrit, Ernesto M. Pernia and Caesar
Saloma. February 14, 2006