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Preparing the Philippines for the Fourth Industrial Revolution: a Scoping Study

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Preparing the Philippines for the Fourth Industrial Revolution: a Scoping Study AUGUST 2018 DISCUSSION PAPER SERIES NO. 2018-11 Preparing the Philippines for the Fourth Industrial Revolution: A Scoping Study 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 The PIDS Discussion Paper Series constitutes studies that are preliminary and subject to further revisions. They are being circulated in a limited number of copies only for purposes of soliciting comments and suggestions for further refinements. The studies under the Series are unedited and unreviewed. The views and opinions expressed are those of the author(s) and do not necessarily reflect those of the Institute. Not for quotation without permission from the author(s) and the Institute. CONTACT US: RESEARCH INFORMATION DEPARTMENT Philippine Institute for Development Studies [email protected] 18th Floor, Three Cyberpod Centris - North Tower https://www.pids.gov.ph EDSA corner Quezon Avenue, Quezon City, Philippines (+632) 372-1291/(+632) 372-1292 Preparing the Philippines for the Fourth Industrial Revolution: A Scoping Study Elmer P. Dadios Alvin B. Culaba Jose Ramon G. Albert Vicente B. Paqueo Aniceto C. Orbeta Jr. Ramonette B. Serafica Argel A. Bandala Jose Carlos Alexis C. Bairan PHILIPPINE INSTITUTE FOR DEVELOPMENT STUDIES August 2018 Abstract Technological breakthroughs and the interplay of a number of fields, including advanced robotics, artificial intelligence (AI), nanotechnology, neurotech, data analytics, blockchain, cloud technology, biotechnology, Internet of Things (IOT), and 3D printing, have ushered in the Fourth Industrial Revolution (FIRe). These various FIRe technologies are already being adopted by Philippine industries, although in varying degrees of diffusion. The extent to which all the potential benefits will be realized from these technologies depends on the country’s ability to overcome its capacity to aptly adapt to the global disruptions that are expected to come along with the FIRe. The country needs to focus on establishing a solid basic foundation for sustained learning and on accumulating various types of capital, while progressively and systematically closing the existing technological and knowledge gaps. Both the public and private sectors need to pay attention to the miniscule investment it has been putting in R&D; concomitantly, the Government must have an informed view on how to improve the efficiency of its deployment. Other interrelated measures needed to be able to catch up technologically and benefit from FIRe include: (i) openness to international trade and investment, which can be useful vehicles for faster transfer of innovative ideas and technology; (ii) reduced anti-competition practices and more competition in key industries like ICT; (iii) better educated and more trainable workers and more flexible and less costly labor market regulatory environment; (iv) development of the education and training systems, including both Government and private sectors, that can efficiently and equitably produce malleable human capital; (v) accumulation of other types of complementary capital like institutional, organizational and physical capital; (vi) progressive establishment of a universal social protection system to keep the people secure, especially the poor and vulnerable, in the face expected unprecedented business and employment disruptions; and (vii) more investment in data collection, monitoring, testing and evaluation. The opportunities and challenges are multifaceted and complex. To harness the FIRe, Government as a whole should systematically review and adapt its policies, institutions and development efforts in light of upcoming revolutionary changes. Keywords: Fourth Industrial Revolution, Industry 4.0, innovation, R&D, technology, digital, ICT, robotics, artificial intelligence ii Table of Contents 1. Introduction .................................................................................................................. 6 1.1 Significance of the study ......................................................................................... 7 1.2 Objectives of the study ............................................................................................ 7 1.3 Organization of report ............................................................................................. 7 2. Background .................................................................................................................. 8 2.1 Industrial revolutions ............................................................................................... 8 2.2 Disruptive technologies ......................................................................................... 12 2.2.1 Identifying the technologies that can disrupt the current status ...................... 12 2.2.2 Potential technologies that are candidates to be disruptive ............................ 13 2.3 Frontier technologies ............................................................................................ 15 3. The emerging technological landscape ................................................................... 17 3.1 Internet of Things .................................................................................................. 17 3.1.1 Basic description ............................................................................................ 17 3.1.2 Trends and applications ................................................................................. 17 3.2 Artificial Intelligence .............................................................................................. 18 3.2.1 Basic description ............................................................................................ 18 3.2.2 Trends and applications ................................................................................. 19 3.3 Blockchain ............................................................................................................ 21 3.3.1 Basic description ............................................................................................ 21 3.3.2 Trends and applications ................................................................................. 21 3.4 Big Data ................................................................................................................ 22 3.4.1 Basic description ............................................................................................ 22 3.4.2 Trends and applications ................................................................................. 23 3.5 Robotics ................................................................................................................ 25 3.5.1 Basic description ............................................................................................ 25 3.5.2 Trends and applications ................................................................................. 26 3.6 Neurotech ............................................................................................................. 27 3.6.1 Basic description ............................................................................................ 27 3.6.2 Trends and applications ................................................................................. 28 3.7 Nanomaterials ....................................................................................................... 29 3.7.1 Basic description ............................................................................................ 29 3.7.2 Trends and applications ................................................................................. 30 3.8 Additive Manufacturing ......................................................................................... 31 3.8.1 Basic description ............................................................................................ 31 iii 3.8.2 Trends and applications ................................................................................. 32 3.9 Cloud computing ................................................................................................... 33 3.9.1 Basic description ............................................................................................ 33 3.9.2 Trends and Applications ................................................................................ 34 3.10 Energy Storage ................................................................................................. 36 3.10.1 Basic description ............................................................................................ 36 3.10.2 Trends and applications ................................................................................. 37 3.11 Synthetic Biology ............................................................................................... 38 3.11.1 Basic description ............................................................................................ 38 3.11.2 Trends and application ................................................................................... 39 4. Impacts and implications of the Fourth Industrial Revolution................................ 41 4.1 Labor market ......................................................................................................... 41 4.2 Education and Human Capital .............................................................................. 43 4.3 Implications for Social Protection .........................................................................
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