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Towards an Innovation-Led Development Path in the Philippines

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Towards an Innovation-Led Development Path in the Philippines 1 TOWARDS AN INNOVATION-LED DEVELOPMENT PATH IN THE PHILIPPINES By: The Department of Science and Technology Report Type: Final Technical Report Date: November 8, 2011 IDRC Project Number: 105177‐001 IDRC Project Title: Towards an Innovation‐led Development Path in the Philippines Country/Region: Philippines Implementing Agency: Department of Science and Technology (DOST) Planning and Evaluation Service (PES) General Santos Avenue Bicutan, Taguig City 1603 Cooperating Agencies: National Statistics Office (NSO) Solicarel Building Ramon Magsaysay Boulevard Sta. Mesa, Manila 1008 Philippine Institute of Development Studies NEDA sa Makati, 106 Amorsolo St., Legaspi Village Makati City DOST National Capital Region DOST Region No. VII DOST Region No. XI Selected Local Government Units (LGUs) and Local Universities This report is presented as received from project recipient(s). It has not been subjected to peer review or other review processes. 2 This work is used with the permission of the Department of Science and Technology. Abstract: With the advent of using innovation surveys to provide a better understanding of evolving practices and factors that shape innovation system, the Department of Science and Technology has conducted a study involving the said survey to measure the current state of innovation in the Philippines. The pilot innovation survey covered key cities in the Philippines and focused on firms engaged in Electronics and Food Manufacturing and ICT-related industries. The key findings of the survey revealed that cost factors are the major barriers to innovation and knowledge management (KM) is a good determinant of innovation. It was found that firms active in KM practices have shown high innovation activity across size, industry type, and location of establishment. The results have shown that knowledge networks are weak. Firms do not avail technical assistance from the government, academe and research institutions. They preferred to rely on internal sources and partnerships with customers and suppliers. This showed low cooperation among the key stakeholders of innovation. Building on with these results, it was recommended that government authorities need to work in tandem with the academe and business sectors, strengthen its partnerships to advocate for innovation, and provide more leadership in bringing people and institutions together. Keywords: innovation survey, cooperation, economic growth, competitiveness, academe- industry linkages, Philippine government 3 Table of Contents I. The Research Problem II. Objectives III. Methodology IV. Project Activities V. Project Outputs VI. Project Outcomes VII. Overall Assessment and Recommendations Annexes Annex I. Project Work Plan (Revised) Annex II. Members of Project Core Team and Steering Committee A. The DOST Core Project Team Members B. The Project Steering Committee Members C. The Local Project Steering Committees Annex III. Survey Questionnaire Annex IV. PSC Meetings Conducted Annex V. Final Reports A. National/Integrative Report B. Quezon City Report C. Philippine Economic Zone Authority (PEZA) Areas Report D. Metro Cebu Report E. Davao City Report Annex VI. Field Operations and Processing Manual Annex VII. List of Press Releases 4 I. Research Problem Innovation is recognized worldwide as the main driver of economic progress and social well-being. Policy-makers in many countries seek to create a policy environment that stimulates and supports innovation in their economies and societies, and thereby, increasingly demand the development of policy tools to make innovation better understood, measured and applied in the implementation of specific initiatives in science, technology and engineering. In many countries, the innovation survey has been used and tested as an appropriate policy tool, designed as systems-oriented and policy-relevant, and implemented to produce meaningful policy inputs. In the Philippines, the importance of innovation in national development has recently been recognized. In 2007, the Department of Science and Technology (DoST), in collaboration with the Intellectual Property Philippines, Asian Institute of Management Policy Center and IBM Philippines, launched the National Innovation Strategy dubbed as “Filipinnovation” focused on: 1) strengthening human capital; 2) supporting business incubation and acceleration efforts; 3) regenerating the innovation environment; and, 4) upgrading the Filipino mindset. This initiative provided the impetus for the formation of the Filipinnovation Network, an open and multidisciplinary network with membership of 14 private, 13 government and 11 academic institutions. The members of the Filipinnovation Network have raised the concern on the need to measure innovation in the country particularly the innovative performance of economic actors, and to provide empirical basis for designing effective innovation policies and monitoring their impact over time. To address this need, the DoST, with funding support from the International Development Research Center (IDRC), has initiated the implementation of the project, titled, “Towards an Innovation-led Development Path in the Philippines” (IDRC Project 105177-001). This Project aims to introduce and pilot test an innovation survey in the Philippine statistical system. The conduct of an innovation survey is a necessary step for the development of innovation metrics and indicators. 5 The results of the pilot innovation survey are expected to provide a better understanding of the innovative activities of firms, their performance, their linkages and other relevant indicators for the development of policies and support programs. The survey findings will also offer opportunities for the government to assess and get feedback on the impact of its policies, enable assessment of how technologies diffuse and knowledge spread, and identify gaps and weaknesses in the innovation system. II. Objectives The general objective of the Project is to boost economic performance and social well-being in the Philippines by mainstreaming the innovation system approach into the center-stage of national policy-making processes. The specific objectives of the Project are as follows: 1. to enable the design and administration, in collaboration with relevant stakeholders, of an innovation survey as policy tool for measuring innovative performance of economic actors and for providing internationally comparable data that are systems-oriented, policy-relevant and adapted to the Philippine setting; 2. to stimulate a sustained and collaborative process of policy dialogue, policy learning and adaptive policy-making among researchers, policy-makers and other stakeholders on tapping innovation to boost economic performance and social well being particularly at the sub-national level; 3. to identify and recommend policy tools such as, but not limited to, the establishment of innovation indicators system, innovation scoreboard, free on- line access to innovation survey results, use of panel data, and policy monitoring and evaluation that promote a better understanding by the general public of the importance of innovation in sustaining economic growth and prosperity; and, 4. to generate a set of policy initiatives that can be assessed for possible advocacy and adoption. 6 III. Methodology The project methodology was implemented with minor modifications on the planned composition of Project Steering Committee, as well as of partner organizations. The first year of implementation was delayed as the decision of DOST management to provide counterpart funding was deferred due to cost-cutting policy adapted at that time. The project timetable (originally 24 months) required additional 6 months to implement. With regards to the research methodology, data was gathered through a survey conducted by NSO. The development of questionnaire was based on the concepts, definition and methodology embodied in the OECD Oslo Manual, “Guidelines for Collecting and Interpreting Innovation Data” (3rd Edition, 2005), and patterned after the European Community Innovation Survey (CIS). Three items from the survey instrument designed under the New Partnership for Africa’s Development (NEPAD) were also included in the questionnaire. Then, the questionnaire was contextualized to the Philippine setting and used the reference period, January 2009 to June 2010. Questions pertaining to government support to innovation initiatives were also added. The survey covered the following sites in three major Philippine islands: Luzon (Quezon City and the Special Economic Zones in Cavite and Laguna), Visayas (Metro Cebu which consists of the cities of Lapu-lapu, Mandaue, and Cebu); and, Mindanao (Davao City). The sampling unit is the establishment in the formal sector categorized according to the size of employment, that is, micro, small, medium, and large. The design used stratified systematic sampling with selected industries in different employment sizes within the city/province, and enabled the construction of indicators of innovation. The selected industries include the food, electronics manufacturing, and ICT industries. The total number of samples is 500 with 40% coming from the food manufacturing and the remaining 60% are from electronics manufacturing and ICT industries. The medium and large establishments account for 80% of the samples per industry grouping, while the small and medium 7 establishments account for 10% each of the samples on industry grouping. Out of 500 samples, 474 questionnaires are included in tabulations. Aside from
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