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PHL needs to invest in knowledge capital

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FINEX Folio -- Reynaldo C. Lugtu, Jr.

FINEX Folio

Parang lahat ng inyong budget puro research? Baliw na baliw kayo sa research. Aanhin niyo ba yung research” (It seems like all of your budget goes to research. You are so crazy about research. What will you do with those research?)”

This was the comment of Senator Cynthia Villar during the recent Senate budget hearing for the Department of Agriculture (DA) and its attached agencies. She was referring to the P150 million proposed budget of the National Corn Program for 2020.

While this budget figure in absolute terms may be significant relative to others line items such as that for seeds and machinery for farmers. But this underscores a glaring stance — our policy and law makers do not place much importance in investing in research in particular, and to the country’s knowledge capital, in general.

The knowledge capital of a nation, broadly defined as the approaches and capacity in creating innovations and improvements in the processes of production and distribution, has been the linchpin of the long-term economic development of a country, as proven in the landmark book of Hanushek and Woessmann, The Knowledge Capital of Nations: Education and the Economics of Growth, published in 2015.

The authors argued, through rigorous economic and empirical analysis, that the long-run economic growth of a nation is overwhelmingly a function of the cognitive skills of the population, or the knowledge capital of a nation. “The historical consequences of increased knowledge capital prove to be huge — multiples of GDP,” the authors averred.

But sorrily, the Philippines lags in knowledge capital globally and among ASEAN peers. This is evidenced by the 2018 Global Innovation Index (GII) study co-sponsored by the United Nations World Intellectual Property Organization which ranked the Philippines 73rd out of 126 economies, which was steady from a year ago.




While strengths of our country were cited such as knowledge absorption, firms offering formal training and research talent in business enterprise, trade, competition and market scale and market capitalization; key weaknesses were likewise highlighted such as in human capital and research index as determined by expenditure on education, pupil-teacher ratio, global research and development companies’ expenditure, and ease of doing business — positioning the Philippines as ‘below average’ in regional innovation ranking.

Additionally in the area of scientific publications, a leading indicator of a country’s knowledge capital, the Philippines likewise lags among its Asian neighbours. In a paper authored by Dr. Tereso Tullao, Adjunct Professor in Economics of the De La Salle University, he analysed and compared the production of scientific journals from private universities in the country in the areas of medicine, agricultural and biological sciences, social sciences, biochemistry, engineering environmental sciences, and computer science, as listed in Scorpus, the largest global database of published journals.

The study revealed again the poor ranking of our country. In 2018 alone, The Philippine private universities published 4,234 scientific research outputs, compared to 10,348 and 37,677 published from Vietnam and Indonesia, respectively. Though Dr Tullao’s study revealed an improvement from previous years, the Philippines still fall behind other neighbouring countries.

As the 4th Industries Revolution sets in, it’s urgent that our policy makers focus on building our knowledge capital. For one, overhauling our education system to develop critical thinking among students is a necessary ingredient to make this happen. Budgets in research and development among government agencies including state universities and colleges should be sufficient. The private sector, on the other hand, should sponsor and fund research activities in universities to spur the production of research outputs.

We should do these now, or suffer the consequence of being a laggard in the 4th Industrial Revolution.

 

Reynaldo C. Lugtu, Jr is CEO of Hungry Workhorse Consulting, a digital and culture transformation consulting firm. He is the Chairman of the Information and Communications Technology Committee of the Financial Executives Institute of the Philippines. He teaches strategic management in the MBA Program of De La Salle University. The author may be emailed at rey.lugtu@hungryworkhorse.com









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