Philippine R&D Needs a Dose of Keynes

By Dennis Posadas* Contributor THE Philippines held a National R&D Conference at the University of the Philippines last December 2008 to try to synergize its research and development (R&D) efforts in science and technology, particularly in the government. The conference involved most of the government departments and state colleges and universities that have R&D programs. At present, like in most countries, R&D budgets are scattered across many government R&D units and agencies. Getting these agencies and their staff to work together can sometimes be a gargantuan undertaking. In a December 2008 article in the Washington D.C. based journal Science, the Philippines was reported to have spent $81million in R&D in 2007, and this spending has remained basically the same throughout the last decade. This amount represents roughly 0.14% of GDP, a far cry from that of developed countries which often reaches 2%, and is also less than its regional neighbors like Thailand (0.26%) and Malaysia (0.69%). Worse, this amount is not a homogenous figure but is actually the sum total of government R&D spending scattered across many departments and agencies. In a country colonized by Spain and the United States, where the saying goes that it went through “three hundred years of the Church and fifty years of Hollywood,” the normal mode of operation is to take the allocation from the national budget, and in a laizzez faire manner, do whatever one institution or department pleases in R&D. Now this approach may work in countries that have a lot of money to bet on whatever one fancies. Silicon Valley for example in the United States has never adopted any national roadmap for R&D. Instead, its legions of entrepreneurs and venture capitalists pursue their own ideas and let the market decide which ones will be the winners and which ones will eat the dust. But that should not be the case for developing countries like the Philippines. While $81 million is a lot of money for S&T in this country, nevertheless it is chump change compared to other countries. Notwithstanding the fact that labor is cheaper here, even to hire MS and PhD science and engineering graduates, the fact is that scattering this money in a random manner will not yield useful economic results. Take for example the fact that many state colleges and universities are duplicating R&D efforts, instead of trying to find a way to divide up the work and specialize in particular fields. This tends to weaken further the already small amount devoted by this archipelagic country to R&D. A Keynesian (named after economist John Maynard Keynes) national R&D approach should be adopted by the Philippines, where the national S&T roadmap is set by scientists and technologists from the ground up. The Department of Science and Technology (DoST) has picked some fields that the Philippines should specialize in. Since it wields the funding carrot, it has some ability to direct the areas of research. But it has not totally been successful in this effort, judging from the outcome of the National R&D Conference. In order to drive a nail into a piece of wood, you need a strong strike in a concentrated place, and not a lot of small taps in many places. Obviously if you only have $81 million to bet (although this will probably see some increase), you need to pick certain winners and drop certain fields. A small amount of random research, picked from the grassroots by universities themselves can be allowed, but the bulk of the money should be put in certain areas where it can produce results ranging from published papers, to patents, to commercialized technologies, particularly since the need of the times calls for the creation of new jobs and industries from R&D. Take for example the recently passed Renewable Energy Act of the Philippines. This new law creates a mandate for electric utilities to purchase renewable energy in increasing amounts over the next few years, and gives a lot of fiscal incentives and tax breaks to entrepreneurs and investors who go into this area. Obviously this mandate creates a market for clean energy technologies, many of which can be supplied by clean technology companies spun off from R&D. In fact, a renewable energy R&D center, funded by fossil fuel levies, will hopefully create the technologies that can form the basis for new companies and jobs in this sector. But that will only happen, just like in the hammer and nail analogy, if the R&D is in synch with the investor community, with the needs of the market, with the legal and financial framework, and with the culture of the researchers and entrepreneurs. A laizzez faire mentality works in the U.S. but here, it looks like a Keynesian big hammer approach where everyone coordinates their efforts is the only way to achieve this, especially since the amount of money is, by world standards, quite small. The problem is complex, and involves financial, legal and cultural constraints. But there are certain issues that can be resolved that will lead to a realignment of R&D money in the Philippines. First, the percentage of R&D spending to GDP ratio is too simplistic. If one compares the percentage GDP of R&D in the Philippines to Thailand and Malaysia, obviously it is too small. But this ratio does not say anything about how you use this money effectively. One country can have a slightly smaller percentage GDP ratio, but if it spends that money more efficiently than another country that has a greater percentage GDP ratio, then that difference may not be of much consequence. A proper metric, aside from percentage GDP, should include a measure of how well the country is able to publish papers, is able to issue patents, and is able to commercialize technology, from a unit of currency spent on R&D. Otherwise, the focus is on the total amount spent on R&D, which may not be enough to solve the problem. Second, while the capability of scientists to innovate is important, it is also important that they be willing to work in synch with other scientists and with other scientific institutions, in order to complement each other and not have redundant efforts. One issue that complicates things is a difficulty in getting agreement on what technology directions to pursue. The anthropologic and cultural cause of this issue is beyond the scope of this article, but that is what we see in the Congressional Commission on Science & Technology and Engineering (COMSTE). National directions in S&T might be set and arrived at from the top, but this does not always trickle down to the bottom. Perhaps the answer lies in using technology to get everyone’s inputs, and then show where the scientific and technical community consensus lies. Third, the politician should marry the scientist. To some extent, the politicians who run COMSTE have been trying to do this, but the impact on the public imagination still needs some work. The ideal is of course, a JFK exhorting Americans to go to the moon, or a Barack Obama pledging to cut dependence on Middle East oil in ten years. Those national statements, coming from American politicians, have been based on the advice of noted scientific groups in the U.S. But in the Philippines, a general distrust of politicians coupled with a lack of real mainstream media interest in science, and a lack of clear communication between politicians and scientists, seems to have made what can be bang into a whimper. Lastly, the traditionally rigid government bureaucracy (of which I am a part) needs to allow for some flexibility. Take for instance auditing and purchasing. Best practices in procuring scientific and technical materials and equipment need to be benchmarked with fast moving countries, without sacrificing proper purchasing and procurement regulations. There is of course a reason why these rules were installed in the first place, but they also need to take into account the speed of technology change, in order for the Philippines to remain competitive in S&T. Surely countries like the Philippines need to increase their R&D spending beyond the current levels. But to simply equate progress in R&D with an increase in spending will not be enough. How the money is spent to yield published papers, patents and marketable technologies is the more important problem that needs to be faced. More importantly, it is not just about the money, but it is about getting a national consensus of the politicians and the public to back those R&D programs solidly, from private sector support, to investor support, to legal and non-government organization support, to even the public support. Until this synergy happens, the promise of R&D in science and technology will never be fulfilled. Like in roulette, sometimes the answer is to put your chips in as many places as you want to ensure some small wins. But in these gloomy economic times, it looks like as Keynes would argue, it is time for everyone to agree that government needs to make the best big bets in certain areas and skip other areas, in order to create new industries and jobs. Dennis Posadas is the Deputy Executive Director of the Philippine Congressional Commission on Science, Technology and Engineering (COMSTE). He is also the author of Jump Start: A Technopreneurship Fable to be published by Pearson Prentice Hall this April 2009.