Op-ed Commentary, Philippine Daily Inquirer, April 9, 2014, p. A15

A plethora of explanations has been advanced why the Philippines (PH) has fallen well behind the other four Asean originals (Singapore, Malaysia, Thailand, and Indonesia). This ranges from the protectionist policies for so-called infant industries from external competition, political instability particularly in the 1980s that practically shooed away Japanese FDIs to the country’s neighbors, weak governance and dysfunctional institutions, to poor infrastructure, rapid population growth, brain and skills drain from massive emigration, and so on. While all these likely mattered one way or another, little is said about the underinvestment in education in general and in science and technology (S&T) in particular. Being a public good, education and S&T create positive externalities and, hence, tend to be privately under-consumed and under-supplied especially in terms of quality.

The development economics literature says that technological innovation and economic growth are interactive and mutually reinforcing. That is to say, economic growth can be effectively sustained by spending for technological innovation that results in new processes, products and markets, and innovation in turn can come about from research and development (R&D) made possible by economic growth. Substantial investments in S&T and R&D are in fact what underlie the sustained rapid growth and poverty reduction achieved by the East Asian miracle economies.

Spending on R&D covers basic and applied research, and experimental development. PH’s R&D spending at 0.15 percent of GDP is woefully inadequate for the country’s modern-day requirements. Sadly, this reflects the relative importance the government and society-at-large give to the economy’s modernization vis-a-vis its Asean contemporaries’ R&D expenditures which hew closer to the UNESCO norm of 1.0 percent of GDP. Consequently, the number of our patent applications has been among the lowest in Asia, namely, 1.8 per million population in 2010 while Thailand had 17.6, Malaysia 43.4, and Vietnam 3.5. Indeed, we reap to the extent that we sow!

Our lag in higher education also stands out. Spending per tertiary student in PH is about 10 percent of per capita GDP which is half of that in Thailand, three-fifths of Indonesia’s, and further short of Malaysia’s and Singapore’s numbers.

Looking at public funding for the top universities in the Asean-5, data for 2011-2012 are quite telling. The National University of Singapore (NUS) with funding of about US$869 million easily tops in the Quacquarelli-Symonds (QS) ranking. University of Malaysia (UM) comes next with US$249 million followed by Thailand’s Mahidol University with US$326 million. The University of Indonesia and University of the Philippines (UP) are ranked 7th and 9th, respectively, though the former has lower funding than UP’s estimated US$178 million. More telling still are the disparities in faculty compensation. For example, basic monthly salary (in US$) for a full professor at NUS is 14,100 vs 2,822 in UM and 1,862 in UP.

A World Bank 2012 study points out that greater efficiency in the financing of education entails a “more selective and performance-based approach in the way public funds for teaching and research are allocated across institutions and targeting scholarships and loans better”. Private resources should also be harnessed to augment public funds. Public-private matching grant schemes have been employed successfully in other countries.

The study also notes that there is a clear case for public financing to support research and STEM (science, technology, engineering and mathematics) capacity, being two areas with high positive externalities. Although the financial costs can be high, the social benefits due to innovation are greater. There is a need to mobilize and allocate resources to a few premier research and teaching universities – UP, ADMU, DLSU, and UST that figure in QS rankings (and U of San Carlos down south) – considering the large resource requirements for high-level research and teaching.

As well, linking the higher education system to industry is an important component of education policy such that the curriculum becomes more responsive to the needs of the industry, thereby avoiding skill gaps and disconnects.  It is extremely critical for PH to have a solid skills base and a stronger capacity for innovation.

When the ASEAN Economic Community (AEC) integration comes into full force by end-2015, the unimpeded flow of faculty and students (apart from goods, capital and labor) across national borders can be expected. It is urgent for PH’s higher education institutions (HEIs) to take qualitative improvements in their faculties and curricula much more seriously. But this can only happen if society accords a higher value to quality education, R&D and innovation required for the country’s economic modernization and long-run inclusive development. Concretely, this means that much greater funding must be made available by both the government and private sector to a few select HEIs that will have a spread effect over time.

If this is achieved along with other policy reforms, the country would be on a stronger platform to face up to the AEC challenge. Otherwise, an uncompetitive PH may have to bear with a double whammy: (a) dumping of products from other countries, and (b) accelerating drain of already scarce human resources to greener pastures in AEC, thereby further hurting industry besides agriculture.

Media will be key in rebalancing society’s cultural values from the glitz and glamour of showbiz and sports to the critical importance of quality education, S&T, and innovation. With AEC ringing the doorbell, it can’t be business-as-usual.