Philippines slips in innovation list

THE PHILIPPINES’ innovation ranking has slipped 15 spots into the bottom 30% of a recent global survey as education and science development continued to fall while governance improvements failed to keep up with faster innovating economies.

The country placed 91st out of 125 surveyed economies this year, from 76th in 2010, in the latest edition of the Global Innovation Index that was released on June 30 by the INSEAD business school.

Out of the 15 countries grouped in the East Asia and Pacific regions, the Philippines was only ahead of Indonesia, which ranked 99th, and Cambodia (111th), and was immediately behind Brunei (75th).

Singapore topped the region as the third most innovative country in the world behind Switzerland and Sweden which were first and second, respectively.

INSEAD defined innovation as the ability to “[implement] a new or significantly improved product (good or service), a new process, a new marketing, method, or a new organizational method in business practices, workplace organization, or external relations”.

While the Philippines improved its infrastructure along with market and business sophistication, these were not enough to offset sharp declines in human capital and research, which mostly concerns education, and scientific outputs.

Institutional innovation and creative outputs improved over the year as well but among the positive indicators these made the smallest jumps.

Institutional innovation marginally improved to 101st from 106th since last year, while creative outputs moved six places up to 90th.

“The improvements are largely driven by private sector, but we are probably not moving up fast enough relative to other countries,” Felino A. Palafox, Jr., Management Association of the Philippines president, said on Monday.

Infrastructure, which includes transportation, energy, and information and communication technologies, made the biggest leap to 68th from 103rd on strong performances in share of reusable energy use (25th), the government’s online service (47th), and ecological footprint and biocapacity (59th).

Low scores in electricity output (93rd) and consumption (96th) were offset by gross domestic product (GDP) per unit of energy use (7th), the country’s best ranking.

Gross capital formation (113th) was one of the country’s lowest scoring indicators.

Business sophistication gained 20 places to 61st and market sophistication moved nine places to 98th thanks to innovations that improve workers’ knowledge (47th) and openness of the country to trade and competition (65th).

Another notable indicator is the trend among firms in the country to engage in innovative joint ventures and strategic alliances (10th).

Poor ratings, however, came in protecting investors (103rd) and the process in approving start-up businesses (104th).

“Doing business in the country is still cumbersome because it is overregulated, while foreign investors are not as attracted to our country because of poor IPR (intellectual property rights) protection and the government’s inconsistency in honoring the sanctity of contracts, which many foreign commerce chambers complain about,” Mr. Palafox said.

In terms of human capital and research, the Philippines plunged 41 places to 116th given poor ratings with regard to the overall education system (116th), tertiary education (69th), and research and development (113th). -ELIZA J. DIAZ, Businessworld