Productivity-Enhancing Research & Development: Public Spending and Institutions

The intensity of research and development (R&D) that is necessary to accelerate innovation leading to economic growth is nuanced by industry needs and the interplay of variables during pre-R&D, conduct of R&D, technology transfer and commercialization, and the readiness of end-users. The Philippines is behind comparator countries in terms of both public and private investments in R&D. In the public R&D sphere, there are myriad wicked problems that need to be solved to spur R&D investments: low budgets, complex procurement rules, missing markets that hamper technology transfer, lack of human resource complement, and lack of clear and coherent vision on how to harness innovation to improve productivity. We recommend focusing on the low-hanging fruits. There should be an articulated vision on what type of innovation to focus on, complemented by policies to reform or relax bottlenecks regarding budgetary and procurement processes. Government should promote an R&D culture that prioritizes efficient and responsible data sharing, provide clear rationale on the roles, scope, and limitations of existing and proposed research centers, and harness digitalization to streamline processes and to enhance synergies among the government, firms, individuals, and research institutions.