The Philippines needs to spend more on innovation in both the public and private sector if it wishes to sustain its current pace of economic growth over the long term, according to a top analyst of the World Bank.
World Bank Group Senior Economist Marcin Piatkowski, speaking at a recently held general membership meeting of the Philippine Exporters Confederation Inc. (Philexport), said the country should increase spending on innovation to overcome constraints on growth.
“Technology absorption and innovation will be key to further growth in productivity and job creation. But for now, both are lagging behind, constrained by infrastructure, business climate and incomplete system of public support,” Piatkowski said.
The World Bank economist explained that innovation involves the implementation of a new or significantly improved product or process, a new marketing method, or a new organizational method in business practice that confers a competitive edge on the country or a particular sector, and is especially critical as the country faces greater competition because of the regional market integration through the Asean Economic Community.
Piatkowski said both the public and private sectors are underspending in innovation, a problem he suggested would eventually cause the Philippines’ economic growth to slow.
“The projection is, you may be growing at 6 percent for another year or two, but can you really grow for another decade? The Philippines needs to grow at 6 percent for 20 years at least to become as rich as Malaysia today. Can it happen without innovation?” he said.
Piatkowski said other countries that have sizes of gross domestic product (GDP) similar to the Philippines often spend 10 or even 100 times on research and development (R&D) or innovation compared to the Philippines.
He suggested that establishing a strong market identity was the ultimate objective of greater investment in innovation.
“You want to be in a situation where all of you, the companies that you represent, have your own ideas, your own brand names, your own markets and you are the Asian and the global champions in whatever you do,” Piatkowski said.