Global Innovation Index 2017: A glimpse of PHL’s strengths

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LAST time, we introduced the Global Innovation Index (GII), which had the simple goal of evaluating metrics and approaches that better capture the richness of innovation in society beyond number of research articles and the level of research and development expenditure.

The 2017 report was released mid-June, with Switzerland leading both overall and the 48 high-income economies. For the 35 upper-middle income economies, China ranked the highest at 22nd/127 overall. Among the list of lower-middle income economies in this report, Vietnam tops at 47th/127 overall; the Philippines lags behind at 73rd/127 overall (in terms of percentile ranking, 58). Finally, Tanzania leads the low-income economies, at 96th/127 overall.

As mentioned before, the GII is anchored on two subindices—the Innovation Input Sub-Index and Innovation Output Sub-Index—which are, in turn, rooted upon five and two “pillars”, respectively. Institutions, human capital and research, infrastructure, market sophistication and business sophistication make up the first, while knowledge and technology outputs (KTOs), as well as creative outputs, comprise the second. And each pillar mentioned is further subdivided into subpillars and finally indicators.

Strengths

TO fully appreciate the GII, we must look at our performance at each of the indicators studied and compare them with our past scores. For today’s article, let us focus on our strengths, as shown in the index.

Our strongest indicator of innovation is research talent in business enterprise. This refers to the percentage in an enterprise of researchers “as professionals engaged in the conception or creation of new knowledge, products, processes, methods
and systems, as well as in the management of these projects”. We are ranked 8th (6.3 percentile) in the world this year, a steep jump from 18/127 last year (14.1), where it was also listed as a strength, belonging to the business sophistication pillar.

Next top indicator also coming from the same pillar is firms offering formal training, ranking 9th (7.1), rocketing from rank 55 (43.0) last year. It refers to “the percentage of firms offering formal training programs for their permanent, full-time employees”. This was, likewise, a strength last year.

We are on the top 15 spot (11.8) for growth rate of GDP per person engaged, a KTO indicator. We ranked 2nd (1.6) among all countries included in the study last year, which measures labor productivity “defined as output per unit of labor input”. This means that for less cost, we get the job done, which translates to the growth of GDP.

GDP per unit of energy use is the next strength on the list, coming from the institution pillar (16th, 12.6 percentile). The energy here refers to “oil equivalent of energy use”, and is defined as the “purchasing power parity GDP per kilogram of oil equivalent of energy use”.

The fifth strength of the Philippines is in its information and communications technology (ICT) exports (16th, 12.6; KTO). This refers to “[t]elecommunications, computers, and information services exports” (percent of total trade). This year we ranked highest in this among the Asean countries, besting Singapore. Let’s see how.

Other strengths include market capitalization (17th; 13.4; market sophistication); high-tech and medium high-tech output as a percentage of total manufactures output (18th; 14.2; KTOs); graduates in science and engineering (27; 21.3; human capital and research); domestic market scale (28th; 22.0; market sophistication); and foreign direct investment (FDI), net outflows (33rd, 26.0; KTOs). These were listed as strengths too in 2016.

Snapshot of strengths—data from the GII

WE are a nation where 25.5 percent of college graduates are from science and engineering courses. They, and others more, become research talent, comprising 63.2 percent of business enterprises. In relation to this, 59.8 percent of all firms offer formal training to raise the technical expertise of its employees.

The domestic market is fairly large at $801.9 billion (based on the purchasing-power-parity valuation of GDP); with high market capitalization/value, forming 81.7 percent of total GDP. This shows that, of the domestic market, $655.2 is invested in market capitalization.

We are fairly productive in providing knowledge and technology outputs. In fact, we have 0.4 percent of all manufactured items that are high- and medium-high-tech. Moreover, we are particularly strong in providing ICT services exports as it comprises 4.3 percent of the total GDP (and tops this indicator among all of Asean, besting even Singapore). Finally, the three-year average net outflow of FDI, make up 1.9 percent of our GDP.

Thus, looking only at the data above, one can already see where our strengths lie and which direction we are currently heading. One can also have an idea where we need improvement. Policy-makers should constantly review our positioning in the globe and assess whether action should be made (See my article on the National IP Strategy). Once the standard has been set, the public should also take part in raising our innovativeness through their respective industries and fields.

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Josephine Rima-Santiago, Ll. M., is currently the director general of the Intellectual Property Office of the Philippines. She has had more than 20 years of extensive experience in IP as a public servant, educator, practitioner and researcher. E-mail: jrsantiago@columnist.com.

 



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