UP: Education is indispensable for economic development

CIDS Summary V.2 final
Education is indispensable for economic development. While this is widely acknowledged, studies have also shown the importance of research and development (R&D) in achieving growth in this age of globalization driven by scientific and technological advancement. Hence, the country’s human or knowledge capital can now be considered as the key for technological innovation to achieve and sustain inclusive growth that reduces inequality and poverty.

Specifically, higher level education and training enable people to create new knowledge, innovate products and processes, and improve productivity. Science and technology innovation supports the manufacturing sector which generates jobs and helps people adjust to new market challenges and opportunities. Innovation also supports small and medium-sized enterprises that create income for the poor.

Despite recent increases in the national budget for education and the adoption of progressive measures such as the K-12 program in the basic education, much remains to be desired and to be done in higher education to bring us up and match with our neighbors in Asia.

We only spend 3 percent of GDP on education, compared to an average of 5-6 percent in the rest of ASEAN. This is why even our best universities lag behind their global and regional counterparts. In 2014, the University of the Philippines ranked only 8th out of the top 10 universities in ASEAN. In 2012, the Philippines ranked 92nd in the global Knowledge Economy Index, far behind Singapore, which placed 23rd.

Expenditure on R&D by government and industry is relatively low. Thus, our level of technology remains low as well in quality and scale, and is concentrated in sectors that are not considered high-value. To catch up and move ahead faster, we need to raise our technological knowledge and skills, which only advanced education and training can address.

This agenda calls for massive government investment in high-level knowledge capital—the so-called “suprastructure” who will then mobilize actions and reforms for economic development. This human capital will also create a knowledge-based economy driven not just by brawn but brains, tapping into one of our richest but least developed resources.

Some of that massive investment should go to the large-scale training of the best Filipino minds in leading knowledge institutions overseas, and in providing sufficient and attractive incentives to bring them back home. This should be complemented by investments in non-formal education, which will raise the skills of our work force. Moreover, continuous improvement in the basic education is also necessary to replenish and sustain the knowledge capital pool.

Filipinos returning with advanced degrees in various disciplines can then form the vanguard of R&D and innovation in Philippine education and industry. But they should be given ample incentives and institutional support to encourage research and productivity.

Furthermore, international experts and educators should also be brought in the country to help their Filipino counterparts and Filipino students catch up with global standards of R&D and with the latest innovation in the field and industry.

To hasten the development of our knowledge capital, a “hub-and-spokes” model of organizing the suprastructure should be adopted at the national and regional levels. The hub is an established center of strength—an institution or an individual—and the spokes are other agents of learning and change in the area. The hub-and-spokes organization provides a focused and coordinated use of knowledge from various sectors in framing development efforts.

In a region, for instance, the hub-and-spokes framework can create local networks of knowledge that can draw on the region’s comparative advantage—the best it has to offer. The model will involve strong partnerships between and among government, academe, private sector, and civil society organizations. Selected state universities in the regions can be encouraged to become research-intensive universities like UP to have strong regional centers of knowledge (hubs).

And because interdisciplinary approach is important in setting the right path to growth, the promotion of science and engineering should be closely integrated with the social sciences, the arts, and the humanities to ensure the holistic development of the Filipino and society.

Moving towards knowledge-based development and governance will require a comprehensive and collaborative effort, including the review and revision of government policies that hinder growth, such as overly restrictive procurement regulations and other bureaucratic bottlenecks. This will also require improvements in supporting infrastructure—in our maritime transport and in our Internet connectivity, among others. Of course, substantially larger investments in education also need to be made; specifically, one percent of GDP should be set aside for the build-up of knowledge capital. Establishment of a cabinet-level Knowledge Capital Development Commission may help accelerate the building up of the country’s knowledge capital.

Beyond infrastructure, human and knowledge capital—the suprastructure of economic growth offers the best possibilities for sustaining inclusive growth, for reducing inequality and poverty, and for transforming Philippine society for the next generation of Filipinos.

The challenge facing the next Philippine President is to recognize the importance and the urgency to build up the knowledge capital, and to implement the measures that will help realize the great potential of such capital in the country’s quest for inclusive growth.

To download a copy of this summary of the think paper, please click here.

To read the press release of the paper Knowledge-based development and governance: Challenges and recommendations to the 2016 presidential candidates, please click here.

To read the full think paper, please click here.

To download the full think paper, please click here.