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close this bookTechnological Independence The Asian experience (UNU, 1994, 372 pages)
close this folder5 The Philippines
View the document(introductory text...)
View the documentThe historical roots of technological dependence
View the documentS&T policy: rhetoric and reality
View the documentCase-studies
View the documentCase-study results
View the documentTechnological dependence: nature and consequences
View the documentS&T in the Philippines: inputs and outputs
View the documentThe vicious circle paradigm
View the documentThe anatomy of technology transfer
View the documentThe search for models: learning from Asia
View the documentVision and commitment
View the documentToward a leap-frogging strategy
View the documentNotes
View the documentBibliography
View the documentAppendix 1
View the documentAppendix 2. major achievements of S&T in the Philippines

(introductory text...)

Alvin Toffler's paradigm of the three waves of civilizations, following and sometimes overlapping one another, represents the major stages of S&T development.1 His civilizations also reflect an ascending level of scientific and technological sophistication. They are characterized by the following technologies:

1. First-wave technologies, comprising the pre-industrial technologies which are labour-intensive, small-scale, decentralized, and based on empirical rather than scientific knowledge. The intermediate, appropriate, or alternative technologies based on the Schumacherian philosophy of "small is beautiful" also fall into this category.

2. Second-wave technologies, comprising the industrial technologies that were developed between the time of the Industrial Revolution and the end of the Second World War. These are essentially based on the principles of classical physics, classical chemistry, and classical biology.

3. Third-wave technologies, comprising the post-industrial or high technologies which are called science-intensive because they are based on our modern scientific knowledge of the structures, properties, and interactions of molecules, atoms, and nuclei. Among the important high technologies are micro-electronics, robotics, computers, laser technology, optoelectronics and fibre optics, genetic engineering, photovoltaics, polymers, and other synthetic materials. Some of the representative types of technologies in the first-wave, second-wave and third-wave classes are tabulated in the S&T taxonomical matrix given in table 1.

Table 1. S&T taxonomical matrix

Type of technology

First-wave technologies

Second-wave technologies

Third-wave technologies

Materials technologies

Copper, bronze, iron, glass, ceramic, paper

Steel, aluminium, dyes, plastics, petrochemicals

Polymers, semiconductors, liquid crystals, superconductors

Equipment technologies

Plough, lathe, mills and pumps, spinning wheel

Engines, motors, turbines, machine tools

Laser tools, micro processors' robots

Energy technologies

Wood and charcoal, wind power, water power

Coal, oil, hydroelectric power, geothermal power

Solar cells, synthetic fuels, nuclear fusion

Information technologies

Printing, books and letters, messengers

Typewriter, telephone, radio, telegraph, TV

Computers, fibre optics, artificial intelligence

Life technologies

Traditional agriculture, animal breeding, herbal

Mechanized agriculture, surgery, antibiotics, food

Hydroponics, artificial organs, genetic engineering

It is possible to define five discernible stages in the development of a national technological capability. These are, in ascending order: (1) operative capability; (2) adaptive capability; (3) replicative capability; (4) innovative capability, which is the ability to make significant modifications and improvements on the basic design of existing technology; and (5) creative capability, the ability to design and produce an entirely new and revolutionary technology.

The attainment of stage 5 (creative capability) represents technological mastery in a given country.

The notion of technology is complex, with numerous links to other complex notions: the conceptual framework that we use in this study, including the case-studies, is the techno-system shown in figure 1. This shows the ends and means of organized production as well as the growth and evolution of the useful stock of technical knowledge.

The stock of relevant knowledge in the information subsystem interacts with the other components through the flow of information and feedback processes. It consists not only of scientific and technical knowledge, but also managerial, banking, legal, and other skills.

One mechanism that stimulates the growth of the stock is research and development (R&D), a component of the techno-system linked with the others through information flows and feedbacks. The R&D component is the source of changes.


Fig. 1. A techno-system for product X

The definition of inputs and outputs for the techno-system also defines essentially its system boundaries and structure. In the copper industry, for example, we could consider either copper metal or copper wire to be the principal output of the techno-system. The principal input could be either just energy or energy and copper concentrates. These choices imply various configurations of the system components. To reduce arbitrariness, the principal output is limited to consumer products or intermediate products. The inputs could either be endogenous (internal to the system) or exogenous (outside the system). Of the various system components, material inputs, capital, and unskilled labour are defined as exogenous, while skilled labour and managerial inputs, which are essentially information, are considered endogenous.

One could state, by way of summary, that the techno-system is conceived to be an organized structure for the creation of products to satisfy a set of human needs. Its central feature is the knowledge stock which acts as the source of skills and expertise in the operation of the various components. It provides the mechanism for systems' memory and learning. Technology refers to the knowledge and skills, either in software or embodied in hardware, associated with productive components of a techno-system.

The system "crossfeeds" are exogenous factors which greatly affect (i.e. influence the system characteristics of) the techno-system. These may be classified into four broad categories.

Political/legal factors:

- Political stability/government and political structures. - State perception of S&T.
- State priorities in S&T.
- State incentives, disincentives.
- Endogenization of S&T.
- State policies on technology transfer.
- Policies of major trading partners.
- Activism of engineers and scientists.
- Interests of political leaders.
- Capacity for policy implementation.
- Consensus on development goals.
- Acceptance of meritocracy.
- Existence of policy instruments favouring self-reliance.
- Existence of vested interest for technological dependence. -Corruption.

Sociocultural factors:

- History of S&T.
- S&T tradition.
- Commitment to self-reliance in S&T.
- Social environment for successful technology transfer. -National pride.
- Social equity in technology development. -Existence of a "techno-class."
- Educational levels in S&T.
- National S&T potentials.
- Existing technological capacity.
- Social cohesiveness and stability.
- Self-reliant attitudes of scientists/engineers.
-Class character of technology.
- Attitudes favouring technological dependence.

Economic factors:

- Economic development philosophy.
- Existing structure of the national economy.
- Economic roles of the private and state sectors.
- Local market size.
- Economic dualism.
- Strong local demand for foreign products.

Technology transfer factors:

- Transfer mechanisms.
- Capabilities for technology choices.
- Learning effects of technology transfer.
-Costs of technology transfer.
- Terms of technology transfer.
- Characteristics of technology.

We use a two-level definition of S&T self-reliance. At the macro level, self-reliance is defined as at least the existence of replicative capacity in all types of second-wave technologies. These are the entries in the third column of table 1. This definition may be complemented by choosing some values of the indicators in table 2.

At the micro level, self-reliance is associated with a specific integrated production system. It must be expressible in terms of systemic characteristics such as goal-setting, inputs and outputs, dynamics, control, learning and memory, etc. This is in contrast to the macro definition of S&T self-reliance, which is a definitive state of a country's S&T capacity. For example, it is only meaningful to talk about self-reliance in copper wires, or personal computers, or refrigerators. The concept, therefore, is micro.

Table 2. Comparative education indicators


Number enrolled in primary school as percentage of age-group

Number enrolled in secondary school as percentage of age-group

Number enrolled in higher education as percentage of population aged 20-24


Total

Male

Female






1965

1983

1965

1983

1965

1983

1965

1983

1965

1983

India

74

85

89

100

57

68

27

34

5

9

China

89

104

-

116

-

93

24

35

_

1

Philippines

113

114

115

115

111

113

41

63

19

26

Thailand

78

99

82

101

74

97

14

29

2

22

Republic of Korea

101

103

103

104

99

102

35

89

6

24

Japan

100

100

100

100

100

100

82

94

13

30

Source: World Bank, World Development Report, 1986.

The historical roots of technological dependence

Even before their contact with Western cultures, Filipinos already had an alphabet, some mathematics, a calendar, and a system of weights and measures. They were engaged in rice farming, fishing, and the mining of gold. Medicine based on local herbs was practiced. Small boats and ships up to 2,000 tons were being constructed out of logs.

The Spaniards introduced the manufacture of lime, cement, and bricks and the use of concrete materials. Primary education was started by the Spanish missionaries in 1565. There were about a thousand of these parish primary schools by the end of the sixteenth century. The Spaniards also started higher education in as early as 1597 with the establishment of the Colegio de Cebu (now the University of San Carlos), and the University of Santo Tomas opened in 1611. Admissions to these schools were limited to a select few.

The emphasis in the church schools was on classical learning, specifically Latin, Greek, philosophy, the humanities, and law. Although medicine and pharmacy were taught, the natural sciences and engineering were generally neglected. The educational system, primarily based on the propagation of Roman Catholicism, did not foster a scientific tradition of scholarship.2 On the contrary, it reinforced the superstitious, pre-scientific outlook of the existing folk beliefs.

The teaching of science was disdained and Filipino students were discouraged from its pursuit. The emphasis was on rote learning. The objective of the lesson, for example, was not to teach physics, but to convince Filipino students that they were incapable of learning physics. Yet the Spanish system produced Filipinos whose liberal education was comparable to that of the graduates of European universities.

In the Spanish colonial period, the cultivation of sugar and coconuts was started, and to support these activities the first agricultural school was established in Manila in 1861. Since then, sugar and coconuts have become the prominent elements of the Philippine economy.

The significant change during the American colonial period (18981946) was the establishment of an alternative to sectarian education. A department of Public Instruction was created. American teachers were imported, and English was used as a medium of instruction. In 1901, a Bureau of Government Laboratories (now the National Institute of Science and Technology) was established and concerned itself initially with activities related to chemistry and tropical diseases. In 1908, the first state university, the University of the Philippines (UP) was established. In the following year, 1909, the College of Agriculture was set up in Los Banos. In 1910, the College of Medicine was organized from the already existing Philippine Medical School. In 1926, scientific research was started at the College of Veterinary Medicine, and the School of Hygiene and Public Health was added to the University of the Philippines.

It is interesting to note that, as in the Spanish period, the focus of the American period was also on agriculture and the medical sciences. Industrial technology was initially relegated to the vocational level at the Philippine School of Arts and Trades. This bias is also reflected in the emergence of scientific periodicals. The Philippine Agricultural Review was first published in 1908, whereas the UP Natural and Applied Science Bulletin was started 22 years later. Even today, there are no specialized journals in physics. The history of the formation of scientific societies also reflects this uneven development. The Philippine Medical Society was organized in 1901 while the Philippine Society of Civil Engineers was formed only in 1933. The early bias towards agriculture and medical sciences was also prominent in the manpower training programme.

The Philippines was effectively transformed into an exporter of agricultural products and raw materials and an importer of manufactured goods. This hindered the emergence of economic self-reliance and industrialization. There was practically no demand for research engineers and physical scientists. The emphasis was on agricultural and medical research.

The momentum of this colonial policy has continued up to the present. Caoili3 points out that factors associated with this colonial condition resulted in the cultivation of Filipino tastes for American brands and products. Cultural imperialism also critically influenced the outlook of the nascent Filipino scientific community.

In 1934, the American colonial government sanctioned the formation of the National Research Council of the Philippines, which was patterned after American models. Filipino scientists and their research were more relevant to the American condition, since the US was where they obtained their training and where their peers resided. Beyond the social effects of colonialism, the impact on the industrialization process itself has been profound.

As Yoshihara points out,4 the entrepreneurial class in the Philippines dramatizes its colonial origins. Only one-third of entrepreneurs today are native Filipinos, the other two-thirds being mostly foreigners. Even during the early years of independence, Philippine industries were dominated by the Americans.

After the end of direct American rule in 1946, the uneven development of S&T in the Philippines continued. Most of the scientific organizations established by the independent Philippine government were also predominantly agriculture-based. The physical sciences, engineering, and mathematics continued to be neglected.

In 1956, a National Science Board was established by Republic Act 1606 to promote scientific, engineering, and technological research. In the same year, the Chairman of the Senate Committee on Scientific Advancement submitted a "Report on the Status of Science in the Philippines" to the President. Among other things, it recommended "an all-out financial support of scientific work and the establishment of a coordinating agency to handle scientific matters." This gave birth to the Science Act of 1958 (Republic Act 1067), which abolished the newly established National Science Board and created the National Science Development Board (NSDB). As reflected in the expenditures for R&D, the emphasis continued to be on agriculture and medicine, which accounted for more than half of all R&D funds. Basic research in the physical sciences was given something like 1-3 per cent of the total R&D budget, and applied industrial research about 5-15 per cent. According to NSDB figures for the 1960s, there were more physical scientists and engineers engaged in R&D, together constituting about 68 per cent of the total R&D workers. Life scientists (including medical and agriculture) were only about 15 per cent of the total. Thus, R&D expenditures were also biased in favour of agriculture and medicine.

The year 1968 is significant in the history of S&T in the Philippines. Presidential Proclamation No. 376 provided NSDB with a 35.6 hectare area in Bicutan to house the future Bicutan Science Community, consisting of research laboratories, pilot plants, science museum, etc. Moreover, the Congress of the Philippines passed Republic Act 5448, which imposed new taxes for a Special Science Fund to finance scientific activities for the next five years.

In the early 1970s, NSDB's principal concern was the infrastructural development of the science community. Most of the Special Science Fund was used for construction of the buildings of the National Science and Technology Authority (NSTA) and the other institutions.

The gross national expenditure for S&T for the period 1970-1975 varied from 0.21 to about 0.48 per cent of the GNP. Almost one-half of the research grants went to the University of the Philippines (UP). The significant developments in this decade were the establishment of the Philippine Council for Agriculture and Resources Research

(PCARR) and the Technology Resource Centre (TRC). PCARR became the effective research coordinating mechanism in the agricultural sector, resulting in more efficiency in the allocation of resources. This further strengthened the already dominant role of agriculture. The creation of TRC outside the orbit of NSDB was only the beginning of the dismantling and weakening of NSDB's monolithic hold on Philippine S&T. In this period, the Metals Industry Research and Development Centre and the Philippine Textile Research Institute were transferred from the NSDB to the Ministry of Trade and Industry. The National Computer Centre was established under the Ministry of National Defense. The TRC operates a technobank and a computerized database connected to foreign and local databases. The NSDB was pre-empted by others in the new and vital information technologies.

In 1982, NSDB was reorganized into a National Science and Technology Authority (NSTA) with four sectoral councils patterned after PCARR. In spite of this, however, NSTA was outside the mainstream of the Philippine industrialization programme. The Ministry of Trade and Industry (MTI) was supervising the Technology Transfer Board and the establishment of the country's major industrial projects. On the other hand, the TRC was implementing the so-called Technology Utilization of Energy under the Philippine National Oil Company. The control of MTI and TRC was in the hands of non-scientists. The management of S&T development in the Philippines was fragmented among various agencies. In spite of the transformation of the NSDB into an NSTA, it has, in fact, been considerably weakened by the loss of control over some of the important elements of national S&T development.

S&T policy: rhetoric and reality

During the American rule in the Philippines, science and technology policy was outwardly benevolent and paternalistic but implicitly colonial in purpose. The early articles in the first issues of the Philippine Journal of Science were mostly aimed at investigating the country's natural resources, which were extremely useful to the colonizers. There were inventories of flora and fauna in various places, analyses of local minerals, taxonomy, geologic explorations, and tropical medicine. There was practically no "frontier" research in which the motive was simply to discover and elaborate the laws of nature. The Filipino scientists generally served as apprentices to the American researchers.

The scientist as classifier, data-gatherer, and taxonomist became the model of the Filipino students. Many of the first American-trained Filipino scientists were cast in this image. The scientist as a technician rather than a discoverer became a tradition which persists up to the present time. This is the taxonomy tradition in science in the Philippines. Its non-biological equivalents are, for example, the irradiation of various local materials, the chemistry of Philippine natural products, and the geology of various sites in the country.

There was no serious attempt to introduce industrial technology in the Philippines. The first colleges were the College of Agriculture (1909) and the College of Medicine (1910). Industrial technology was introduced later, in 1926, with the establishment of the Philippine School of Arts and Trades. Although a College of Engineering was established at the UP in 1910, engineering was not actively promoted, with the exception of civil engineering, which was needed for the construction of public facilities and for the surveying and mapping of the country. It was perhaps for this reason that the Philippines today has significant capability in this field. Philippine construction and surveying firms are carrying out projects in other countries.

The recognition of the importance of science and technology in the Philippines has not been wanting. In the 1935 Constitution, there is a provision (Article XII, section 4) which affirms: "the State shall promote scientific research and inventions." In the 1973 Constitution, the provision even clarified the role of S&T in development. Article XV, section 9(1), states: "The State shall promote scientific research and invention. The advancement of S&T shall have priority in national development. "

The first concrete step in the implementation of the constitutional policy on science and technology was the enactment of the Science Act of 1958 (Republic Act 2067). It reaffirmed, in no uncertain terms, the belief in S&T as a tool for national development.

However, the picture that emerges from the actual allocation of government resources belies these good intentions. Upon its creation, the National Science Development Board was given a lump appropriation for five years. During this period, the growth rate in R&D expenditure was apparently a healthy 12.3 per cent. However, the average growth rates of all other government expenditure at that time was 13.0 per cent. Thus, the S&T sector received no special treatment. On the contrary, after the lump sum period, when NSDB had to compete with other government agencies, the growth rate for R&D funds was less than 1 per cent.5

In more recent times, the appropriation for NSTA has been, in general, declining as a percentage of the national budget. This is shown in figure 2. The sudden increase in 1983 was merely due to the reorganization of NSDB into NSTA: some new agencies were created or were attached to NSTA, resulting in an apparent increase in appropriations. Figure 3, which shows the R&D budget of NSTA as a fraction of the national budget, demonstrates the government's real attitude towards S&T research.

In sharp contrast with the financial reality, the rhetoric of presidential statements of policy have been bold, ebullient, and encouraging. Support for science in the Philippines has become something like motherhood statements. In the budget message of 1957, the President said: "Scientific research shall be intensified and accelerated, scientists adequately paid, because the results of our scientific investigations are the bases of economic and social progress." In 1966, in the State of the Nation Address, the President stated: "Our best efforts shall be directed to encourage the development of research." In 1968, the President once again bravely asserted that the country would "put scientific research on a systematic and continuing basis and it [in reference to a proposed, but never realized, science centre] will become the focal point of the scientific effort of the nation."

These statements were by three different Presidents of the Republic. Statements of this nature are common during science weeks, sponsored by the NSTA. NSTA usually takes them seriously as policy statements and formulates programmes accordingly, only to be disappointed at the actual results.

There have been three major policy episodes in science and technology in the Philippines, corresponding roughly to the present, the 1970s, and the 1960s. In the 1960s, the slogan was "import substitution," which mimicked the economic thrust of the government. Four priority areas were identified:

1. Basic needs and import substitution.
2. Quality improvement of exports.
3. Waste materials and product utilization.
4. Science promotion and education.

Looking back and evaluating the tangible results of this effort, it was only in education that the policy possibly made some mark. This was simply because of the continuous support of NSDB scholarships. Some curricular materials for science subjects were developed at UP.

In the 1970s, the battle cry was "mission-oriented research." Although several S&T missions were identified and planned' none was actually funded or implemented. The inertia of the R&D community in doing what they have been doing, and the antipathy toward the Marcos administration, ultimately led to the demise of the policy and the NSDB administration that supported it. The policy package also included organizational reforms of the NSDB. These were the only ones that were actually realized. Organizational changes are always easier to undertake than programmatic changes.


Fig. 2. NSTA general budget, 1976-1985


Fig. 3. R&D allotment of the NSTA, 1976-1985

The general policies of the NSTA for the 1980s were the following:

1. The strengthening of the support system for industries, and the emphasis on mission-oriented research for agriculture, natural resources, health, and energy.

2. The provision of increased resources for S&T, particularly for R&D and manpower development.

3. The strengthening of regional S&T institutions in order to encourage industrial dispersal and country development.

4. Encouraging the scientific community to evolve largely self-regulatory but centrally coordinated R&D organizations that would promote creativity and minimize administrative impediments. "Demand-pull strategy" was the policy strategy of the early 1980s. This was accompanied by an elaborate National Science and Technology Plan. To a certain extent, the demand-pull strategy accomplished its goals. Some consumer products, such as soy sauce, bath soap, salt, and charcoal, were produced in cooperation with private industry and eventually marketed.

The National Science and Technology Plan was obviously the work of a committee. It contained a good number of priority areas, from ecology to micro-electronics' that could not possibly be supported at any reasonable level by the meagre funds of the NSTA. As previously, no specific missions were identified and pursued under a mission-oriented approach. The flamboyant commitment made by statutes and plans to S&T had not been matched by the outlay of financial resources.

An examination of the kind of research projects undertaken by the NIST from 1946 to 1982 shows a continuation of the emphasis on the analysis and use of Philippine natural products: earthenware from Philippine clays, sweet potato flour, powdered dills (dried fish), oxalic and oxalates from Philippine vegetables, cottonization of ramie fibers, and others of the same genre.6

Thus, there was no essential departure from the colonial S&T policy. The only difference was that there were no American overseers. This kind of research has acquired so much momentum that it continues to command the commitment of a significant fraction of R&D funds. While its importance cannot be denied, the resulting inhibition of the development of other scientific fields is unfortunate. The colonial policy has a historical momentum, a life of its own, as it were. It appears to be impervious to policy innovations. The most difficult problem in S&T policy formulation seems to be the cultivation of the receptivity of the political leaders and the science community itself to new policy directions.

The economic history of the Philippines is one of chronic crisis and increasing poverty for an increasing number of its citizens. This is reflected in the continous devaluation of the Philippine peso from 2 pesos to the US dollar in 1946 to 20 pesos to the dollar in 1986. Poverty has also inexorably increased. Forty years ago, about 40 per cent of the population was below the poverty line. Today, the figure could be as high as 85 per cent.7 Although the economy showed impressive gains in the three decades after the Second World War,8 the lasting foundations for sustainable growth in terms of indigenous capability to support modern productive processes were not put into place. In spite of the respectable increase in Net Domestic Product in the last few decades, Philippine economic development was accompanied by high rates of unemployment, wide disparities in income distribution, and regional concentration of productive facilities in the Metro Manila area.

During the period 1949-1969, the annual average growth of manufacturing was an impressive 8.5 per cent. However? this was mostly illusory industrialization, because there was negligible enhancement of local technological capability. Furthermore, the policy merely favoured the manufacture of import-substituting consumer goods and discriminated against the manufacture of capital goods and exports.

The lack of concern for the technological aspects of industrialization is also reflected by the expenditures of private industry on R&D. In a survey of the 50 largest industrial firms in 1956, it was found that only 350,000 pesos were spent for R&D.9

The early exuberant growth of manufacturing in the Philippines in the 1950s was not sustainable because it was not self-reliant growth. It was not based on local technological capability, and it did not rely on local innovation and international competitiveness for growth. It was simple import-substitution with most of the capital goods and technology imported.

Dependence on foreign technology is apparent in the predominance of foreign brands in the Philippine consumer market. To a certain extent, this was the result of the early industrialization efforts based on an undiscriminating import-substitution policy. The case of the cigarette industry provides an interesting insight. Before the 1950s, there were many local brands of cigarettes. When the American brands were introduced in the 1960s, local brands were pushed into oblivion. What eventually survived were those companies with strong links to American companies.

Because of the failure of the policies of the 1960s to stimulate the industrial sector, a package of attractive incentives was put together in the form of the Industrial Incentives Act of 1967. The Act was aimed at stimulating investment in industrial enterprises, and consisted primarily of fiscal inducements. In subsequent legislation (P.D. 92), fiscal incentives were also provided to promote labour intensiveness and backward integration.

Yet these incentives did not include a provision on the transfer of technology and the assurance of a learning process for local technologists. Although a Technology Transfer Board was created, the main motivation was to safeguard the interests of local investors and not to ensure a real technology transfer.

In spite of the Industrial Incentives Act and its obvious attractions, industrial growth was very modest in the 1970s (table 3). Only a few took advantage of the government incentives. In 1973, there were only 131 firms registered with the government."' It was clear that entrepreneurs had no real interest in new, pioneering ventures- an attitude which persists up to the present.

The uneven growth of agriculture since the 1950s (table 2) and the lack of a outstanding performance indicates that the relatively heavy emphasis on agricultural R&D was not significant.

The general picture of S&T manpower in the Philippines is shown in table 4. In this table, the 1965 data, obtained from the Survey of Scientific and Technological Manpower conducted by the NSDB in 1965, serve as the baseline figures. Using these figures, the future supply of S&T manpower was calculated from the data on graduates of the country's educational system.

Table 3. Average annual growth rates of domestic product (1972 prices) by industrial origin, 1949-1982 (percentages)


1949-53

1953-57

1957-61

1961-65

1965-69

1969-73

1973-77

1978-82

Agriculture

7.7

4.3

4.2

4.6

4.0

3.4

5.4

4.1

Industrial sector

8.8

8.1

3.7

5.8

5.5

7.3

8.1

4.9

Mining

23.5

7.7

1.0

2.7

14.6

11.4

4.3

3.2

Manufacturing

14.1

11.1

5.7

4.8

6.6

7.5

5.0

3.8

Construction

0.3

2.6

-1.6

10.8

-0.6

5.2

21.8

8.7

Utilities

3.6

5.7

2.5

3.0

5.3

7.9

11.2

9.0

Service sector

9.4

0.6

4.6

4.6

4.7

4.6

5.2

4.7

Net domestic product

8.6

6.2

4.2

4.8

4.6

4.9

6.1

4.3

Source: National Accounts Staff, National Economic and Development Authority.

Table 4. S&T manpower in the Philippines



Scientists and engineers




Working in R&D





Breakdown by field of education training (units)

Year

Population(in unite)

Total stock (in units)

Total number (in units)

Natural sciences

Engineering and technology

Agricultural sciences

Medical sciences

Social sciences

1965

31,886,081

81,600

25,600

1,838

11,900

2,187

5,575

4,100

1970

36,684,981

100,385

31,493

2,261

14,638

2,690

6,858

5,044

1975

42,070,660

115,482

36,230

2,601

16,840

3,094

7,890

5,802

1979

47,719,000

128,897

40,433

2,903

18,793

3,453

8,805

6,476

1985

53,108,000

157,000

-

-

-

-

-

-

1990

59,846,000

177,026

-

-

-

-

-

-

Source: UNESCO.

The following observations could be made from the manpower figures:

1. The proportions of scientists and engineers increased only slightly, from 26.5 per 10,000 in the 1960s to 27.0 per 10,000 in the 1970s. This is expected to remain more or less constant up to the 1990s. The growth rates are quite low. The numbers appear to be rather high when compared to more developed countries. However, a small fraction of the total S&T manpower has graduate training and fewer still are engaged in R&D.

2. In the natural sciences, there were marked increases. For the 1980s, increases in all fields are predicted except in agriculture. However, growth rates will decrease.

3. The trend shows that the number of scientists and engineers in R&D will increase, but at a decreasing rate.

There were 1,157 colleges and universities in the Philippines in 1984. About ?3 per cent of these were private schools. Of the graduates of these schools, classified by field, only 22 per cent studied engineering and the sciences.11 The state of science education in the country is perhaps reflected by the figures in physics, chemistry, and mathematics. In a survey conducted by the Kilusan ng mga Siyentipiko sa Pilipinas, the following facts were reported:

1. In the 1970s, there were 250 chemists. Only 15 per cent of them had graduate degrees.

2. In physics, there were 21 Ph.D.s and 15 M.Sc. degree-holders. Only 10 were actively engaged in research. More than 95 per cent of college physics teachers did not have a B.Sc. physics degree.

3. In mathematics, fewer than 1 per cent of the teachers had Ph.D. degrees.

4. There were only 10 institutions which were doing research. The University of the Philippines had 75 per cent of the total research projects.

Tables 5 and 6 reflect the allocation of financial resources for R&D. Three general sources are: the government, the private sector (private industry and foundations), and foreign sources.

Table 5. R&D expenditures: Breakdown by source and sector of performance, 1979
(in thousands of pesos)


National



Sector of performance

Government funds

Other funds

Foreign

Total

Productive

820

75,815

876

77,511

Higher education

84,250

49,347

-

133,597

General service

166,914

53,871

14,148

234,933

Total

216,372

143,579

7,830

367,781

Source: UNESCO, Science and Technology in Countries of Asia and the Pacific Policies, Organization and Resources, Paris: UNESCO, 1985.

Table 6. R&D expenditure: trends

Year

Population (millions)

GNP (in millions of pesos)

Total R&D expenditure (in thousands of pesos)

R&D expenditure as percentage of GNP

Per capita R&D expenditure

1965

31.886

23,382

41,198

0.18

1.29

1970

36.685

41,751

65,056

0.16

1.77

1975

42.071

114,265

239,233

0.21

5.69

1979

47.719

220,935

446,041

0.20

9.35

1985

53.108

475,147

985,455

0.21

18.56

1990

59.846

979,089

2,046,748

0.21

34.20

Source: UNESCO, Science and Technology in Countries of Asia and the Pacific: Policies, Organization and Resources, Paris: UNESCO, 1985.

Table 7. Per capita government budget for education

Schools

Cost per student (1982 pesos)

Public elementary schools

392

National secondary schools

1,037

Locally funded high schools

123

Government tertiary schools

5,636

Source: MECS and NSTA, Science Education Development Plan, Vol. 1, November 19X5.

It is worth noting that in 1979 about 69 per cent of the total R&D funds were provided by the government. The private sector contributed about 39 per cent, with foreign sources contributing about 2 per cent. The total amount spent for R&D was 367 million pesos (US$50 million). As seen in table 6, the expenditure on R&D as a fraction of the GNP is not expected to change significantly up to 1990.

Looking at trends in R&D expenditure in the decade ending in 1975, there was no significant change in terms of US dollar values. In 1983-1985, there was a significant decrease in the US dollar values of R&D expenditures because of inflation.

In regard to expenditure in education at the tertiary level, the 313 government colleges and universities were allocated 717 million pesos in 1983-1984. The country's investment in education is shown in table 7.

The institutions engaged in S&T activities are shown in figure 4. Three categories are used: R&D agencies, S&T education and training, and S&T services and delivery.


Fig. 4. Institutional network (Source: UNESCO)

The mechanisms and interrelationships in this network are as follows:

1. The R&D institutions are linked through the NSTA and its policy councils. R&D in the universities and colleges is coordinated through the grants-in-aid programme of the NSTA. 2. The private and government educational institutions produce the manpower for the R&D and S&T services and delivery systems.

3. In S&T services, those provided by the private sector are also utilized by the government. On the other hand, the information services of the universities are used by both the government and the private sector.

4. In the delivery of S&T services, government agencies that have commercially viable technologies are assisted in contacting private industry for possible ventures. The principal agency for S&T development is the National Science and Technology Authority (NSTA), whose organizational chart is shown in figure S. While the NSTA attempts to centralize S&T activities, almost the entire government bureaucracy is involved in one way or another.

The R&D of various research institutes is intended to be coordinated by the various councils of the NSTA. Except in the case of agriculture and natural resources, this has not been very successful.

In 1978, a "consortium concept" was introduced by the NSTA. The general idea was to pool the resources of the various S&T units, particularly the universities. In 1983, another concept called "science communities" was included in the growing lexicon of S&T in the Philippines. Four science communities were established: the Bicutan, Diliman, Ermita, and Los Banos. These communities are groupings of research and academic institutions that are in physical proximity to each other. They are expected to promote an environment of productive and creative interaction and cooperation among the members. Housing and other social amenities are supposed to be provided. Sharing of facilities and resources is encouraged.

In the Philippines, foundations registered with the NSTA enjoy some privileges, such as tax exemptions, provided they do scientific and technological R&D. In 1979, there were 69 foundations registered. The top three in terms of R&D expenditure are the Population Centre Foundation, the Philippine Business for Social Progress, and the Filipinas Foundation. None of these is engaged in R&D in the hard sciences. In private industry, there were 118 private firms engaged in R&D in 1980. Most of the R&D was in the areas of textiles, paper products, food, beverages, tobacco, and chemicals.


Fig. 5. Present NSTA organizational chart

Case-studies

The primary objective of the case-studies was to test the validity of the assertions and hypotheses arising out of the historical analysis. They were also expected to provide new insights into the dynamics of S&T and social development in the real world. Whenever possible, the case-studies attempted an empirical determination of micro-level indicators. At the very least, the indicators would provide a frame of reference for the interviews of principal actors and for the ensuing analysis.

The need for a traditional qualitative approach which involves intuitive and normative processes to achieve insights becomes more convincing when used in parallel with the indicator-empirical approach. The two approaches are complementary and mutually reinforcing. Since the problem involves numerous variables, an unconstrained freedom of imaginative exploration could yield valuable insights and discoveries. However, the standard norms of the scientific process must not be unduly compromised if we are to claim any degree of scientific validity. This is the rationale for using two parallel and simultaneous approaches in the case-studies.

The analytical framework for the case-study is shown in figure 7. The case-studies were directed at the following sectors:

1. The copper industry.
2. The alternative energy sector.
3. The coconut industry.
4. The semiconductor industry.

The copper industry is one of the oldest industries in the Philippines. It was hoped that it could provide significant insights into the evolution of technological capacity. The recent establishment of a local smelter and refinery would necessarily involve new technological inputs and backward linkages to the copper-wire industry. At the same time, the validity of the copper R&D establishment is being challenged by competition from aluminium and fibre optics. The response of the industry to its present depressed state and to the threat of technological obsolescence could reveal the salient structural features of its technological capacity.

The energy crisis of 1973 found the Philippines heavily dependent on imported oil. Ninety-five per cent of its energy requirement was supplied by imported petroleum. A crash programme to attain partial self-sufficiency was undertaken with strong government support. The non-conventional alternative energy sector, principally the geothermal and biogas systems, was considered a priority area.

Because of a strong political commitment to geothermal energy, the sector is an interesting subject for a case-study. And? the role of political support could be tested empirically.

The biogas subsector is also considered a good case-study because it is one of the very few examples of a successful response to the energy crisis by a private company through R&D. The biggest biogas facility in the Philippines (Maya Farms) is the product of more than a decade of R&D.

Like the copper industry, the coconut industry has a long history in the Philippines. It started in 1768 when a Spanish decree ordered the planting of coconuts. The export of copra began in 1895, and the first commercial oil mill was constructed in 1906. However, what makes the industry interesting for a case-study is the long history of R&D? which is mostly government-supported.

The semiconductor industry is claimed to be the Philippines' venture into high technology. The industry presents an interesting mix of subsidiaries, joint ventures, and fully Filipino-owned firms. A case-study of this sector could reveal the features of various modes of technology transfer and the role of equity.

In terms of the S&T taxonomical matrix, the choices for the case-studies are shown in table 8. In this sense? they are quite representative of the total technology-industry picture in the Philippines.

The essential input to the case-study consists of the following background information:

1. List of companies involved in the sector.
2. Company profiles.
3. Profiles of engineers.
4. Academic/government institutions involved in R&D in the sector.
5. List of training and educational institutions relevant to the sector.
6. Statistics on manpower with relevant expertise involved in the sector.
7. Compilation of literature on the economics of the sector.
8. Compilation of legislation and government policies and regulations on the sector.
9. Listing of relevant regulatory agencies.
10. Listing of the principal actors in the sector.
11. Compilation of historical literature on the sector.
12. Compilation of technology transfer arrangements in the sector.
13. Compilation of the local patents on the sector.
14. Listing of components of the techno-system.

Table 8. S&T taxonomical matrix for the case-studies

Type of technologies

First-wave technologies

Second-wave technologies

Third-wave technologies

Materials technologies


Copper industry


Equipment technologies




Energy technologies


Geothermal energy


Information technologies



Semiconductor industry

Life technologies


Coconut industry


Most information of significance is not in documented form. This is especially true of technology transfer arrangements and pricing. Interviews and commissioned background papers are primarily intended to overcome this constraint. Symposia and workshops involving the leading actors could yield further information and insights. Thus, documented information from bibliographic research supplemented by commissioned papers and the results of workshops are two major sources of inputs, illustrated in figure 6. These two sources are used to evaluate the self-reliance indicators, which are defined below. In addition, these are also utilized in determining the role of exogenous forces such as political, social, cultural, economic, and technology transfer factors.

For each case-study, two types of analysis are used. The cross-impact analysis is simply a semi-quantitative evaluation of the influence of the various exogenous factors on the set of self-reliance indicators. This will serve to identify the factors with most influence on particular dimensions of self-reliance.

The normative analysis is essentially qualitative, that is, complementary and supplementary to the cross-impact analysis. It involves the assessment of the explicit goals of the techno-system vis-à-vis the self-reliance indicators. In addition, sectoral goals are analysed in the context of national goals and needs.

In general, the research methodology presented here is a logically structured approach. It is a synergistic mixture of quantitative and qualitative elements.

The first step in the process of getting an operational fix on the concept of technological self-reliance at the micro level is to enumerate all the relevant characteristics of the techno-system. These characteristics are subsequently expressed in terms of variables that relate to self-reliance, and each variable is further broken down into measurable indicators. The process is depicted in figure 7. The result of this process is shown in Appendix 1.


Fig. 6. Analytical framework for the case-studies


Fig. 7. The process of quantifying self-reliance

Each indicator will, of course, be chosen to be theoretically measurable. One way of doing this is to choose indicators that could be expressed as an ordinal set of rank order categories. The ordinal set must be constructed in a standard undirectional classificatory principle. Here it is conceptualized as a continuum from absence to presence, and from low to high, as illustrated below.

Indicator values

Empirical reference

1

Absent, low

2

Partly, medium

3

Present, high

Each indicator should have a special and suitable formulation of empirical reference. The result of the process is shown in Appendix 1, where the system characteristics, variables, and indicators are listed.

In the actual studies, the relevant indicators are evaluated through the analysis of background information and interviews. The evaluation of the indicators reveals the most significant dimensions of self-reliance. It must be emphasized that the operational definition presented here is primarily intended to fix the meaning of the multidimensional concept of S&T self-reliance. The numerical values of the indicators are relatively unimportant compared to the semantic clarification of the concept. Moreover, the concept of the techno-system and the self-reliance indicators provide a common framework for the different case-studies. The ultimate prize was that the case-studies could be undertaken in a uniform systematic manner. Consequently, the results have a high degree of comparability.

Case-study results

Copper industry

We considered the techno-system for copper wires and cables, copper cathodes, and copper concentrates, as shown in figure 8. For simplicity's sake we will refer to this techno-system as the copper industry. The evaluation of self-reliance indicators for the copper industry was undertaken through the analysis of existing literature and background papers and the interviews of the principal actors of the sector. The results are shown in table 9.

The important dimensions of S&T self-reliance are obvious. The general assessment is that in terms of technological capability, the system is still in the operative stage, with some indications of nascent adaptive capability. This is confirmed by the value of indicator no. 4.21 in table 9.

The self-reliance of the copper industry is weak in the following dimensions, where the average score is 1.5 or less:

- Quality of technological innovation by Filipinos.
- Support of local R&D by the industry.
- Utilization of R&D results.
- Local supply of hardware.
- Number of innovations in the industry.
- Control of financing.
- Foreign nationals in management.

Both the quality and the quantity of local innovations in the industry are unsatisfactory. Of the 10 important patents registered for the industry, only one is of Filipino origin.


Fig. 8. Techno-system for the copper industry

Table 9. Indicators of self-reliance in science and technology: copper industry

Indicator number

Indicator

Average values

3.22

Change in the number of Filipinos with managerial know-how

3

6.23

Local maintenance of hardware

2.6

6.12

Adequacy of number of graduates

2.6

1.11

Existence of technical training programme in corporate plans

2.6

7.11

Existence of the various components of the techno- system for product X

2.5

3.21

Change in number of Filipinos with the technical know- how in relevant technologies

2.4

2.21

Control of managerial inputs

3.25

3.13

Use of local material inputs to the various processes

2.2

1.31

Role of nationals in policy formulation

2.2

5.21

Utilization of locally trained technicians and engineers

2.2

4.12

Existence of historical industry statistics

2.2

2.12

Equity of participation of nationals in corporations

2

4.11

Existence of technical industry library locally

1.8

1.21

Existence of plans for local autonomy

1.8

6.11

Relevance of curricula to the industry

1.8

2.22

Control of technological inputs

1.75

2.23

Control of material inputs

1.75

3.14

Adaptation of some of the processes to local conditions

1.75

6.13

Quality of the graduates

1.6

2.24

Control of financing

1.5

1.12

Existence of R&D programme in corporate plan

1.5

2.11

Nationality of management

1.5

1.22

Plans for vertical integration

1.33

3.11

Number of innovations in the industry

1.25

6.22

Local supply of hardware

1.2

4.21

Technological capacity

1

5.11

Support of local R&D by industry

1

5.12

Utilization of R&D results

1

3.12

Quality of technical innovations by Filipinos

1

In R&D, the sector is not doing anything important. The industry's only significant link to government R&D is in the area of geological exploration. The interviews with the technological leaders of the industry revealed a static perspective on process or product improvements. The prevailing general attitude is that R&D cannot help the industry except in trivial ways.

In spite of the constitutional provision that natural resources-based industries should be at least 60 per cent owned by Filipinos, alien control of the copper industry is still significant. This is indicated by the following facts:12

- The key officers of the biggest firms are mostly foreigners.

- The biggest sales contracts are with a very few foreign firms.

- Of the combined resources of the 10 biggest mining companies about P22 billion - only P9.8 billion is owned by stockholders; the rest is owned by creditors.

- Only about P5.9 billion of the mining resources representing 27 per cent of total assets, are owned by Filipinos; 73 per cent are owned by foreign stockholders and leaders.

The strongest aspects of self-reliance (indicator value greater than 2.5) are the following:

- Local maintenance of hardware.
- Technical training programmes in companies.
- Adequate supply of graduates.
- Vertical linkages of the system.

Although almost all the capital equipment is imported, local technicians can maintain these properly. This further reinforces the observation made previously that the industry is still in the operative state and has not reached the replicative stage. This is consistent with the finding that there is an adequate supply of engineers and technicians but they are of low quality.

In summary, then, the copper industry is technologically dependent. The historical, political, and social factors conspire to create this condition of perpetual dependency. The recent closures of many firms in the industry are perhaps symptomatic not only of dependency but of a latent potential for self-destruction.

Geothermal energy

The techno-system for the geothermal energy sector is shown in figure 9. There are four processing stages, starting from the geophysical and geochemical survey and leading to the transformation process in which the voltage output is stepped up before it is transmitted to the local substation.


Fig. 9. Techno-system for the geothermal energy sector

Table 10. Indicators of self-reliance in science and technology: alternative energy sector (geothermal and biogas)



Average values

Indicator number

Indicator

Geothermal

Biogas

1.11

Existence of technical programme in corporate plans

3

3

3.21

Change in number of Filipinos with technical know-how in relevant technologies

3

3

3.22

Change in the number of Filipinos with managerial know-how

3

3

4.11

Existence of technical industry library locally

3

3

4.12

Existence of historical industry statistics

3

3

4.3

Number of scientists, engineers, and technicians in relevant fields

3

3

5.21

Utilization of locally trained technicians and engineers

3

3

6.11

Relevance of curricula to industry

3

3

6.12

Adequacy of number of graduates

3

3

7.11

Existence of the various components of the techno-system for product

3

3

7.12

Interdependence/linkage of subsystems

3

3

1.21

Existence of plans for local autonomy

2

3

1.22

Plans for vertical integration

2

3

1.31

Role of nationals in policy formulation

2

3

2.12

Equity of participation of nationals in corporations

2

3

Interviews with some of the principal actors in the sector and a thorough analysis of literature and background papers written about geothermal energy operations in the Philippines facilitated the evaluation of the self-reliance indicators. The results can be seen in table 10. From these, it can be generalized that the Filipinos are more or less capable as regards the main technologies involved in a full-scale geothermal energy production. Skills in geothermal exploration and drilling management have been acquired by a significant number of Filipinos. These skills range from the evolvement of design layouts for steam collection and effluent disposal systems to the supervision of their con struction and the eventual maintenance of the systems. In terms of technological capability, therefore, it can be surmised that the system has clear indications of adaptive capability.

It is worth noting that technology transfer was assured here through the training of local professionals under "hands-on" conditions. This was provided for in the contract with Union Oil. This training programme was complemented by bilateral training assistance programmes with New Zealand, Italy, Japan, and the United States. By 1985, there were more than 280 technical personnel trained in other countries.13

As can be seen in table 10, self-reliance is low or absent in the following dimensions, where the score is 1:

- Existence of R&D programme in corporate plans.
- Nationality of management.
- Number of innovations in the industry.
- Quality of technological innovations by Filipinos.
- Utilization of R&D results.
- Local supply of hardware.

The quantity of local innovations in the industry is unsatisfactory. There are only two important patents registered, neither of which is Filipino in origin.

Self-reliance is very strong in the following areas, where the indicator value is 3:

- Existence of technical training programme in corporate plans.
- Number of Filipinos with managerial know-how.
- Existence of technical industry library locally.
- Existence of historical industry statistics.
- Utilization of locally trained technicians and engineers.
- Relevance of curricula to industry.
- Adequacy of number of graduates.
- Local maintenance of hardware.
- Existence of the various components of the techno-system.
- Interdependence/linkages of the subsystems.

From all indicators, the geothermal sector, being a very important energy source, has been given more than adequate attention by the government. However, the government has yet to make it more viable for local geothermal companies to operate in the Philippines. Laws on tax exemptions on capital goods and other inputs, plus presidential proclamations setting aside geothermal areas as national reservations, are indicators of the heavy government support for the sector.

The geothermal energy sector is still technologically dependent on imported capital equipment. However, in spite of this, there are clear indications that it has achieved a semblance of self-reliance in its manpower requirements and in the adaptation of the technology to local conditions.

The existence of relevant indigenous R&D and strong government support for the industry's development account for the higher degree of technological capability in this field. It is unfortunate, however, that this thrust is not being pursued with a sustained commitment to reach the level of technological mastery.

Coconut industry

The major products derived from coconut trees are copra, coconut oil, copra meal/cake, and dessicated coconut.

Figure 10 shows the six processing stages, starting from the planting and cultivation of coconut trees to the processing of coco-chemicals. The knowledge stock of the industry is with engineers, chemists, botanists, agriculturalists, technicians, and managers. Training is carried out mainly in the universities and through company-sponsored training programmes. R&D is undertaken by government agencies and universities. The government agencies are the Philippine Coconut Authority and the Bureau of Plant Industry, and the universities UP Los Banos, Palawan National Agricultural College, the University of Eastern Philippines, Visayan State Agricultural College, and the University of San Carlos.

The results of the evaluation of self-reliance indicators are shown in table 11.

With respect to coconut milling and refining, the system is in the replicative stage of technological capacity. However, at the coco-chemical processing stage, it is still at the operative level. The average value of indicator no. 4.21 is 1.5, indicating that the system is weak in terms of technological capacity.

Other indicators show that the sector is weak in the following aspects of self-reliance:

- Existence of technical training programmes in corporate plans.
- Quality of technical innovations by Filipinos.
- Utilization of R&D results.
- Level of R&D effort.
- Support of local R&D.

There are no explicit technical training programmes in the industry's corporate plans. The industry, then, does not put emphasis on learning in its formulation of goals.

Table 11. Indicators of self-reliance in science and technology: coconut oil industry

Indicator number

Indicator

Average values

4.12

Existence of historical industry statistics

3

4.3

Number of scientists, engineers, and technicians in relevant fields

3

5.21

Utilization of locally trained technicians and engineers

3

6.12

Adequacy of number of graduates

3

6.22

Local maintenance of hardware

3

1.31

Role of nationals in policy formulation

2.5

2.11

Nationality of management

2.5

2.12

Equity of participation of nationals in corporations

2.5

2.21

Control of managerial inputs

2.5

3.13

Use of local material inputs to the various processes

2.5

4.11

Existence of technical industry library locally

2.5

7.11

Existence of the various components of the techno-system for product

2.5

1.12

Existence of R&D programme in corporate plans

2

1.21

Existence of plans for local autonomy

2

1.22

Plans for vertical integration

2

2.22

Control of technological inputs

2

2.23

Control of material inputs

2

2.24

Control of financing

2

The technical innovations by Filipinos are of little value to the in dustry. The industry does not support local R&D and utilizes hardly any local R&D results.

The strongly self-reliant aspects of the industry are the following:

- Role of nationals in policy formulation.
- Nationality of management.
- Equity participation of nationals in corporation.
- Control of managerial inputs.
- Use of local material inputs to various processes.
- Existence of technical industry library locally.
- Existence of historical industry statistics.
- Number of scientists, engineers, and technicians in relevant fields.
- Utilization of locally trained technicians and engineers.
- Adequacy of the number of graduates.
- Local maintenance of hardware.
- Existence of the various components of the techno-system for coconut.

Control of the techno-system rated high self-reliance scores. Philippine nationals have increased their participation in the industry's control.

In the past, while actual crop cultivation was in the hands of Filipinos, the intermediate processing of coconut products for export and local distribution was dominated by foreign capitalists. In recent years, a new breed of local capitalists, composed of coconut landlords, Filipino capitalists, and government bureaucrats, has emerged and taken over the processing and export of coconut oil. Foreign capital, however, has remained in the manufacture of coco-chemicals.

In terms of material inputs, the industry has increasingly made use of local materials in the various processes. Local maintenance of hardware is ably done by local technicians. In terms of local manpower there is an adequate supply of engineers and technicians for the industry.

Foreign technological and material inputs continue to flow into the various sectors of the industry. Although the industry has made moves to disengage itself from foreign control, it continues to follow a colonial pattern of trade. Its present orientation still maintains the colonial and agrarian character of the Philippine economy. The refining and manufacturing of coconut-based consumer products are still in the hands of TNCs.

Semiconductors

Over a span of 10 years, the semiconductor industry experienced tremendous growth. There were 17 companies in 1978, and these grew to 33 foreign and local firms in 1981. In a matter of nine years since the first shipment of electronic components in 1973, worth US$10 million, semiconductors have become the Philippine's top non-traditional export. Table 12 shows the performance of semiconductors in relation to other prime exports. The techno-system for the semiconductor industry is shown in figure 11.

The Philippine semiconductor plants only carry out assembly, and are classified into: (a) captive producers or foreign-owned subsidiaries who turn out products for the exclusive use of the mother company; and (b) independent contractors who cater to the requirements of various customers.

Raw materials are consigned to subsidiaries by the mother company or to subcontractors by the foreign clients. These imported raw materials include silicon dice, wafers, metal can packages, aluminium wire, gold wire, epoxy caps and bases, chemicals, etc. In packaging assembly, there are four stages which are done in the Philippines; a few companies have testing facilities. All marketing activities are done by the mother company/customer.


Fig. 10. Techno-system for the coconut oil industry

Table 12. Top commodity exports, 1980-1983 ($US millions)


1980

1981

1982

1983

Rank

Commodity

Value

Commodity

Value

Commodity

Value

Commodity

Value

1

Sugar

624

Sugar

566

Sugar

416

Coconut oil

516

1

Coconut oil

567

Coconut oil

533

Coconut oil

401

Garments

409

3

Copper concentrates

545

Garments

458

Garments

397

Sugar

299

4

Garments

362

Copper concentrates

429

Semiconductors

329

Semiconductors

256

5

Gold

239

Semiconductors

271

Copper concentrates

312

Copper concentrates

249

6

Semiconductors

179

Gold

215

Gold

169

Gold

154

Sources: NCSO Foreign Trade Statistics; External Trade Statistics Group, DER International; Special Study, Technical Staff. Foreign Exchange Committee.

a. Garments are net of import value of material inputs for exports on consignment basis, while semiconductor devices are net of import value of material inputs for consigned exports and payments for loans and advances from parent companies.


Fig. 11. Techno-system for the semiconductor industry

For foreign-owned subsidiaries, R&D activities are carried out by the mother company. Minimal innovations (e.g. simplification of word processes) are made in the Philippines. An evaluation of self-reliance indicators, based on existing literature, plant visits, and interviews with key officers in the industry, is shown in table 13.

In foreign-owned subsidiaries, the chief executive officers are mostly expatriates, except for Timex, which is headed by a Filipino. Filipino engineers occupy managerial and supervisory positions. as the country has an adequate supply of skilled and highly trainable technical personnel. Technical training programmes are present in most companies as part of the regular manpower orientation and training programme.

R&D and linkages with relevant institutions are non-existent. self-reliance. is weak in the following aspects;

- Existence of R&D programmes.
- Control of technological inputs.
- Control of material inputs.
- Control of financing.
- Innovations in the industry.
- Existence of technical industry library.
- Local supply of hardware.

The Philippines does not in fact have a "semiconductor industry." The labour-intensive phase of production is carried out here primarily because of inexpensive labour, whereas the more capital- and technology-intensive stages take place in the mother companies or clients' facilities. There is a need to develop the industry's backward and forward linkages to establish technological independence.

The industry could break out of this situation by: (1) establishing local R&D; (2) training the Philippines' unlimited labour force for high technologies; (3) providing investment and financial assistance from local sources; (4) developing the support of allied industries; (5) developing new products; (6) expanding and seeking new markets; and (7) promoting regional and global cooperation through exchanges of technologies.

Table 13. Indicators of self-reliance in science and technology: semiconductor industry

Indicator number

Indicator

Average values

3.21

Change in number of Filipinos with technical know- how in relevant technologies

3.0

1.11

Existence of technical programmes in corporate plans

2.5

3.22

Change in the number of Filipinos with managerial know-how

2.5

4.30

Number of experts

2.5

5.21

Utilization of locally trained technicians and engineers

2.5

6.12

Adequacy of number of graduates

2.0

6.13

Quality of the graduates

2.0

6.23

Local maintenance of hardware

2.0

2.21

Control of managerial inputs

2.0

3.13

Use of local material inputs to the various processes

2.0

3.14

Adaptations of some of the processes to local conditions

2.0

1.31

Role of nationals in policy formulation

1.5

2.11

Nationality of management

1.5

4.12

Existence of historical industry statistics

1.5

6.11

Relevance of curricula to industry

1.5

7.11

Existence of the various components of the techno-system for product X

1.5

1.12

Existence of R&D programme in corporate plans

1.0

1.21

Existence of plans for local autonomy

1.0

1.22

Plans for vertical integration

1.0

2.12

Equity of participation of nationals in corporations

1.0

2.22

Control of technological inputs

1.0

2.23

Control of material inputs

1.0

2.24

Control of financing

1.0

3.11

Number of innovations in the industry

1.0

3.12

Quality of technical innovations by Filipinos

1.0

4.11

Existence of technical industry library locally

1.0

4.21

Technological capacity

1.0

5.11

Support of local R&D by industry

1.0

5.12

Utilization of R&D results

1.0

5.30

Level of R&D effort

1.0

6.22

Local supply of hardware

1.0

7.12

Interdependence/linkage of subsystems

1.0

Self-reliance may be achieved by moving in the following directions:

1. Establishing a semiconductor R&D centre.
2. Organizing a national association of semiconductor producers in the Philippines.
3. Creating a government agency that would protect local interests in the industry.
4. Setting up a Philippine wafer fabrication facility.
5. Developing a semiconductor industry complex that would spear head the transformation of the industry from more offshore assembly houses to a total manufacturing base for semiconductor production.

Technological dependence: nature and consequences

Technological development is essentially a historical process that depends on a society's initial state of S&T knowledge and the significant influences that modify, enlarge, and stimulate that existing base. When the Philippines first made contact with the more technologically developed Western cultures, its technological capabilities and capacity were primitive. Because of the very unequal development of the two cultures, Western domination was the inevitable result. The contact did not result in any significant technological learning for the Philippines over the centuries of Spanish and American rule. After more than 400 years of colonization, the Philippines still relies on other countries, principally the US and Japan, for most of its technology. This situation is a sure symptom of technological dependence.

Like most multidimensional concepts, technological dependence is difficult to define rigorously. A clarification is attempted here.

Technological dependence could be considered the opposite of self-reliance. One transparent indicator of its existence is a situation in which the major source of a country's technology is abroad.14 When a country imports from a single country, it has a very high degree of technological dependence. From these considerations alone, one is easily convinced of the state of technological dependence of the Philippines.

There are other useful macro-indicators of technological dependence, which are shown in table 14. The consistently low figures for the number of scientists and engineers, R&D expenditures and patent grants for the Philippines, compared to the Republic of Korea and Japan, reflect its undeniable state of underdevelopment and technological dependence. There is no desire to be labor this point. However, the various indicators show the particular areas of relative weakness. These could be useful in the formulation of policies and strategies.

Table 14. Technological capacity: selected indicators, 1982


Japan

Republic of Korea

Philippines

Total R&D personnel

648,977

46,390

17,992

Scientists and engineers engaged in R&D per 10,000 population

40.44

7.23

1.53

Technicians engaged in R&D per 10,000 population

7.68

2.97

0.69

Expenditure on R&D as percentage of GNP

2.5

0.9

0.2

Application for patents filed by residentsa

227,708

1,599

63

Grants of patents to residentsa

45,578

245

52

Sources: UNESCO Annual Statistical Yearbook, 1984; Techno-economic Evaluation Division, Planning Service, NSTA; ADB, Key Indicators of Developing Member Countries of ADB, 1985: Bank of Japan, Economic Statistics Manual, 1984; Philippine Yearbook, 1983.

a. 1983.

The case-studies provided a very detailed picture of the gross features and nuances of self-reliance in particular industries. Table 14 summarizes the strong and weak points with respect to the self-reliance. micro-indicators arising from the results of the case-studies.

It is interesting to observe that in the older industries like copper and coconut, the weak points in self-reliance are those relating to inadequate and low quality of R&D. The prognosis here is that there is very little desire and ability to improve the industries technologically. In spite of their long histories, technological capability has remained low. In general, the capabilities are still in the operative stage. These observations are consistent with the very low values of macro-indicators for the Philippines in table 14, which show relatively very little expenditure for R&D. In the case of copper wire manufacture, the industry is still dependent on the mother companies abroad for R&D. The same is true for coco chemicals. In these two cases the original licensing agreements required the local entrepreneur to fill his R&D needs through the mother companies. Government research agencies have been engaged in coconut research for a long time, but they have concentrated on the agricultural side of the industry. The research that has been done on the processing aspects is not relevant to the needs of industry, or, if it is, it has simply been ignored. One can say that, in the older industries, persistent colonial attitudes seem to hinder the growth of S&T self-reliance.

In the case of the newer industries (geothermal energy and semiconductors), technological dependence is starkly apparent. The micro-indicators of interest in table 15 are the nationality of management, dependence on inputs and financing, and the importation of the hardware of production. It is interesting to note that geothermal energy is the pride of the government science establishment. Its rapid development made an impact on the local energy scene.

However, the role of Philippine science has been limited to the exploration aspects. In fact, the local expertise that has been developed in this area is of world-class quality. Sadly, however, the actual installation of machinery and pipelines was carried out by foreign multinational companies. Indeed, the Philippines is totally dependent on imported capital equipment for most of its industries.

In all the case-studies, there is evidence of heavy technology imports. Even in an old industry like mining, the biggest mine in the Philippines relies on foreign managers for the supervision of the underground operations and the maintenance of the heavy equipment. Most of the machinery is imported. In the entire copper techno-system, only the furniture is of purely local origin.15 In the assembly and packaging of semiconductors, practically all equipment and material inputs come from abroad. Similarly, all processes and technologies are licensed by foreign firms.

As Stewart points out,16 technology imports are addictive. In the Philippines, technology transfer is the standard way of initiating new enterprises because it appears to be the quickest and most convenient way of doing things. Once established, technology imports tend to inhibit the growth of local initiatives in the same industry because of the latter's inability to compete in terms of quality and cost. Given the lack of technological capability to develop substitutes, a local vested interest grows up around such enterprises, which end up dominating the market and assuming a prominent role in the national economy. At this stage, the continuous importation of technology becomes difficult to manage and control.

Technological dependence in the Philippines comes in many forms. In the older industries, the importation of critical inputs and capital equipment is the most common. This is followed by the actual management of enterprises by aliens, as in the case of coco chemicals and copper wire manufacture. The lack of R&D isolates these companies from the mainstream of technological innovation. Ultimately, they lose their competitive edge in the world markets. In the newer industries, foreign investments and financial control are the mainsprings of technological dependence; the case of the semiconductor industry is typical. Most Philippine operations are only the dispensable components of a long chain of operations leading to the marketable product. In other words, only certain portions of the techno-system are under some kind of control by Filipino nationals. In almost all cases, the learning process for Filipino technicians and engineers is of little value in the national context.

Table 15. Indicators of self-reliance in science and technology: case-studies

Copper industry

Alternative energy (geothermal)

Coconut industry

Semiconductors industry

Strong points

Weak points

Strong points

Weak points

Strong points

Weak points

Strong points

Weak points

Local maintenance of hardware

Quality of technological innovations by Filipinos

Existence of technical training programme in corporate plans

Existence of R&D programme in corporate plans

Role of nationals in policy formulation

Technological capacity

Existence of technical programmes in corporate plans

Existence of R&D programmes

Technical training programmes in companies

Support of local R&D by the industry

Number of Filipinos with the technical know-how in relevant technologies

Nationality of management

Nationality of management

Existence of technical training programmes in corporate plans

Number of Filipinos with technical know-how in relevant technologies

Control of technological inputs

Adequate supply of graduates

Utilization of R&D results

Number of Filipinos with managerial know-how

Number of innovations in the industry

Equity participation of nationals in corporation

Quality of technical innovations by Filipinos

Number of Filipinos with managerial know-how

Control of material inputs

Vertical linkages of the system

Local supply of hardware

Existence of technical industry library locally

Quality of technological innovations by Filipinos

Control of managerial inputs

Utilization of R&D results

Number of experts

Control of financing


Number of innovations in the industry

Existence of historical industry statistics

Utilization of R&D results

Use of local material inputs to various processes

Level of R&D effort

Utilization of locally trained technicians and engineers

Innovations in the industry


Control of financing

Utilization of locally trained technicians and engineers

Local supply of hardware

Existence of technical industry library locally

Support of local R&D


Technological capacity


Foreign nationals in management technological capacity

Relevance of curricula to industry


Existence of historical industry statistics



Existence of technical industry library



Adequacy of number of graduates


Number of scientists, engineers, and technicians in relevant fields



Local supply of hardware



Local maintenance of hardware


Utilization of locally trained technicians and engineers



Level of R&D effort



Existence of the various components of the techno-system


Adequacy of the number of graduates






Interdependence/linkage of the subsystem


Local maintenance of hardware








Existence of the various components of the techno-system for coconut




In the dependency theory of underdevelopment, it is postulated that the third world is immersed in a complex but painful array of dependent relationships with the industrialized countries. This dependent relationship spans the economic and cultural spheres. This is especially true in former colonies like the Philippines, where the values of the colonizers have been internalized and have grown deep roots. Industrialized countries' interests have developed powerful local constituencies. The most critical aspect of this entire dependent relationship could well be technological dependence. Because of the vital role of technology in the life of any nation, its control, whether direct or indirect, implies effective dominance of all the other aspects of national life. The freedom to explore alternative paths to development has been confined to very narrow limits for most third-world countries. Whether universally valid or not, the dependency theory provides a convenient conceptual frame for the understanding of the nature of technological dependence.

Since technological dependence is a multilateral relationship between a user and various suppliers of technology, governments, and international organizations, the quest for S&T self-reliance in the Philippines cannot be separated from the geopolitical context. Measures directed at S&T alone cannot succeed unless they are complemented by the influence of the technologically advanced countries. The TNCs are more affluent and powerful than many third-world countries. The economics of technology is characterized by imperfect markets in the perpetuation of technological dependence. Their awesome resources and corresponding power must be confronted with all the cunning and caution that third-world countries can muster.

S&T in the Philippines: inputs and outputs

Reckoning from the establishment of the Bureau of Government Laboratories (now called the National Institute of Science and Technology), S&T in the Philippines was more than 50 years old when the first indictment of it was made. In a report submitted by the Chairman of the Senate Committee on Scientific Advancement, the following points were expressed:

1. Lack of coordination of research work.
2. Shortage of research funds.
3. Shortage of manpower and qualified teachers.
4. Lack of science consciousness.

In 1972, Reyes assessed the state of S&T in the Philippines in relation to other countries:

In spite of these efforts, our rate of scientific and technological progress has not been enough. A recent survey showed that the Philippines is still 40 to 60 years behind the United States; 35 to 40 years behind Russia; 30 to 40 years behind the United Kingdom, Sweden and Canada; 30 years behind West Germany and France; 20 to 25 years behind Norway and Australia; 20 years behind Poland, New Zealand and Japan. Dr Frank Co Tui, consultant to the SEATO Committee on Scientific Advancement, summed up the state of scientific and technological development in the country as "semi-primitive."17

Even in the 1970s the perception was that S&T in the Philippines was not being supported adequately. Reyes went on to claim that "Our expenditure in 1961 was 1/20 of 1 per cent of GNP and ten years later in 1970 it was 1/10 of 1 per cent."

A more quantitative assessment is possible through the use of some macro-indicators of technological capacity. Table 14 shows some of these indicators in relation to Japan and the Republic of Korea - two countries which are much more progressive than the Philippines. Table 16 exhibits a relative macro-indicator called the technology index. This is defined as the average of the sum of the number of patents and registration of new designs, technology trade, value added in manufacturing, and the export of technology-intensive goods. For inter-country comparison, the technology index for the US, the world's technology leader, is set at 100.

Table 14 suggests that in comparison to Japan and the Republic of Korea, the Philippines' serious deficiency is in what has been termed technological effort.18 This is reflected in a shortage of scientists and engineers doing R&D and of national resources devoted to R&D. The meagre expenditure in R&D is another facet of this weak technological effort. The corresponding outcome, as measured by patents, is, as expected, of minimal economic significance.

Some quantitative indicators of the inferior position of the Philippines with respect to the industrialized countries are depicted in table 16. The most serious is the negative value of technology trade, which is also reflected by the very low value for the export of technology-intensive goods. The overall negative value of the technology index represents the stark reality of the country's technological dependence. These indicators somehow convey the "technological distance" between the countries.

Table 16. International comparison of technology indices, 1982 (US$ billions)


Number of patents and registration of new designs

Technology trade

Value added in manufacturing

Export of technology- intensive goods

(1) + (2) + (3) + (4)


(1)

(2)

(3)

(4)

4

USA

57,889

7.5

642.3

109.2



(100.0)

(100.0)

(100.0)

(100.0)

(100.0)

Japan

105,905

2.3

321.1

91.4



(182 9)

(30.9)

(50.0)

(83.7)

(86.9)

Federal Republic of Germany

16,306

1.4

244.5

103.5



(28.2)

(18.7)

(38.1)

(94.8)

(45.0)

UK

29,590

1.8

124.9

42.3



(51.1)

(24.4)

(19.4)

(38.7)

(33.4)

France

23,944

1.3

154.3

43.3



(41.4)

(17.1)

(24.0)

(39 6)

(30.5)

Republic of Korea

4,512

0.3

21.1

8.7



(7 8)

(3 7)

(3.3)

(7 9)

(5 7)

Philippines

449a

-0.3b

9.3c

1.4d



(0.8)

(0.4)

(1.5)

(1.3)

(-0.1)

Source: Korea Development Bank. For the Philippines, information on patents is from the Philippine Patent Office (figure for 1983), on technology trade from the NEDA Statistical Yearbook, 1985, and on value added from the World Bank, World Development Report, 1986 (figure for 1983).

a. Figure represents total exports of selected technology-intensive goods less total import of capital goods for 1983.

Table 17. Filipino technological capabilities

Type of technology

First-wave technologies

Second-wave technologies

Third-wave technologies

Materials technologies

Replicative in most, adaptive in some

Operative in some, adaptive in others

Pre-operative in most, operative in some

Equipment technologies

Replicative in most, innovative in some

Operative in most, adaptive in some

Pre-operative in most, adaptive in few

Energy technologies

Replicative in most, innovative in some

Adaptive in most, replicative in some

Pre-operative in most, operative in some

Information technologies

Replicative in most, innovative in some

Operative in some, adaptive in others

Pre-operative in most, adaptive in some

Life technologies

Replicative in most, innovative in some

Adaptive in some, replicative in others

Pre-operative in most, adaptive in a few

A more detailed but qualitative assessment is made possible by using the S&T taxonomical matrix (table 1) and the notion of stages of technological capability. The assessment of S&T in the Philippines is shown in table 17. The evaluation was based on the results of the case-studies and the general knowledge of the Philippine situation.

A more precise definition of what it means to be an agricultural country is apparent in table 17, where it is shown that replicative and even innovative capabilities exist for all first-wave technologies. This is perhaps the result of the decades of education and research in Philippine agriculture. Unfortunately, however, agriculture cannot reach full efficiency with a weak second-wave technology. Philippine agriculture is still dependent on foreign inputs (fertilizers, pesticides, and processing technologies); there are some adaptive capabilities in equipment and information technologies, but the country is hardly in the game as far as most of the others are concerned.

Table 18. Distribution of NSTA-SPI awardees by field of study as of May 1984a










Teaching

Degree Programmes

Agricultural and natural sciences

Biological sciences

Medical sciences

Physical sciences

Engineering sciences

Mathematical sciences

Social sciences

Total

Math

Bio

Physics

Chem.

Gen. sci.

Total

Total

Undergraduate

64

338

-

628

802

594

22

2,448

229

-

182

-

68

479

2,927

Master'sb

91

222

64

201

77

76

23

754

183

73

94

56

101

507

1,261

Doctoral

10

6

-

12

7

18

1

54

-

-

-

-

-

-

54

Short-term training programmes for teachers
















Summer science institutesc

-

-

-

-

-

-

-

2,640

1.401

1,081

2,318

3,086

10,526

10.526


Certification programme

-

-

-

-

-

-

-

14

24

11

19

5

73

73


Total

165

566

64

841

886

688

46

3,256

3.066

1,498

1,368

2,393

3,260

11,585

14,841

a. Prepared by Scientific Manpower and Institutional Development Division, Science Promotion Institute.
b. Includes graduate research fund grantees.
c. Awardees during the period 1971-1983.

Of course, Philippine S&T is not without its achievements. Appendix 2 lists the most significant accomplishments of the NSTA. Since there is very little R&D going on in the private sector, this list is indicative of the entire S&T system of the Philippines.

The large variety of research points to the lack of focus and dispersal of the already meagre funds for R&D. It is fair to say that none of these accomplishments is outstanding in the international sense. Mission-oriented R&D that is directed to specific nationally significant problems has not been addressed. In the case of geothermal energy, for instance, the lead in the exploration technology should have been carried further downstream to include the development of local capability in actual geothermal power generation. This, together with the uses of geothermal steam, could have been planned as a mission-oriented programme. The same could be said for biogas and alcohol projects.

The strong historical bias for agricultural R&D is also apparent. Industrial research has been quite inadequate. As we have pointed out, the weakness in industrial capability ultimately weakens the agricultural sector also.

The scholarship programme of the government is intended to address the weakness of S&T in respect of manpower. The result of the programme is summarized in table 18. Although the programme was probably constrained by lack of financial resources, this kind of output will not permit the Philippines ever to catch up with the internationally set norms for manpower requirements. Technological capacity in terms of R&D manpower per 10,000 population has remained fairly static during the last few years.

Philippine R&D has no detectable impact on the national economy. This is intimated by table 3, which shows no systematic increases in the growth rates of either agriculture or industry over the years. Significant and successful innovations could have spurred growth in these sectors. The observed changes in the growth rates are perhaps the short-term effects of economic policy measures. In comparative terms, table 19 shows the performance of the Philippines and other Asian countries. The average growth rate of agriculture is comparable to that of others, including the Republic of Korea, but the Philippines has a comparatively slower growth rate in industry.

The distorted emphasis of Philippine R&D in agriculture does not show any significant effect in productivity. According to table 20, the period 1971-1978 is the lowest for the economic sectors. In other words, agricultural R&D made little difference to agricultural labour productivity. In contrast, while there has been no significant research in industrial R&D, productivity in this sector shows the largest annual growth rate. This could have been due to the introduction of imported technological innovations.

Table 19. Annual growth rates of major sectors of real GDPa (simple average: percentages)


Agriculture

Industry


(1971-84)

(1971-84)

Indiab

1.6c

4.0c

Republic of Korea

3.6d

12.6

Philippines

3.9

5.8

Thailand

3.9e

7.3e

Source: Key Indicators of Developing Member Countries of Asian Development Bank, April 1985.

a. Gross Domestic Product.
b. GDP data are at factor cost.
c. 1971-1982.
d. 1971-1983.
e. 1973-1984.

Table 20. Labour productivitya


Labour productivity (pesos per worker)

Year

All sectors

Agriculture

Industry

Services

1957

2,980

1,740

4,320

5,280

1971

3,620

2,370

5,170

4,640

1978

4,200

2,420

7,390

5,180


Annual growth rates of labour productivity (percentages)

1971-78

2,120

0.300

5.100

1.570

Source: R.L. Tidalgo and E. Esguerra, "Philippine Employment in the 1970s," PIDS Working Paper 82-02, table A-6.

a. Output per person employed is estimated by dividing national income (in millions of pesos) at 1972 prices by employment in thousands.

One major factor that could somehow explain the lacklustre performance of the R&D system is the extremely low funding levels. Although there has never been a lack of bold policy statements about the support of S&T, the realization of policy is in the actual allocation of resources. In the case of S&T, there is a wide gap between policy and practice.

Although other government agencies and the private sector are also involved in S&T activities, the budget of the NSTA adequately reflects national trends of expenditure for S&T and R&D. In the Philippines the R&D expenditure of the private sector is negligible. In the case of other government agencies, the definitions "S&T" and "R&D" are very obscure and doubtful.


Fig. 12. NSTA general budget, 1974-1985 (index year: 1974)

In general, the outlay for NSTA has been decreasing in relative and absolute terms during the last 10 years. Figure 12 gives the NSTA budget, using 1974 as the best year to correct for inflation. The sudden increase in 1983 was due the reorganization of the NSTA. Some new agencies were created and some old ones were attached to the NSTA. As shown in figures 13 and 14, there were no real increases in R&D outlay. In fact, there was a downward trend in the appropriations for R&D. These figures portray the sad reality behind the encouraging commitment of policy makers to S&T.

Table 21 shows the divergence between dream and reality. On the basis of the plan to attain a level of S&T expenditure of about 2 per cent of GDP by 1988, the annual financial requirements of NSTA were calculated. The expected annual appropriations were estimated on the basis of the historical funding increases granted by the Office of Budget Management (OBM). The last line on the table shows an expected growing shortfall. Unfortunately, the prospects for the next three years (1987-1989) are definitely much worse. In real terms, the budget of the NSTA will probably decrease.

Table 21. NSTA resource projections, 1984-1988


1984

1985

1986

1987

1988

GDP (billions of pesos)a

461.6

530.9

610.5

702.1

807.4

S&T allocation (% of GDP)b

1.0

1.5

1.8

2.0

2.0

S&T allocation (billions of pesos)

4.6

8.0

11.0

14.0

16.2

Private sector share of no.3 (%)b

15

20

20

25

25

Government share of no.3 (%)b

3,918

6,368

8,784

10,530

12,113

NSTA share of no.6 (millions of pesos)c

823

1,337

1,845

2,211

2,544

Projected OBM allocation

683

751.3

826.4

909.0

999.9

Estimated requirements of NSTA agencies (million of pesos)

1,083.3

1,112.3

1,189.7

1,106.2

1,166.4

Source: EVSA.

a. Assumed to grow at 15 per cent annually from the 1982 level of P349 billion, at 5 per cent real growth and 10 per cent inflation.
b. Indicated in the National S&T Plan.
c. Historical average.
d. Arbitrary increase of 10 per cent annually from the amounts requested for 1984.


Fig. 13. R&D allotment of the NSTA, 1974-1985 (index year: 1974)


Fig. 14. R&D allotment of the NSTA, 1974-1984

Like most established bureaucracies in the Philippines, the NSTA has grown organizationally. Starting out as a National Science Board in 1956, it transformed itself into a National Science and Technology Authority in 1983, attaching and creating agencies in the process. The elaborate structure of NSTA is shown in figure 5. By 1987, the NSTA was once more transformed into a Department of Science and Technology. The NSTA does not have an exclusive mandate over the nation's S&T. The network depicted in figure 4 is a complex bureaucratic system which is supposed to nurture the creative enterprise of scientific and technological R&D. The situation is that there are just too many agencies, and the number is growing, making demands on a shrinking S&T pie.

It is very unlikely that things will change for the better soon. Under the new Aquino government, the usual syndrome of big words and short delivery are already apparent. The NSTA are making bold new national S&T plans, seemingly undeterred by the 30-year history of dismal funding. A recent policy paper (1986) listed an array of S&T "development strategies": there are 14 in agriculture, 7 in health, 14 in industry and energy, 5 in S&T capability and development structure, and 4 in natural hazards and environment. All these are supposed to be implemented with a budget of 93 million pesos. The document is a strange mishmash of meaningless epithets from the lexicon of previous policy exercises by NSTA. Meanwhile the inherent weakness of endogenous technology continues to worsen.

The vicious circle paradigm

After almost four decades of S&T policy formulation and planning in the Philippines there has been no qualitative improvement in the status of S&T. Certainly, there have been quantitative changes. There are now more S&T and R&D institutions, more scientists and technologists with advanced degrees, more research going on, and more laboratory equipment and tools. In the productive systems there are new indigenously developed technologies being used, especially in agriculture. Although there are new industrial facilities, these are mostly established through turnkey agreements. However, the more crucial process of what Sagasti19 called the "endogenization" of technology has not been achieved, except in some trivial industries like soy sauce and soap manufacture. Endogenization would require a strong feedback linkage between scientific and technological R&D and the country's production systems. In general, technological skills have not gone beyond the operative stage.

The severe economic crisis of 1983 exposed the almost total dependence of the Philippine production system on the importation of the means of production and inputs. The near total inability of the local S&T system also became quite clear. The crisis of 1983 was only one of a series that have occurred periodically since the 1940s. It was just another manifestation of the underlying backwardness of S&T in the Philippines- its dependence on foreign technology and capital to sustain the economic life of the country.

To understand the anatomy of the failure of endogenization would require insights into the country's political economy and its links to the evolutionary process of growth in the national S&T culture, the nature of modern S&T itself, and the present geopolitical environment.

In the present world economic and technological order, the Philippines is at a serious disadvantage. Because of its scientific and technological backwardness, it cannot produce the equipment and machinery needed to transform raw materials into manufactured goods. As a consequence of this incapacity to produce its own means of production, the national economy has to depend on the importation of foreign technologies in the form of manufacturing processes, producer goods, and even complete production facilities in order to meet the consumer needs of the domestic market.

To finance the country's technological dependence on imported technologies, the national economy relies on the export of low value added products and raw materials such as sugar, coconut oil, logs, copper concentrates, handicrafts, and other minerals. The so-called semiconductor industries of the Philippines are merely the labour-intensive assembly operations of multinational companies. As a result, the Philippines finds itself locked into the international division of labour, playing the role of the exporter of primary commodities and importer of production technologies. It has subordinated its development to the loans and dictates of the international capitalist system.

Part of today's geopolitical reality is the growing militant awareness of third-world countries regarding sovereignty over their natural resources and economy. On the other hand, the industrialized countries are strongly asserting their proprietary rights over some vital technologies. Certainly, some hard bargaining can be expected regarding access to technologies and natural resources. Careful planning and strategy formulation will be required by third-world countries in order to obtain an equitable deal. This will require a good measure of self-reliance in S&T.

Modern S&T is very different in character from the S&T of the early years of the Industrial Revolution. Before, most industrial skills were accumulated knowledge learned through long practice. Today we have a science-driven technology which means that innovations in technology arise out of fundamental scientific R&D. There are "technology factories" controlled by big transnational corporations, where systematic mission-oriented R&D is undertaken. Some well-known examples are atomic energy, computers, and telecommunications. Commercial technologies are therefore considered to be products of a long-term investment of venture capital. These commercial technologies are the carefully guarded properties of transnational corporations. Their transfer to other parties is made with deliberate care and involves huge payments. If third-world countries are to achieve a state of excellence that can compete with the industrialized countries, they must be able to match the modern R&D infrastructures in some particular problem areas.

These are just some of the important factors that must be considered in the effort to understand why some countries, like the Philippines, seem to be trapped in backwardness and underdevelopment.

For purposes of organized analysis and strategy formulation, it is useful to construct a conceptual model to represent the salient features of the forces shaping the character of S&T in the Philippines. This model also summarizes in a concise way the rather complex feedback relationships among the numerous factors that effect the state of S&T in this country. This conceptual model is represented by figure 15, which depicts the vicious circle paradigm of S&T in the Philippines.

Some of the principal driving forces of the vicious circle are historical factors. The legacy of colonial S&T is one of the major causes of the present weakness in endogenous S&T capacity. Of course, it can be argued that there was no significant indigenous S&T before the first contacts with the West. However, the point being made here is that the colonial policies actually inhibited the emergence of a relevant and nationalistic community of scientists and technologists. During the Spanish colonial era, S&T was discouraged in favour of more classical learning. In the American era, Philippine S&T was directed towards the service of colonial objectives. Scientific and technological R&D were not linked to the local production systems. S&T was and still is not relevant to the country's economy.


Fig. 15. The vicious cycle of technological dependence and backwardness

The momentum of these forces and the hostile social ecology of S&T that they create are responsible for the present weakness in endogenous S&T capacity. Since the local S&T is inadequate to serve economic needs, the necessary technologies are imported. The widespread use of foreign technology has many undesirable consequences: foreign investments, loss of control over decision-making and the emergence of a pattern of consumption and production based on developed-country tastes. A local vested interest in foreign technology is also created in the process. When foreign experts and executives enter a country, they easily establish strong ties with the local political and business élites. The developed country's interests are thus internalized in ways that effectively inhibit attempts to break the dependent relationships. This can strongly affect future options that are more advantageous for the host country as a whole. In this situation, local S&T becomes irrelevant to production, which further weakens it because of the lack of effective demand for local S&T products and services. The situation is a self-reinforcing, negative feedback loop that marginalizes the indigenous S&T institutions.

The other main driving forces of the vicious circle are contextual factors originating from the social, political, and economic environment. The most significant factor in Philippine social reality is the lack of self-reliant attitudes on the part of scientists and engineers. The peer group of scientists is the larger world scientific community. The local science community is not large enough to constitute a viable community with its own set of professional values. The engineering community, on the other hand, lacks a useful R&D attitude. The science group is isolated from the engineering group. There is practically no linkage between the two and both look up to the West as a model for emulation. Local scientists and engineers usually serve as consultants to foreign firms and contribute indirectly to the perpetuation of the vested interest in foreign technology and the demand for foreign products. The sense of being an identifiable and recognized actor whose views are sought and expected to influence social choices is absent.

The nature and character of the country's development philosophy implicitly abets the vicious circle. Since independence, the Philippines has deliberately courted foreign investment and technology transfer. It is obvious that the direct social costs of foreign investment are, as shown in figure 15, the stimulation of demand for foreign products and the creation of local vested interests for its perpetuation. Technology transfer is largely unregulated in terms of the actual learning process. There has been very little impact on the local S&T capacity.

The fact that the country is underdeveloped is in itself a contributory factor to the vicious circle. There are two aspects to this. One is the highly distorted distribution of wealth, in which 85 per cent of the national assets are owned by 15 per cent of the population. The result is that the wealthy have a natural preference for imported goods and the poor do not have sufficient purchasing power to encourage local production. In a sense this is another vicious circle within the vicious circle of S&T backwardness. The other aspect is the timidity of the wealthy class in risking investments in technology-intensive ventures. The outlook of the rich has always been in the traditional sectors like banking, agribusiness, insurance, real estate, and merchandising.

Some of the important political factors that tend to reinforce the vicious circle are the state's perception of the importance of S&T and the instability of the bureaucracy.

The breaking of the vicious circle will require strong political initiatives. However, S&T has not really been perceived by political leaders as crucial to the long-term success of the development programme. In spite of the political rhetoric, the problems of S&T are often overwhelmed by the more urgent political problems. It is apparent that a political consensus on the significance and priority of S&T has not yet been realized.

Since the early 1970s, the Philippine bureaucracy has been characterized by instability. Leaders at the ministerial level and the organizational structures have changed so often that it is extremely difficult to pursue a consistent policy. Even in S&T, policy directions have been in constant flux. The management of S&T has not made a dent on the vicious circle.

The anatomy of technology transfer

A general definition of technology transfer is the movement of technology into new contexts.20 And by technology we mean the stock of knowledge required for the operation of the various components of the techno-system. In techno-system terms, technology refers principally to the information subsystem (see figure 1). When viewed in the techno-system framework, the relevance of the economic, political, and socio-cultural factors in technology transfer become quite explicit. The information subsystem is physically manifested in the living minds of the social carriers of technology and various storage media. This concept is useful in clarifying the notion of the absorptive capacity of a country for technology transfer. Figure 1 also shows the linkages of the information subsystem to the training and R&D subsystems. This idea enables one to understand the two broad categories of technology transfer: the transfer of commercial assets and the transfer of noncommercial assets. The transfer of non-commercial assets, which are knowledge in the public domain, usually involves the training and the R&D subsystems, and is therefore only indirectly relevant to the production activities. Most technical assistance agreements are transfers of non-commercial assets.

When the term technology transfer was first used, the meaning was restricted to the transformation of the results of R&D in the basic sciences into commercial technologies. In current usage this movement of knowledge is now called vertical technology transfer. However, technology transfer is now universally used to mean the movement of technology from one country to another, which is also called horizontal technology transfer.

Technology transfer is not a new phenomenon. Technology diffusion is a natural process. Skills and techniques are transferred from one culture to another as a result of contacts through commerce and conquest. In the past -that is, before the colonial period - the prevailing direction of technology transfer was often from East to West. Today, most of the debate in technology transfer centres on the North-South technology transfer. It must be kept in mind, however, that technology transfer between industrialized countries is of a greater magnitude.12 The main sources of technologies at present are the US, UK, Federal Republic of Germany, and Japan. The main channels used are the transnational corporations (TNCs) which account for 80-90 per cent of technology transfers.

Technology is often transferred informally through personal contacts, readings of the literature, and professional meetings. In the techno-system framework, these could be viewed as inputs to the training and R&D subsystems and hence as not immediately crucial in productive activities.

The various formal mechanisms used in technology transfer are shown in figure 16. Direct forms of transfer include the direct purchase of capital goods and equipment, the training of nationals in specific technologies, and the hiring of foreign experts and consulting firms. The indirect mechanisms consist of the establishment of wholly owned subsidiaries of foreign companies, turnkey construction of plants and facilities, joint ventures with local companies, and variations on these dominant forms depending on the industry, national policies, and the policies of the technology suppliers. There are no established rules for obtaining the best terms. In the final analysis, technology transfer is the result of a negotiation process. The most crucial element is the ability to bargain in order to get the best terms, including the assurance that technology will really be transferred.


Fig. 16. The anatomy of technology transfer

The developing countries must contend with the stark reality of the modern world: that the most critical resource for development - the technology of production - is controlled by a few TNCs. For example, the TNCs control over 60 per cent of the world's petrochemicals.22 Only these few large enterprises have the necessary organization, resources, and expertise to undertake the expense and risks of modern R&D for commercially competitive products. The production technologies of the TNCs are internationally tested and commercially viable. They have worldwide marketing networks.

The historical origin of the dominance of the global technology "industry" by the TNCs is traceable to the head start in empirical science by a few countries. Of the 110 significant innovations identified by the OECD in the twentieth century, 60 per cent originated from the US, 14 per cent from the UK and 11 per cent from Germany.23

An important aspect of technology transfer is its rapid growth in the developing countries of Asia. This is shown in table 22. Between 1972 and 1981 technology imports in the Philippines increased fourfold. In terms of technology payments for royalties and fees, the increase was sixfold. For Thailand, the increase was more than eightfold. It is important to note that even technologically advanced Japan increased its import of technology by threefold in the decade 1972-1981. Although Japan is an exporter of technology, it was still a net importer as of 1981. It should also be mentioned that there is technology transfer between developing countries; the supply of capital goods and consultancies are the prevailing mechanisms. Moreover, there is a growing number of third-world TNCs.

The experiences of Japan and the newly industrializing countries of Asia suggest that technology transfer is an essential ingredient of industrialization. The fact that modern technology is controlled by a few firms from a few countries exposes the developing countries to the dangers of monopolistic pricing, technological dependence, and inappropriate technology.

Because of the fact that technological development will certainly affect the distribution of wealth and power locally and internationally, technology transfer has a political economy dimension. In many countries, the import of technology has been associated with the emergence of a dualistic economy. One of the common features of the third world is the existence of a modern, urban, and affluent sector amidst a traditional, rural, and poor countryside. The situation is that of a micro first-world enclave. This is the inevitable result of introducing capital-intensive industries into an environment of unemployment and poverty with a feudal political economy. Unrestricted and unplanned technology transfer accentuates and perpetuates the worst features of the third world. It is not surprising, therefore, to expect that attempts to control the terms of technology transfer will be resisted by local and international vested interests.

It is quite plausible to assume that technology transfer can be a potent instrument to advance the foreign policy interests of a developed country. There are instances in which exports of high-technology products to the socialist block countries have been prohibited. On the other hand, the liberal technology transfer to strategically significant countries like the Republic of Korea and Turkey suggests that forces other than commercial considerations are at work. In the process of technology transfer negotiations, the developing countries would do well to take these implicit factors into account in calculating the trade-offs. One of the imminent dangers of technology transfer is the perpetuation of technological dependence. Unless safeguards are deliberately sought by governments, the alliance between vested interests in the importing and exporting countries will constitute a powerful combination that will continue to defend and promote the existing political economy of technological dependence. The terms of technology transfers may contain restrictive provisions which could negate the attempts of developing countries to achieve S&T self-reliance and technological mastery. The following is a summary of the onerous terms that technology transfers may involve.

Table 22. Payments for transfer of technology: selected ESCAP member countries, 1972-1981 ($US millions)

Country

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

Total

Three-year average, 1979-81

Developed countries













Japan

572

715

718

712

846

1,027

1,241

1,260

1,439

1,711

10,241

1,470

Developing countries













India

7.78

3.43

8.23

3.58

8.18

4.87

11.48

7.12

11.25

12.55

78.47

10.31

Republic of Korea

<------------

96.51

-------------->

58.06

85.07

93.93

107.23

107.10

547.90

102.75

Philippines, of which:

16.76

23.56

34.01

55.73

60.00

63.08

62.20

63.63

72.91

67.92

519.80

68.15

Royalties/technical fees

5.81

8.83

13.62

16.56

22.01

28.51

28.56

30.74

36.32

37.59

228.55

34.88

Salaries + fees

10.95

14.73

20.39

39.17

37.99

34.57

33.64

32.89

36.59

30.33

291.25

33.27

Thailand

6.79

9.83

11.12

14.55

17.75

24.74

26.71

35.11

45.42

57.86

249.88

46.13

Developing countries combined

<------------

377.81

-------------->

150.75

185.46

199.79

236.81

245.43

1,396.05

227.34

Sources: Japan: Science and Technology Bureau, Report on Annual Introduction of Foreign Technology, Tokyo, 1981 (in Japanese) India: Government of India, Foreign Investment Board; Republic of Korea: Government of the Republic of Korea, Technology Transfer Centre; Philippines: Central Bank of the Philippines; Thailand: Bank of Thailand.

1. The cost of technology transfer. This could be very high in monopolistic situations and where the technology is transferred in completely packaged form, as in turnkey contracts. In some cases this is accomplished through the manipulation of payments in many joint venture agreements. The favourite techniques are the overinvoicing of imports and the underinvoicing of exports.

2. Tied inputs. In many countries with low technological capacity, the contracts for technology transfer often contain provisions for the exclusive supply of machinery, equipment, spare parts, and other inputs.

3. Unreasonable government guarantees. Some exporters of technology demand guarantees against changes in taxes, tariffs, and currency exchange rates. Others ask for guaranteed remittances and royalties.

4. Limited learning effects. Some technology transfer arrangements are self-defeating because of the excessive use of expensive expatriate expertise when either such expertise is locally available or local people could be easily trained to the desired level of competence. Some contracts even call for the discouragement of local technological effort in the same field as the imported technology.

5. Limits on competing technologies. This is usually accomplished by imposing terms limiting the imports of similar technologies, or through provisions of exclusive access to local resources.

It is safe to presume that it was only during the Spanish colonization that significant technology transfer occurred in the Philippines. The principal technologies brought in by the Spaniards were those relating to construction and plantation agriculture, mainly sugar, coconut, tobacco, and hemp. The relevant manufacturing technologies that were introduced were those concerning the processing of the major crops: the milling and processing of copra and the manufacture of cigars, cigarettes, and ropes. Since this took place before the era of the commercialization of technology, needless to say, the transfers were accomplished through informal channels and by direct investments.

The technology transfer process in the early years of Philippine industrialization is exemplified by the sugar industry and the role of the Roxas family. The family dates back to the mid-eighteenth century when Juan Pablo de Roxas came to the Philippines from Acapulco. His grandson Domingo Roxas started the family's sugar business by employing a Frenchman named Gaston to experiment with sugar-cane cultivation in Batangas. While the cultivation of sugar started much earlier, the first sugar mill was constructed in 1912. Presumably, machinery and expertise were imported from Europe with gradual local adaptations. By 1930, the Roxas sugar mill had grown into a milling complex. The total Spanish investment in sugar had grown to over $20 million before the war.24

The history of the San Miguel Corporation, the Philippines' largest manufacturing company, typifies the transition from informal technology transfer to the more formal, indirect mechanism of licensing agreement. The enterprise started manufacturing beer in 1880 by importing expertise from Europe, and thrived in spite of the open access of the American company, which established an office in Manila to oversee the management.

The licensing agreement has been the principle mode of technology transfer in the manufacturing of electric appliances, pharmaceuticals, transport equipment, batteries, and paints. Up to the present, all are heavily dependent on foreign technology and use foreign brands. Even in cases where local brands are used, there is a heavy dependence on foreign technology.

During the era of unregulated technology transfer in the Philippines, the dominant mechanisms used to transfer technology in support of the industrialization programme were direct investment in majority-owned subsidiaries and licensing agreements in the use of manufacturing know-how, patents, and trademarks. It has been estimated that foreign investment in the Philippines was $100 million in 1914, $300 million in 1930, $315 million in 1935 and $240 million just before the outbreak of the war.25 Table 23 shows the breakdown of ownership of domestic and foreign enterprises in the Philippines based on the first 250 largest manufacturing corporations. This table clearly shows the foreign dominance in the more modern sectors of the industry such as petroleum, chemicals, machinery, and transport equipment. Domestic companies are more active in the traditional sectors like tobacco, textiles, and beverages.

Table 23. Foreign ownership of Filipino corporations


Domestic

Foreign

% foreign

Food

40

21

34

Beverages

6

2

25

Tobacco

10

2

17

Textiles

29

5

15

Pulp and paper

8

2

20

Rubber

4

3

43

Chemicals

16

25

61

Petroleum

0

4

100

Non-metallic minerals

13

3

19

Metals

19

8

30

Machinery, equipment

6

7

54

Transport equipment

6

7

54

Electric appliances

5

3

38

Source: Yoshihara, 1985.

The first earnest attempt to regulate technology transfer began in 1967 with the creation of the Board of Investments (BOI) under Republic Act 5186. However, under this regulatory regime the effort was concentrated on the discrimination between pioneer and non-pioneer industries. Pioneer projects were granted liberal incentives by the government, and could be 100 per cent owned by foreigners; non-pioneer projects could only be owned by Filipinos. Projects registered with the BOI could bring into the country any number of foreign technicians.

In a study made in 1970 on foreign collaboration agreements,26 it was found that almost 50 per cent of the sample agreements contained onerous and restrictive clauses which were unfavourable to the country. Provisions on royalties and technology were vague and nonexistent, which raised the suspicion that payments were being made in other forms to evade existing foreign currency regulations. This suspicion was reinforced by the fact that most agreements were between parent companies and their subsidiaries. The initial official response to this problem was a circular by the Monetary Board which limited payments of royalties to not more than 5 per cent of net sales and for not more than five years (Monetary Board Circular 393, 1973). Like most regulations promulgated under martial law, the circular provided loopholes under the guise of "exemptions" based on the "merits" of the project.

After a review of the performance of the technology transfer regulations based on the 1967 Investment Act and the Monetary Board Circular, the necessity for the creation of an institution specializing in the field was recognized by both government and industry. Thus, a Technology Transfer Board (TTB) was created under Presidential Decree 1520, which took effect in 1978. The TTB requires a prior evaluation of all technology transfer agreements before project implementation.

Rule V of the implementing rules and regulations for P.D. 1520 conveys the principal concerns of the current technology transfer regulation. This is reproduced below.

Rule V. Policy Guidelines for Evaluation

Section 1. In evaluating agreements, the Board shall be guided by policy guidelines which shall include:

(a) Appropriateness and need for the technology/industrial property right;

(b) Reasonableness of the technology payment in relation to the value of the technology to the technology recipient and the national economy as well. For this purpose, the rate of payment for contracts involving manufacturing or processing technology shall not go beyond the rate that will be established by the Board for the specific technology or industrial right to be transferred;

(c) Restrictive business clauses shall not be allowed in any agreement; specifically, the following clauses shall be prohibited:

1. Those which restrict the use of technology supplied after the expiry of the agreement (without prejudice to the application of the Philippine Patent Law).

2. Those which require payments for patents and other industrial property rights after their expiration, termination or invalidation.

3. Those which restrict the technology recipient from access to continued improvements in techniques and processes related to the technology involved during the period of the agreement even if the technology recipient is willing to make additional payments thereon.

4. Those which provide patentable improvements made by the technology recipient shall be patented in the name of the technology supplier and required to be exclusively assigned to the technology supplier; or required to be communicated to the technology supplier for its use, free of charge.

5. Those which require the technology recipient not to contest the validity of any of the patents of the technology supplier.

6. Those which restrict a non-exclusive technology recipient from obtaining patented or unpatented technology from other technology suppliers with regard to the sale or manufacture of competing products.

7. Those which require the technology recipient to purchase its raw materials, components and equipment from the technology supplier or a person designated by him (except where it could be proven that the selling price is based on international market prices or the same price that the supplier charges third parties and there are no cheaper sources of supply).

8. Those which restrict directly or indirectly the export of the products manufactured by the technology recipient under the agreement.

9. Those which limit the scope, volume of production or the sale or resale prices of the products manufactured by the technology recipient.

10. Those which limit the research activities of the technology recipient to improve the technology.

(d) The agreement shall provide that the law of the Philippines shall govern the interpretation of the contract.

(e) The agreement shall provide for a fixed term not exceeding five (5) years and shall not contain an automatic renewal clause in order to ensure adequate adaptation and absorption of technology.

Section 2. Exceptional cases. In cases where substantial benefits will accrue to the economy, such as in export-oriented ventures, labor-intensive industries, those that would promote regional dispersal of industries or which involve substantial use of raw materials, exemption from any of the above requirements may be allowed when feasible under such guidelines to be determined by the Board.

As usual, the rules and regulations contained have a deliberate loophole in section 2. There is no information available from TTB on how many applications took advantage of this provision.

After the first year of implementation, the TTB processed some 151 applications for technology transfer. Tables 24, 25, 26, 27, and 28 summarize the review by the TTB staff of the first year of operation. From these tables the following observations may be made:

1. The US is the dominant collaborator, with Japan a poor second, and the UK a very poor third. However, the US dominance has been declining. Agreements with the US constituted 67 per cent in 1970, 50 per cent in 1974, and only 46 per cent in 1980. On the other hand, Japan's role increased from 7 per cent in 1970 to 21 per cent in 1980.

2. Most of the agreements are with minority foreign capital companies
(13 per cent), followed by technical agreements with domestic companies (34 per cent) and majority-owned subsidiaries (23 per cent).

3. Licences in electrical supplies and appliances have the biggest share of agreements, with the US and Japan contributing equally. This is followed by metal products and pharmaceuticals, which came mainly from the US. However, the transportation equipment sector is dominated by Japan, with the US as a poor second.

4. The relatively high technology areas of industrial chemicals and data processing are exclusively for the US.

5. The biggest share of the agreements (69 per cent) from table 27 involves trademarks which are mostly American and Japanese.

Table 24. National classification of agreements by type of company, 1978-1979

Country or area

Number of agreements


Subsidiaries/majority foreign capital participation companies

Minority foreign capital participation companies

Purely technical collaboration agreements

Total

United States

25

22

22

69

Japan

1

20

10

31

United Kingdom

2

3

5

10

Federal Republic of Germany

2

2

2

6

Switzerland

1

3

2

6

France

3

2

5


Italy


2

3

5

Australia

1

2

1

4

Denmark

1

1


2

Sweden


1

1

2

Republic of Korea


1

1

2

Bermuda


1


1

India



1

1

Belgium



1

1

New Zealand


1


1

Panama


1


1

Netherlands

1



1

Luxembourg


1


1

Hong Kong

1



1

Total

35

64

51

150

Source: Bautista, 1980.

Table 25. National classification of licensor by productsa


Foods

Beverages

Textiles, clothes, etc.

Electrical supplies, appliances, and accessories

Paints and printing materials

Pharmaceuticals

Metals and metal products

Petroleum products

Cosmetics, toiletries. soaps, and detergents

Motors. engines, and machinery

Cigarette and tobacco products

Office supplies and equipment

Cars, car parts, and other transport equipment

Rubber and rubber products

Paper and paper products

Telecommunications network

Plastic and plastic products

Household chemicals

Industrial chemicals

Non-metallic products

Footwear, etc.

Pyrotechnic products

Glass and glass products

Mercury pollution technology

Restaurant operation

Miscellaneous products

Vehicle-renting business

Manpower office

Data processing

Dynamic compaction

United States

7


4

11

1

8

10

1

2

3

2

1

3

2

4

1

4

4

2

1



1




2

1

1


Japan

2

1

1

10

1


1



2


2

9

1










1







United Kingdom

1


2

1

1

1

1


1





1
















1

Federal Republic of Germany



1



3

1
























Switzerland

2






1









1















France


1




1

1



2










1





1

1





Italy




1


2




1





















Australia







2








1





1











Denmark



1

















1











Republic of Korea







1














1










Sweden


























1





Netherlands






















1









Panama







1
















1








India










1





















New Zealand

1






























Bermuda


1





























Hong Kong










1





















Belgium






1

























Luxembourg































Total

13

3

9

23

3

16

19

1

3

10

2

3

12

4

5

2

4

4

2

5

1

1

2

1

1

2

2

1

1

1


Total

United States

76

Japan

31

United Kingdom

10

Federal Republic of Germany

6

Switzerland

6

France

5

Italy

5

Australia

3

Denmark

2

Republic of Korea

2

Sweden

2

Netherlands

1

Panama

1

India

1

New Zealand

1

Bermuda

1

Hong Kong

1

Belgium

1

Luxembourg

1

Total

156

Source: Bautista, 1980.
a. Some contracts have several product classifications included in the same contract.

Table 26. Classification of agreements by industry

Industry

Subsidiary, foreign-owned and/or controlled

Minority foreign capital participation

Purely technical collaboration

Total

Agriculture





Artificial propagation of prawns


1


1

Manufacturing





Foods

7

5

2

14

Beverages


1

2

3

Textiles, clothes, and accessories

1

5

3

9

Electrical supplies, appliances, and accessories (includes non-electrical counterparts)

4

11

8

23

Paints, paint materials, and printing materials


1

2

3

Pharmaceuticals

11


5

16

Metals, metal products, construction equipment and materials

3

10

6

19

Petroleum products

1



1

Cosmetics, toiletries, soaps, and detergents

1

1

1

3

Motors, engines, machinery, distribution transformers

1

5

4

10

Cigarettes and tobacco products



2

2

Office supplies and equipment


2

1

3

Cars, car parts, and other transport equipment

1

3

8

12

Rubber and rubber products

2

1

1

4

Table 27. Classification of agreements by type of assets transferred

Type of assets

Number of agreements


Subsidiaries/ majority foreign capital participation companies

Minority foreign capital participation companies

Purely technical collaboration agreements

Total

Patents, trademarks and know-how

15

20

9

44

Patents and trademarks

1


1


Patents and know-how

3

3

6


Trademarks and know-how

12

20

25

57

Patents



2

2

Trademarks

1

1


2

Know-how

7

20

12

39

Total

35

65

51

151

Source: Bautista, 1980.

These empirical observations further confirm the results of the previous historical analysis concerning the colonial origins of the country's technological dependence. The domination of technology transfer by the US and the prevalence of trademark agreements continue to cater to the Filipino taste for American brands (Japanese brands are now also making headway in the Philippine market). This, of course, de presses the demand for local products and so inhibits the growth of local technology. The increasing trend for purely know-how transfers and the emergence of Japan as a supplier of technology will some

Table 28. Classification of agreements by type of assets transferred against country of origin

Type of assets

Number of agreements


United States

Japan

Fed. Rep. of Germany

Switzerland

France

Italy

United Kingdom

Others

Total

Patent, trademark, know-how

21

13

2

2

1


3

2

44

Patent, trademark

1








1

Patent, know-how


3




1


2

6

Trademark, know-how

33

8

1

2

4

2

3

4

57

Patent



1





1

2

Trademark

1


1



2




Know-how

14

7

1

2


2

4

9

39

Total

70

31

6

6

5

5

10

18

151

Source: Bautista, 1980. how dilute the historic American bias of Philippine manufacturing industries.

The industry-type classification of agreements (table 26) supports the qualitative assessment of Filipino technological capabilities represented in table 16. Moreover, the necessity for agreements in electrical equipment, which is a second-wave technology, and the absence of agreements on third-wave or high technologies further reinforce this assessment.

In their self-evaluation of the performance of the TTB, the only indicators used were the savings in foreign exchange and employment generation.

From all the available reports of the TTB, there is no information on how the contribution of technology transfer to local technological capabilities is determined. Since this is the very essence of technology transfer, it is a very significant shortcoming of the country's technology transfer regulations. Presumably, this is the responsibility of the NSTA (now called Department of Science and Technology).

The development of technological capability is a complex process. Here we can use the ideas of the stages of technological capability as a guide in determining the learning effects of a technology transfer agreement. An essential element, however, is "learning by doing." The agreements must contain an assurance that local technologists are given "hands-on" experience. In order to reach the creative stage, it has been suggested27 that what is needed is an integrated technology transfer where know-how is blended with learning-to-know. In other words, to move forward technologically the seed must be planted, and the possibility of reaching the innovative and creative levels must not be foreclosed in any technology transfer agreement.

When a technology is transferred in a completely packaged form, as in turnkey contracts, the learning effects are minimal, and the development of each stage of technological capability will be delayed. Yet, in spite of this well-known fact, the TTB does not explicitly prohibit pure turnkey contracts.

A monitoring scheme for the purpose of determining whether technology is really transferred or transferred in the right way should be a first priority of the TTB. At the outset the details of the learning process must be spelled out clearly in the technology transfer agreements.

Conceptually and operationally, the determination of the existence of the conditions for a particular technology transfer agreement is a very difficult one. Considering the meagre resources of the TTB, it seems unlikely that this process is undertaken properly. Neither the

NSTA nor the Technology Resource Center, which are members of the TTB, has the necessary expertise to make an enlightened choice among the bewildering number of alternative technologies and sources. This calls for high expertise which may not be available locally. It has often been pointed out that the fundamental problem of many developing countries in this respect is one of making autonomous decisions on types, sources, and degrees of packaging of technologies. The American dominance in technology transfer in the Philippines strongly suggests that long-standing contracts and familiarity are the primary factors in the choice of technology.

Each type of technology is associated with a set of characteristics: the required inputs, the scale of production, the required supporting infrastructures, the income levels of the potential consumers, and the required skills. Those responsible for technology transfer must make sure that the transferred technology fits into existing and profitable techno-systems. In other words, the technology must be appropriate. Although the determination of appropriateness is in the rules of the TTB, the implementation is not clearly spelled out in the available records.

The usual notions associated with appropriate technology are labour intensiveness, small scale, the use of local materials, and products for low-income consumers. However, if the national objective is technological development, then it is clear that technologies promoting self-reliance and technological mastery are appropriate.

The search for models: learning from Asia

There is merit in studying the development of S&T in other Asian countries. The combined experience of the other countries, their successes and failures, could supplement and complement our own limited experience and perhaps sharpen our responses to the challenges that we face. Japan and, to a lesser extent, the Republic of Korea loom large as possible models.

Some social observers have pointed out that seemingly crucial elements of tradition and culture that have existed in Japan and the Republic of Korea are not present in the Philippine situation. There is no such thing as a Filipino culture. Instead, we have a universe of micro-cultures with a great variety of diverse characteristics. The Llocanos are known for hard work and clannishness, while the peoples of Central Luzon exhibit their own version of the communal spirit in what is called bayanihan. The diversity of cultural traits and traditions of the Philippines could be an asset in this respect, and not a liability.

Compared with the gigantic problems of post-war Japan and of Korea in the 1960s, the problems facing the Philippines today appear relatively easy to tackle. Although the country is now buffeted by political and economic problems, it has some assets that could be capitalized on for technological development. The Philippines has one of the highest literacy rates in the world. As shown in table 2, enrolment schools is comparable to that of present-day Japan and the Republic of Korea. It has a managerial class that is experienced in some second-wave technologies. It is better endowed with natural resources than Japan and Korea. More than all these, however, the world today is rife with vast technological opportunities. The third wave of civilization engendered by the twentieth century has only just begun, and there are numerous technological possibilities for "leap-frogging" into the twenty-first century. The Philippines today has more going for it than post-war Japan and Korea. The prevailing national pessimism is mostly self-perceived and imaginary. With a little dose of self-confidence and national resolve, the Philippines could catch up with the advanced countries in the early part of the next century.

Vision and commitment

If there is a commonality at all between the technological histories of Japan, China, and Korea, it is the existence of a grand vision of the future and their potential role in that future. The resources of both the government and the private sector are focused on common goals and a shared image of the future.

The Philippines is not lacking in vision. In fact, there seems to be a plethora of competing visions about the country's future. This reflects a lack of national consensus. Of course, an official long-term development plan exists, although it is not clear whether it is being supported by the present administration. In 1977, the Development Academy of the Philippines undertook a project called "Philippine Resources, Environment and the Future," which resulted in a book, Probing the Philippines Future. Today, this book, for whatever it is worth, has been largely forgotten by the new leaders of government. A similar interdisciplinary work entitled "The Philippines into the Twenty-first Century," under the leadership of a President of the University of the Philippines, was never published owing to lack of financial support. Recently, a big conference on an "Agenda for the Twenty-first Century" was convened by a private group. The conference degenerated into a bushfire conference and focused on the outstanding problems of the present: economic recovery, agrarian reform, delivery of justice, the role of the military, etc. The recommendations that emerged were all concerned with the immediate present. The image of a preferable or possible future for the Philippines was conspicuous by its absence. S&T was not discussed at all.

In the current Medium-term Development Plan (1987-1991), there is no apparent technology strategy. There is no reference to how the role of the Philippines is envisioned in the next century, when S&T will be the dominant world activity. Although there is a national S&T plan, this is not correlated with the planned activities of the other economic sectors. At most, there are suggestions that local S&T will be supportive of development activities but not the principal agent of growth.

In the private sector, the story is much the same. Industries, even some of the biggest ones, are not heavily involved in R&D activities. They are not motivated to innovate and they have no perception of their future competitiveness in the world of the future.

On the other hand, the S&T community has not produced anything spectacular to merit the attention of the government and the private sector.

In conclusion, the Philippine problématique is compounded by the lack of awareness of the value of S&T for the development process. Given this condition and the historical heritage of the Philippines, the country is trapped in a vicious circle of technological dependence and poverty. The country is besieged by political and economic problems and S&T has become buried in the turmoil of competing political and social issues.

Toward a leap-frogging strategy

The Philippines has been left behind economically and technologically by almost all its neighbours in the East Asian and South-East Asian regions during the past three decades. This suggests that the vicious cycle of S&T backwardness and economic dependence has not been broken by previous government science administrators.

With the appointment in June 1986 of a new Science Minister under a new administration and the reorganization of government science agencies under the new Department of Science and Technology (DOST) in January 1987, new science and technology policies have been formulated and new government agencies have been established. It remains to be seen whether an all-out drive to break the vicious cycle will be carried out by the new DOST; our previous analysis has shown that it takes much more than S&T policy statements and reorganization to achieve this. An entirely new national development strategy is needed to overcome technological and economic dependence.

Our initial assessment of the new government of the Philippines, however, does not evoke our optimism for national self-reliance in S&T, as the government's economic development strategies and policies do not differ much from those of the previous regime. In order to liberate the country from its economic and technological dependence' the government needs to pursue new and bold economic and technological policy directions that must attempt, first of all, to break the vicious cycle of technological backwardness and dependence.

Since the vicious cycle stems from the interrelated problems of (1) the weakness of the country's S&T potential, (2) the lack of effective demand for endogenous R&D and technological innovations, and (3) the almost total dependence of the country on the importation of technology for production, it is obvious that these three problems have to be tackled and overcome simultaneously (see figure 15).

A national strategy to break the vicious cycle is outlined in the conceptual model shown in figure 17. This includes the following essential components:

1. Accelerate massive development of the country's S&T potential through the expenditure of at least 1 per cent of GNP on the development of advanced S&T manpower, infrastructure, and information resources and the implementation of selected R&D projects.

2. Increase the effective demand for endogenous R&D technological innovations through fiscal policies and legislative acts that would make local firms, whether private or government-controlled, invest a certain percentage (at least 1 per cent) of their net income before taxes on endogenous R&D.

3. Initiate strategic management of technology transfer that would link the importation of selected foreign technologies with endogenous R&D and innovation projects for the purpose of facilitating national technological mastery of these selected technologies. The central goal of this proposed national strategy would be the technological mastery of those selected technologies that are strategically important to the Philippine economy in its relationship with the rest of the world.

Earlier, the various technologies were categorized into first-wave' second-wave, and third-wave technologies. It was pointed out that the


Fig. 17. Breaking the vicious cycle of technological dependence

Philippines has reached the replicative and even innovative stages of technological capability in most first-wave technologies, but that it is still largely at the operative and adaptive stages in most second-wave technologies, and at the pre-operative and operative stages in most third-wave technologies.

For the past two decades, the Philippine national debates on technological choices have been dominated by two schools of development thought: the "Countryside Development" school and the ´'Nationalist Industrialization" school. The former, arguing that agricultural development must precede industrialization, advocates the adoption of labour-intensive, employment-generating first-wave technologies. The latter, on the other hand, insists on following classical industrialization programmes and promoting second-wave technologies.

Under the present government, the "Countryside Development" school has gained ascendancy over the "Nationalist Industrialization" school, and the development of the agricultural sector has been included in national development plans. In fact, the "Countryside Development" philosophy was even incorporated into the new Philippine Constitution of 1987. Hence, industrialization will now be given a low priority, while agriculture-based, labour-intensive, export-oriented economic development will be pursued.

In justifying the "Countryside Development" strategy, government economic policy makers invoke the "law of comparative advantage," arguing that the country's comparative advantages lie in its abundant cheap labour, natural resource endowments, and agricultural products. Thus, they have been promoting the export of cash crops, garments, handicrafts, dolls, furniture, copra, prawns, etc.

What has been realized is that comparative advantage is not absolute and permanent but subject to technology. What has been ignored is that, today, comparative advantages are increasingly determined by scientific and technological knowledge. For example, the development of synthetic or genetically engineered products in advanced countries has determined the comparative advantages that used to be enjoyed by certain resource-rich third-world countries, while the increasing automation and robotization of production are now beginning to erode the comparative advantages of labour-intensive manufacturing in third-world countries.

In fact, three of the industries which we investigated in this project have become "sunset industries" for the Philippines because of high-technology developments. The international market for copper has been dwindling because copper wires are now being replaced by optical fibres in communication systems. New substitutes for coconut oil have been developed, resulting in the shrinkage of the export market for coconut oil. The use of fully automated systems for the fabrication of highly integrated, high-speed, sophisticated chips has started reversing the trend of setting up labour-intensive semiconductor assembly facilities in third-world countries.

What is very clear is that whatever comparative advantages the Philippines used to enjoy in the recent past owing to its natural resources or cheap labour are fast being eroded by third-wave technologies. It is also obvious that, in the twenty-first century, the economic viability of nations will be determined largely by mastery of third-wave technologies.

The current national debate between the proponents of first-wave technologies and those of second-wave technologies is, therefore, ludicrous and pathetic at a time when almost all the rest of the countries in East and South-East Asia are trying to master third-wave technologies in preparation for the twenty-first century, which is just a few years away. To pursue either a first-wave or a second-wave development strategy is to condemn the country to economic obsolescence and increased dependence.

In the face of high-technology developments that are already affecting the national economy, the Philippines can no longer afford to ignore the third-wave technologies that are radically reshaping human civilization. The only choice left for the country in the remaining years before 2000 is whether to start mastering these technologies to its economic advantage or to let high-tech development undermine its economic survival in the next century.

While third-wave technologies pose threats to the Philippine economy, they also offer opportunities for the country's economic development because of their knowledge-intensive and capital-saving characteristics. For example, the abundance of highly educated manpower in the Philippines could be turned into a comparative advantage in areas like software development, which for some time will remain a labour-intensive and skill-intensive activity. Biotechnology could also be used to lessen dependence on imported agricultural inputs and produce high-value crops, while micro-electronic instrumentation and CAD/CAM systems could be utilized to improve certain existing manufacturing processes.

The strategy of breaking the vicious cycle of S&T backwardness and economic dependence and gaining national technological mastery of selected third-wave technologies is what we propose for the Philippines. An appropriate term for this strategy is technological leapfrogging, because it seeks to bypass the second wave in order to (1) modernize Philippine production technologies, (2) provide a competitive edge to the national economy, and (3) bridge the technological gap between the Philippines and the advanced countries.

The essential feature of the strategy of technological leap-frogging is the linkage of selected transfers of third-wave technologies with endogenous R&D and technological innovations for the purpose of building up adaptive, replicative, innovative, and ultimately creative capabilities in these technologies.

A specific example of a technological leap-frogging approach would be the bypassing of the technology of second-wave, steel-based machine tools in favour of mastering the technology of third-wave industrial lasers for use in cutting, drilling, welding, annealing, and marking materials. The basic idea is to master, whenever feasible, the state-of-the-art technology rather than to invest money and efforts in acquiring competence in the corresponding obsolete technology.

Technology mastery refers to the innovative and creative levels of technological competence. In the example of industrial lasers, technological mastery would be indicated by the ability to improve the design and performance of existing industrial lasers or to invent and fabricate entirely new and better laser systems.

In our view, the term "technological mastery" is preferable to "technological self-reliance," because the latter is open to the misinterpretation of being either equivalent to technological autarky (i.e. the development of a technology from exclusively indigenous resources) or limited only to replicative levels of technological capability.

Besides, technological mastery connotes not only innovative and creative technological competence and state-of-the-art S&T knowledge and skills, but also the idea of "socio-economic command of technological development" -that is, the ability of the entire society to control the direction of technological innovations so as to maximize their social benefits and minimize their negative effects. In this sense, national technological mastery of third-wave technologies would imply democratic, social consensus in the selection, assimilation, development, application, and diffusion of high technologies so as to ensure a better future for everybody in the society.

The successful implementation of the strategy of technological leap-frogging, leading from the vicious cycle of S&T backwardness and dependence to national technological mastery of the third wave, is an extremely difficult national project that requires the following:

1. Strong political leadership that is fully committed on a long-term basis to this national project.

2. An effective, internationally linked national system for S&T and economic scanning, forecasting, prospective assessment, and intelligence.

3. A strong S&T system which is highly competent in adapting, replicating, and improving foreign technologies and creating new science and technology.

4. A national economic planning and management system that can formulate and implement integrated national technological and economic plans and policies in anticipation of opportunities and threats from new technological developments.

5. An economic system that is self-reliant, technologically oriented, innovative, internationally competitive, and possessed of a high degree of social equality.

6. An educational system that can anticipate and assess various probable futures and provide students with self-learning capacities for adapting to a rapidly changing society.

7. A national culture that places a high value on learning, creativity, originality, innovativeness, productivity, quality, and excellence. Furthermore, all these elements must be coordinated and integrated with one another.

In short, a radical overhaul of Philippine society is required if the strategy of technological leap-frogging is to be pursued successfully. Unfortunately, the prospects for this necessary social transformation are dim at present, for, notwithstanding the 1986 February Revolution that overthrew the Marcos dictatorship, the new Aquino government seems to lack long-term national vision for the country beyond national economic recovery.

Nevertheless, inspired by the successful experiences of Japan, the Soviet Union, China, and the Republic of Korea in technological leapfrogging, we believe that a national programme to master third-wave technologies could still be carried out in the Philippines if future national leaders could be convinced that it is imperative for national development.

Notes

1, Alvin Toffler, The Third Wave, New York: Bantam Books, 1980.

2. Olivia C. Caoili, History of Science and Technology in the Philippines, Quezon City: University of the Philippines, 1986.

3. See note 2 above.

4. Kunio Yoshihara, Philippine Industrialization: Foreign and Domestic Capital, Manila: Ateneo de Manila University Press, 1985.

5. UNESCO, Manual for Surveying National Scientific and Technological Potential, UNESCO, 1975

6. Jose Velasco and Arcega Baens, National Institute of Science and Technology 1901-1982. A Facet of Science Development in the Philippines, Manila: NSTA. 1984.

7. A. Lichauco, "The IMF-World Bank and the International Economic Order," Impact 11(1986): 410-420.

8. Romeo Bautista and John Power and Associates, Industrial Promotion Policies in the Philippines, Philippine Institute of Development Studies, 1979.

9. UNESCO, National Science Policy and Organization of Research in the Philippines, UNESCO, 1970.

10. See note 8 above.

11. MECS and NSTA, Science Education Development Plan, vol. 1, Manila, 1985. 12. Ibon Facts and Figures, no. 81.

13. See note 11 above.

14. Frances Stewart, "International Technology Transfer: Issues and Policy Options," Staff Working Paper no. 344, Washington, D.C.: World Bank, 1979.

15. Pablito M. Ong, Scientific and Technological Self-Reliance and the Copper Mining Industry, September 1985.

16. See note 14 above.

17. Francisco Reyes, Science and Technology in Philippine Society, Manila: UST Publications, 1972.

18. C. Dahlman, and L. Westphal, ´´Technology Effort in Industrial Development- An Interpretative Survey of Recent Research," in F. Stewart and J. James, eds., The Economics of New Technology in Developing Countries, London: Westview Press, 1982.

19. F. Sagasti, Technology, Planning, and Self-reliant Development: A Latin American View, New York: Praeger Publishers, 1979.

20 F. Bradbury, ed., Technology Transfer Practice of International Firms, Sijthoff & Noordhoff, 1978.

21. UNIDO, Technological Self-reliance of the Developing Countries: Towards Operational Strategies, Development and Transfer of Technology Series, no. 15, Vienna, 1981.

22. ESCAP/UNCTC, Costs and Conditions of Technology Transfer through Transnational Corporations, Publication Series B. no. 3, Bangkok: ESCAP, 1986.

23. See note 14 above.

24. See note 4 above.

25. Lilia Bautista, "Transfer of Technology Regulations in the Philippines," Geneva, 1980 (UNCTAD/ TT/32).

26. See note 9 above.

27. See note 20 above.

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Appendix 1

Indicators of self-reliance in science and technology

System characteristics

Variables

Indicators

Values

Empirical references

1. Goal-setting

1.1 Emphasis on learning in the formulation of goals

1.11 Existence of technical training programmes in corporate plans

1

No explicit training programme in plans




2

Training programmes not complete only for the low-skill components. Not on critical aspects of the technology




3

Detailed training programme aimed at ultimate takeover by local experts



1.12 Existence of R&D programme in corporate plan

1

No explicit R&D programme




2

Some R&D programmes but on minor aspects of the technology




3

Detailed R&D programme for product improvement


1.2 Emphasis on local autonomy

1.21 Existence of plans for local autonomy

1

No explicit programme for the attainment of local autonomy









2

Some aspects are programmed for local autonomy




3

Detailed programme for local autonomy, e.g. sale of equity of nationals



1.22 Plans for vertical integration

1

No explicit plans for vertical integration




2

There are plans for partial integration




3

Detailed programme for vertical integration


1.3 Articulation of techno- system policies

1.31 Role of nationals in policy formulation

1

Techno-system policy fully controlled or influenced by foreigners




2

Techno-system policies partly influenced by foreigners




3

Techno-system policies fully controlled by Philippine nationals

2. Control

2.1 Role of nationals in corporate decision- making

2.11 Nationality of management

1

Top-level decision makers are foreign nationals




2

Medium-level decision makers are foreign nationals




3

Top-level decision makers are Philippine nationals



2.12 Equity of participation of nationals in corporations

1

No equity participation of Philippine nationals




2

Partial participation by Philippine nationals




3

Equity fully owned by Philippine nationals


2.2 Role of nationals in the flow of inputs

2.21 Control of managerial inputs

1

Full control by foreign nationals




2

Partial control by Philippine nationals




3

Full control by Philippine nationals



2.22 Control of technological inputs

1

Full control by foreign nationals




2

Partial control by foreign/ Philippine nationals




3

Full control by Philippine nationals



2.23 Control of material inputs

1

Full control by foreign nationals




2

Partial control by Philippine nationals




3

Full control by Philippine nationals



2.24 Control of financing

1

Full control by foreign nationals




2

Partial control by Philippine nationals




3

Full control by Philippine nationals

3. Dynamics

3.1 Innovation by Filipinos in the relevant technologies

3.11 Number of innovations in the industry

1

No important innovations at all by Filipinos




2

Some important innovations by Filipinos




3

Great number of innovations by Filipinos



3.12 Quality of technical innovations by Filipinos

1

No, or very little, value for the industry




2

Some technical innovations are of high quality




3

Most of the technical innovations are of high quality



3.13 Use of local material inputs to the various process

1

No change in the character of material inputs (or increasing use of foreign material inputs)




2

Some increase in the use of local material inputs




3

Most of the material inputs are now local



3.14 Adaptations of some of the processes to local conditions

1

No change in the production processes




2

There have been some adaptations to local conditions




3

There are many important adaptations to local conditions


3.2 Change in number of Filipinos with relevant know-how

3.21 Change in number of Filipinos with the technical know-how in relevant technologies

1

No change or decrease in the number of Filipinos with technical know-how




2

There has been a significant increase in the number of Filipinos with technical know-how




3

There has been some increase in the number of Filipinos with technical know-how



3.22 Change in the number of Filipinos with managerial know-how

1

No change or decrease




2

Same but not much increase




3

There has been a significant increase in number of Filipinos with managerial know-how

4. Systems memory

4.1 Documentation (books, manuals, journals) of the techniques

4.11 Existence of technical industry library locally

1

No specialized technical library/literature collection for the relevant technologies




2

Same but not adequate




3

Adequate specialized technical library



4.12 Existence of historical industry statistics

1

No statistics are being kept locally




2

Some statistics are being gathered but there are important gaps




3

Adequate statistics are being gathered by the local industry


4.2 Quality of information subsystem

4.21 Technological capacity

1

Operative/adaptive capacity




2

Replicative capacity




3

Innovative/creative capacity

5. System feedbacks

5.1 Linkage of the industry with local R&D

5.11 Support of local R&D by industry

1

The industry/company has not supported any local R&D




2

The industry/company has supported some local R&D




3

The industry/company has its own R&D unit



5.12 Utilization of R&D results

1

The industry or company has not used any local R&D results




2

The industry has utilized some of the results of local R&D




3

The industry or company has been utilizing most of the results of local R&D


5.2 Linkage of the industry with training and educational programme

5.21 Utilization of locally trained technicians and engineers

1

Most of the technicians or engineers are foreign-trained




2

Some of the technicians are foreign-trained




3

Most of the technicians or engineers are locally trained

6. Systems maintenance

6.1 Adequacy of local technological educational systems

6.11 Relevance of curricula to the industry

1

Curricula not relevant to the needs of industry




2

Curricula partly relevant to the needs of industry




3

Curricula very relevant to the needs of industry



6.12 Adequacy of number of graduates

1

Number of graduates is not enough




2

Number of graduates is barely enough for the industry



6.13 Quality of the graduates

1

Local graduates are not good enough for the industry




2

Local graduates are barely qualified and need further training




3

Local graduates are quite qualified to work for the industry


6.2 Adequacy of local supply of industry hardware and maintenance

6.22 Local supply of hardware

1

Almost all machinery and spare parts are imported




2

About half of the required hardware is available locally




3

Most of the required hardware is available locally



6.23 Local maintenance of hardware

1

Hardware is maintained mostly by foreigners




2

Maintenance is partly done by Filipinos




3

Maintenance of hardware is mostly by Filipinos

7. Interdependence/ integration

7.1 Existence of the various components of the techno-system for product X


1

Only the extraction subsystem and minor subsystem exist locally




2

Some of the critical subsystems exist locally




3

All the critical subsystems are found locally


7.2 Interdependence/linkage of the subsystems


1

The various subsystems are not linked with or dependent on one another




2

Partial linkage of the various subsystems and components




3

All the various subsystems and components are linked with one another

Appendix 2. major achievements of S&T in the Philippines

(Source: EVSA)

Several NSTA projects spearheaded exploratory efforts in new areas of research. These projects established the technical feasibility of potential technologies and provided valuable baseline data for subsequent development efforts. Several other projects were undertaken to provide scientific and technological inputs to support the government's thrusts and priorities.

Agriculture and natural resources

Development of IR20, one of the most insect- and disease-resistant rice varieties used in the Masagana 99 programme.

Development of yellow corn varieties, e.g. Protena (with higher protein content than the other varieties).

Development of new soybean varieties, e.g. Tiwala, with as much as 150 per cent yield increase over the average national yield.

Improvement of cowpea varieties, resulting in six superior varieties which outyield similar Philippine Seedboard varieties.

Development of eight disease-resistant and high-yielding mungbean varieties including Pag-asa, the first variety released by the Philippine Seedboard.

Development of high-yielding cassava varieties.

Demonstration of the feasibility of local production of wheat.

Development of local wheat varieties with commercial potential.

Improved cropping systems technology for areas that rely solely on rain for moisture.

Development of new agro-fishery techniques which allow the profitable culture in captivity of shrimps and mussels, monosex tilapia, bangus-tilapia, and rice-fish.

Development of integrated fish-crop-livestock farming system.

Monoculture and polyculture of tilapia, carp, shrimps, and bivalves.

Development of floating cage culture of fish.

Development of fish culture techniques which increased milkfish production yield from 565 to 2,000 kg/ha/yr and tilapia yield from 3 to 5 tons/ha/yr.

Improvement of breeding, raising, feeding, and management techniques of local dairy animals to develop the local dairy industry.

Production of new pig strain which performed on a par with the York shire and the Hampshire from crosses between native pigs and standard breeds.

Development of a single-comb White Leghorn strain of chicken with high egg production, longevity, and hatchability.

Genetic improvements in Philippine commercial broiler chicken.

Conversion of agricultural and industrial wastes, such as banana rejects, rice hull, and straw, to animal feeds.

Substitution of costly yellow corn cassava in poultry ration.

Breeding of sunflower varieties and their utilization as a source of feedmeal and oil.

Determination of the water requirements of rice production, which formed part of the basis by which irrigation systems were designed and rehabilitated.

Innovative use of abaca for the rehabilitation of the Lake Caliraya watershed.

Adaptation of land satellite (landsat) remote-sensing as a rapid and cost-effective method of environmental and resource survey.

Improvement of plant pest and disease surveillance system, resulting in reduced field losses.

Industry and energy

Pioneering geological surveys of thermal springs as potential sources of electricity.

Demonstration of the feasibility of generating electric power using geothermal energy, so that the Philippines would become the second-largest producer in the world.

Industrial use of geothermal steam, e.g. production of iodized salt, grain drying, and fish canning.

Assessment of natural gas see pages in the country and their utilization for household cooking and lighting.

Establishment of the technical and economic feasibility of utilizing natural and man-made forests in the Philippines as sources of heat energy.

Pioneering production of biogas from animal and agricultural wastes.

Development and use of improvised strains of yeast for alcohol production.

Production of coco-diesel or petroleum fuel substitutes from coconut oil.

Development of several fuel-saving devices for automobiles which allow replacement of 20-40 per cent petroleum fuel with ethyl alcohol.

Production of producer gas from charcoal and development of its use in driving irrigation diesel pump.

Improved method of charcoal production yielding smokeless, well charred product.

Local production of charcoal briquettes.

Design and fabrication of important machines in industry, like the lumber dry kiln for the furniture industry and the abaca defibring machine.

Development of silkworm-rearing and silk-making techniques, resulting in a revival of silk production in the Philippines.

Commercial production of cotton in the Philippines.

Assessment of ceramic raw material deposits in the country to locate appropriate material for earthenware, stoneware, and refractories.

Improvement of ceramic technology, e.g. formulation of clay mix and introduction of locally fabricated equipment.

Development of clay bricks, floor and roofing tiles as housing materials.

Production of hollow blocks from soil and agri-wastes like bagasse and rice hull.

Characterization and use of secondary or lesser-known wood species.

Production of particleboards from secondary wood species and agri-wastes for use as panelling and roofing materials.

Conversion of coconut logs into lumber.

Conversion of tropical hardwood into pulp and paper, which led to the local production of newsprint.

Use of abaca fibre in preparing high-quality pulp for use in the manufacture of fine and specialty papers.

Improvement of oleoresin products from Benguet pine resins, which helped accelerate the growth of pigment and resin manufacturing industry.

Development of containers and other packaging materials for fruits and fish from indigenous materials, e.g. abaca fibre, banana stalks, coconut lumber.

Establishment of minimum thermal processes for some canned foods.

Processing and preservation of fish, meat, and vegetables.

Integrated coconut processing with products from coconut milk to activated carbon.

Production of chemicals for the cosmetic and pharmaceutical industries from coconut oil.

Creation of artificial rain through cloud seeding, using smoke generator and meterological balloon.

Determination of the meteorological parameters in the development of typhoons for more accurate prediction.

Design and fabrication of appropriate low-cost equipment for small and medium industries, e.g. chipping machines, wood-fired boilers, mixer machines.

Local manufacture of aircraft parts.

Nationwide survey of mercury and other heavy metal pollution, the results of which prompted the NPCC to impose sanctions on the industries responsible.

Support for the fabrication of prototype models.

Health and nutrition

Food consumption surveys to accumulate household nutritional data as basis for more effective policy-making and planning in agriculture and nutrition.

Development of low-cost, high-protein snack-food items, weaning food, and noodle formulations from indigenous sources like legumes and coconut.

Use of beef blood for iron supplementation.

Establishment of the relationship between aflatoxin loads and primary cancer of the liver.

Use of coconut water as a replacement fluid for children and adults suffering from diarrhoea.

Modification of approaches in health-care delivery to utilize paramedics or resident health workers.

Establishment of the prevalence, cause, and mortality record of cardiovascular diseases.

Identification and use of Philippine medicinal plants for inclusion in the Philippine National Formulary.

Pilot plant production of tablets and suspensions from such plants as lagundi, niyog-niyogan, and yerba buena.