Take the Lead! The Role Scientists and Engineers in Developing National Industries Raymond P. Pingol

Walkthrough State of science and technology National industrial policy What can we do?

State of science and technology

Philippine science and technology Underdeveloped Stunted Reflected on statistics Education Industrial growth Reflected on livelihood Lack of industries Massive poverty

Philippine poverty and backwardness Widespread poverty 1 out of 4 (NSCB 27.9 %, < P7,821/mo) Worsening inequality Agricultural and industrial backwardness Overly reliant on cheap labor export (OFW), foreign capital and debt

2012 data: Agri 12.3%, Industry 33.3 %, Services 54.4% (2011 est) Feb 2013 data: Agri 12.4 %, Industry 31.3%, Services 56.4 % (2012 est) “De-industrialization” and shrinking manufacturing: As small as in 1950s Falling food production per capita, rising agricultural trade deficits

SWS survey (1Q 2013): 25.4% unemployment Around 10.6 million unemployed (IBON) + 5 million (due to Yolanda) 47.2%-49 % in the age range, 30.2% % for (Dec 2012 SWS)

Weak Manufacturing Manufacturing industry has been weak, growth has been slow and contribution to value added and employment has been limited...Industrial structure remained “hollow” or “missing” in middle and medium enterprises... never seriously challenged the large entrenched incumbents. Linkages between SMEs and large enterprises [remain] limited …Heavy concentration of Philippine exports on three major products groups: electronics, garments and textiles and auto parts Within these major product groups, exports are highly concentrated in low value added and labor-intensive products sectors. Twenty Years after Philippine Trade Liberalization and Industrialization: What Has Happened and Where Do We Go from Here Rafaelita M. Aldaba, Philippine Institute for Development Studies DISCUSSION PAPER SERIES NO

Brain Drain Worsens In 1998, there were 9,877 outbound science workers. In 2009, the number has grown to 24,502 (2.5x) More than half of these are health professionals and nurses while a fifth are engineers. 23 % of total science workers pool go abroad to seek employment. Philippines ranked 96 out of 139 nations in terms of availability of scientists and engineers in the Global Competitiveness Report by the World Economic Forum. Emigration of Science and Technology Educated Filipinos ( ) and 2011 DOST SEI studies

Brain Drain Worsens The number of scientists and engineers currently engaged in research and development (R&D) activities across the Philippines is about 8,800 In 2008, allocation for science and technology related activities in Philippines comes to 0.14% of GDP (half of Thailand's 0.26% and 1/5 of Malaysia's 0.69%) UNESCO Science Report 2010: researcher population density of the Philippines is 1 per 12,345 population in Singapore (one per 164), Thailand (one per 3,215), Indonesia (one per 6,172) and Vietnam (one per 8,695). Emigration of Science and Technology Educated Filipinos ( ) and 2011 DOST SEI studies

Current situation Lack of basic industries No program for rural industrialization, agricultural modernization No genuine infrastructure in energy, transportation, communications, information technology and basic services

National Industrialization

National industrialization Maximum self-sufficiency in industrial production of capital Provide intermediate and consumer goods for domestic needs based on national potential Ensure food security and self- sufficiency Heavy industries base metals base metals, basic chemicals, petrochemicals, pharmaceuticals, machinery, precision instruments, electronics, and consumer durables. LEADING FACTOR Light industries processing of grains, cereals, fruits and vegetables, beverages and dairy products, meat and poultry; aquaculture and fisheries, clothing-footwear, textile and garment industries and mass housing BRIDGING FACTOR Agriculture (modernized and mechanized)‏ BASE

...as opposed to... Current pattern of production, investments, and trade Export of agricultural and extractive raw materials Importation of surplus finished goods, agricultural commodities and capital, Re-export of reassembled or repackaged imported manufactures

Why build national industries? Key to establishment of modern and diversified industrial economy Secure livelihood Satisfy basic needs Ensure rapid and sustained economic growth Achieve economic independence Heavy industries base metals base metals, basic chemicals, petrochemicals, pharmaceuticals, machinery, precision instruments, electronics, and consumer durables. LEADING FACTOR Light industries processing of grains, cereals, fruits and vegetables, beverages and dairy products, meat and poultry; aquaculture and fisheries, clothing-footwear, textile and garment industries and mass housing BRIDGING FACTOR Agriculture (modernized and mechanized)‏ BASE

Why build national industries? Generate and mobilize domestic capital Generate domestic market Create Jobs Give living wage to workers Raise purchasing power of peasants/poor Produce primarily for domestic consumption not exports Heavy industries base metals base metals, basic chemicals, petrochemicals, pharmaceuticals, machinery, precision instruments, electronics, and consumer durables. LEADING FACTOR Light industries processing of grains, cereals, fruits and vegetables, beverages and dairy products, meat and poultry; aquaculture and fisheries, clothing-footwear, textile and garment industries and mass housing BRIDGING FACTOR Agriculture (modernized and mechanized)‏ BASE

Is there economic basis for national industrialization? Comprehensively rich natural resource base Metals, minerals, energy, biodiversity, marine resources Skilled forces of production Workers, peasants, professionals (incl. scientists and technologists)

Some features of a national industrialization policy

Public sector ownership and operation of vital industries Nationalization of vital and strategic enterprises Main source of raw materials Main lines of distribution All public utilities Social services (housing, health, education, social security)‏ Dismantle and control big monopoly commercial operations

Limited foreign corporations and entities in manufacturing enterprises Foreign investments will be allowed only in clearly unreplicable advantages in terms of technology transfer or access to capital, products and markets Strict regulation and supervision including entry of all forms of speculative capital May be allowed a minority equity share (not more than 40%)‏

Financing National Industries Public finance to maximize funds for the realization of the strategic plan Eliminate bureaucratic, military and other counterproductive expenditures (aka pork barrel) Remove automatic appropriation for foreign debt service Balance accumulation and consumption All fraudulent and behest loans shall be repudiated

PDAF network of releases Legislator → NGO size of lines correspond to amount of money transferred Text PDAF releases Legislator and NGOs thickness of lines = amount of money

The cost of pork barrel funds

Genuine national development with a domestic industrial policy

Agriculture as base Provide means of subsistence Source of industrial raw materials Vast market for industrial products; Main reservoir of labor power for industry and other sectors of economy Important source of accumulation funds Biotechnology, high yield farming, low inputs, efficency, etc. Heavy industries base metals base metals, basic chemicals, petrochemicals, pharmaceuticals, machinery, precision instruments, electronics, and consumer durables. LEADING FACTOR Light industries processing of grains, cereals, fruits and vegetables, beverages and dairy products, meat and poultry; aquaculture and fisheries, clothing-footwear, textile and garment industries and mass housing BRIDGING FACTOR Agriculture (modernized and mechanized)‏ BASE

Heavy industry is leading factor Provide modern machinery, motor power, chemical fertilizers, pesticides, and other means of production for agriculture Produces various light industrial machines and light industrial raw materials Heavy industries base metals, basic chemicals, petrochemicals, pharmaceuticals, machinery, precision instruments, electronics, and consumer durables. LEADING FACTOR Light industries processing of grains, cereals, fruits and vegetables, beverages and dairy products, meat and poultry; aquaculture and fisheries, clothing-footwear, textile and garment industries and mass housing BRIDGING FACTOR Agriculture (modernized and mechanized)‏ BASE

Heavy industry is leading factor Provides necessary conditions for technical innovation and development of the national economy as a whole and guaranteeing independence Heavy industries base metals, basic chemicals, petrochemicals, pharmaceuticals, machinery, precision instruments, electronics, and consumer durables. LEADING FACTOR Light industries processing of grains, cereals, fruits and vegetables, beverages and dairy products, meat and poultry; aquaculture and fisheries, clothing-footwear, textile and garment industries and mass housing BRIDGING FACTOR Agriculture (modernized and mechanized)‏ BASE

Light industry as a bridging factor Produces necessary consumer goods for rural and urban areas Indispensable in raising living standards Requires smaller investments but provides quick returns Accumulation fund for expansion of heavy industry Heavy industries base metals, basic chemicals, petrochemicals, pharmaceuticals, machinery, precision instruments, electronics, and consumer durables. LEADING FACTOR Light industries processing of grains, cereals, fruits and vegetables, beverages and dairy products, meat and poultry; aquaculture and fisheries, clothing-footwear, textile and garment industries and mass housing BRIDGING FACTOR Agriculture (modernized and mechanized)‏ BASE

Industrialization for whom? Committed to people’s interests Science and technology for people’s requirements and needs Responsive and constantly plans Development and management Judicious use of natural resources Consciously linked on people’s needs Heavy industries base metals, basic chemicals, petrochemicals, pharmaceuticals, machinery, precision instruments, electronics, and consumer durables. LEADING FACTOR Light industries processing of grains, cereals, fruits and vegetables, beverages and dairy products, meat and poultry; aquaculture and fisheries, clothing-footwear, textile and garment industries and mass housing BRIDGING FACTOR Agriculture (modernized and mechanized)‏ BASE Greatest and continuing challenge is to make science and technology and progress serve the benefit of the majority

Role of Engineers and Scientists in National Development Inventors, scientists, technologists, engineers, and other research and development workers are the key players in a country’s quest for industrialization S&T workers are the lifeblood of research, innovation and have important roles in the industry and manufacturing sector

What can we do? Unite Participate Serve Man can find meaning in life. Short and perilous as it is, only through devoting himself to society. – Albert Einstein

Take the Lead! The Role Scientists and Engineers in Developing National Industries Raymond P. Pingol