Dr. Tapang's discussion on National Industrialization - the current situation, domestic industrialization policy's features and the country's economic capability to finance such program.

1. National Industrialization
for Science and Technology Development
Dr. Giovanni Tapang
Associate Professor, National Institute of Physics
University of the Philippines Diliman
!
STS 2014

2. Walkthrough
• Introduction
• Science and technology in the Philippines
• National industrial policy
• Critical innovation for national industrialization

3. 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

4. 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

5. • 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

6. • SWS survey (1Q 2013):
25.4% unemployment
• Around 10.6 million
unemployed (IBON) + 5
million (due to Yolanda)
• 47.2%-49 % in the 18-24
age range, 30.2% -32.9
% for 25-34 (Dec 2012
SWS)
Overseas Remittances,
1980-2009 (US$ million, % of GDP)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Year
US$million,current
0
2
4
6
8
10
12
%ofGDP
OFW remittances (US$ million)
As percentage of GDP (% )

8. 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. 2013-21

9. 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 2010-2011
Global Competitiveness Report by the World Economic
Forum.
Emigration of Science and Technology Educated Filipinos (1998-2006) and 2011 DOST SEI studies
!

10. 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
2009.
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 (1998-2006) and 2011 DOST SEI studies
!

11. 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

12. National
Industrialization

13. 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, 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

14. National industrialisation
• 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
• Produce primarily for domestic
consumption not exports
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

15. ...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

16. 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)

17. Some features of
a national industrialization policy

18. 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

19. 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%)

20. 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

21. Legislator → NGO
2007-2009
size of lines correspond to
amount of money transferred
Text
Network Visualization of
PDAF releases 2007-2009
Legislator and NGOs
thickness of lines = amount of money

22. Anong nawawala dahil sa pork?

23. Genuine national development
with a domestic industrial policy

24. 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, 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

25. 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
• 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

26. 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

27. Patriotic Science and Technology
l Pushing for pro-people
development
l National industrialization
l Genuine agrarian
Reform
l United with other
progressive sectors

28. Science and technology for the people
• Committed to people’s interests
• Science for people’s requirements and needs
• Responsive and constantly plans
• Development and management
• Science, technology and natural resources
• Consciously linked on people’s needs
Greatest and continuing challenge is to make science
and technology and progress serve the benefit of the
majority

29. Man can find meaning in life. Short and perilous as it
is, only through devoting himself to society.
–Albert Einstein
Prometheus Bound
Weekly column in the Manila Times
Every Thursday
www.agham.org

30. National Industrialization
for Science and Technology Development
Dr. Giovanni Tapang
Associate Professor, National Institute of Physics
University of the Philippines Diliman
!
gtapang@nip.upd.edu.ph
STS 2014