The Philippines is only second to India among the developing countries that are performing better in frontier technologies than might be expected, according to a new United Nations Conference on Trade and Development (UNCTAD) report.
The country is one of only a few developing nations exhibiting stronger capabilities to use, adopt and adapt frontier technologies than their per capita gross domestic products (GDPs) would suggest, according to an index of 158 countries in UNCTAD’s Technology and Innovation Report 2021.
The report, launched on February 25, provides a “country readiness index” that assesses the progress of countries in using frontier technologies, considering their national capacities related to physical investment, human capital and technological effort.
Frontier technologies are technologies that take advantage of digitalization and connectivity and include artificial intelligence (AI), the internet of things, big data, blockchain, 5G, 3D printing, robotics, drones, gene editing, nanotechnology and solar photovoltaic.
These rapidly developing technologies represent a US$350 billion market, which by 2025 could grow to over $3.2 trillion, according to the report. The paper scored countries on their readiness for frontier technologies based on five building blocks: ICT deployment, skills, research and development, industry activity, and access to finance.
The report found that the countries best prepared to use, adopt and adapt these technologies are the richest ones, mainly those in Northern America and Europe, while those least prepared are in sub-Saharan Africa and other developing regions. The United States, Switzerland, the United Kingdom. Sweden and Singapore lead the readiness index as the best prepared for frontier technologies.
However, some developing countries perform better on frontier technologies than their per capita GDPs would suggest, noted the report. Among these are India, the Philippines, Ukraine, Vietnam and China. The extent of “overperformance” is measured as the difference between the actual index rankings and the estimated index rankings based on per capita income.
India is the top overperformer as its actual index ranking is 43, while the estimated one based on per capita income is 108. Hence, India overperformed by 65 ranking positions. The Philippines follows, having a ranking of 44 overall but placing 101 in terms of per capita income; thus, overperforming by 57 ranking positions.
The Philippines has a high ranking particularly for industry, reflecting high levels of foreign direct investment in high-technology manufacturing, particularly electronics, noted the report. Multinational enterprises are attracted by the country’s strong supply chains and solid base of parts manufacturing. The Philippines also has pro-business policies along with a skilled, well-educated workforce and a network of economic zones.
Overall, however, the top five overperformers, like other developing countries, have lower rankings for ICT connectivity and skills.
To catch up and forge ahead, UNCTAD urged developing countries to adopt frontier technologies while continuing to diversify their production bases by mastering many existing technologies. These countries need to strengthen their innovation systems, as most of them are weak and prone to systemic failures and structural deficiencies, the report said. The research also emphasized that governments have a critical role to play in paving the way for technologies, especially in creating an enabling environment and ensuring the benefits of these technologies are shared by all. “A whole-of-government approach is needed to absorb these technologies, as opposed to working in silos,” Shamika Sirimanne, director of UNCTAD’s division on technology and logistics, said.
“Each country will need science, technology and innovation (STI) policies appropriate to its stage of development, but all developing nations will suffer the impact of frontier technologies and need to prepare people and firms for a period of rapid change,” the report said.
The Philippines has taken steps toward STI development with the signing in 2019 of Republic Act (RA) No. 11293 or the Philippine Innovation Act and RA 11337 or the Innovative Startup Act. The Innovation Act aims to promote a culture of strategic planning and innovation in the country through improving innovation governance and adopting long-term goals.
The Innovative Startup Act creates the Philippine Startup Development Program that will offer programs, benefits and incentives for both start-ups and enablers to strengthen, promote and develop the Philippine start-up ecosystem.