Philippine Regional Inclusive Innovation Centers: Solving Community Problems and Bridging Development Gaps

Abstract

The Philippine economy has been growing at a remarkable average rate of 6.4 percent from 2010 to 2017 and at 6.2 percent in 2018. Although it slowed down in 2018, the economic outlook has remained positive given the country’s strong macroeconomic fundamentals. Manufacturing has continued to be one of the important growth drivers, posting an average growth of 7.6 percent during the 2010-2017 period while services grew by 6.7 percent on average. The manufacturing resurgence that the country is experiencing has been attributed to its growing domestic market, growing middle class low and stable wages; abundant, young, highly trainable, English-speaking workforce; and rising costs in China. A manufacturing slowdown was evident in 2018 when the sector registered a growth rate of 4.9 percent. This was due to high inflation, global rise in oil prices, weakened consumer spending, drop in business confidence, and sluggish export growth arising from the US China trade war and global economic slowdown. The performance of the agriculture, hunting, fishery, and forestry has remained lackluster, lagging behind services and industry with an average growth of only 1.4 percent from 2010 to 2017 and 0.8 percent in 2018. Since most of the regions are dependent on agriculture, fishing, and forestry, regional economic imbalances have continued to persist, along with poverty, unemployment, and underemployment. The Autonomous Region of Muslim Mindanao (ARMM) has the highest poverty incidence at 54 percent, followed by CARAGA and Eastern Visayas at 39 percent, SOCCSKSARGEN and Northern Mindanao at 37 percent, Bicol at 36 percent, and Zamboanga 34 percent. One important question is whether or not Industry 4.0 technologies such as artificial intelligence or AI, data analytics, robotics, 3D printing, or Internet of Things will help address regional inequality and poverty and drive the country’s industrial development. These new technologies can reduce costs and lead to more efficient and scalable industry, and to the development of new business models, new production techniques, and changes in global value chains that would require new skills and capabilities.