With close to half of the world’s economic output coming from knowledge and its management, managing intellectual-property (IP) assets is the most important task for any individual, corporation or country.

During the National Innovation Summit a few days ago, the Philippine Intellectual-Property Policy Strategy (IP Policy Strategy) was presented to President Arroyo. The IP Policy Strategy, spearheaded by IP Philippines, lays down a road map to manage the country’s IP assets to spur social and economic development. The road map is part of a broader innovation strategy, which is being led by the Department of Science and Technology.

Innovation, of course, means more than creating new products. Unlike in the 1990s when innovation was always about technology, innovation today is not necessarily associated with a particular technology. It is about reinventing business processes and building entirely new markets for untapped customer needs. It’s about executing the right ideas and bringing them to the market quickly.

In fact, scholars and policymakers recognize the critical role of non-technological innovations in creating economic value and boosting competitiveness.

But measurement of innovation activity still rests heavily on the “traditional” technology-based indicators, such as research and development (R&D) outputs and patenting activity.

In a recent white paper released by the Economist Intelligence Unit (EIU) entitled “Innovation: Transforming the Way Business Creates,” patent data is used as a proxy indicator for innovation.

Patents continue to be used as a tool for measuring innovative performance. How many patents a country generates per million population is a basic indicator. Patent statistics help measure innovation output and R&D outputs. They also track how knowledge is diffused across technological disciplines, economic sectors, firms and countries.

Although the number of patents may be an imperfect measure of innovation, the EIU study argues that patent activity correlates well with three other proxies for innovation performance.

First are citations from scientific and technological journals per million population of a country. This indicator pertains to the traditional measure of research output in the form of publications.

Second, the average of two ratios: the share of medium- and high-technology products manufactured in a country and the share of these products in a country’s exports.

Third, the ability of corporations to absorb new technology as surveyed in the annual Global Competitiveness Report of the World Economic Forum (WEF).

How did the Philippines fare in the EIU 2007 white paper?

The study made a global ranking of the innovation performance of 82 countries. The Philippines was ranked No. 60—among the bottom one-third on the list. Compared with Asean members, the Philippines trails behind Singapore, Malaysia and Thailand, but is several notches above Indonesia and Vietnam.

Our rating in innovative performance can be easily correlated to our competitiveness rating, which the WEF releases every year. Addressing the innovation challenge will bridge the competitiveness gap. 

(The author is the director general of the Intellectual Property Office of the Philippines. Comments may be sent to  dg_asc@ipophil.)

THIS week, there have been several venues for discussing the future of the Philippine economy, as the national income accounts reports for the third quarter are being released; as the exporters, representing one of the main planks of economic growth, are continuing their agitation for government intervention as they reel under the impact of an appreciating peso; and as the agriculture sector leads in the observance of National Biotechnology Week.

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