LAST month the Obama administration awarded $37 million to 20 high-growth regional innovation clusters (RIC) through the Jobs and Innovation Accelerator Challenge. It is one of President Barack Obama’s preferred ways to revive the ailing US economy.
Supporting RICs is an excellent strategy to jolt the economy out of an anemic growth. RICs group together companies, suppliers, providers, research institutions and government agencies related to a specific field in one geographical location.
The group facilitates a synergy of academic know-how and business acumen that hastens the commercialization of new products and services. The interaction of talented minds from various disciplines also leads to the creation of innovative products that could advance, if not create, new industries. Furthermore, the geographic proximity of competing companies and related industries generate higher value, more jobs, and more innovation than those dispersed in several locations.
Investing in RICs is smart spending because it is a prime example of leveraging. Jonathan Sallet, special advisor on RICs at the think tank Center for American Progress, wrote that creating incentives for private parties to coordinate their activities and share resources could leverage an initial public investment at a 4, 5, or even 10-1 ratio.
Winners of the Challenge, for instance, will be awarded $1.8 million per cluster. This will be matched locally for an aggregate value of $13 million. Awardees expect their projects to create an additional 4,800 jobs aside from the 2,400 jobs that will be retained. The RICs will also generate $69 million worth of new private investment, and give rise to 339 new businesses.
The same rationale is behind the innovation clusters, which I wrote about last week. The Congressional Commission on Science, Technology and Engineering, of which I’m chairman, devised this program, while the Department of Science and Technology (DOST), Commission on Higher Education (CHED) and state universities and colleges (SUCs) almost immediately signed up for it.
We want to create areas of synergy among the government, industry and academe to leverage the limited resources each possesses. Pooling these resources—funding, infrastructure, facilities, manpower and technical skills—will allow us to fast-track generation of innovation that can be applied to national challenges.
The DOST has agreed to download its research money to pilot area-based clusters—algae research and commercialization, cloud computing and Software as a Service, disaster science and management, and ecology-friendly mining technologies.
We will also tap into a P500-million fund from the CHED, made up of P250 million for maintenance and other operating expenses (MOOE) and P250 million for capital outlay, to give succeeding clusters at least P10 million each. SUCs involved in innovation clusters can then apply for competitive grants based on their R&D project proposals.
However, we need to make strategic and structural reforms to maximize the impact. First, we must make an honest assessment of how much we truly invest in education relative to gross domestic product and on a per capita basis. It is pointless to deny the truth that we make one of the lowest education investments in Southeast Asia. The political leadership has the power and mandate to reverse this—and must do so immediately. Then we must rationalize the structure of our higher education institutions (HEIs), both public and private. Again, the government must muster the will to close down nonperforming schools, as well as terminate subpar programs and courses. Many of our graduates cannot even get decent jobs relevant to their skills because of poor training. We waste our talent pool by allowing this problem to fester.
Corollary to that is instituting proper financial and asset management among HEIs. Case in point: The budget pie for SUCs is not growing—even shrinking further after more SUCs were created due to political concessions and not academic standards. SUCs must maximize their land endowments, tap their networks to raise funds, generate R&D money and attract foreign grants.
High tuition and other fees remain the single-biggest obstacle to getting students to school. We should ask government financial institutions, like the Development Bank of the Philippines and LandBank, to open a single window that will provide affordable and accessible financial assistance to students, teachers and schools. These government banks have billions squirreled away in their reserves that could be easily channeled toward seed funding for this purpose. I will write some more on this key education issue.
Finally, we ought to ensure that our educational standards are consistent with international benchmarks on accreditation and licensure. For example, our engineering graduates will only be hired as engineering assistants in many developed countries unless we qualify under the Washington Accord. It is hard to mobilize political will but, for once, we have to be single-minded about it as the window for reform is narrowing. The best time to institute tough reforms is now, in the early years of a new leadership.
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