The Philippines in the The Philippines in the New Asian Economic New Asian Economic

DynamicDynamicPerspectives from Robert Eberhart, FellowPerspectives from Robert Eberhart, Fellow

Stanford’s Program on Regions of Innovation and Stanford’s Program on Regions of Innovation and EntrepreneurshipEntrepreneurship

The Philippines in contextThe Philippines in context

• The Philippines is experiencing profound changes The Philippines is experiencing profound changes in its national environmentin its national environment• China is developing and asserting national China is developing and asserting national

ambitions, but development will not be straight -line ambitions, but development will not be straight -line or calmor calm

• Japan and the US are experiencing a search for a Japan and the US are experiencing a search for a new “normality” in economic and political realmsnew “normality” in economic and political realms

• Global access to information an knowledge here-Global access to information an knowledge here-to-fore accessible to only a few is affecting the to-fore accessible to only a few is affecting the PhilippinesPhilippines• News will outrun formal news servicesNews will outrun formal news services• Political interest groups will form and move faster Political interest groups will form and move faster

than governmentsthan governments

• How can the Philippines prosper in this context?How can the Philippines prosper in this context?

Business and EconomicBusiness and EconomicOutlookOutlook

• Continuing Effects from the Financial CrisisContinuing Effects from the Financial Crisis

• The Evolution of EconomiesThe Evolution of Economies• Advanced economiesAdvanced economies

• Declining birth rateDeclining birth rate• increasing concentration of wealthincreasing concentration of wealth• Retention of the top of the value chainRetention of the top of the value chain• Loss of mid-level skilled employmentLoss of mid-level skilled employment

• Developing economiesDeveloping economies• Increasing share of the global economyIncreasing share of the global economy• Political challenges as wealth increases aspirationsPolitical challenges as wealth increases aspirations• Resource constraintsResource constraints

• Proliferation and Development of the Global Supply Proliferation and Development of the Global Supply ChainChain

Supply ChainSupply Chain

Supply ChainSupply Chain

Strategies For National Strategies For National GrowthGrowth

• Improving Factor InputsImproving Factor Inputs• ActionAction

• Increase amount and/or quality of labor and capitalIncrease amount and/or quality of labor and capital• Result:Result:

• Improved productivityImproved productivity

• Trade and Comparative AdvantageTrade and Comparative Advantage• Action:Action:

• Reduce import substitution rules and increase exports, sell Reduce import substitution rules and increase exports, sell currency, acquire part of global supply chaincurrency, acquire part of global supply chain

• ResultResult• Increase of world market share of products and increase in Increase of world market share of products and increase in

GDPGDP

• Innovation and EntrepreneurshipInnovation and Entrepreneurship• ActionAction

• Create favorable Habitat for Innovation and EntrepreneurshipCreate favorable Habitat for Innovation and Entrepreneurship• ResultResult

• Increase in new business formation both within companies Increase in new business formation both within companies and in formation of new companiesand in formation of new companies

The “Habitat” for RegionalThe “Habitat” for RegionalEntrepreneurial DevelopmentEntrepreneurial Development

• Technology entrepreneurship:Technology entrepreneurship:• Occurs in a framework of ways of doing things, Occurs in a framework of ways of doing things,

the “Habitat”the “Habitat”• The Habitat is the rules and institutions within The Habitat is the rules and institutions within

which the ecosystem of entrepreneurship which the ecosystem of entrepreneurship developsdevelops

• The Habitat consists of:The Habitat consists of:1.1.The global marketplace for goods and servicesThe global marketplace for goods and services2.2.Networks of local, family and national relationshipsNetworks of local, family and national relationships3.3.The Business Infrastructure of laws and habitsThe Business Infrastructure of laws and habits4.4.The Hard InfrastructureThe Hard Infrastructure5.5. Finance: Venture Capital and AngelsFinance: Venture Capital and Angels6.6.Universities and Research InstitutesUniversities and Research Institutes

The Tech Entrepreneurial The Tech Entrepreneurial HabitatHabitat

A Habitat forA Habitat forEntrepreneurshipEntrepreneurship

• Visitors to Silicon ask how it works. Most of them Visitors to Silicon ask how it works. Most of them focus only on one part of the picture and miss focus only on one part of the picture and miss many key points. Among key misunderstandings:many key points. Among key misunderstandings:• Science ParksScience Parks. If they do not set the right . If they do not set the right

conditions and recruit visionary companies into the conditions and recruit visionary companies into the park, they become only real estate developments.park, they become only real estate developments.

• University technology transfer programsUniversity technology transfer programs. Often . Often subvert the purpose of a university transforming it subvert the purpose of a university transforming it into a research lab for large firmsinto a research lab for large firms

• Start Venture Capital FirmsStart Venture Capital Firms. If they do not have . If they do not have the right regulatory regime, the venture capital the right regulatory regime, the venture capital companies just become banks or AppleCorpcompanies just become banks or AppleCorp

Entrepreneurial HabitatsEntrepreneurial HabitatsEntrepreneurship Dimension SV Japan China Phil.

Favorable and rational rule of law

Knowledge intensity

High quality, mobile workforce

Results oriented meritocracy

Climate that tolerates failure

Open business environment

University / Industry collaboration

Business / gov’t / non-profit collaboration

High quality of life

Specialized business infrastructure

The ChoiceThe Choice

• So, what path with the leaders, So, what path with the leaders, businesspersons, and people of the Philippines businesspersons, and people of the Philippines take toward greater economic prosperity:take toward greater economic prosperity:

• A unique but efficient semi-isolated economy?A unique but efficient semi-isolated economy?• The supplier of low value add segments of the The supplier of low value add segments of the

global supply chain?global supply chain?• An innovative economy with the high turnover An innovative economy with the high turnover

and high potential returns of technology and high potential returns of technology entrepreneurship?entrepreneurship?

• The many choices in front of you ... are yours!The many choices in front of you ... are yours!