Philippine E-Journals

Rates of Return to R&D Investment in the Philippines

Caesar B. Cororaton

 

Abstract:

Using a production function approach, the paper attempts to estimate the rates of return to investment in research and development (R&D) in the Philippines in three major sectors: (1) primary sector which agriculture and mining industries; (2) industry which includes manufacturing, construction, and utilities; and 13) service sector which includes transportation, trade, finance and other services. Also, the paper compares the computed rates with other forms of investment like physical capital which includes fixed assets such as machineries and equipment, building and facilities, land and etc. includes sector for the primary sector, estimates of the rates of return to R&D range between 54 and 60 percent for the case without spillover. In the case with spillover, the estimates are higher: 57 to 62 percent. For the industry, the rates of return are much lower: between 10 and 12 percent. Lastly, for the service sector, estimates of the rates of return to R&D are high: between 60 and 62 percent.