Correlates of High Technology Exports Performance in the Philippines

This study presents empirical evidence among the predictor variables of foreign direct investment (FDI), energy investment, official development assistance, and gross domestic product (GDP) which have a bearing on the growth of high technology exports in the Philippines. Data sets of indicators used in the study had been downloaded from the World Development Indicators website covering the period 1991-2016. The data were processed and analyzed utilizing the symbolic regression analysis through machine learning, the Nutonian Eureqa Desktop. The results of the study revealed that foreign direct investment and official development assistance have significant contributions to the development and manufacture of export-driven commodities classified by the Organization of Economic Cooperation and Development as high technology exports. On the other hand, the gross domestic product has a negative impact while energy investment has no contribution to exports development at all. Further, the results likewise demonstrated that strong causal relationships between high technology exports and the variables evidenced by a very high R 2 goodness of fit of 0.82 signifying 82% of variations in high technology exports could be explained by the predictor variables included in the transfer. The study concluded that two relevant information was obtained. First, the indicator of official development assistance is only suitable in the short run period. Second, the gross domestic product will continue to decline if continuous trade deficit pervades in the long run period.


Introduction
High technology exports comprise of products with top research and develop-How to cite this paper: Garces struments, and electrical machinery classified both by the World Bank and the Organization for Economic Cooperation and Development. In this age of information technology and globalization, high technology exports are fast becoming one of the key players in the rapid growth of the economy of a particular nation. Seyoum (2015) [1] claimed that in the future high technology products would become the primary attribute in the creation of wealth, accelerated growth in top exports, higher standards of living, economic growth and development. The main purpose of undertaking this study was to examine the determinants of high technology exports in the Philippines. It is on the assumption that the sets of indicators comprising of foreign direct investment, gross domestic product, energy investment, official development assistance, and foreign direct investment played significant roles in transitioning the country toward economic growth and emergence. Anderson and Ejermo (2008) [2] and Kato (2015) [3] ascertained that both knowledge and technology are the critical, essential components in the production of high-quality technology-intensive products geared for distribution in domestic and international markets. The exports of manufactured goods are also observed sensitive to exchange rates in countries and territories like Japan, Hong Kong (China), Korea, China and Taiwan Province (Kato, 2015) [3]. Competitiveness coupled with research and development expenditures should be sufficient and viable enough to establish the level of the technology infrastructure (Porter, 1990) [4] of a particular country desiring to embark in the manufacture of export-oriented goods (Ege, A., and Ege, A.Y., 2017) [5] in order to acquire strong competitiveness (Alemu, 2013) [6] and to become a significant player in the global trade (Zeng, M., 2000, Liu, X.J., 2007, Han, Y.C., 2010) [7] [8] [9]. Porter (1990) [4] also observed that government plays a significant role in the pursuit of excellence in the technology infrastructure by way of deregulating industries, continuously encourage sustained investment in human capital, innovation, and physical assets. The government likewise should support intense local rivalries of competing industries as a stimulus to the creation of competitive advantage. A country having a competitive advantage in the production of a particular good will have an edge in the global market.  Investments in government assets are the resources the project company   spends on acquiring government assets such as state-owned enterprises, rights to provide services in a specific area, or the use of specific radio spectrums.
Official development assistance (ODA) is a measure of grants, aids, and loans offered by the thirty member-countries of the Organization for Economic Cooperation and Development to the various recipient-developing countries. ODA is widely used as an indicator of international aid flow although it includes some loans. It needs to contain the three elements: the assistance is undertaken by the national governments, with the main purpose of promoting economic development and welfare and concessional financial terms for loans having a grant component of not less than 25%. Gross domestic product (GDP) is the market value of goods and services produced within a country in a selected interval in time, often a year (Leamer, 2009) [10]. GDP also represents the capstone and grand summary of the world's best system of economic statistics (Anderson, 1993) [11]. The calculation of the GDP can be viewed in three different approaches comprising of the production approach sums the "value added" at each   [18], and transfer of technology (Borensztein, et al., 1998) [19]. Many of the results suggested FDI is an essential vehicle for the removal of technology, relatively contributed more to growth than domestic investment. However, the higher productivity and economic growth fostered by FDI can only be realized

Theoretical and Conceptual Framework
Contemporary studies provide dimension as to why countries engaged in high

Data and Methodology
The high technology export model utilized in this study is given by:   If the country continues to manufacture high-quality goods both for domestic consumption and exports all other things are held constant, more foreign direct investments will flow into the country which will create additional jobs to qualified job seekers-highly skilled and semi-skilled bringing unemployment rate at its acceptable level. As determined in previous studies lower unemployment also intensifies the consistent growth of the country's economy (Fuchs, 1980 [31]. The massive drop in the high technology exports in 2011 presented in the graph was aggravated by bad weather, weak global demands of electronics, and delays in government spending. As reported by the Center for Research on the Epidemiology of Disasters, 33 natural disasters struck the country in this particular year alone. Typhoon Sendong and other natural disasters that ravaged the different parts of the country caused over 26 billion economic losses and affected livelihood and income of 3.5 million families. Lower demand for electronic exports was also affected by the massive earthquakes and tsunami in Japan, and the very severe flooding in Thailand, a primary source of automotive parts and units. Since Philippine exports were very concentrated in just a single sector, this was severely hit by the global slowdown (the National Economic Development Authority 2012); thus, a considerable drop in exports was accounted in this particular year. Table 1 which presents the best mathematical model suggested by the software has R 2 goodness of fit of 0.82 signifying 82% of the variation in high technology exports can be explained by the predictor variables included in the transfer function. Of the four identified independent variables consisting of foreign    Table 2.

Results and Discussion
The sensitivity report indicates a 100% positive indicating increasing this variable will directly increase the target variable. As discussed earlier, the official development assistance accounts for only 20% positive for the simple reason in the long run, availing of such aid will reduce gradually. The gross domestic product incurred a 100% negative impact as a result of the trade deficit. As expected, when exports are higher than imports, a trade surplus will be achieved that would significantly contribute to an increase in the nation's outputs.
Overall, the model generated likewise is found to have high adjusted R-squared, high correlation coefficient and low mean absolute error. It indicated the predicted variables of foreign direct investment and official development assistance showed the combined positive magnitude based on the sensitivity analysis. High technology exports were significantly dependent on the two predictor variables.
Moreover, increases in these variables lead to improvements in the target variable, generally indicating how significant the positive impact was. If the trend results continue to generate a positive outlook for the Philippines in the long run, the country will become better off in terms of holistic economic growth and development. Porter's (1990) [4] diamond theory which proposed the establishment of a framework for development likewise suggested the integration of highly skilled human capital, resource endowment, innovation, and capital in the national development plan and agenda of a particular country. In the absence of a single component, any development efforts will lead to nowhere. As in the case of the Philippines, the nation has been lethargic for decades and was often labeled as the "sick man of Asia". It cannot be argued that increased production of goods geared for domestic and export will reduce the likelihood of un-  policy instruments with a focus on research and development that will bring the country towards continued sustained growth and prosperity.

Conclusion
There are two relevant facts obtained in this particular study. First, official development assistance is suitable only in the short-term not on the long term basis. Hence, inflows of this indicator should be channeled into the creation of innovative programs and activities rather than focusing on the development projects. Second, the gross domestic product continues to decrease if consumers spend more on buying and consuming foreign goods rather than patronizing goods sold by local producers. As such, there is a continuing need to educate consumers on the impact of the trade deficit. Foreign direct investment and official development assistance are two important macroeconomic indicators necessary for the full development of goods classified as high technology efforts. It is pervasive that over the years, the country suffered a significant setback in global trade due to continued trade deficits detrimental to the nation's economy as this likewise increases in foreign debt. Economists, however, agree that trade deficits are sustainable as long as it does not exceed 3% of the nation's gross domestic product (GDP) in the long run. The world is now increasingly migrating into industry 4.0 and to be able to keep at pace with the recent development policymakers who have to put more teeth in the creation of wealth through innovation. Initially, it requires a comprehensive development planning participated by the academe, the industry and relevant sectors. Finally, the use of symbolic regression (SR) will offer unbiased statistical results in future research.