Chapter on Latin America

Description

Since the structural adjustments of the 1990s, a new generation of STI policy instruments has emerged that has profoundly transformed the institutional ecosystem, legal framework and incentives for research and innovation. In some countries, this has been beneficial. Why then has the gap between Latin America and the developed world not narrowed? This is because the region has failed to overcome the following challenges. Firstly, Latin American economies do not focus on the type of manufacturing that lends itself to science-based innovation. Manufactured goods represent less than 30% of exports from most Latin American economies and, with the notable exception of Costa Rica and to a lesser extent Mexico, high-tech goods represent less than 10% of manufactured exports. With the exception of Brazil, GERD remains well below 1% and business contributes one-third, at best. These ratios have hardly changed for decades, even as many other developing countries have moved on. On average, R&D intensity in the private enterprise sector (expressed as a percentage of sales) is less than 0.4%, well below the averages for Europe (1.61%) or the OECD (1.89%) [IDB,2014]. A recent Argentinian study showed that R&D expenditure as a percentage of sales over 2010–2012 amounted to just 0.16% for small firms, 0.15% for medium-sized firms and 0.28% for large firms (MINCYT, 2015). The stock of innovation capital is far lower in Latin America (13% of GDP) than in OECD countries (30% of GDP). Furthermore, in Latin America, this stock is mainly comprised of tertiary education, compared to R&D expenditure in the OECD countries (ECLAC, 2015c). Secondly, the paltry investment in R&D partly reflects the insufficient number of researchers. Although the situation has improved in Argentina, Brazil, Chile, Costa Rica and Mexico, numbers remain low in relative terms. The shortage of trained personnel restricts innovation, especially that done in SMEs. Some 36% of companies operating in the formal economy struggle to find a properly trained workforce, compared to a global average of 21% per country and an OECD average of 15%. Latin American companies are three times more likely than South Asian firms and 13 times more likely than Asian–Pacific firms to face serious operational problems owing to a shortage of human capital (ECLAC, 2015b). Thirdly, the education system is not geared to addressing the shortage of S&T personnel. Although the number of tertiary institutions and graduates has been rising, their numbers remain low in relative terms and insufficiently focused on science and engineering. The shares of bachelor’s and PhD graduates against the major six fields of knowledge (Figure 7.4) show an important structural weakness. More than 60% of bachelor’s graduates and 45% of PhDs obtained their corresponding degrees in social sciences and humanities. Moreover, only a small proportion of scientific researchers work in the business sector in Latin America (24%), compared to the OECD average (59%). In Argentina,Brazil, Chile, Colombia and Mexico, there is a lack of engineering graduates in the private sector. Last but not least, patenting behaviour confirms that Latin American economies are not seeking technology-based competitiveness. The number of patents granted per million inhabitants between 2009 and 2013 was highest in Panama, Chile, Cuba and Argentina but generally very low across the region. Patent applications by Latin Americans over the same period in the top technological fields18 accounted for just 1% of those filed in high-income economies in these same fields. In the past decade, Argentina, Chile, Mexico and Uruguay have followed Brazil’s example by initiating a shift from horizontal to vertical funding mechanisms like sectorial funds. In so doing, they have given a strategic boost to those economic sectors that require innovation to increase productivity, such as agriculture, energy and ICTs. In tandem, they are implementing specific policies and putting incentive mechanisms in place to foster strategic technologies such as biotechnologies, nanotechnologies, space technologies and biofuels. This strategy is beginning to pay off. CONTENTS 7 . Latin America Figure 7.1: Trends in GDP growth in Latin America, 2005–2009 and 2010–2014 Figure 7.2: Relation between governance indicators and scientific productivity in Latin America, 2013 Figure 7.3: Technological intensity of Latin American exports, 2013 Table 7.1: Inventory of operational STI policy instruments in Latin America, 2010–2015 Figure 7.4: Trends in higher education in Latin America,1996–2013 Box 7.1: Tenaris: a corporate university building industrial skills in-house Figure 7.5: Researchers (FTE) in Latin America, 1996–2013 Figure 7.6: Researchers (FTE) in Latin America per thousand labour force, 2012 Figure 7.7: Trends in GERD in Latin America and the Caribbean, 2006–2014 (%) Box 7.2: Towards a common knowledge area for Europe and Latin America Figure 7.8: Scientific publication trends in Latin America and the Caribbean,2005–2014 Table 7.2: Scientific articles on indigenous knowledgesystems, 1990–2014 Box 7.3: A growing policy interest in indigenous knowledge in Latin America Figure 7.9: Patent applications and grants in Latin America, 2009–2013 Table 7.3: Percentage of manufacturing firms in Latin America engaged in innovation Table 7.4: National space agencies and main national space technology suppliers in Latin America Table 7.5: Existing regulatory policies and fiscal incentives in Latin America for renewable energy, 2015 Box 7.4: Ikiam: a university in the heart of the Amazon Table 7.6: Institutions in Latin America and the Caribbean with the most scientific publications, 2010–2014