Blueprint for an Innovation Decade in Latin America

Regional Agenda Council for Latin America 2010-2011 World Economic Forum on Latin America Rio de Janeiro, Brazil

The Decade Ahead for Latin America Latin America emerged relatively unscathed from the recent global economic downturn, with a robust pace of recovery during 2010-2011 and a positive outlook for the region as a whole. A young and growing middle class, continued demand for its natural resources and an improved business environment will be the regions economic drivers over the next ten years. Yet, the region still faces severe economic and social challenges, as one-fourth of its population lives in poverty with unequal access to basic services, such as quality education. Productivity and investment, particularly in infrastructure, are still comparatively low in the region. Additionally, Latin American countries share some of the worlds most pressing risks: energy insecurity, harmful impacts of climate change, and organised crime and violence, among others. The Innovation Imperative: A Vision for 2020 In this context, the Regional Agenda Council for Latin America 2010-2011 has determined that strengthening innovation is a central priority for Latin America. It is imperative both for reaping the benefits of growth and addressing regional challenges in a timely manner. Strong partnerships, particularly between business and universities, together with the right public policies and incentives for investment, will help make innovation a key enabler for productivity and sustainable development in Latin America. Building on the insights and analysis of the Regional Agenda Council, these four dimensions are addressed as the foundations of a Latin American Decade of Innovation: Innovation for Technology and Business Productivity Institutional and Public Policy Framework for Innovation The Role of Education and Training for Innovation Innovation for Sustainability and Social Inclusion Innovation Dimensions
Regional Agenda Council for Latin America

Productivity

Development

Education

Public Policy

For each of these four imperatives, the following sections present the current state of affairs, summarize some of our key recommendations for action, and establish achievable targets for 2020. Our aim is to spread this vision among key decision-makers from government, business, academia and civil society in Latin America and help transform our reality.

1. Innovation for Technology and Business Productivity With the goal of enhancing productivity, Latin Americas scientific and technological capacities should be strengthened by means of increased investment in R&D. As shown in the graph below, the region currently concentrates only 2% of the total global R&D spending, just one percentage point above Africa. Furthermore, close to 70% of this investment originates from the public sector, and in very few countries of the region, R&D represents more than 0.5% of GDP.

Consequently, the regions share of global patents is inadequate, as corporations spend only around 0.5% of revenues on R&D, while the OECD level is higher than 2%. Latin Americas per capita high-tech manufacturing output is also comparatively low with respect to other emerging regions, including China. In order to encourage innovation activity in Latin America, a new framework based on clear intellectual property rights, improved investment conditions and more developed financial systems is proposed.

Recommendations for Action: Improve coordination and coherence among different sources of R&D funding. Mobilise private funding for innovation and increase patenting. Foster a culture of healthy risk-taking and creative activity, particularly in small and medium-sized firms. Foster well-functioning financial markets and easing access to finance for new firms, in particular for early stages of innovation. Encourage the diffusion of best practices in the reporting of intangible investments.

2010

INDICATORS
Innovation for Technology and Business Productivity

R&D Intensity (% of GDP) Intnl Internet Bandwidth (Mb/s) per 10.000 population Share of Global Patents (USPTO) Business Ability to Absorb New Technology (GITR)

0.6 177 * 0.2 * data from 2007.

2. Institutional and Public Policy Framework for Innovation Over the past decade, many countries in the region have been very successful at strengthening key institutions around important policy areas such as social development, fiscal management and democracy. This has not been the case in the context of innovation. Building Momentum: Innovation in the Policy Debate 2009-2011 During the past few years, the regions most important events and Summits have focused on different aspects of the innovation imperative. This Blueprint builds on the conclusions of: World Economic Forum for Latin America Summit of the Americas, Port-of-Spain World Bank / IMF Spring Meetings VI EU-LAC Summit: Madrid Declaration XX Ibero-American Summit: Innovation Program Inter-American Development Bank: Innovation in Cities

Through different platforms, Summits and declarations, regional leaders have called for a new institutional and public policy framework for innovation that addresses the critical aspects of infrastructure, human resources, knowledge and investigation, and science and technology development. It should also create the appropriate mechanisms for regional cooperation, as well as cooperation between sectors. Individual Government Strategies The OECD has recently developed a series of principles to help governments formulate regional and national strategies for innovation; balancing short and long term priorities, evaluation of effectiveness and the creation of market-mechanisms and incentives for innovation activity.

The 2010 OECD Innovation Strategy is built around five priorities for government action: empowering people to innovate; unleashing innovation in firms; creating and applying knowledge; applying innovation to address global and social challenges; and improving the governance and measurement of policies for innovation.

Recommendations for Action*: Provide sufficient investment in an effective public research system and improve the governance of research institutions. Ensure that a modern and reliable knowledge infrastructure that supports innovation is in place. Create a suitable policy and regulatory environment that allows for the responsible development of technologies and their convergence. Foster innovation in the public sector at all levels of government to enhance the delivery of public services. Foster evidence-based decision making and policy accountability by recognising measurement as central to the innovation agenda
* from OECD Innovation Strategy

2010

INDICATORS 1
Institutional and Public Policy Framework for Innovation

High-Tech Exports in % of total good exports (Global Mean) 2 Intellectual Property Protection (Global Mean) 3 Gov. Budget Share for Science and Technology (in %, 2006) 2 Public Procurement of Advanced Tech. Products (Global Mean)
1

3.2 (China 50.5) 3.0 (3.7) 53 (US 29) 3.3 (3.7)

Source: The Global Information Technology Report 2010 2011 2 Scale 1 7, 1 is very low, 7 very high 3 Cimoli, Mario et al (2009)

3. The Role of Education for Innovation Education and training systems should equip people with the foundations to learn and develop the broad range of skills needed for innovation in all of its forms, and with the flexibility to upgrade skills and adapt to changing market conditions. Universities and higher-education centres are vital partners in the innovation ecosystem. The private sector should foster an innovative workplace and ensure that employment policies facilitate organizational learning, development and creativity. The education and social sectors should foster an entrepreneurial culture by instilling the skills and attitudes needed for creative enterprise.

"It is only through cooperation among the agents in national innovation systems (universities, research centres, businesses and State institutions) that progress can be made towards building more inclusive and integrated societies"

Alicia Brcena Ibarra Executive Secretary, ECLAC and Regional Agenda Council Member

Recommendations for Action:

Improve the quantity and quality of scientific publications and broaden applied research. Formulate indicators to measure the scope and impact of the relationship between universities and businesses

INDICATORS 1
The Role of Education and Training for Innovation

2010
Availability of Scientists and Engineers (Global Mean) 2 University-Industry Collaboration in R&D (Global Mean) 2 Quality of Scientific Research Institutions (Global Mean)
1
2

3.6 (4.1) 3.5 (3.7) 3.3 (3.8)

Source: The Global Information Technology Report 2010 2011 2 Scale 1 7, 1 is very low, 7 very high

4. Innovation for Sustainability and Social Inclusion Further to improving living standards, innovation can also be directly applied to solve specific environmental and social challenges. Last year, the European Union & Latin America and Caribbean Summit recognized the key role played by innovation for achieving sustainable development and social inclusion, through the social appropriation of knowledge. Social innovation, breakthroughs that simultaneously meet social needs and enhance societys capacity to act, provides an important venue. The OECD has also highlighted the role of innovation in sustainable development:
Climate change is a global challenge that can only be addressed effectively through massive innovation. Pricing of environmental externalities, such as carbon emissions, will be an important trigger for the development and diffusion of green technologies and innovations. [..] Investment in long-term research and innovation will be needed to develop breakthrough technologies that private initiative alone will not undertake.

INDICATORS
Innovation for Sustainability and Social Inclusion
Impact of ICT on access to basic services

2010

Regional Agenda Council for Latin America, 2010-2011 Council Chair and Vice-Chair

Enrique V. Mauricio

Iglesias Crdenas

Secretary-General, SEGIB, Spain Director, Latin America Initiative, Brookings Institution, USA

Council Members

Alicia

Brcena Ibarra

Executive Secretary, United Nations Economic Commission for Latin America and the Caribbean (ECLAC), Santiago Vice-President, Latin America and the Caribbean, World Bank, Washington DC Foreign Policy Adviser to the President of Mexico, Mexican Presidency, Mexico

Pamela Rafael

Cox Fernndez de Castro Leycegui Marcovitch

Beatriz Jacques

Undersecretary for International Trade Negotiations of Mexico Professor, Universidade de So Paulo, Brazil, Global Agenda Council on the Future of Latin America Chief Executive Officer, Empresas Polar, Venezuela

Lorenzo

Mendoza

Andrs Javier Susan Arturo Andrs

Oppenheimer Santiso Segal Valenzuela Velasco

Columnist, Latin America, The Miami Herald, USA Managing Director, Telefonica, Spain President and Chief Executive Officer, Council of the Americas/Americas Society, USA US Assistant Secretary of State for Western Hemisphere Affairs Professor, International Finance and Development, John F. Kennedy School of Government, Harvard University, USA

Council Manager and Blueprint Editor: Arturo Franco, World Economic Forum arturo.franco@weforum.org