That’s the consensus of a recent IDB Regional Policy Dialogue on Science, Technology and Innovation Network which agreed that for countries in Latin America and the Caribbean, now more than ever innovation is pivotal in addressing challenges of low economic growth and productivity.
At the forum, Santiago Levy, IDB Vice President of Sectors and Knowledge, noted that “Despite the boom of recent years, Latin America and the Caribbean suffer from a chronic problem of growth.”
“ But poor growth in the region is not due to an investment problem in general, the region has a problem of low productivity,” explained Levy. “Indeed, empirical evidence shows a strong co-relationship between investments in innovation and growth.”
Investment in R&D has been growing steadily in most industrialized economies, reaching 2.29 percent of GDP in 2007, and also substantially in China.
On the other hand, Latin America still invests significantly less than these economies, according to the IDB’s 2010 Statistical Compendium of Indicators: Science, Technology, and Innovation in Latin America and the Caribbean.
Lack of private sector financing for innovation in the region is mainly caused by market failures to provide finance and effective and sufficient incentives for innovation. But each country’s innovation sector is at a different level of development. While some countries such as Brazil, Chile, Argentina and Mexico have advanced innovation industries that are competitive in the global market, others are still in the process of identifying their niches in the market.
Despite of their varied contexts, policy makers agree that it is necessary to incorporate innovation in their respective national economic development strategy as a key area of cooperation between policy makers, government agencies, the private sector, academia and civil society. Public policy also needs to articulate the role of each stakeholder to effectively coordinate the joint efforts to create a favorable and positive environment to promote innovation development.