In an ambitious bid to create a more diversified, high-tech and knowledge-based economy, Ecuador’s socialist President Rafael Correa is building what he hopes will become the nation’s very own Silicon Valley.
With a budget allocation of US$1 billion for the first four years of this mid- to long-term project, the government is building a new hub for education, innovation and industry known as the Yachay City of Knowledge. It is billed as the most ambitious project that Ecuador has embarked on in over a century and the aim is for Yachay – which means “the wise use of knowledge” in the indigenous Quechua language – to become the most important research institute in Latin America.
Ecuador’s economy has long been heavily reliant on oil, mining, fishing and agriculture, but, in the knowledge that some of its natural resources have a limited lifespan, the government is trying to diversify the economy and instill a culture of research and innovation. By switching to a knowledge-based economy, President Correa hopes to create an advanced manufacturing sector that can produce and export high-value goods worldwide.
City of Knowledge
At the center of the government plans is Yachay, a state-of-the-art complex that will entail academic, scientific and technological compounds spread across a site of over 4,200 hectares. Strategically located in the picturesque valley of Urcuqui in a biodiverse area of northern Ecuador, Yachay is just a 90-minute drive from the capital Quito’s new international airport. Given that a country of Ecuador’s size (the population is 15.7 million) cannot be world-class in every field, Yachay will focus on strategic areas such as life sciences, IT, nanotechnology, energy and petrochemicals.
The government aims to attract innovative new high-tech businesses that specialize in these fields and expects 80 small and medium-sized enterprises to settle in Yachay during the first phase of urbanization. It will offer incentives to cater for the scientific and business community, including discounts on tax revenue, benefits for reinvestment, and co-financing to incentivize the creation of SMEs.
The nearby town of Urcuqui is presently ill-equipped to handle the expected influx of workers and their families, so Yachay will be fitted with its own range of real estate options, stores and restaurants. With an ecologically friendly design to limit energy costs and water consumption and encourage efficient mobility and the protection of green areas, the site will be developed in three phases: the first involves the construction of the university city and a research and development complex; the second includes building a road linking the site to the Pan-American Highway, plus the construction of an industrial learning center, commercial and international business districts, and educational, cultural and medical facilities; and the third is focused on the construction of more residential, commercial and educational facilities.
One of jewels in the City of Knowledge crown will be the Technological Experimental University or Yachay Tech, as it is commonly known, which opened earlier this year. The idea is that focusing on higher and postgraduate education – which is not widely available in Ecuador – will help to deliver the high-level skills needed to transform the economy and society.
In tune with President Correa’s aim to make higher educational an accessible tool that can lift millions out of poverty, Yachay Tech is a public university with no tuition fees, while rent for on-campus housing costs students just $36 a month, according to the Times Higher Education.
There are currently about 425 undergraduate students currently at the university, according to Jose Andrade, professor of civil and mechanical engineering the California Institute of Technology, who also serves as the academic secretary of the Yachay Tech and sits on the board of trustees. In the years to come, those students will be joined by thousands more at undergraduate, masters and PhD level. The aim is to attract up to 70% of students from among the most promising candidates in Ecuador, while the remaining 30% would be drawn from elsewhere in Latin America and the rest of the world.
Staffing the University
Using a London-based academic headhunting firm, the Yachay team has just hired a chancellor and is in the process of hiring five deans and five department heads. They are also searching for lecturers, Andrade told Nearshore Americas: “We don’t yet have professors but we’ve hired about 50 lecturers or instructors who we found through a different process of advertising in academic networks.”
Attracting human talent has been the biggest challenge to date, Andrade added: “But so far we’ve been lucky. The project is seen by many people – myself included – as the project of a lifetime. So we’ve been able to attract a very high caliber of talent, people who are toward the end of their careers that want to make one more move and see this as a huge opportunity to make a big difference. We’ve also been able to attract people at the beginning of their career who see this project as a great opportunity to start their careers.”
Andrade continued: “The most challenging age-group is the one in the middle, the people in their late-30s to early-50s. Those are the most difficult because they’re very well established somewhere else and they usually have families, so for them the opportunity cost is a lot higher. Even in those profiles we are able to attract some people but they are a minority. Our challenge in the next five years is to strengthen that group and I think our biggest challenge in the next five to ten years will be retaining the talent that we’ve attracted.”
The caliber of talent recruited to date is early evidence of the profound impact that the Yachay project will have in Ecuador, Andrade said: “This is going to change the mentality of the Ecuadorian population and the way they think of higher education and innovation. This is already occurring. The fact that we’ve recruited a foreign chancellor with a PhD from Harvard, and a dean from Penn State is a huge statement of the radical change that is occurring in higher education. This has never happened before in Ecuador. We also stole a very successful rector from Spain. Those milestones are making a huge impact in the way Ecuador sees higher education and that change is irreversible.”
“We want Yachay Tech to be a research-intensive university and that’s revolutionarily different from the classic universities in Ecuador and most of the surrounding region as well. We have very good teaching universities but we don’t have great research universities,” Andrade said. “Our goal isn’t to publish articles in journals every week – although we do value and encourage that – we also want to produce the kind of research that translates into patents and has a very close connection with the country’s productive sector. In doing so we’re trying to establish an academic reputation both internationally and within Ecuador, a country that doesn’t necessarily appreciate scientific productivity for the sake of it. Ecuadorians will only support a project in as far as they see that their lives can be improved by it.”
But given the unprecedented nature of this project, how realistic is the aim of becoming Latin America’s foremost research institution? “I think that aim is possible because if you look at what exists today you have very good research institutions in places like Argentina and Brazil, however you don’t have a place in Latin America that is able to take creation of knowledge all the way from the scientific papers to patents and even have pharmaceutical plants right on site,” Andrade said. “At Yachay you’ll have the research laboratory where the professor and the students produce pharmaceuticals and you’ll also have the generic plant that is making hundreds of thousands of pills every month. There are few places in Latin America that have the capability to do that. So I think Yachay has the opportunity to become the leading institution in Latin America for research and innovation.”
Although still in its infancy, the project appears to be moving ahead at an impressive rate. “In 2015 Yachay will sign specific agreements with industrial partners. I can tell you without naming names that we are extremely close to signing an agreement with a private partner that will finance millions of dollars worth or infrastructure and research projects for the university,” Andrade said.
“I think the biggest impact we’ll have is in the creation of new human talent. The main product of this university will be people and when we graduate the first generations of undergrads, masters and PhD students in the next few years they will be a generation of human talent with a very special way of thinking and looking at the world. That will be the ultimate symbol of the impact of the project,” he added.
Given President Correa’s reputation as one of Latin America’s more left-wing leaders and a close ally of the late Hugo Chavez, it may come as a surprise to some that he if funding this pro-business initiative. Yet Andrade insists that he has no concerns about the government’s commitment to the project. “This is a government initiative and so far the support from the government has been tremendous. The president has gone on record saying this is his most important project and that it will be the legacy of his government,” Andrade said. “I think the president, his cabinet and the vast majority of Ecuadorians all recognize the importance of a project like this,” he added, noting that this is not a political vanity project but a major initiative with strong national interest. “I think that’s a necessary condition for the project’s survival in the long term.”
First Signs of Investment
Evidence that Ecuador’s plans are beginning to attract international investment came last year when Chicago-based software delivery firm ThoughtWorks announced the launch of its operations there in September 2013. The firm was drawn to the country by its new-found political stability, a GDP that has almost tripled in the last decade, and by the government’s commitment to invest in education and build a knowledge-based society, said Bryan Jimenez, Operations Manager at ThoughtWorks Ecuador.
The company’s aims are threefold: to create a sustainable business; to champion software excellence around the globe and revolutionize the IT industry by creating new technologies and new theories; and to fight for economic and social justice, Jimenez told Nearshore Americas, noting that the latter point “is one of the things that differentiates ThoughtWorks from other global companies.”
Two of the biggest challenges that the company has faced in Ecuador are finding the right talent and creating a wider knowledge and acceptance of Agile software development methodologies. “ThoughtWorks’ recruiting process is one of the longest and the toughest in the world so finding the right people in Ecuador has been a challenge,” Jimenez said. He added that ThoughtWorks has tried to promote its Agile methodology, but “that’s something that sometimes the Latin American markets are not used to. We have to change the mindset here in Ecuador, it’s a matter of educating the community.”
The Yachay City of Knowledge should help the company overcome both challenges, Jimenez said, before praising the holistic nature of government policy. “What we like is that Ecuador is orchestrating all of these strategies as one. These are not separated attempts to solve separate problems. Yachay is also related to the changes that Ecuador is trying to make to the productive matrix in order to replace our primary commodities – like petroleum and bananas – with services,” he explained. “To achieve that we need capable people with the right talents, so Yachay and the change of the productive matrix and the investments in education are all orchestrated with the aim of building a capable workforce in Ecuador that can face important challenges.”
Will Yachay Prosper?
Major tech firms like IBM, Oracle and Tata Consultancy Services are already established in Ecuador and ThoughtWorks may be the first of a new wave, but will the investment in Yachay be enough to convince other to follow them? Jimenez thinks so. As Latin America’s primary markets for IT outsourcing services become increasingly saturated, there will be a natural diversification of the market which will benefit secondary cities and emerging hubs like Yachay, he said. Labor pools are already running dry in places like Costa Rica and even in Ecuador’s capital, he noted: “If you come to Quito you will see that the pool of software engineers has almost been exhausted so we need to go outside the capital to the smaller university cities to find the talented people that we want.”
Like Andrade, Jimenez said he has no concerns over the socialist government’s commitment to this initiative. “I think the government understands that this is one of the ways that we can change the productive matrix. IT is at the top of the list of the areas where the government wants to change production,” he explained. “Software companies require relatively little investment as all you need is people and computers, so that’s one of the quickest and most interesting ways to change the matrix without spending too much money.”
Moreover, the government’s plan to harness technological innovation as a means of bringing people out of poverty is a far cry from any policy devised in Venezuela and it fits well with ThoughtWork’s pledge to fight for economic and social justice. “I think it’s a very wise approach,” Jimenez said. “We call this a socialist government but I think that we’re aware that none of the strict left- or right-wing models have actually worked so far. So we’re creating a new version of a socialist model based on our understanding that you need the right balance.”