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Mexico’s Minimal Investment in R&D Curtailing Productivity: IDB

The Inter-American Development Bank (IDB) has urged Mexico to invest more in research and development (R&D) activities, blaming the lack of investment for a drop in productivity.

Mexico spends less than 1% of its gross domestic output on research and technological development, according to the bank’s annual analysis of the Mexican economy.

There have been some improvements in R&D investments over the past few years, yet productivity cannot be raised unless private companies participate, the report said, noting that currently more than 60% of R&D investment is coming from the government.

The lack of R&D has led to fewer introductions of new products and processes, curtailing productivity in all sectors.

A week after the report emerged, Coparmex, the country’s private sector lobby group, raised its voice, demanding that the government develops a program offering incentives for each R&D project worth more than 10 million pesos (US$528,148).

Edgar Cerecero López, former president of Coparmex, has warned lawmakers, saying that countries with insufficient spend on R&D and technological innovation will remain underdeveloped.

Mexico is a member of the Organization of Economic Cooperation and Development (OECD). Most OECD countries invest an average of 2.4% GDP into R&D. The biggest pro-capita investor is South Korea with 4.3% of its annual GDP spent on R&D, followed by Israel with 4.1%, and Japan with 3.6%.

Of all the OECD countries, Mexico and Chile spend the least on R&D, according to America Economia.  Brazil, in comparison, spends more than 1.2% of its GDP on research and development.

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Also, 70% of investment into innovation comes from private companies in OECD nations, while in Latin America only 40% of companies invest in innovation.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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