Innovation is the process of creating something new from nothing. In the business world, innovation means creating, designing, testing and launching new products and/or knowledge that help businesses or people function better.
Corporate giants have embraced innovation as a key driver of growth, with companies in biotech, information technology, nanotech, pharma, fintech, medical science and aerospace at the forefront of this creativity. According to a 2018 PWC report, the top 1000 most innovative companies in the world invest over US$700 billion in R&D each year.
The centrality of the innovation idea has pushed some companies to create large international advertising campaigns to associate innovation with their brands in an effort to capture customers and the best employees. For example, ManpowerGroup’s slogan is, ‘What brought you here won’t take you there’, which means that reinvention is needed if a person or company is serious about success.
The Mecca of innovation is Silicon Valley. And while there are many advantages of basing an enterprise in the area, there are also clear disadvantages, including extremely elevated operating costs, high salaries and rents, and low employee loyalty. Considering that, we must ask ourselves if any other hubs exist that can provide the pros without the cons. Could Latin America, where US$2.8 billion is invested into R&D each year, be that place?
Innovation Hubs in Panama
In Panama City, Panama, the City of Knowledge, a former military base and special economic zone created 20 years ago, has over 200 buildings for housing companies, start ups, universities and ONGs that contribute to the world in terms of sustainable development, scientific and technological research, and inclusion and diversity. It’s in the heart of Panama City, is easy to reach and has affordable residential zones nearby.
As a hub of industry, talent availability is not a problem, and initiatives for startups and female-owned businesses provide resources for entrepreneurs aiming to solve real-life problems with creative solutions. Google has previously picked up some companies grown in the City of Knowledge, making a compelling case for its capacity to drive further innovation.
Digital Innovation in Colombia
Ruta N, located in the middle of the Innovation District of Medellin, Colombia, is another important example of this type of innovation hub outside of the US. It has generated more than 11,000 jobs with more than 379 private global companies, especially from the tech sector. Its primary goal is to promote science, technology and innovation, and to become the preeminent innovation hub in Latin America, transforming Medellin from an industry-driven economy to a STEM-driven one.
Medellin’s long list of great universities – EAFIT, La Salle University, and University of Medellin among others – provides a steady stream of highly qualified talent. The Smart Capital Network tool gives those at Ruta N access to private equity firms, venture capital and even angel investors. By the end of 2019, investors had allocated more than US$1.2 billion to different business ventures via the Smart Capital Network.
Financial Access in Chile
And then we have Santiago, Chile, a beautiful destination that was placed 70th globally and 4th in Latin America in the Global Startup Ecosystem Index 2021 StartupBlink. The city’s academic institutions, including the center of Bio-materials and Nano Technology of Bio Bio University and the “Dr. Daniel Alkalay” Center of Biotechnology at the Federico Santa Maria Technical University, push research and innovation regionally.
In 2018 the top 1000 most innovative companies in the world invest over US$700 billion in R&D annually
Throughout Latin America, Chile is recognized as a leader in academia with excellent public and private universities. It also provides access to funds for entrepreneurs through a number of programs handled by the Production Development Corporation (CORFO), an organization attached to the Secretary of Economics intended to support entrepreneurs, innovation and competitiveness. Importantly, CORFO provides funds to foreign entrepreneurs living in Chile.
Interesting companies like Crystal Lagoons, a company that constructs low-cost lagoons, have landed in the city and demonstrate the capabilities of Santiago as a hub for the development of global entrepreneurial talent.
As we can see, Latin America offers several strong locations to attract startups and aid innovation. And this is not an exhaustive list.
History shows that innovation and the entrepreneurial spirit are clear drivers of economic development, and in these cities of the region, this spirit can be fostered. It’s time to look beyond Silicon Valley.