Nearshore Americas

Untapped Potential: What Will it Take to Get Latin America Innovating?

Latin America’s innovation potential continues to be largely untapped as many countries in the region spend, comparatively, the least amount of money on education and research and development (R&D) activities, a report shows.

The Global Innovation Index 2019 shows no Latin American nation is ranked among the top 50 countries in terms of innovation investment. The regional leader is Chile, at number 51, followed by Costa Rica (55) and then Mexico (56).

But Peru, Colombia and Costa Rica have been hailed as the “fastest-growing” innovators. Colombia and Peru scored above the regional average in all categories of innovation, while the report describes Costa Rica as one of the “thriving economies” of the world.

Considering the report, Chile is the only country in the region investing enough money on education. Chile also has overtaken regional peers in acquiring patents and grooming larger numbers of mobile app developers.

Meanwhile, the growing number of microfinance companies has eased the task of obtaining credits, and the school dropout rate is also declining in Chile year after year. Heavy reliance on foreign players for high-tech products and ICT services remains a major drawback for Chile.  Mexico’s success came largely from its rising creative goods exports and the exchange of high-tech products with other countries.

Brazil’s Declining Innovation

Brazil slid two positions from last year to 66th place on the index. The biggest problem with Brazil is its shrinking skilled talent pool and delays in registering patents. But the region’s largest economy is spending a significant sum of money on R&D and bringing out many quality scientific publications. It is also home to the region’s largest science and technology clusters.

The University of Sao Paulo (USP) is ranked among the world’s best universities, too, along with the National Autonomous University of Mexico.

For Brazil and Argentina, some of their large companies with wider international operations are the main drivers of innovation. Though analysts say these firms need to do more to help their countries excel in innovation.

Anderson B. Fgueiredo
Anderson B. Fgueiredo, ICT consultant based in Sao Paulo

“The Brazilian IT industry is running short of more than 80,000 skilled professionals and the shortage is only worsening year after year,” Sao Paulo-based ICT consultant, Anderson B. Figueiredo, tells Nearshore Americas.

“We have young people moving out of the country to countries like the United States. My daughter is also studying in Europe. We don’t have any quality universities here in this country.”

Figueiredo says that the quality of education is also poor and the education sector is not equipping students with the skills that the businesses are looking for. “There is a mismatch,” he adds.

Protecting intellectual property is a challenge for innovation in Brazil, where the registration of patents can take up to 11 years. Intellectual property rights are the main tool to reward the innovator for the risk incurred in innovating.

Colombia & Peru: the Rising Stars

Colombia has performed well on the index, with the Andean country scoring good results  in both international patents and the quality of scientific publications. “Colombia is 8th among its income group peers in the quality of its universities, with notable scores for Los Andes University of Colombia, National University of Colombia, and Externado University of Colombia,” the report noted.

Peru is ranked 69 on the index, up two positions from 2018. Tertiary education is reportedly contributing greatly to Peru’s growing skilled workforce.  There has been a considerable increase in the number of students enrolling in technology schools, according to the report.

“Knowledge workers (27th) remain a strength for Peru, assisted by females employed with advanced degrees (38th),” the report says. Despite these improvements, Peru is relatively weak in gross expenditure on R&D, global R&D companies, and university/industry research collaboration.

Collaboration Holds the Key to Innovation

No country can become innovative unless it collaborates with global innovation hotspots, say analysts. “Today’s innovation landscape is highly globally interlinked,” said the World Intellectual Property Organization (WIPO) Director General Francis Gurry, in a report on Intellectual Property.

“Increasingly complex technological solutions for shared global challenges need ever larger and more-specialized teams of researchers, which rely on international collaboration. It is imperative that economies remain open in the pursuit of innovation.”

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Javier Peña Capobianco
Javier Peña Capobianco, the Secretary General for the Latin American Association of Exporters of Services (ALES)

“Unfortunately, the outcomes from this report are not new, innovation is not a priority in the region,” says Javier Peña Capobianco, the Secretary General for the Latin American Association of Exporters of Services (ALES), adding that to innovate, “you need to be in close contact with other people (face to face), and in particular you need an entire ecosystem.”

Developed countries are increasingly using autonomous technologies, meaning that they need fewer services from developing countries, he notes.

Latin American countries, according to Javier, should focus on fostering STEM education. “We need workers to drive innovation,” he says, citing Sweden’s decision to make coding compulsory in higher education.

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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