Latin America’s Innovation Potential Is Largely Untapped

Mexico, Chile and Costa Rica were the big winners of Latin America’s 2017 Global Innovation Index (GII). This index ranks countries based on their innovation capabilities (innovation inputs), and measurable results.

Cornell University, INSEAD, and the World Intellectual Property Organization co-authored the GII report. It was launched at the United Nations Headquarters in Geneva in June.

The central driver of economic growth and prosperity is innovation, which is widely recognized. The GII aims at providing countries with a snapshot about their innovation ecosystem. This will help them identify strengths and weaknesses.

Latin America In The Middle

Effective innovation policies can be a powerful tool to counter regional and global political and economic uncertainties. The region’s overall score increased by 2% last year, but countries within the region still need to realize their innovation potential.

Chile ranked 48th out of the 127 countries. Costa Rica ranked 53rd, Mexico 58th, and Chile was 53rd. The list of the top ten most innovative economies in the world was topped by Switzerland, Sweden and the Netherlands.

The region’s countries are not outperforming in innovation relative to the level of their development. This is evident in India and Vietnam, and the rankings of the largest countries have not improved.

The region is behind in both the inputs that facilitate innovation, including increased investment, science and tech graduates, credit markets availability, and innovation outcomes such as patent filings and scientific articles published.

And The Latin American Innovator

Chile is ranked 46th in the world for innovation. It remains the top economy in Latin America as it has been for the past four year, although it has fallen two places in the overall rankings.

Its 2017 improvements are mainly due to its technology outputs and knowledge. In particular, the number of new companies created ranks 14th in the globe with eight new company registrations for every thousand people in 2014. Chile is now in good company with places like Bulgaria (8.9 per 1000) and Iceland (9.5 per 1,000).

Chile ranks tenth worldwide in terms of foreign direct investment (FDI), net outflows. This refers to the amount of Chilean residents who invest in foreign countries. It accounted for 5% of Chile’s GDP during the period 2013-2015, which puts Chile’s FDI output higher than that of Norway and Canada.

With 88.6% of its total population in 2015, the high-income South American country also surpasses other economies like Finland and the US in terms of tertiary education enrollments. This is followed by Uruguay (ranked 38th), and Colombia (47th).

Costa Rica And Mexico Are Strong Contenders

Costa Rica is now the second most innovative country in Latin America, and 53rd globally. This is eight places less than its 2016 ranking. This small Central American country is ranked among the top three performing economies in the region for the seventh consecutive year.

Its strengths are mainly in its business sophistication and creative outputs. Costa Rica ranks first in the world for creative and cultural-services exports such as advertising, market research, and public opinion polling services. It is also fifth in the number and quality of business researchers.

Costa Rica ranks third worldwide in the exports ICT-based services, behind India, Ireland, and Israel. ICT service exports accounted for 14.6% of its total trade in 2015.

Costa Rica’s greatest weaknesses lie on the innovation inputs end. Low percentage of engineering and science graduates (91st globally) and few industrial designs from their origin (103rd).

Innovation Over The Past Latin Year

Mexico also did well in innovation over the past year, moving up three places to be the 58th most innovated economy globally.

It is rank seventh in the 62 middle-income countries for innovation quality, which includes India, Brazil, China and India. This indicator shows that Mexico is performing above average in terms of the quality of its universities and its international impact.

Mexico’s gross domestic research and development expenditures (known as GERD and BERD respectively) did not decrease during the 2008-2009 global financial crisis. They have actually increased since 2010.

GERD accounted for 0.55% GDP in 2015, which was 34% more than 2008 levels. BERD was 22% higher than the crisis-era levels in 2015.

Mexico, projected to become the 16th largest economy in the world in 2017, has shown itself to be a contributing member of global value chains. Imports such as aerospace equipment and scientific instruments accounted for 18.4% of total Mexican trade between 2015 and 2015.

Mexico’s greatest weakness is its lack of political stability and safety. This indicator ranked Mexico 104th among the 127 countries. Gender equality is another area for improvement. Only 8.2% of Mexican women employed had a degree (compared to 21.1% of French women working and 15.9% of Chilean women working).

Latin Brazil A For Effort

Brazil is a key innovation player in Latin America. It ranked 69th globally and 7th in Latin America, losing ground to countries like Uruguay and Panama. It is now at the same rank as it was in 2016, but has improve one spot relative to 2015, when it was rank 70th.

Brazil has made significant gains in research and human capital, as well as improving its education expenditures. The average score of top three Brazilian universities in the QS university ranking 2016 ranks 24th globally, higher than countries like Austria or Italy.

There were mark improvements in PISA scores between 2003-12 and the OECD Program For International Student Assessment (PISA). However, tertiary education is still a barrier to innovation. Brazil ranks 96th out of the 102 countries surveyed, with only 12% studying engineering and science.

Unleash Your Potential

The results for this year show that even though Latin American and Caribbean countries have increase their investment in R&D, innovation inputs, these inputs are not always translate into innovation outputs such as patents, scientific publications and quality certificates.

This is affecting the effectiveness of the region’s innovation system. Latin America and the Caribbean, with a combined GDP of US$5.2 Trillion and nearly 650 million inhabitants. Has the potential to be a larger source of global intellectual production as well as high-tech manufactured goods and other areas of growth.

The GII results show that countries must create enabling environments for creativity. In their own country and at the regional level.