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The economic transformation: Latin American models

Despite the recent protests and the unfortunate political and economic crisis that some of our sister countries in Latin America are going through, it is important to highlight the positive part of their development in the last 20 years, their different models and the aspects that have favored its economic boom in order to explore what we could replicate.

Why is Latin America so strong?

In the Latin American region, emerging economies have emerged as a result of the strong investment for the development of policies and programs focused on innovation and economic development, such as Brazil, Mexico, Chile, Colombia and Costa Rica. This strong public investment together with the vision of development, pragmatism and strong determination have favored the emergence of models that today are worthy examples to follow.

Chile is the country in Latin America with the best management in science, technology and innovation policies (CT + I). One of the strategies has been to strengthen and modernize institutionality by creating an agency that establishes consistent, medium and long-term orientations, to ensure the relevance and coordination of science and innovation policies. Another strategy was to identify sources to finance research and innovation, including the assessment of the mining sector; and from there the Innovation Fund for Competitiveness (FIC) was born. He focused his efforts on institutional reform of the sector and on adopting programs and instruments to strengthen the innovation capacity of companies from those sectors that generate greater factor productivity and impact on the national economy.

The Costa Rica case

In the case of Costa Rica, its economy is the one that invests most in education, compared to any other OECD country. 7.6% of GDP is destined to education, while the average of the countries that belong to the OECD is perhaps more than 5%. Costa Rica remains a leading country in scientific production in per capita terms: it has a base of 2,500 university researchers and produces around more than 2,000 research per year, which translates into more than 500 indexed publications per year. Enrollment at the graduate level represents 4.6% of the total enrollment in higher education. Careers in science and engineering, including Systems Engineering, Industrial, Electronics, Electrical, Electromechanics and Mechatronics are the most demanded. The process of joining the Organization for Economic Cooperation and Development (OECD) has also contributed to this improvement; This international organization approved the country’s progress in education and health, along with the science and technology, innovation and labor policies sectors.

Brazil, meanwhile, has had the innovation policy on its agenda since the late 1990s, although it already had the Secretariat of Science, Technology, Innovation and Communication since 1985, which later becomes a Ministry at the beginning of the 21st century. During the Lula government, between 2003 and 2010, the Industrial, Technological and Foreign Trade Policy (PITCE) was established, prioritizing innovation. Brazil formulated new financing schemes based on sectoral funds, with the aim of rebuilding financing capacity for science and technology activities. Targeted policies were structured, not only in sectors, but also in territorial development. Science, technology and innovation policies were articulated with industrial policies and development policies.

The main pillars

In 2013, the innovation strategy was created based on three main pillars: (1) incentives for technological development and innovation in companies; (2) incentives for the creation of new technological infrastructure; and (3) incentives for newly established technology companies (start-ups) (Dutrénit, 2013). Since then, the policy of Brazil in CTI has a stable and effective budget.

Colombia has had science, technology and innovation policies since the 1970s. Since then it has undergone a series of reforms, strengthening its institutionality and starting from regional and national policies and programs, developing pilot tests. Today it has a national innovation system that has been strengthened thanks to the cooperation of multilateral agencies, at the will of the political, business and social elite. This has resulted in the development of regional entrepreneurship ecosystems, innovation hubs, technology clusters. Medellín went from being the drug capital and the most violent in the region to being the capital of industrial development and the regional model for technological innovation. Its current president, Iván Duque Márquez, is the author of the orange economy and has assumed the innovation agenda as a national priority. The country is one of the largest knowledge generators in the region.

In Latin America, around two billion dollars (USD2B) has been invested in 2018 in venture capital to finance technology-based enterprises that are conquering the continent and knocking on the doors of the United States. The investment has been concentrated mainly in Brazil and Mexico, following Chile and Colombia, as their regulatory frameworks have been favorable to financial investment of this type. Entrepreneurship ecosystems in Latin America have been strengthened. Startup Chile has been an exemplary global model copied by many countries around the world. Brazil is known as the Silicon Valley of Latin America as it is the largest generator of unicorns or technological ventures valued in billions of dollars.

The greatest learning

The greatest learning of all these models is to develop a regulatory framework favorable to business innovation and the creation of technological entrepreneurship that allows Dominican companies to conquer international markets, strengthen our institutions to achieve coordination and execute policies and programs, making the most efficient expenditure, improve the quality of education in our country to generate highly qualified human capital in the areas of science and engineering, commit to a large investment and define a source of either the mining sector, tourism or those sectors relevant to attracting of highly qualified human resources, the adoption of new technologies and digital transformation, and the financing of transformation processes through research, development and innovation. If we cannot agree and do not move towards a national pact for the economic transformation of our country through collaboration between the different sectors to take the necessary firm steps, it will be difficult for us to make the big leap.

Published inStartups

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