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How can Latin America catch up?

By Christina MacCulloch

Investments in science, technology and innovation are crucial to compete in the world economy, but they are also essential to improve people’s lives. In fact, comprehensive, sustainable and equitable development cannot succeed today without appropriate contributions by science and technology.

The IDB is promoting a renewed effort in the area of technological innovation, which is one of the most important challenges now facing Latin America. At the same time, technological innovation offers the region a unique opportunity to take a major step forward in a world that is becoming more globalized and competitive every day.

In November 2004, the IDB and other international agencies organized a meeting in Lima, Peru, on “Financing and Priorities in Science and Technology in Latin America and the Caribbean,” in conjunction with a regional conference of ministers of science and technology. Also invited to the meeting were government budget directors, experts and representatives from the private sector and from academia. The purpose was to identify challenges, priorities and options related to financing science and technology.

The Bank is also planning another seminar comparing Latin American and Asian experiences in science, technology and innovation, to be held during its upcoming 2005 Annual Meeting in Japan. In anticipation of that meeting, Carlos Jarque, manager of the IDB’s Sustainable Development Department, spoke to Christina MacCulloch about challenges and opportunities facing Latin America and the Caribbean in this sector.

IDBAmérica: What has happened with investment in science and technology in Latin America in the last decade?

Jarque: In many countries and sectors, people have recognized the importance of science and technology. However, when you look at the response in terms of specific actions taken, the efforts being made in many areas fall short. Needless to say, there are differences among the various countries. Some have made important advances related to institutions or legislative frameworks. In other areas, such as allocation of resources, the advances are clearly insufficient.

Generally speaking, Latin American and Caribbean countries do not invest much in science and technology. In most countries in the region, investment in research and development (R&D)ranges from 0.1 percent to 0.6 percent of GDP, a figure that has not changed significantly in the past 10 years. That’s low compared with the 2 percent to 3 percent invested by high-income countries. But even if we compare ourselves with other regions, we see that, for example, all Latin American and Caribbean countries together invest barely half as much South Korea in this area. The impact of these investments accumulates year after year, so we have quite a gap in our capacities. We must give more priority to research and development, and increase private investment in these areas, which up to now has been comparatively quite modest.

IDBAmérica: How big is the gap between us and the other regions?

Jarque: The gaps are significant, and are as much a result of how much is being invested as of how the National Innovation Systems work. There are various figures that illustrate this. For example, Dutch and Swedish scientists alone publish more than all scientists in Latin America and the Caribbean put together. Many of our researchers are poorly funded, don’t do research in critical or strategic areas, and tend not to have many connections with the manufacturing sector.

There are also huge gaps with regard to the number of people working in research and development. It is estimated that in the United States approximately 1 million people are working in R&D, compared with fewer than 30,000 in our countries. There are millions of web sites about R&D in the United States, while in our region, the total is below 300. These differences are also reflected in such areas as the number of patents and in how many businesses are involved in innovation on an ongoing basis.

The capacity for innovation begins with the educational system. The connections between technology and basic science training are growing closer and closer. However, the quality of our educational systems must be strengthened, especially in these areas. For example, the Programs for International Student Assessment (PISA) tests conducted by the Organization for Economic Cooperation and Development—which enable us to compare results among countries—show that the highest-scoring 10 percent of Latin American and Caribbean students would be among the lowest 25 percent for Korea. This is also a major gap that must be addressed. There are multiple challenges.

IDBAmérica: What are the economic and social consequences of not advancing in science and technology?

Jarque: One is that we become less competitive. Many economies in the region have become less competitive on a global basis, and this is partly due to weaknesses in science and technology. We could see this very clearly from our meeting in Lima. Underutilization of science, technology and innovation limits manufacturing capability, return on investments and job creation. It’s hard to compete in a world with a globalized economy if you don’t keep innovating, because innovation is what enables you to make products that offer an increasing amount of value added.

Science, technology and innovation also have a key impact on social well-being. Why? Because they pave the way for major advances in health services, quality of education, and preservation of the environment and natural resources.

Technology even helps democracy to function, because it fosters political equality among citizens. Here we can point to technological applications of information and communications technology in electoral processes, in matters involving e-government, and in processes that create and disseminate a broad range of information. This helps create societies that are more informed, more aware and more participatory.

Technology influences economic growth, social well-being and political development. It should not be regarded with indifference or as a topic that matters only to specialists. We need to look at technology as something that is a key component of development.

IDBAmérica: Is it possible to recover lost ground in an area where change is taking place at such lightning speed?

Jarque: Others have been able to do it. There’s no one way to make progress in development. We can jump-start important technologies with innovative applications. In fact, we’re already seeing clear results in some areas. For example, we can look at biotechnology as applied to traditional farming, or rural telecenters, or solar energy technology in remote areas, or telemedicine. It’s not just that we need to invest more. We also need to invest smarter, in critical and strategic areas that offer a comparative advantage for each country in the region.

IDBAmérica: What can the IDB do to support countries in Latin America and the Caribbean?

Jarque: The IDB has recognized the importance of science, technology and innovation right from the start. Since 1962, the Bank has allocated more than US$1.8 billion dollars to this area, and it has also been one of the main sources of multilateral financing for such sectors as higher education. However, regional demand for these types of projects has been falling, which is why the Bank is redoubling its efforts. The IDB’s president, Enrique V. Iglesias, has unveiled a series of initiatives designed to give more momentum to this strategic sector and address the issues with renewed energy. We have a new strategy (see link at right) that has been approved by the Board of Executive Directors, and the executive vice president has put together an inter-departmental group that is finalizing an action plan. We are engaging in an improved and more vigorous dialogue with countries that are involved in planning and identifying science and technology projects. The Board of Executive Directors has also approved a new Education, Science and Technology Subdepartment, and we have new funds (such as the Korean technical cooperation funds) that can help support these activities, in addition to other financial instruments (the Regional Fund for Agricultural Technology, the Italian Trust Fund for Information and Communication Technology for Development, etc.) and other Bank resources.

The IDB will continue to support countries in their efforts to include science and technology in their political agendas and to give them higher priority, as well as to diagnose, analyze and evaluate the National Innovation Systems, and to identify challenges and opportunities. The Bank also finances programs in critical, potentially strategic areas, and supports numerous projects that have a technological component. Finally, the IDB helps strengthen institutional capacity, especially in the smaller, poorer countries, and it promotes regional initiatives in education, science and technology.

These are areas in which the IDB can make a substantive contribution to supporting these countries, and the ministers and representatives from the private sector and academia at the November 2004 meeting in Lima agreed. They signed a declaration that sets priorities and commitments, and that establishes a new group to deal with shared challenges. This move grew out of an objective diagnostic process and a dialogue among multiple sectors.

IDBAmérica: Do we need a paradigm shift?

Jarque: The absence of a vigorous science, technology and innovation sector diminishes us as a region. Given the tremendous growth in science and technology and the need to keep making progress, we will incur enormous costs if we get mired in “short-termism” without a plan. These costs drag on economic growth, but they also figure into poverty and cause a loss in overall well-being.

Latin America and the Caribbean offer tremendous opportunities in science and technology because of the region’s human and natural resources. But we need to make this area one of our national priorities. We need to advance structural reforms, create more alliances, and enhance coordination among the public, private and academic sectors. We must strengthen and reinforce institutions, do a better job of creating innovation systems and make a real effort to create more effective relationships with the manufacturing sector. We must redirect resources and accumulate a critical mass, which will keep technology investments from being volatile and scattered.

The challenge is to identify each country’s comparative advantages, along with those at the regional level, and then to fulfill the potential of these advantages, as well as to demonstrate the economic and social return each country offers , and to use a critical eye when selecting the areas that will receive the most attention. What is needed is a new paradigm, a more pragmatic focus, and a profound systemic change in the area of science and technology.

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