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Technological innovation called key to competitiveness for Latin America

BELO HORIZONTE, Brazil - Technological innovation is the key for enabling Latin America to compete in the modern economy, increase its production and respond to the demands of the global market, concluded participants in a seminar on science and technology.

Participants also noted that, with few exceptions, the region’s countries invest only a small part of their gross national product in science and technology compared with industrialized countries and emerging economies such as China, India and Thailand.

The seminar, the first in a series being held in conjunction with the 47th Annual Meeting of the Inter-American Development Bank, brought together experts and experts from Latin American and Caribbean and other regions to recommend ways to increase the development and use of new technologies.

“The development of technological capacity in the region is not meeting the magnitude of the challenge,” declared IDB President Luis Alberto Moreno in his closing statement.  

In fact, he added, with exception of some countries such as Brazil and Chile, the portion of the region’s gross national product spent on research and development has actually dropped or leveled off in recent years.

Moreno also emphasized the key role of information technology as a foundation for the increases in productivity achieved by industrialized countries. “The new communications networks play a transformative role in all sectors of the society,” he said, and pledged the Bank’s support in strengthening the region’s capacity in this area.

“To confront this situation and win a more competitive position in the world, the countries of Latin America and the Caribbean must establish or strengthen national innovation systems as an integral part of their national economic and social development plans,” said Moreno. He called for systems to integrate productive enterprises in systems that generate and apply technological knowledge, creating clusters to spur innovation in the private sector. The aims of this integration are to foster the transfer and adoption of new technologies, create risk capital, particularly for small and medium-sized enterprises, and attract foreign investment.

Speaking at the opening of the meeting, Brazil’s Secretary of International Affairs in the Ministry of Planning and Budget, José Carlos Miranda, highlighted the importance of clusters for local development, the development of information societies, and the contribution of innovation for productive development. He noted that Brazil has successfully used technological innovation and strategically directed financing to become one of the world’s major agricultural producers.

In his presentation, Carlos Alvarez, executive vice president of the Chilean economic development agency CORFO, emphasized his country’s success in integrating networks of small companies with large exporting firms. Chile’s success in becoming one of the world’s two major exporters of salmon was due in large part to the success of this vertical integration.

Alvarez also described CORFO’s efforts to create clusters of firms, both large and small, mostly in agriculture, but also in manufacturing and services. He stressed the importance of creating social capital as a determinant of the success of such clusters. In fact, he said, lack of an adequate level of skilled labor in some sectors has resulted in poor results in the use of subsidies to encourage the establishment of laboratories and systems of quality control.

Luiz Carlos Barboza, technical director of the Brazilian agency charged with supporting small and medium-sized enterprises, SEBRAE, noted the importance of technological innovation in reducing economic and social inequalities among the country’s different regions. Training is a major part of SEBRAE’s work with 800 groups of firms it is supporting throughout the country.

Other speakers included Lee Jae-hong, director general of the Ministry of Information and Communication of the Republic of Korea, Joao Carlos Ferraz, chief of the Production, Productivity and Management Division of the Economic Commission for Latin America and the Caribbean, and Alberto Briozzo, general coordinator of Argentina’s Competitiveness Forum.

IDB President Moreno said that training human resources is a “fundamental condition” for a dynamic and innovative regional economy, and called for strategic investments in advanced education to produce scientists, engineers and other specialists.  He noted that technical expertise in presently concentrated in the public sector and universities, and not in the private sector. The opposite is the case in industrialized countries. 

The IDB has invested $3.1 billion since its founding in science and technology development, higher education and agricultural research. It is presently stepping up its support to the sector with the creation of a Sub Department of Education and Science and Technology. In addition, the Bank’s newest member, the Republic of Korea, has created a $25 million fund to finance policy evaluations and promote the implementation of good practices.

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