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Latin America Business News

Innovation Key to Development in Latin America

The countries of Latin America and the Caribbean are making comparatively low investments in research and development, and the region’s private sector is also comparatively under-represented in R&D spending, according to a new study.

Through a comparative analysis of R&D investments in developed countries, the study, entitled “The need to innovate,” concludes that companies in Latin America and the Caribbean have favored technology procurement strategies instead of promoting new technology and new ideas.

All this translates into very low performance when it comes to innovation, and the study points out that the problem may be getting worse. The number of new patent applications per 100,000 inhabitants—a standard indicator of innovation—fell from 6.5 the years 1995-1998 to 5.5 in the years 2005-2008, for example.

“Innovation today is an imperative for the development of all countries, and Latin America and the Caribbean is no exception,” said Flora Montealegre Painter, head of the IDB’s Science and Technology Division. “The countries of the region cannot keep postponing the required investment in innovation and technological development needed to achieve levels of productivity and growth that will enable a substantial improvement in the quality of life of their populations.”

Brazil is the Latin American country that spends the highest percentage of GDP on innovation, yet it faces the challenge of effectively coordinating different sectors in the country involved in innovation processes.  “The disconnect between what is studied in universities and companies is a major challenge in Brazil and throughout Latin America,” added Painter. “Our interest is to strengthen regional sustainable development, focusing on innovation sponsored by companies.”