perry by yaoyufang

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									ENHANCING INNOVATION
  IN LATIN AMERICA.
      WHY? HOW?


           Guillermo Perry
   Chief Economist for Latin America
             World Bank
         Barcelona, June 2005
     Should LAC worry about
      enhancing innovation?
Low TFP growth, due to several factors:
  Limited entry and exit of formal firms
  Low quality of education.
  Low levels of innovation (broadly understood)
   by firms.
  Specifically, low levels of R&D, patenting and
   University/firm collaboration.
Heterogeneity: different priorities
 depending on country context (GDP per
 capita, skills, institutions)
    Should LAC worry about
     enhancing innovation?
All forms of innovation (transfer,
 adaptation and creation) share
 appropriability and spillover issues.
 Policies and instruments are bassically
 the same.
Using wisely natural wealth advantages
 require skills and R&D (Scandinavia,
 Australia, NZ, Canada, US, Chile and Costa
 Rica recently). Specially true for tropical
 agriculture
       Should LAC worry about
        enhancing innovation?
                Annual Growth of TFP
  3


2.5


  2


1.5


  1


0.5


  0


-0.5   Chile   Mexico   Latin America   OECD       East Asia
 -1
                                           1970s      1980s
-1.5


 -2                                        1990s
                  Should LAC worry about enhancing
                            innovation?
                                  LAC lags in innovation
                                  when compared to peers
                          0.2                                 LAC
Patents: Std. Dev. from




                                                              Asia
                          0.1                                 NR rich countries
       Prediction




                            0

                          -0.1

                          -0.2
                                 1964   1969   1974   1979   1984     1989        1994   1999
                                Should LAC worry about enhancing
                                          innovation?
LAC not among the R&D superstars
                                                                                                             2
                                                                                 R&D      GDP       GDP 
                                                                                      1      2 
                               5.0%                                              GDP      CAP       CAP 
                                                                                                         
                               4.5%


                               4.0%
Predicted & Observed R&D/GDP




                                                                                 Israel
                               3.5%
                                                                                            Finland

                               3.0%


                               2.5%
                                                                         Korea
                               2.0%


                               1.5%


                               1.0%
                                                      China

                               0.5%
                                          India
                                                                                     Argentina
                               0.0%
                                                                        Mexico
                                      4   5       6      7          8            9           10       11

                                                      Log GDP per Capita
Should LAC worry about enhancing
 innovation? Low efficiency of
converting R&D into patents
  20.00%


    Patents = B1I&D + Bp country*R&D
  15.00%




  10.00%




   5.00%




   0.00%
            ARG



                  BRA




                                                            VEN



                                                                  TWN
                        CHL



                              COL



                                    CRI




                                                PER



                                                      URY




                                                                        KOR



                                                                              ISR



                                                                                    FIN



                                                                                          NOR
                                          MEX




   -5.00%




  -10.00%
             ..due, inter alia. to disconnects
             between Universities and firms
                    (interviews with entrepreneurs: score 1-7)
7.0
                  Finland 40% of firms have                           Less than 20% financed and
6.5
                  formal arrangements with U                           done by firms (most by U)
6.0
                  Chile 25% and not very                              60% R&D devoted to basic
5.5
                  fruitful                                             science, US 15%
5.0

4.5

4.0

3.5

3.0

2.5

2.0
      Arg   Bra     Chi      Col    CR     Mex    Chn   Esp   Cor     Ind    Irl   Aus   Sw e   Isr     Fin   EUA


                          Quality of Scientific Inst.               Univ/Private Sector Collaboration
Priority: Horizontal Policies to
 enhance both investment and
           innovation
Deal with weaknesses in basic institutions
(rule of law, protection of property rights)
Reduce over-regulation (entry and exit barriers,
  employment and deployment of formal labor)
Continue improving macro/financial policies
Foster further trade openness and competition
Overcome infrastructure and access to finance
  bottlenecks
   Specific policies and institutions
    dealing with innovation. Issues

What is the right balance between “strong”
IPR and “efficient subsidies”?
Tax credits are likely to be inefficient:
 weak tax enforcement and administration,
 proliferation of tax incentives and loopholes
 Specific policies and institutions
  dealing with innovation. Issues
How to design “efficient subsidies”?
   Governance: public/private/academia partnership;
   Selection criteria and level of subsidies : Quality of
    proposals, technical capacity, cooperation between
    firms and Universities, strategic relevance,
    SME’s,?
   Strategic areas: revealed comparative advantages?:
    agriculture, light manufactures, electronics, ITC,
    services; public goods: health, environment, utilities
    External “Peer reviewing” and Monitoring
    &Evaluation
      Specific policies and institutions
       dealing with innovation. Issues
Universities and Public Research Institutes :
   From entitlements to competition: balance between basic
     vs competitive financing
   Incentives for researchers: reward structure, IPR
   Infrastructure: labs, Technology Transfer Office’s
   Culture, Governance
   Promote all type of links between firms and Universities
   student practices, specialized training, consultancy, research
Supporting Public/Private Institutions:
   Certification of Standards
   Diffusion (eg, INIA’s in agriculture)
   Specific policies and institutions
    dealing with innovation. Issues
Clusters:
  Support existing and incipient clusters (vertical
    or horizontal)
  Public/private cooperation: overcoming
    infrastructure and regulation bottlenecks, skills
    (technical education, training), support to R&D,
    FDI attraction, market intelligence
  Incorporate SME’s?
Specialized Institutions (Fundacion Chile, Inbio
 Costa Rica): how replicable?
Incubators, Scientific Parks: best practice?
   Specific policies and institutions
     related to innovation. Issues
Support a few elite scientific research
groups at Universities?
Support a few Ph. D programs in basic
 sciences, engineering?.
Venture capital
 Export promotion schemes?
Organizational and managerial change
 (and entrepreneurship):business schools;
basic management and business training
in all professions?

								
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