OECD Observer
Innovation in Latin America

Latin America’s future as a region of innovation will be far from secure if investment in research and development (R&D) continues at current low levels.

Unlike in developed countries, the private sector in Latin America contributes little to investment in innovation. Investment in R&D in Latin America grew from an average of 0.5% of gross domestic product (GDP) in 2004 to 0.63% in 2009, while in OECD countries it grew from 2.2% to 2.4% during the same period.

There are wide disparities in the region too, both in terms of amounts invested and results. Brazil invests the highest proportion of GDP in R&D, followed by Uruguay, Argentina, Cuba and Chile. But substantially higher private investment in R&D, along with more and better public sector support, are needed in the region to boost innovation. Promoting the creation of start ups could also help.  

Why is Latin American R&D growth so sluggish? Specialisation in labourintensive sectors and natural resources are largely to blame. In Latin America, natural resource-intensive sectors still account for 60% of total manufacturing value added, while in the United States, knowledge-intensive sectors have experienced strong growth and now represent 60% of total manufacturing value added. Latin American firms therefore concentrate their science and technology activities on acquiring machinery and equipment, which may limit innovation.

See www.oecd.org/dev/americas/

Also see Latin America Economic Outlook 2013

© OECD Observer No 296 Q3 2013