Innovation in Latin America: More Education and Funding are Needed
The Johnson Graduate School of Management at Cornell partnered with the Council of the Americas to host a day long, “Innovation in Latin America” conference in New York City on October 16, 2013.
by Sami Zeinoun, MBA '12 (12/3/13)
Panel speakers representing the financial services, information technology, and manufacturing industries addressed the progress in innovation in their respective businesses after an economic overview of the region was delivered.
Johnson Professor Lourdes Casanova began the series of panel discussions by sharing findings of a study on innovation in Latin America. Specifically, Professor Casanova studied the impact that public and private institutions have on innovation and compared the progress made in Latin American to fast growing nations such as India. From a government perspective, Professor Lourdes says that innovation is on the top of many countries’ agenda. Although governments in Latin America pass legislation that funds research and development, more private sector participation is needed. Compared to other regions in the world, Latin America has a low rate of investment relative to the region’s GDP. By contrast, India experiences similar issues in regard to infrastructure needs and power shortages and is a leader in information technology.
Latin America also has low graduation rates in engineering and science. Overwhelming bureaucracy in the political system also adds to the regions’ slower growth in innovation because firms find it difficult to secure patent protection for their technologies. Professor Casanova ended her presentation by encouraging more education, investment in infrastructure, and flexible policies.
Ambassador Sandra Fuentes-Berain, the new Mexican Consul General in New York, continued by giving an account of Mexico’s economy and trade. Ambassador Fuentes provided statistics on trade with North America and on migration patterns of Mexicans. According to her presentation, Mexico is strong on manufacturing, and as a result has signed a record number of free trade agreements around the world. Although Latin America exports commodities to China, 80 percent of Mexico’s trade export is to the U.S. and Canada. Mexico’s dependence on foreign trade with North America is a future concern that can be mitigated by exporting more goods to Asia.
Also, according to her presentation, an estimated 1.2 million Mexicans currently reside in the tri-state area, with another 3 million in Chicago. The general consensus in terms of migration is that more Mexicans are stretching out from southern states to northern states. These migration patterns suggest closer ties between the two countries in the future.
Alberto Ramos, Head of Latin American Research at Goldman Sachs, shifted the conversation to the economics of Latin America as a whole. Mr. Ramos focused his attention on the impact that low savings and low investment rates have on Latin America. Inflation remains high in the region in part because of low savings and investment rates among consumers and companies. Trade is also low among Latin American countries. Trade represents a low percentage compared to the region’s GDP. Mr. Ramos suggests that governments form more regional trade deals, to boost savings and investment, and fewer large multi-lateral deals since those are more complex and time consuming to arrange.
Francisco Manrique, President of the Executive Council for Connect in Bogota, Colombia, shared his views on innovation in the IT sector. Mr. Manrique centered his thoughts around six points that move IT innovation forward: power, facilities, cash, skilled labor, cost, and ease of use. A lack of skilled labor and a shortage of Ph.D. programs in the region are a major hindrance on innovation judging by his six points. Mr. Manrique suggested that governments in the region send students abroad for advanced degrees and offer incentives for them to return and work in their native countries.
Mr. Manrique cited Vive Digital as a government sponsored program that exemplifies the six points that foster innovation. The Colombian government spent $2 billion on building an internet network, 8,000 kiosks, and 2 million laptops, all with the goal of giving the poor access to technology and content.
Overall, Mr. Manrique’s comments are consistent with Professor Casanova’s findings in that more education and funding are required to support innovation in Latin America.