Amid the bloodshed in Venezuela, the corruption scandal in Brazil and the stream of bizarre tweets coming from US President Donald Trump, a very important news item has gone almost unnoticed in Latin America: A new study says the region is failing miserably in innovation.
The Global Innovation Index 2017, a ranking of 130 countries around the world, says that African, Eastern European and Southeast Asian countries are doing much better than Latin America when it comes to modernising their economies and producing more sophisticated goods and services that help their economies grow faster.
The study is a collaborative effort by Cornell University’s College of Business, the European business school INSEAD and the UN World Intellectual Property Organisation. The annual ranking is based on dozens of measurements, including the number of new invention patents filed by each country, educational achievements and the ease of doing business.
The ranking does not list one single Latin American country among the 25 most innovative nations, despite the fact that three countries in the region – Brazil, Mexico and Argentina – are among the world’s 25 biggest economies.
This year, Switzerland topped the ranking, followed by Sweden, the Netherlands, the US and Great Britain. Among Latin American nations, Chile ranked 46th, Costa Rica 53rd, Mexico 58th, Colombia 65th, Uruguay 67th, Brazil 69th, Peru 70th, Argentina 76th, Ecuador 92nd, El Salvador 103rd and Bolivia 106th.
What’s more worrisome for the region, the ranking also does not include a single Latin American country among the 17 developing countries that it describes as “innovation achievers,” or emerging nations that are advancing much more rapidly than their peers.
“The region’s innovation rankings have not significantly improved relative to other regions in recent years, and no country in Latin America and the Caribbean currently shows any innovation outperformance relative to its level of development,” the report says.
Why is it that a region with so many talented individuals cannot excel in innovation? Latin America is producing some of the world’s most creative and successful people, including soccer player Lionel Messi, Nobel literature laureate Mario Vargas Llosa, and the Venezuelan-born president of MIT – often ranked as the world’s No. 1 university – Rafael Reiff. Even the Vatican has a Latin American chief, Pope Francis.
And yet, the collective output of the region in patents of new inventions is pitiful. All Latin American and Caribbean countries together applied for about 1,400 patents with the WIPO last year, less than 10% of South Korea’s 15,560.
Many economists say this is because Latin American countries have too many government regulations that stifle creative enterprises, and not enough venture capital to fund ideas from talented people.
While it takes more than a dozen legal steps to open a small business in your garage in many Latin American countries, you can get the necessary permits much more easily in the US or Switzerland, they argue.
Others say the opposite: that Latin America needs more government intervention to produce more innovation. They argue that while highly innovative nations spend 4.2% of their gross domestic products on research and development, and the US about 2.8%, the average in Latin America is at 0.5%.
The fact that the Global Innovation Index 2017’s conclusions about Latin America got so little attention in the region is worrisome. It’s urgent for Latin America to stop being a region with a surplus of talent, and a shortage of innovation.