Better Governance for Better Policy
In summary, in the past decade the agenda for productive development and innovation has been given new impetus in the countries of Latin America. Today innovation plays a central role in the development agenda in almost all of the countries in the region, although its importance is more often reflected in debates and speeches rather than in increased levels of budgetary allocation. The current global and regional economic trends are creating growing expectations regarding the need for medium-term impact of innovation policies on growth and competitiveness in global markets and on the capacity to strengthen domestic markets by generating more and better jobs.
Renewed interest in innovation places new pressure on governments to develop and implement more effective innovation strategies that can mobilise the business sector, especially in a context of high uncertainty regarding the dynamics of global markets. In addition, more effective and transparent management of the public system to support innovation is required for countries facing tight budgetary restrictions, as well as for those currently enjoying a period of high growth based on increasing exports of natural resources at high prices.
Diagnosis of productive development and innovation in Latin America makes it clear that the region needs to move forward in four areas:
1) I nvest to close the productivity gap.
2) R aise investment in science and technology and R&D activities.
3) I ncrease the private sector’s commitment to innovation and productive
4) R educe the mismatch between supply and demand of skilled human
This requires new models for public-policy governance capable of articulating actions and fostering agreements for investment in innovation. Institutions need to be stronger and public policy models more sophisticated; they must be capable of mobilising the different stakeholders in national innovation systems and all levels of government. This is particularly true in the Latin American context, with productive specialisation in low-knowledge-intensive sectors, high uncertainty and barriers to access to credit. Public policies therefore play a decisive role in generating incentives for investment in science and technology activities and for competitiveness based on added value and innovation.
In recent years, the countries of Latin America have made great strides in policy learning and have introduced significant reforms in innovation policies. Although there is still great heterogeneity in institutions and in governance models in the region, we can identify some common trends.
Among the advances are: strengthening the institutional framework for innovation (Argentina, Chile, Uruguay); creating and consolidating new funding models for innovation (Brazil, Chile, Colombia, Mexico); greater synchronisation between supporting innovation and developing strategic productive sectors (Argentina, Brazil, Chile, Mexico, Panama, Uruguay); growing attention to the territorial impact of innovation strategies, especially in relatively larger countries (Argentina, Brazil, Colombia) and improved institutional capacity to measure and assess the dynamics of innovation and the impact of public policies (Argentina, Brazil).
To overcome its structural weaknesses in innovation and in its capacity to support the development of production and technology, governments need to develop better governance models, which should be able to align actions and create synergies between different programmes and levels of government. To do this, the region must:
— Consolidate the synchronisation between innovation strategies and productive development by increasing the capacity to articulate programmes for sectoral and value-chain development. This requires governance mechanisms that promote dialogue among the ministries of economy and finance, trade and industry and innovation. It also requires financing mechanisms with a sectoral approach and the participation of all the stakeholders in the national innovation system (universities, businesses and civil society) in defining priorities. Innovation policy must also be synchronised with policies to support productive development to ensure more effective action and greater impact. — Strengthen the capacity to develop innovation strategies. States must improve vertical co-ordination (between different levels of government) and horizontal co-ordination (between the different ministries responsible for different areas of innovation such as industry, agriculture, health, education, infrastructure, etc.) for defining priorities. There must also be greater private-sector participation in innovation.
— Increase resource-allocation capacity through multi-year plans to facilitate investment in medium- and long-term projects, and in parallel, increase the financial and business sectors’ commitment to innovation. This requires investing in strategic intelligence in public administration and creating spaces for dialogue to establish trust mechanisms while increasing the state’s regulatory capacity in the area.
— Evolve towards outcome-oriented policy models, designing policies that target outputs (more and better jobs and greater competitiveness) and consider inputs (such as R&D spending and human resources training) to be the means to achieving the strategic objectives.
— Strengthen the capacity to measure innovation. Investment is needed to create institutional spaces and feedback mechanisms between policy design and implementation in order to improve the capacity of policy makers to define and implement new, more sophisticated instruments. It is important to invest in the generation of innovation indicators and to create incentives for the use of information in policy assessment.
— Invest in the training of human resources responsible for managing policy on innovation and productive development and promote regional dialogue to exchange experiences and develop greater knowledge on innovation policy design and implementation. The innovation challenge for Latin America needs each country to have its own development agenda based on its specific production, historical and cultural characteristics. But it also requires a regional agenda in order to achieve the critical mass required in certain areas of knowledge and production for its successful integration into an increasingly competitive and dynamic global economy.