New Governance Models for Strategy Formation

There is high heterogeneity among countries in Latin America in regard to the institutional framework for innovation and its place in the government power structure. Only five countries have a Ministry of Innovation: Argentina, Brazil, Costa Rica, Cuba and the Bolivarian Republic of Venezuela. In other countries different models prevail: national innovation councils directly under the presidency, as in Chile and Nicaragua, for example; or national councils under different ministries (usually the ministry of industry or education), as in Mexico or Peru. 

There are different institutional models, which vary in terms of level of complexity and frequency of contact among different actors. Brazil has the most complex institutional system. The Brazilian Ministry of Science and Technology has an influential and co-ordinating role in defining strategy and execution, together with the Ministry of Development, Industry and Foreign Trade and the Brazilian Development Bank (BNDES). In addition, various agencies are responsible for programme implementation and funding, such as the Brazilian Innovation Agency (FINEP), which offers funds for business innovation programmes, and the National Research Council (CNPq), which funds scientific R&D programmes. Brazil also has a well-articulated governance structure, albeit with significant differences across the country, in which across levels of government each State has its own foundation for R&D support. Other countries in the region have simpler models, some more decentralised (e.g. Mexico) than others (e.g. Chile). 

Beyond country differences, a common element is that innovation is a priority of the development agendas of almost all of the countries in the region, although its importance is reflected in the debates that take place than in increased levels of budgetary allocation. The greatest challenge is to design and implement innovation policies that on the one hand support structural change, the diversification of production and the creation of new sectors, and on the other hand promote the modernisation and competitiveness of traditional sectors. 

In addition, some structural weaknesses continue to hinder the formulation of innovation policies and to hamper the transition towards more pragmatic and effective policy models. For innovation policy to be effective it needs real financial support. For example, recent advances in Uruguay in terms of institutionalisation and promotion of innovation have taken place thanks to the Ministry of Economy and Finance’s support to the country’s national innovation strategy. 

Weaknesses in the design of policy instruments include: i) poor planning capacity and a tendency to allocate resources based on short-term evaluations, ii) little capacity to monitor and evaluate implemented programmes, iii) insufficient feedback mechanisms between design and implementation; and iv) an excessive focus on “inputs” (more R&D, more qualified human resources, etc.) rather than on expected outputs (growing number of export firms, more and better jobs, introduction of new production processes and/or services, etc.). There has also been little synchronisation between productive developmentand innovation policy, although this trend has been changing in recent years insome countries, in part thanks to the introduction of sectoral funds in support ofinnovation. 

In recent years, countries in the region have prioritised a series of reforms inthe governance and management of innovation policy in order to strengthen thestate’s capacity to support innovation in the new global economic situation. Mostcountries have established new institutions and/or new governance models for theformulation of innovation strategies. For example, in Argentina, the establishmentof the Ministry of Science, Technology and Productive Innovation in 2008 responded to the desire to promote productive development and innovation and to increase the collaboration between science andbusiness. In Chile, the creation of the NationalInnovation Council for Competitiveness has been a major advance in enabling institutions, through the Committee of Ministers for Innovation, to make innovation

a key issue in the government agenda.

The growing demand for the formulation of innovation strategies has created a need for new spaces for vertical and horizontal co-ordination. In fact, innovationis increasingly a cross-cutting issue in the agendas of different sectoral ministries(such as health, energy, the environment and education), beyond its traditionalrole for development in agriculture and manufacturing.There is an increasing need for more coordination between different sectoralagendas (of the various ministries) to increase the effectiveness of public action.This also augments the complexity of managing innovation policies, since variousvisions and conceptualisations of innovation clash, requiring different publicpolicytools. 

Brazil has responded to these challenges by creating co-ordination mechanisms between innovation policy and productive development policy. In this regard, the partnership between the Ministry of Science and Technology, Ministryof Development, Industry and Foreign Trade and the Brazilian Development Bank(BNDES) is a clear advance in institutional design. At the same time, in line withthe recent national strategy for growth with social inclusion, the Ministry of Sciencen and Technology hasn supported the strengthening of institutions in Brazil’s federalstates in order to promote production structure diversification and to increase thecountry’s scientific, technological and productive strength.