Latin America gets bad marks in innovation

By Andres Oppenheimer

It shouldn’t come as a big surprise that most Latin American countries ranked towards the bottom of a new United Nations index of innovation. What’s surprising — and depressing — is that, with a few exceptions, they are not even making the list’s sub-group of “innovation learners.”

The massive new study entitled Global Innovation Index 2012, done jointly by the U.N. World Intellectual Property Organization (WIPO) and the France-based INSEAD business school, ranked 141 countries according to their innovation capabilities, or their overall capacity to invent new products.

It’s a key indicator of countries’ future: in a knowledge-based global economy, where companies that invent new products — such as Google, Apple or Facebook — often have a higher market value than the economies of many countries, innovation is a major economic growth factor these days.

According to the new Global Innovation Index 2012, the 10 top world leaders in innovation are Switzerland, Sweden, Singapore, Finland, Britain, Netherlands, Denmark, Hong Kong, Ireland and the United States.

The ranking takes into account not only countries’ new patent registrations — an area in which the United States leads the pack — but also investments in research and development, and whether their business and regulatory climates are conducive to inventions with business potential.

Among the study’s data:

• No Latin American country, with the exception of Chile, ranks among the world’s 50 innovation leaders.

•  Chile ranked 39th in the world, while Brazil ranked 58th, Colombia 65th, Uruguay 67th, Argentina 70th, Peru 75th, Guyana 77th, Paraguay 84th, Bolivia 114th and Venezuela 118th. Chile “shows strengths across the board,” with the exception of primary and secondary education expenditures and student-teacher ratios.

•  Brazil, despite benefitting from changes in the way the ranking was made this year, lost 9 positions from last year’s index. The reason was Brazil’s “particularly worrisome” business environment, university education and credit conditions.

•  Venezuela has been steadily losing ground in recent years, and its 118th position this year is near the bottom of the world ranking, below Zimbabwe, Lesotho and Uganda.

•  A sub-index that divides the world among innovation “leaders,” “learners” and “underperformers,” according to countries’ per capita income levels and efforts to improve their innovation standings, places Switzerland, northern European countries, New Zealand and Israel among the “leaders.”

•  The group of “innovation learners” includes China, India, Vietnam and Ghana, with Chile listed in a grey area close to them. The group of “innovation underperformers” includes Mexico, Argentina, Ecuador and Venezuela.

Soumitra Dutta, the INSEAD academic who authored the Global Innovation Index, told me in a telephone interview that the main reasons why there are not Latin American countries among the world’s 30 top innovation leaders — despite the fact that Brazil and Mexico are among the world’s twelve largest economies — has to do with their political, regulatory and business environments. 

In addition, the quality of education in the region is often poor, especially in scientific areas, and in many countries there is little credit available for new ventures, he said.

Asked about whether the “underperformers” are oblivious to the growing economic importance of innovation, education, science and technology, Dutta said, “Latin America’s “underperformers” are improving, but the rest of the world is moving faster. In Asia, they are moving much faster.”

My opinion: I have to confess that I scratched my head when I saw Switzerland — a country I identified with making good chocolates and watches, rather than producing major inventions — in the No. 1 spot of the world’s leading innovators. But then, reading the report, I found that Switzerland has attracted a surprising concentration of international research and development centers.

Regarding Latin America’s low rankings, they are largely due to most of the region’s leaders’ failure to admit that the region is falling behind international education and scientific standards.

Much like happens with the international standardized PISA tests for 15-year-old students, or the U.S. Patent and Trademark Office’s statistics of patents per countries of origin — where South Korea alone registered 13,200 patents last year, while Brazil registered only 250, Mexico 120 and Argentina 50 — most presidents prefer to look the other way, and continue living in denial.

Fortunately, some — including Chile, Brazil and Colombia — are beginning to recognize the problem, and starting to address it. But most others are perpetuating the myth that their countries are making great progress in education, science and technology, and continuing to fall increasingly behind the rest of the world