Innovation Policies for Productivity

Recent studies show that greater investment in innovation, together with complementary activities, such as training and using information and communication technologies, may help to close the productivity gap between the region and more developed countries.

Microeconomic factors include the decisions taken by companies with regard to innovation, which are essential as far as productivity is concerned. Empirical evidence shows that the use of modern technology may result in the more effective use of resources and turn new ideas into innovative economic solutions, thereby creating new working opportunities and consolidating competitive, sustainable advantages for the country.

Although productivity may be the consequence of the influence of several factors, in the short term, in the long term it is thanks to countries’ investment in science, technology and innovation, based on the creation and accumulation of the internal capability to produce technical and scientific know-how and, in particular, pass this know-how on to the economy and society in general. Science, technology and innovation require highly qualified people. The contribution of human capital may be correlated with higher productivity of work and increased new know-how and technological development.

The availability of qualified human capital can be measured considering the stock of skilled researchers and technologists, for example, counting the number of scientists who carry out scientific and technological work and whose level of productivity is sufficient to sustain the domestic capability of creating internal know-how. The flow or rate of training new researchers and technologists may also be examined, by counting the number of graduates and post-graduates in relevant areas of science, technology and innovation, as well as the number of scholarships given for courses taken at centers of excellence abroad.

As in the rest of the world, there are many examples of promoting the production of scientific know-how by intervention, mainly by state intervention. These methods may include financing research projects, providing direct support for researchers and increasing facilities at research centers, consisting of providing infrastructure and improving organization.

This is a priority for CAF - development bank of Latin America-, put into practice by supporting educational programs and technical and professional training courses that produce enough qualified human capital to introduce innovations that improve countries’ productivity and competitiveness.