Innovation is Critical to Boost Productivity
Innovation and entrepreneurship are key elements to addressing the enormous economic and competitiveness challenges in Latin America.
This article was also published in The Huffington Post
What leads and drags the world are not machines, but ideas. With this phrase, the great French playwright Victor Hugo encouraged us to innovate. To start businesses. To create. And he was right. The best way to live in the world we dream of is to invent it.
In recent decades, we have witnessed great creations that have impacted the world, inventions that have improved people’s daily lives by making them easier and more enjoyable, promoting a longer and—if we are being optimistic—happier life.
These changes compel us to learn new behavior patterns. We have evolved from bookstores to the largest online sales platform (Amazon); from cinemas to on-demand television (Netflix or YouTube); from rolodex to the world’s largest social network (Facebook); from taxis to private transport networks (Uber) and from hotels to private accommodation providers (Airbnb). These tools have one thing in common: immediate service for users with a single click from mobile devices. And so do their creators: the ability to innovate and develop initiatives that improve people’s quality of life.
These transformations are enabled by the rapid impact of the technological revolution. According to a report by the Telefónica Foundation, it took 65 years for landline telephones to reach one hundred million households, while Facebook achieved the same feat in just five years. These experiences are a sign that every passing day there will be fewer restrictions and more freedom. We are moving towards a world full of creativity that will hopefully be for the benefit of global well-being.
In the case of Latin America, innovation and entrepreneurship are key elements to addressing the enormous economic and competitiveness challenges. There is a poorly diversified export offer with a precarious technology value; labor productivity is relatively low and not in tune with the needs of the productive sector of international markets. This situation, and the current level of innovation, poses long-term challenges for the region’s productive growth.
While much remains to be done, the region has made significant strides. Public policies and laws have been designed to support entrepreneurial culture, new financing mechanisms are in place, and more innovative, technology-based ventures are emerging. While these are important achievements, significant challenges remain, such as closing gaps in access to and quality of education, eliminating regulatory barriers to entrepreneurship, and addressing the gender gap.
Addressing these challenges requires nations’ agendas to meet efficiency and business sophistication requirements, and to focus on entrepreneurship and innovation as mechanisms to promote productive integration. This transition requires building new institutional capacities that contribute to competitive business development, both in the public and private sectors.
Innovation and entrepreneurship are drivers of change worldwide. Against this backdrop, the exchange of bilateral experiences between Europe and Latin America will be decisive for both regions. The EU has created vast knowledge in sectors of interest and an important consolidated business fabric in the region, and therefore, Latin America can benefit from the progress made in terms of productivity and competitiveness. In the case of innovation, both regions collaborate in systems that disseminate the experience of EU regional policy and good practices. However, there is still much progress to be made bi-regionally in this area.
In this context, CAF—development bank of Latin America—is supporting governments in the region to outline and implement public policies aimed at boosting entrepreneurship and innovation, and to share experiences and draft regulatory frameworks and programs to foster the development of venture capital funds. The goal is to drive innovation that boosts productivity.
Promoting innovation is more necessary than ever. The current global context demands new ideas and projects that can prepare us for the future. And the best resource to speed up the progress is young people preparing to make their dreams come true. We are all responsible for empowering them with the necessary tools.
Steve Jobs was clear about it: The people who are crazy enough to think that they can change the world, are the ones who do.
