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Latin America Requires Innovation, Growth and Distribution Policies

1 October 2013|News

New document published by the ECLAC Subregional Headquarters in Mexico examines the development of the region’s economies from 1990 to 2011, in order to identify advances, issues pending and setbacks associated with the market reforms implemented in accordance with the Washington Consensus and other policies with differing orientations.


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Foto: Jeffrey Arguedas/EFE

Latin America requires innovation, growth and income-distribution policies all at the same time if it is to tackle pending challenges for development, according to a new publication from the Economic Commission for Latin America and the Caribbean (ECLAC) subregional headquarters in Mexico.

In the document Economic growth, innovation and inequality in Latin America: Post-Washington Consensus advances, setbacks and issues, authors Gabriela Dutrénit, Juan Carlos Moreno-Brid and Martín Puchet Anyul (with the collaboration of Eduardo Moreno) examine the development of the region's economies from 1990 to 2011, in order to identify advances, issues pending and setbacks associated with the market reforms implemented in accordance with the Washington Consensus and the economic policies that came after it but followed a different direction.

The study places special emphasis on three aspects: expansion of per capita GDP, innovation and personal income distribution. According to the authors, the relationships between economies' growth patterns, innovation systems and well-being indicators determine whether trajectories observed over the long term show the formation of development systems in the region.

The document analyses changes to the weighting of aggregate demand components in economic growth, and the repercussions of investment in experimental research and development on the innovation system. The study also describes the effects of these changes and the repercussions for well-being, as measured by changes in per capita income on equality of income distribution.

According to the report, the vision of requiring simultaneous innovation, growth and income-distribution policies contradicts the traditional interpretation of a linear link between innovation and international competitiveness, and between the latter and growth plus equitable income distribution. As a result, the innovation system is considered to be at the service of countries achieving a growing presence in the world market.

The authors state that this vision loses sight of the fact that the innovation system is part of each country's structural conditions, and that the automatic conversion of innovation into growth, and growth into well-being, has not been observed in Latin America in recent times.

In fact, the authors point out the need to integrate policies aimed at consolidating horizontal and selective technological capacities, growth policies that boost investment in strategic innovation sectors and satisfying basic needs, as well as redistributive policies based on fiscal policy and social spending.

The document describes the serious difficulties of designing and implementing valid generic recommendations for countries' differing structural conditions, institutions and experiences. Where there is export-led growth related to global chains, it is vital to design policies linking national enterprises, as well as strengthening the science, technology and innovation capacities to ensure national sectors generate more value added. Where growth is investment led, it is important to focus on strengthening an internationally competitive production sector (which also involves maintaining science, technology and innovation investments).

The innovation system should not be separate from the aim of increasing well-being. Policies to strengthen scientific and technological capacities and promote innovation at the same time must therefore aim to meet the population's basic needs for food, health and education, while generating inclusive development, the study concludes.