Drivers of innovation and competitiveness in small and medium-sized enterprises: a comprehensive analysis of the Latin American and Caribbean region

1 Dec 2025 | Publication

Work area(s)

Economic development Production, productivity and management

Topic(s)

Micro, small and medium-sized enterprises (MSMEs) Innovation, science and technology Economic growth

Drivers of innovation and competitiveness in small and medium-sized enterprises: a comprehensive analysis of the Latin American and Caribbean region

  • Publication type: ECLAC Review
  • Author: David, Lemuel Kenneth; Wang, Jianling; Lazarus, Adama Theresa; Angel, Vanessa
  • Physical description: pages 9-32
  • UN symbol (Signature): LC/PUB.2025/21-P
  • Date: December, 2025
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Abstract

This study analyses the key drivers of innovation and competitiveness in small
and medium-sized enterprises (SMEs) in Latin America and the Caribbean
between 2006 and 2023. Using panel data regression (fixed and random effects)
and machine learning models, the authors identify the most significant enablers
of SME innovation. In addition, they find that political stability plays a positive
role, while inflation and corruption significantly constrain performance. The study
integrates classical innovation theory with emerging insights from Asian economies
and highlights the role of political culture in shaping SME resilience.

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