Latin American leads global entrepreneurship among the emerging economies, but are slowing down due to lack of innovation. A deadly equation which neither multinationals are not spared, and penalizes the growth of the region and exports. Examples abound. Chinese multinationals investing in R & D 34 times more than Latin American transnational manufacturing, except for Brazil, and multinationals of the most developed countries spend 40 times. The percentage of exporting firms on business census, Chile, Colombia and Mexico is lower than in Bangladesh, Pakistan and Tanzania.
The World Bank collects devastating situation in its recent report Entrepreneurship in Latin America: many companies and little innovation, and its chief economist for Latin America and the Caribbean, Augusto de la Torre, met with leaders of the Spanish innovation in Ramón Areces Foundation for analysis.
The report confirms the entrepreneurial boiling in Latin America. One in three workers in the region is autonomous, but most employers are transformers or simple commodity brokers. “It’s a self-employment for those who can not work in large companies, a problem associated with poverty that hampers the region,” said De la Torre. In addition to this venture that does not generate added value, companies of any size are smaller than those in other regions with similar levels of development, and even the giants create higher employment in other regions.
No business segment approved. Small lack of technology to grow and join the productive economy. Median lack modern management practices, and growth stagnates by reaching a certain size. At 40 years, the median Latin American companies employ 110 people, East Asian employ nearly 170 in eastern Europe are around 220 workers, and in developed countries reach 250. But is that Latin American companies begin to destroy employment after age 40.
The situation harms the domestic and export growth. “It is imperative that companies be innovative to remain competitive on the outside, and must be captained by multinationals,” says Ramón Casilda, strategic consultant for Latin America. The reality is stubborn. The glittering market multinationals sell less than their sisters in other regions, many internationalize fearing instability of country, and repeat their structure where implanted. ” Except for the Mexican, not engage in global value chains, unlike Asian. Less competitive on the world stage. Many, or out of the region, “says De la Torre.
Latin introduce new products at a lower rate than other developing regions get to spend on R & D unless Eastern Europe and China. The range of exporting products is much lower than other regions, Brazil saved from burning. “The region settled for export without transforming their local environment, and not bothered to do other innovative products for export. It is the most risk, “explains José Miguel Benavente, chief of the Division of Innovation and Competitiveness IDB denouncing skill shortages even among business owners human capital. The low local demand to buy innovative products, a necessary step to go outside, is another problem.
The social network restricts the outputs. “The innovative emerging firms are often trained youth in need of funding, but banks do not do this kind of loans anywhere in the world, and the seed capital of Silicon Valley does not exist in Latin America,” said Benavente. The solution should be driven by governments. ” Just devote resources to this support. Who is going to do? “he asks.
The IDB has identified the tools to overcome the situation, has given more than 3,500 million euros in 10 years to support them, and have two people per country to set them up for eight years. Correct the education system to form in innovative entrepreneurship from school, advise the legislative changes to create a competitive environment, and suggest the creation of helplines. The Matching Grant program is an example, companies from the state the same amount invested in innovation, Chile has been successful.
Companies also participate in programs to stimulate innovation. Microsoft has supported the formation of 3.2 million teachers in technology with 44 million euros and has donated software for the use of 116 million students. 190,000 other students from the region have received support for training in innovative leadership. ” We support you in marketing products and seeking investors. Brazil, Chile, Colombia and Mexico have strong national innovation programs, “says Rafael Pérez Colón, senior manager of Microsoft.