REGIONAL POLICY DIALOGUE SCIENCE, TECHNOLOGY AND INNOVATION POLICY CHALLENGES Daniel Malkin Deputy Manager, SDS/EST December 11th, 2006

Science, Technology and Innovation in LAC At regional level, important and persistent lag concerning STI inputs (R&D expenditure and Human Resources) and outcomes (patents) In 2003 Korea invested in R&D more than the whole of LAC (US$ 14,000 million) China had twice the number of researchers per labor force as LAC; in 2006, China will have invested more than Japan (US$130,000 million) Structural biases Government and private sector participation and role in R&D financing and performance Political-economical framework (labor and financial markets, IP, competition) Governance Great diversity of situations and conditions of NSIs

Lag and great disparities in R&D intensity (R&D Total Expenditure/GDP)

…and in Human Capital (Researchers per 1000 Labor Force )

… Added to the low level of participation and contribution of the private sector to R&D R&D Expenditure by Source of Financing (2003 or latest available)

… and the low productivity of R&D in the private sector (Number of patents granted by USPTO) 1995-2003

Principal challenges in STI policies (1) Conditions of political and strategic framework (financial and labor markets, competition, Intellectual Property) Scientific and technological infrastructure and supporting Technology diffusion (extension centers, SMEs, ICT, metrology) Institutional development (governance, priorities, financing, resources allocation, coherence of policies) Development and mobility of human resources

Principal challenges in STI policies (2) CPI/productive sector linkage (university reform, marketing, incentives, public/private partnership) Support mechanisms for private R&D and innovation horizontal vs. “focused”; fiscal vs. subsidies Strategic sectors (social demand) Clusters and excellence centers Information, monitoring and evaluation systems

IDB’s medium term strategy - Approach Assigning priority to STI in country strategies (mainstreaming and evaluation, dialogues) Supporting institutional development (NIS and Governance) Technological infrastructure Human Resources (S&T and Engineering) Strategic sectors or technologies, clusters and excellence centers Supporting investment in R&D and private sector innovation (e.g., sector funds, innovation funds, venture capital, SMEs) Regional cooperation Collaboration with private sector (national and foreign) Bank instruments (TCs KFT, RTCs and loans, consolidation of internal experience).

Possible discussion topics for the future Governance and institutional strengthening Coordination with other governmental organizations and ministries of finance Public research institutions (academic and CPIs): autonomy, financing, evaluation Institutes and management of intellectual property Human resources funding and mobility Incentives to SMEs Mechanisms and financing of regional S&T cooperation programs Information, monitoring and evaluation systems

Daniel Malkin danielma@iadb.org Thank you Daniel Malkin danielma@iadb.org