Nanno Mulder International Trade and Integration Division Economic Commission for Latin America and the Caribbean (ECLAC) United Nations Costa Rican and Latin America’s innovation and upgrading in global value chains

2014 ECLAC study on Costa Rica’s participation in global value chanis and export diversification policies 2

Costa Rica is one of the countries in the region which exports are most intensive in services 3 Selected countries: Composition of gross and value added exports (Percent) Sources: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of input-output tables from central ba nks and national statistical offices.

The Costa Rican export sector, particularly clusters operated by multinationals, has few backward linkages to other sectors of the economy 4 Costa Rica and other countries/regions: Ratio of indirect value added to direct value added Sources: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of input-output tables from central ba nks and national statistical offices and World Input Output database.

Costa Rica: Nine challenges to reinforce its competitiveness 5  Increase market access at home and abroad (PA, TPP,…)  Promote backward linkages between MMCs and local firms  Dedicate more resources to promote innovation and R&D  Adapt supply of education to requirements of export sector  Resolve infrastructure bottlenecks  Improve policy coordination for competitiveness & innovation  Generate financing of a broad industrial policy agenda  Foster wider support for the above policies

Chapter on innovation systems in 2013 ECLAC/OECD on SME policies for structural change 6

2014 ECLAC document on regional integration and industrial policy 7

Most R&D spending in Latin America is public and oriented towards basic research 8 Sources: Economic Commission for Latin America and the Caribbean (ECLAC) and Organization for Economic Cooperation an d Development (OECD), 2013 Latin American Economic Outlook.

In the region, few researchers work in the areas of engineering and technology 9 Sources: IDB, The impartative of innoation,: Creating prosperity in Latin America and the Caribbean

In the region, a low share of firms receives public support for innovation 10 Sources: IDB, The impartative of innoation,: Creating prosperity in Latin America and the Caribbean, 2011.

In Latin America, internet speed remains slow and access costly 11 Sources: Economic Commission for Latin America and the Caribbean (ECLAC) and Organization for Economic Cooperation an d Development (OECD), 2013 Latin American Economic Outlook.

The way forward: Stepping up innovation policies to promote upgrading in value chains 12  Innovation policies gain space in national policy agendas  But countries need deeper national innovation systems …  … and stronger business innovation programs  This requires additional (public and private) financing …  … and efforts to improve guarantees for SMEs  Human skills upgrading is also important  Focus innovation to upgrading in value chains (eg Costa Rica)  Importance of (sub)-regional cooperation in areas of common interest, such as joint technology hubs