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Inter-American Development Bank Banco Interamericano de Desarrollo (BID) Research department Departamento de investigación Working Paper #460 The Innovation Systems of Latin America and the Caribbean By Alberto Melo* *Inter-American Development Bank August 2001 Cataloging-in-Publication data provided by the Inter-American Development Bank Felipe Herrera Library Melo, Alberto, 1947The innovation systems of Latin America and the Caribbean / by Alberto Melo. p. cm. (Research Department Worki
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  Inter-American Development Bank Banco Interamericano de Desarrollo (BID) Research department Departamento de investigación Working Paper #460  The Innovation SystemsThe Innovation SystemsThe Innovation SystemsThe Innovation Systemsof Latin America and the Caribbeanof Latin America and the Caribbeanof Latin America and the Caribbeanof Latin America and the Caribbean By Alberto Melo* *Inter-American Development Bank*Inter-American Development Bank*Inter-American Development Bank*Inter-American Development Bank August 2001  ii Cataloging-in-Publication data provided by theInter-American Development BankFelipe Herrera Library Melo, Alberto, 1947-The innovation systems of Latin America and the Caribbean / by Alberto Melo.p. cm. (Research Department Working paper series ; 460)Includes bibliographical references.1. Technological innovations--Latin America--Economic aspects. 2.Technologyand state--Latin America. 3. Technological innovations--Caribbean Area--Economicaspects.. 5.Technology and state--Caribbean Area. I. Inter-American DevelopmentBank. Research Dept. II. Title. III. Series.338.64 M520-dc21 & 2001Inter-American Development Bank1300 New York Avenue, N.W.Washington, D.C. 20577The views and interpretations in this document are those of the authors and should not beattributed to the Inter-American Development Bank, or to any individual acting on itsbehalf.The Research Department (RES) produces the  Latin American Economic Policies Newsletter  , as well as working papers and books, on diverse economic issues.To obtain a complete list of RES publications, and read or download them please visit ourweb site at:http://www.iadb.org/res  iii1.INTRODUCTION 12.THE KNOWLEDGE-AND-LEARNING ECONOMY12.1   The Prevailing Trends in the World Economy12.2An Analytical Framework for the Knowledge-And-Learning Economy 32.2.1   Firms as Creators and Administrators of Knowledge42.2.2   National Innovation Systems83.   THE NATIONAL INNOVATION SYSTEMS OF LATIN AMERICA AND THECARIBBEAN133.1A Brief Historical Overview of the Region’s Innovation Systems 133.1.1   Innovation Systems in the Import-Substitution Era133.1.2   The Liberalization Era: Innovation Systems in Transition153.2   Towards a Characterization of the Region’s National Innovation Systems:Actual Practices173.2.1   Low-Output and Low-Effort Innovation Systems173.2.2   Qualified Human Resources Are Both Insufficient andUnderutilized303.2.3   Actual Innovation Tends to Be Informal323.2.4   Linkages Are Weak and Knowledge Flows Limited323.2.5   Firms Are Not the Central Loci of R&D Efforts353.2.6   The Region’s National Innovation Systems Are Open433.2.7   Innovation Systems in the Region Are Heterogeneous403.3   Towards a Characterization of the Region’s National Innovation Systems:The Formal Organizations45  iv3.3.1Research Institutes413.3.2Universities423.3.3   Policymaking Bodies433.3.4   Legal Frameworks, Agencies, and Policies Are in Transition 454.THE POLICY ISSUES474.1   Innovation Promotion Policies504.1.1   Policies Aimed at Modifying Market Incentives50A.   Fiscal Policies51B.   Venture Capital Policies and Credit Policies524.1.2   Policies Aimed at Providing Public Goods54A.   Issues in Technology Diffusion54B.   Issues in the Promotion of Innovation Clusters554.2Institutional Prerequisites for Efficiency in Technology Policy58BIBLIOGRAPHY60Appendix 1. Where Do Firms’ Managers Believe the Obstacles Lie?70Appendix 2. Policies to Promote Technological Modernization in the Region71
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