Innovation, the Missing Link in Latin American Countries

In common with the rest of the world, Latin America is immersed in the globalization process, and this has generated opportunities as well as challenges and threats. This paper develops the theses that the form of investing, producing, and trading at this stage of the globalization process is closely linked to the form in which knowledge is created and disseminated and that the global networks that link and provide feedback to each of these actions still lack an essential link, innovation. The capacity to innovate is intimately associated with the capacity to develop new business, gain markets, find new niches in international trade, and control the effects of the price volatility of the products traded by the region. As we may note all throughout this paper, the manner in which transnational corporations became integrated into Latin America has not contributed to stimulating a virtuous circle of innovation, investment, and growth; nonetheless, the potential exists for this to happen in the future. This paper is divided into four sections. The first describes the link between foreign investment, innovation, production, and global trade. The second analyzes how the development of these links in Latin America fails to favor international competitiveness, discussing the goals and strategies of transnational corporations and the structure and allocation of foreign investment. The third section analyzes the lack of dynamic interconnection between science, technology, and business and how this fact impacts growth in Latin American countries. The last section presents the conclusions and suggests some policy actions that may have a positive impact on international competitiveness of the countries in the region.