Chile triples investment on Research and Development in four years

Despite the world economic crisis, the country has become one of Latin America’s leaders in I&D over the last few years.


Chile triples investment
The task now is to encourage participation by the private sector, to allow Chile to attain similar standards to those of developed countries

In an information society, Innovation and Development (I&D) are fundamental pillars for a country seeking to move forward. Aware of this reality, under the Michelle Bachelet administration the Chilean state implemented a policy on the issue that has produced successful results: in the four years between 2006 and 2010 Chile became a point of reference for Latin America in terms of I&D.

With this goal in mind, in 2006 the government created the Innovation Fund for Competitiveness with money from the mining royalty, which has allowed the amount allocated to research in the 2006-2010 to triple to the equivalent of US$ 700 million in public investment alone, a historic amount allocated to Science, Technology and Innovation in the country.

In addition to this significant quantitative leap, over the last four years a modern and efficient institutional framework that is up to the challenges of the future has been created to make science, technology and innovation into the path to development.

Unlike in other places, Chile took advantage of the international situation to make further progress on research and development.

“The crisis brought about a clear drop in the contribution that projects received from the private sector. That is why appropriate incentives were created to prevent a downward trend in terms of the adjudication of projects presented so far,” says Orlando Jiménez, chief of innovation at the Economy Ministry, the institution in charge of promoting I&D. “The important thing is that the public funds allocated to science, technology and innovation did not drop; on the contrary, there was a real 19% increase in the budget for 2010, which is unprecedented in a crisis scenario.”

Thus, for example, the country managed to penetrate into the exportation of global servicesin 2009, an activity that generated US$ 1 billion in 12 months, in addition to getting international companies to set their sights on Chile because of its good connectivity and appropriate business conditions, factors that make it possible for Chile to become a platform for technological development.

Not satisfied with this situation, in Chennai, India – on one of her last trips, as her term ends in March 2010– President Bachelet herself signed an agreement between the Association of Information Technology Companies and Nascom, in addition to another with the information technology industrial association of the Asian nation. At the same time a group of Chilean researchers is working to implement a bio-prospecting platform in Antarctica, all projects that come in the context of the current administration’s commitment to this issue.

Future challenges

The scarcity of private funds that Jiménez commented on is the great Achilles heel that the entire process has had to face. The authorities in the sector have highlighted the constant commitment to increase public funds for I&D, though noting that the total expenditure as a percentage of GDP is less than 1 percent.

Thus, there is still a gap with developed countries like Finland, where 3.4% of GDP is invested, or Canada, which allocates 2%, an amount that is similar to what is invested by countries belonging to the OECD, an organization that Chile recently joined. In both countries only one third of the funds come from the public sector, while in Chile it is twice that percentage. Despite this situation, Chile has emerged as a leader n research investment, surpassing other countries like Peru, Argentina and Mexico, which invest in I&D in the region with 0.1, 0.53, and 0.4% of GDP, respectively.

Thus, the revolutionary process that the country has gone through is to a great extent explained as the outcome  of the state staking its bets on obtaining active participation from important social sectors. “Under the President Bachelet administration national agreements have been sought with participation by representatives from all sectors. A good example is the National Council of Innovation for Competitiveness, which is comprised of academics, researchers, and businesspeople of different types. At the same time, instruments and cooperation programs have been fostered, such as technology business consortiums comprised of universities and companies,” Jiménez says.

The task now is to encourage participation by the private sector, to allow Chile to attain similar standards to those of developed countries. Jiménez himself acknowledges this reality. “We must continue to bet on innovation as a path to development, but the effort will be a sterile one if we do not get the business sector to commit with force. Private participation needs to be incentivized with the creation of appropriate incentives to stimulate I&D inside companies. In addition to this, the government must continue to work toward consolidating a modern and efficient institutional framework in the service of researchers, academics, and society as a whole,” he concludes.