Nearshore presentación

COLOMBIA AND THE REGIONPAST AND PRESENT

Alvaro Uribe Vélez

Issues to be addressed

1. The current context of Emerging Markets and the evolution of Latin America 1980-2012

2. Latin America between two policy paths3. The policy challenges in the region4. Lessons from the Colombian Experience



1. Emerging economies have become engines of economic growth.

2. During the last three decades developing countries have experienced a profound transformation driven by two components: On the one hand a rapid demographic transition. Since 1980

the World population has increased by 2.5 billion people and 95 percent of that growth has taken place in the developing World.

The other element has been a dynamic period of sustainable economic growth. In 1980 developing economies represented 33 percent of the World GDP and today that number is closed to 46 percent.


1. By 2050 19 of the top 30 economies by GDP will be countries that we currently describe as ‘emerging’

2. China and India will be the largest and third-largest economies in the world.

3. Eight countries – India, China, Brazil, Russia, Indonesia, Korea, Mexico and Turkey – will be responsible for most of global growth up to 2025

4. Emerging economies will account for 68% of global growth by 2030.

5. In 1980, 5% of goods were sourced globally. By 2000, this was 20%. By 2025, it will be 50%.

6. In 1980, world exports accounted for one-sixth of global GDP. Today it is a quarter. By 2030, it will have risen to a third.

7. By 2030 the urban middle class will rise to 42% of the global population. The number of people with daily income of $10 to $100 a day will rise from 1.8 billion today to 4.9 billion by 2030.


According to FAO: Demand for food could increase 50% by 2030

Demand for water has been projected to rise by 30% between 2000 and 2030

The International Energy Agency has said energy needs will grow by 40% by 2030. According to BP China represents 20.3% of the World Energy

Consumption (The world largest energy consumer in 2010 for the first time over the U.S)

Natural Gas consumption has experience its strongest consumption rate since 1984 (7.4%)

Coal share in world energy consumption has reached its highest level since 1970 (29.6%). China represents 49% of the world coal consumption.

In 2010 Global Biofuel consumption grew by 13.4%

How does Latin America fit in this panorama? Between 1980 and today some changes have occured…

1. The inflation tragedy is over: in 1985 regional inflation average was 159%, today is below 6%. This means that fiscal and monetary prudence have become policy principlkes.

2. Debt is no longer a threat: Debt to GDP ratios in the region have passed from 40% in 2002 to 20.4% in 2011

3. Between 2003 and 2011 the region experienced a growth average of 4.4%...the highest since 1967-1974

4. Democracy has expanded in the region with few exceptions…

5. Regional exports have increased 160% betwee 2002 and 2010

6. In 2011 the region faced a record number in FDI reaching almost 113 US$billion



Population

Close to 600 million people

Average age between 24

and 28

Per Capita Income in PPP

close to US$10.000

Poverty reduction

64% of our population is a expanding middle class.

During the last decade 40 million people have left the poverty line

Life expectancy has increased from 65 to 75 years.

Child mortality has been reduced by 50 per cent.

Literacy rates are above 94%.

Mobile phone penetration has increased by 78 per cent.

Internet access has increased by 33%

Healthcare coverage has increased by 50 percent.

water and sanitation coverage has reached 80%.

Commodities in time of Demand

10 percent of the World oil reserves.

6 percent of the World Gas reserves Almost 50 percent of

the World cooper reserves. 50 per cent of the

World silver reserves.

13% of the World iron reserves

26% of the World fertile land.

24% of the World beef supply.

Bio Reserves

20 per cent of the World

Biodiversity is concentrated in the Amazon

ring. Almost 50% of

the World potable water

supply.

57% of the world primary

forest

Policy Changes match four range of opportunities

The change process and the potential for the years ahead has happen by accident and it is a consequence of the consistency, congruence and sense of urgency that a group of countries have adopted as their policy cornerstone. Brazil, Mexico, Colombia, Chile, Peru and Uruguay represent 70 per cent of the region’s population and 75% of the regional GDP.

This group of countries have common characteristics that explain their outstanding performance:

1. The strengthening of Liberal Democracy

2. The adoption of an institutional Framework in favor of foreign and national investment.

3. The construction of a sound and sustainable social safety net.

4. The expansion of export markets and the commercial integration with the World (FTA’s)

5. A public administration driven by results.

6. A sound Macroeconomic Administration driven by fiscal and monetary prudence.

7. Better regulatory environment

8. Construction of strategic infrastructure.

9. The consolidation of an innovation agenda leaded by an improvement in education.

10. A well capitalized financial sector and the constant expansion of financial services. Today countries like Panama, Dominican Republic, Costa Rica, Salvador, Guatemala,

Honduras, Belize, Paraguay, as well as most of the Caribbean States, are following that line of behavior


Policies have been the root of Latin American Changes

Building Modern

Democracies (5 parameters)

Security

Freedoms and Private Initiative

Independent Institutions

Social Cohesion

People Participation

A dynamic Economic

transformation

Investment Target Policies

Maintaining Fiscal and Monetary

transformation

Integrate commodity and knowledge based

economies.

Expand export markets

Create an Entrepreneurship culture

(Innovation agenda)

Closing Social Gaps

Improve education (quality, coverage,

vocational)

Insure Universal Healthcare

Formal Job creation

Access to Finance

Climate Change,

Environment and Energy

SustainabilityExpand renewable

sources

Install an energy efficiency conscience

Improve waste management

Protect the Amazon Ring

Reduce Co2 Emissions


Despite the changes that have been achieved some important challenges remain…

2. Latin America between two policy paths


The regional current Political Map is a “Tale of two cities” like the Charles Dickens Book… (The ALBA and the non Alba Model)ALBA

(Leaders: Venezuela, Ecuador,

Bolivia, Nicaragua and Cuba)Anti-U.S

Lack of investment Confidence

Ideology driven countries

Political Polarization

Modern Democratic Center Countries (Brazil, Colombia,

Peru, Chile, México, Uruguay, Paraguay, Panamá, Republic Dominican, Costa

Rica, etc)

Cooperation with the U.S

Pro Free Trade

Investment Confidence

Independent Institutions

Political Stability

State Long Term Policies and Mgt by Results

Organized Party Systems

The Democratic Center takes the lead: • Investment grade countries are in this Group: Mexico, Brazil, Chile, Colombia, Peru and Panama.• Countries with more market access through FTA’S are in this group• Countries with more FDI are in this group• Countries with more Middle Class Expansion are in this group.• Better fiscally sustainable social programs: Chile, Mexico, Brasil and Colombia.Only the group of Countries in the Democratic Center will become the regional active participants of the Emerging Markets Boom…some of the ALBA Members will see some benefits, but without solid long term development agendas, they will face transitory profits…

Venezuela

InflationReduction in oil

production

Brain drain

Social conflict

InsecurityPrivate initiative in

Jeopardy

Bolivia

Loss of citizen support

Quality of live deterioration

Lack of private initiative.

Loss in private investment

Ecuador

Press Liberties in danger

Lack of long term private

investment.

Political stability at the expense of higher tensions.

Oil driven political power

Nicaragua

Institutional deterioration (Reelection without

constitutional authority)

Corruption

Private initiative: Uncertainty

Shameful Chavistas


Bad policies are deteriorating the political and economic context in the ALBA Countries….

PeruHumala Challenges

Maintain Investment Confidence(The mining

royalty debate)

Improve social

expenditure targeting

Improve Labor markets• Combat

informality• Improve

productivity

Continue with International insertion• Implement the

FTA with USA• Pacific Agenda

with Colombia, Chile and Mexico.

Challenges

Argentina

Security

Human Insecuri

ty

Legal Insecuri

ty

Political insecuri

ty

Individual Liberties

Property rights at

risk

Limit freedom of expression

Limit freedom of press

Independent institutions

Courts controlled

by the Executive Branch.

Independent institutions are

controlled by the Executive

father

One Party controls the Parliament

Citizen participation

Limited

Controlled

Instruments vital for political

pressure.

Social Cohesion

Class polarizat

ion

Fiscal policy is unsustai

nable

Venezuela

Challenges

Regional integration

Urban security

Drug consumption

Cost of money

InfrastructureWeak Doing Business Indicators

Foreign Policy

Brazil

The Challenges of Doing Business in Brazil

Area: 8,514,877 sq km Population: 203,429,773 (July 2011

est.) GDP: $2.172 trillion (2010 est.) GDP Composition by Sector:

Services: 67.4% (2010 est.)

Industry: 26.8%

Agriculture: 5.8% Unemployment Rate: 6.7% (2010

est.)

Exports: $201.9 billion (2010 est.)

Export Commodities: Transport equipment, iron ore, soybeans, footwear, coffee, autos

Export Partners: China 12.5%, US 10.5%, Argentina 8.4%, Netherlands 5.4%, Germany 4.1% (2009)

Imports: $181.7 billion (2010 est.)

Import Commodities: machinery, electrical and transport equipment, chemical products, oil, automotive parts, electronics

Import Partners: US 16.1%, China 12.6%, Argentina 8.8%, Germany 7.7%, Japan 4.3% (2009)

Good results but there are some worriying “TO DO BUSINESS” indicators Country DB 2011 DB 2010

Mexico 35 41

Peru 36 46

Colombia 39 38

Chile 43 53

Argentina 115 113

Uruguay 124 122

Ecuador 130 127

Brazil 127 124

Venezuela

172 170

Doing Business 2011 shows some elementes that affect Brazil as a destiny for investments (127 out of 180 in the Doing Business Report)

1. Bureaucracy2. Weak Infrastructure3. Weak Technology4. Preference to Local Companies5. Complex tax system

The Challenges of Doing Business in Brazil

Brazil in comparison to the Region best and worst performersIndicator Brazil Chile Mexico Colombia Peru Venezuela

Starting a Business

(Proceadures)

15 8 6 9 6 17

Starting a Business (Days)

120 22 9 14 27 141

Days for Construction

Permits

411 155 105 50 188 395

Hours devoted to pay taxes (Hours

per year)

2600 316 404 208 380 864

Days to enforce a contract

616 480 415 1346 428 510

Enforcing Contracts (Cost

% Claim)

16.5 28.6 32 47.9 35.7 43.7

Cost to export US$ per

Container

US$1730

US$745

US$1420

US$1770

US$860 US$2590

Brazil Infrastructure challenges

Brazil’s infrastructure ranks 74th out of 133 countries, even though its overall economy ranks 56th, according to a World Economic Forum (WEF) survey that asked firms to rank global competitiveness. Among the BRIC economies, Brazil’s infrastructure ranks similar to India’s (76) and Russia’s (71), but it lags China’s (46). Within Latin America, Brazil’s infrastructure ranking is near Mexico’s (69) and is significantly better than Venezuela’s (106), but it is far behind Chile’s (30);

Infrastructure spending in Brazil has been in a declining trend over the past 40 years, averaging 5.4% of GDP during the 1970s, 3.6% in the 1980s, 2.3% in the 1990s, and 2.1% in the 2000s. Some studies suggest infrastructure investment of 2.0% of GDP is needed simply to sustain the current infrastructure stock in Brazil.

Brazil must invest 4% of GDP (doubling its current investment) for 20 years to catch up with Chile, the benchmark in Latin America, according to our estimates.To catch up with South Korea — the benchmark in Asia — Brazil would need to invest 6–8% of GDP per year.

Source Morgan Stanley

Brazil Infrastructure challenges

Challenges for infrastructure development

Improving the business

environment. Brazil needs a more stable

and credible regulatory

environment The main issues are: 1)

regulatory bottlenecks, 2)

excessive renegotiations of

concessions, and 3) the lack of efficiency

of regulatory agencies.

Rethinking fiscal priorities. The

government needs to redesign spending

strategies and rethink priorities by 1) addressing budget rigidities,

2) reducing mandatory

earmarking in the budget, and 3)

revisiting structural

entitlements (i.e., social security

reform)

Reforming the tax system. The government intake is close to 40% of GDP, while

companies spend on average 2,500 hours per year to prepare, file, and

pay their taxes.

Reform the Police Structure

Citizen participation in the fight against organized crime

The security challenge

Mexico

ChileTwo situations

Characteristics

Economic Stability

Political Stability

Investor Confidence

Innovation and entrepreneurshi

p agenda.

Quality of live and

opportunities

Youth distrust in Political

Parties and in Government.

Aggressive protests

Dependant on the China effect

EcuadorThe political condition

Economic

4.5% Fiscal deficit

Oil price has been the driving force.

Investors distrust

4.5% inflation

Political

The President has concentrated more powers

Conflict with congress and with independent media will deteriorate as the Government pushes more interventionist

reforms

There is not a clear opposition figure

Urban security has been deteriorating

Bolivia: new problems arise

Economic

Populism platform loosing popular support

Fiscal superavit driven by more tax collections

Economic Growth above 4.6% driven by Gas price

Inflation close to 9%

Investors distrust with the exception of foreign

governments corporations

Political

2/3 of Congress controlled by the President Coalition

Hunting of all opposition leaders

Confrontation with Santa Cruz Governor Ruben Costas.

Next week 56 Supreme Court Judges will be elected

International

Under the influence of Chavez

Improvement in the dialogue with the U.S

International Market Distrust

Country Homicides per 100K

Hab

Violence cost as % of GDP (Live years

lost due to handicapped

circumstances)

Private sector losses due to

insecurity (% sales)

Violence costs as % of

GDP

Number of gang

members

Number of gangs

Honduras 43 1,31% 4.5% 9.6% 36.000 112

Guatemala

45 1.43% 3.9% 7.7% 14.000 434

El Salvador

58 1.99% 4.5% 10% 10.500 4

Nicaragua

14 0.96% 3.1% 10% 4.500 268

Costa Rica

8 0.58% 3.6% 2.660 6

Panamá 11 0.63% 2.5% 1.385 94

Central America: The security Drama

Violence and organized crime

Not the same stories

A region of different development stories

Central Americaa) 3% of the Region GDP

(US$163 Billion)b) 7% of the Region

population (43 million)c) Income inequality

d) Moderate investment levels

e) Low tax collectionsf) Fragile energy matrix

Caribbeana) 4% of the Region

Populationb) 2% of the Region GDPc) Tourism dependenced) Natural disaster riskse) Low industrial basef) Need for long term

access to markets

3. The policy challenges in the region

The China effect…

Country China Ranking as a trading partner

Porcentage of total exports 2010

Brazil 1 15%

Mexico 4 2.2%

Colombia 3 6.2%

Chile 1 16%

Peru 2 16%

Venezuela 2 7.9%

China’s influence as a trading partner will continue to increase, thus strenghthening its political and diplomatic relations with the regional key players…

China is the destination for c.10% of LatAm exports today, and is the largest trade partner for Brazil and Chile. LatAm was also the largest recipient of announced Chinese outbound investment in 2010, focused on energy and mining.

U.S-Latin America relations The evolution of U.S Latin America Relations…from Doctrines to specific

policies… Doctrines

Monroe Doctrine

Teddy Roosevelt “BIG STICK”

Howard Taft “Pan-American Union”

FDR “Good Neighbor”

Ike Pan American Operation

Alliance for Progress

Carter “Human Rights Agenda”

Reagan Regional Cold War

Bush “War on Drugs” and tradeClinton “NAFTA” & “FTAA”

Objectives

Protect the region from foreign invasions and strengthen the U.S influence in the hemisphere

Exercise strategic control of the region applying hard power (Military interventions in Nicaragua, DR, Haiti, etc)

Build and institutional and permanent diplomatic coordination under the U.S Leadership.

Regional support for World War II and coordination to face the Great Depression

Improve development assistance to prevent social turmoil (Creation of the IDB)

Improve development assistance to prevent the communist expansion.

Promote Human Rights policies to confront the emerging power of dictatorships in the region.

Intervention in Nicaragua, Grenada and Panama.

Fight against Drug Cartels in the region concentrated in Colombia, promotion of NAFTA and Unilateral Trade Preference Act.

Enactment of NAFTA, promotion of the FTAA (1993) and the Andean Trade Preference Drug Enforcement Act.

Policies

Bush Vs Obama and the FTA’s… (Next slide)

U.S-Latin America relations

Two administrations and its strategic approaches…Bush:

1. FTA’s with Chile, Colombia, Peru, Panama, CAFTA, DR.

2. Actively supported the fight against terrorism in Colombia.

3. Promoted the Democratic Charter in the OAS (Signed in Lima September 11 2001)

4. Politicaly confronted anti-democratic regimes in the region.

5. Stablished the Millenium Corporation.

6. Debt Relief for Bolivia, Nicaragua, Honduras, Haity and Guyana.

Obama: 1. FTA’s with Colombia and

Panama took almost 3 years to be ratified.

2. Actively supported the fight against terrorism in Colombia.

3. Political diplomacy with anti-democratic regimes in the region.

4. Timid speech against Drug Cartels in the region.

5. Cautious attitude towards the security crisis in Mexico and the U.S share of responsibility.

4. Lessons from the Colombian Experience

Security

28.837 homicides

2882 kidnappings

69 homicides per 100.000 habitants

1645 terrorist attacks

350 mayors out of their municipalities

158 municipalities without police

Economy

Average Economic Growth 1994-2001: 2.1%

GDP per Capita: US$2377

Investment as % of GDP: 16.5%

Exports: US$11.975 million

FDI: US$2.100 million

Inflation: 6.99%

Fiscal balance: -3.2%

Social

Unemployment: 16.2%

Health Coverage: 25 million Colombians.

Pension affiliates: 4.5 million

Poverty: 57%Education Coverage: Primary 97%, High school: 57%, University: 24%.

Mobil Phone Lines: 4.6 million

Internet coverage: 1.9 million

Ten years ago Colombia was a fragile state…The Colombian Paradox: a long and stable democracy in a permanent threat from terrorist groups, drug dealers and

organized crime…

Colombia faced a Confidence Deficit

The elusive quest for peace

Many governments exhausted all their political capital attempting to reach

peace through political dialogue…the result was

military strengthening from illegal armed groups and a

rapid growth in their criminal activities (68% thought the country was going in a negative track)

Terrorist Groups (Guerrillas and

Paramilitaries) had created a sense of

defeat in the Colombian people.

Fear impacted in the Colombian

people Mindset

The lack of investment

The drain of human capital

The sense of danger in Colombian roads.

The expansion of massive kidnappings

created an emotional domino

effect

Building Confidence became our priority

We introduced a comprehensive policy framework…

Social Cohesion

Investment with fraternity

Democratic Security

Confidence

Security as a Democratic Value

Security

for all

Confront all

criminal organiza

tions

Security without martial

law

Security with

freedoms and human

rights protection

Security in

coordination with

the people

Investment Target

Security:HumanLegal

Political

Sound Macroeco

nomics

Incentives

Access to

markets

Competitiveness factors:• Infrastr

ucture• Regulat

ion• Connect

ivity• Logistic

al chain

Social Cohesion

Highest quality in education

Universal

healthcare

Access to

Finance

Stable Jobs and

entrepreneurial spirit

Connectivity

Our policy achievements generated a turning point

Indicator 2002 2010

Homicides 28838 7400

Kidnappings 2882 123

Homicides per 100K Habitants

69 16.3

Terrorist attacks

1645 250

Municipalities without mayors

presence

350 0

Municipalities without

police

158 0

Indicator 2002 2010

Average Economic Growth

2.1% 4.3%

GDP per Capita

2377 5300

Invest % GDP

16.5% 24.6%

Exports US$11.000

US$ 39.000

FDI US$2.100

US$ 7.000

Inflation 6.9% 2.5%

Indicator 2002 2010

Unemployment

16.2% 11.6%

Health Coverage

25.1 million

43.1 million

Pension affiliates

4.5 million 7.1 million

Poverty 57% 38%

Education coverage (Primary, Hs, University)

97%57%24%

100%79.4%35.5%

Mobile phone users

4.6 million lines

41 million lines

• Reached the highest economic growth in more than 20 years.

• The largest education, health and connectivity coverage in its history.

• The largest poverty reduction in Colombian history

• The biggest FDI rates in history• The lowest violence records in 30

years

• Expanded the middle class• Highest exports in

Colombian History.• Paramilitary groups

dismantled• FARC structure severely

dismantled• Per Capita income more

than doubled

Colombia’s current challenges

Security

Maintain Macro-Vision and Micro-

Management

Continue dismantling all

terrorist organizations

Continue dismantling drug cartels apparatus.

Strengthen Citizen Security agendas

with local authorities

Economic

Face new trends of currency

appreciation

Maintain and increase FDI flows (Security, incentives

and stability rules)

Fiscal Policy to face new countercyclical

challenges

Increase tax collections

Expand new trade markets through

FTA’s

Social Cohesion

Fight labor informality and

create quality jobs

Insure education and health quality

Expand vocational

training coverage

Create Entrepreneurial Family Transfers

program

Political

Judicial reform.

Strengthen Democratic Center

Improve local institutional

capacity

New law implementation

(Victims and land)

Prevent the emergence of

populist movements

Additional issues for Q&A

In search of the knowlege economy

Issues to evaluate


Despite the long list of positive results we still lagg behind in the transition to a real knowlege economy… (Lets look at PISA tests and researchers)

• Among the Latin American countries participating in PISA tests, between 20 and 50 percent of students score below level one (the lowest performance level) in math and between 10 and 30 percent in science, which means that a larger proportion of 15-year-olds lack basic numeracy skills and the rudiments of scientific knowledge.

• According to the data available from 13 countries in the region, there was on average only one researcher per 1000 workers in the labor force in Latin America and the Caribbean. This number is seven times smaller than the OECD average and nine times lower than in the United States. In China the figure is 1.8 and in Spain 5.4. In the region, Argentina leads the ranking with 2.4 researchers per 1000 workers, followed by Chile and Brazil, with 2.0 and 1.3 respectively. Guatemala and Paraguay show the smallest numbers, with less than 0.15 researchers per 1000 workers in the labor force.

• In Latin American and Caribbean countries there are more researchers working in social sciences and humanities (and in other unspecified fields) than in engineering and technology. In fact, except for Mexico and Uruguay, for the rest of the reporting countries, engineering and technology frequently has the smallest share (less than 20 percent). The natural and agricultural sciences continue to be the dominant fields of research: together they typically represent between 30 and 40 percent of researchers.


• In contrast, although some progress has been made in recent years, Latin America still invests significantly less in R&D than benchmark economies. According to Red de Indicadores de Ciencia y Tecnología (RICYT) estimates, R&D investment in the region represented 0.67 percent of GDP compared to 0.52 in1997. Between 2000 and 2007, the R&D investment in the region grew at an average annual rate of 7.8 percent, a bit higher than the OECD rate of about 5.9 percent but at a significantly slower pace than in China (22.5 percent).

• In OECD countries, the business sector is the main and the fastest-growing source of R&D financing. Sixty-five percent of R&D expenditures on average are financed by business. In Japan, South Korea, the United States, and China, this share is above 70 percent. In Latin American and the Caribbean, business’ share in R&D financing represents less than 40 percent. Between 1997 and 2007, this figure remained largely the same.

• In technologically advanced countries, the government conducts a limited and declining portion of R&D (11 percent on average in OECD countries). The business sector is responsible for 70 percent of R&D expenditures and the higher education sector for 17 percent. Non-profit organizations account for the rest. In contrast, in LAC countries, one-fifth of R&D is conducted by the government, while firms conduct around 41 percent, almost as much as the higher education sector (38 percent).

• Although the production of science is improving in LAC, it still remains low compared to industrialized nations. Internationally, the region ranks in the middle in terms of publications per capita, despite improvements. On a normalized scale of 0-10 (0 = lowest, 10 = highest), relative to the 182 and 183 countries available for this indicator in 1994- 1998 and 2004-2008, respectively, the region’s score increased from 5.3 to 5.7. However, if we were to normalize with a sample limited to OECD and emerging countries (BRICS), this score would fall to an average of 1.5.

Research and Development

1. In OECD countries, the business sector is the main and the fastest-growing source of R&D financing. Sixty-five percent of R&D expenditures on average are financed by business. In Japan, South Korea, the United States, and China, this share is above 70 percent. In Latin American and the Caribbean, business’ share in R&D financing represents less than 40 percent. Between 1997 and 2007, this figure remained largely the same.

2. In technologically advanced countries, the government conducts a limited and declining portion of R&D (11 percent on average in OECD countries). The business sector is responsible for 70 percent of R&D expenditures and the higher education sector for 17 percent. Non-profit organizations account for the rest. In contrast, in LAC countries, one-fifth of R&D is conducted by the government, while firms conduct around 41 percent, almost as much as the higher education sector (38 percent).

3. Although the production of science is improving in LAC, it still remains low compared to industrialized nations. Internationally, the region ranks in the middle in terms of publications per capita, despite improvements. On a normalized scale of 0-10 (0 = lowest, 10 = highest), relative to the 182 and 183 countries available for this indicator in 1994- 1998 and 2004-2008, respectively, the region’s score increased from 5.3 to 5.7. However, if we were to normalize with a sample limited to OECD and emerging countries (BRICS), this score would fall to an average of 1.5


Research and Development

1. •Although the production of science is improving in LAC, it still remains low compared to industrialized nations. Internationally, the region ranks in the middle in terms of publications per capita, despite improvements. On a normalized scale of 0-10 (0 = lowest, 10 = highest), relative to the 182 and 183 countries available for this indicator in 1994- 1998 and 2004-2008, respectively, the region’s score increased from 5.3 to 5.7. However, if we were to normalize with a sample limited to OECD and emerging countries (BRICS), this score would fall to an average of 1.5.

2. As in the case of R&D investment, the production of patents is concentrated in very few countries. During the period 2005- 08, three countries were responsible for 75 percent of the patents granted by USPTO to Latin American inventors (1042 in total). Thirty-seven percent of patents granted to the region were for inventions made in Brazil, 25 percent in Mexico, and 13 percent in Argentina.

3. In absolute numbers, between 1995 and 2008, the most striking expansions in the absolute number of trademarks are reported for Chile (it increased 6 times) and Panama (5.5 times); followed by Brazil, Colombia and Mexico (around 3 times). However, in the international ranking, all of them drop in the normalized score. This is due essentially to the increase in the number of emerging countries applying for trademark protection


Science and patents

1. In terms of access to computers the gap between Latin America and the OECD is widening. The number of personal computers per 100 inhabitants has expanded in the region from 5.5 in 1995 to 11.3 in 2006, while in OECD countries this ratio grew from 24.8 to 54.4. Therefore, the gap in penetration rates is persistently rising (from 19.3 to 43.1 computers per 100 inhabitants).

2. The digital gap in internet and broadband subscriptions is widening substantially. The number of internet subscribers in the LAC region has increased from 0.8 to 6.9 per 100 inhabitants between 1998 and 2008. OECD penetration rates have also grown from 4.7 to 27.3. As a result, the gap between the two regions reached a record level of 20.4 subscribers in 2008.


Technology Gap

WWW.ALVAROURIBEVELEZ.COM

Miami March 2012

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