Synergy between academic institutions and enterprises in Mexico:

currentstate and potential of science parks

LAURENCE MERCIER, JOSÉ NARANJO AND HUMBERTO VILLARREAL* BioHelis®, Parque de Innovación Tecnológica de CIBNOR Centro de Investigaciones Biológicas del Noroeste, S.C.

Mar Bermejo # 195, Colonia Playa Palo de Santa Rita, CP 23090, La Paz, B.C.S. MEXICO

*humberto04@cibnor.mx, http://www.cibnor.gob.mx/biohelis/ Abstract: - Mexico has been slow in realizing the importance ofinvesting in innovation as a driving-force for competitiveness and development. This is one reason why Mexico still mainly exports raw materials, manufactures low value-added products, and relies on an in-bond system of assembly factories. Avery low innovation focus can also be perceived through the weak interaction between academic institutions and enterprises. Nowadays, most of the research published by Mexican scientists does not contribute to solving problems or needs of the private sector, as it is not transformed into commercial applications. Enterprises also invest feebly in research and do not develop sufficient new products or services for the market. This mismatch can be explained by differences in interests, scale, time, and language. It is also due to uncertainty on intellectual property protection, low-developed entrepreneurial culture, and an absence of competition for the internal market. There is also a smallnumber and availability of technology transfer institutions. In this context, science parks have shown to be an important bridge between academic institutions and enterprises;their creation and consolidationbeingessential to stimulate innovation. Mexico has an impressive set of competitive advantages that, managed successfully, can drive the country to become one of the ten most dominant economies in the world in the near future. Key-Words: - innovation, competitiveness, economic growth, research, development

1 Introduction Innovation has a promising future in Mexico although the country ranks 63rd among 142 countries for its ability to innovate [1]. This numberreflects an evident need of articulation between science, technology, and production which is also reflected by a weak interaction between academic institutions and enterprises. In Mexico, 99% of businesses are small or medium-sized enterprises (SMEs) that generate almost 55% of the Gross Domestic Product (GDP) and 77% of the employment [2]. Every year, the Mexican government receives about 100,000 new requests to create SMEs; however, 80% of them fail before completing their first year of operation, and many have closed down during their first 5 years due to lack of innovation [3]. The small number of patent applications filed every year by Mexican inventors in the country, only 1,065 in 2011 [4], is another evidence of this low innovation capacity. Although Mexico has more than 1,200 private and public academic institutions including universities, research centers,and technological institutions [5], there is a need of an effective mechanism linking knowledge, business, and

capital. Over the last years, the Mexican government has made innovation-based competitiveness a national priority, and there are many expectationsthat this strategy will help to overcome the difficulties that the country is facing. Mexico has various imminent challenges as the population is growing, food production is unsatisfactory, and there are serious problems of water shortage and air pollution [6, 7]. Poverty still affects 45 millions of Mexicans [8]and the lack of job opportunities stimulates an important flow of immigrants to the United States although a substantial decrease was registered in the last few years [9]. Additionally, Mexico has internal security problems and undergoes an ever-scaling violence between drug cartels and police forces. However, Mexico has the opportunity to overcome all these challenges because it has a growing population of young and talented people that have creative ideas and a capacity of getting ahead. It also has a great variety of natural resources and climates that represent a potential economic asset. By 2050, some experts have positioned Mexico as the 5th largest economy in the world, with a GDP of $9,340

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billionU.S. dollars[10]. To achieve that goal, Mexico has to markedly improve its competitiveness, which should start by developing strong and effective interactions between academic institutions and enterprises, as well as by creating and consolidating science parks.

This paper provides a general view of currentinteractions between Mexican academic institutions and enterprises. It also shows the potential of Mexican science parks to develop knowledge-based technologies.

2 An overview on the interactions

between Mexicanenterprises and

academic institutions: According to a study from the World Economic Forum (2011), Mexico ranked 45th among 142 countries for its collaboration between university and industry on research and development (R & D)[1]. This information reveals a limited interaction between academic institutions and enterprises whichcan be attributed to some differences. The main interest of firms is profitability whereas universities are motivated by the generation of scientific knowledge and developmentof human resources. Academic institutions usually operate on a longer time frame, whereas companies need quicker solutions. Another important factor is the lack of communication and information exchange. Nowadays, Mexico has a small but well-qualified core of researchers whogenerate more and more specific and complex knowledge. However, itappears to be growing further apart from industrial priorities and social needs. Most of the research programs are not focused on commercial applications and, for instance, they do not turn knowledge into business. High quality knowledge is commonly spread out through publications or conferences and transformed occasionally into marketable products. Although the government is making efforts to improve the linkage between business and the research community, there remains plenty to do. In 2009, the science and technology law was revised to integrate innovation as an essential component and allow researchers to participate in the creation of spin-offs.

In Mexico, investment on R&D is still among the lowest of the OECD countries, with only 0.37% of GDP in 2007 while the average is around 2% [11], and two-thirds is provided by the government [12]. Mexican enterprises generally underinvest in research and development (R&D), especially if basic and early-stage applied results do not lead to

commercialization in the short-term. Most enterprises would prefer to only spend money in breakthrough innovations that generate quick benefits. A World Bank study estimated that investment in R&D from the private sector is about 0.1% of GDP, while the average of OECD countries is 1.5% [12]. For the same indicator, data from the World Economic Forum (2011) position Mexico at the 79th level among 142 countries [1]. Itmeans that Mexican companies are not developing new products, services or processes at the same rate as other OECD countries. This low R&D investment damages Mexican economic performance and competitiveness, which can be related to a number of factors [12]. Companies are generally reluctant to invest in R&D as they fear they will not gain the benefits of that investment, which is relevant, as Mexico is listed among the most corrupt countries and largest producers of pirated goods [13]. Companies are afraid their competitors obtain their know-how for a trivial amount when they have invested a large sum of money to develop it [12]. Thoughlegal and intellectual property protection systems in Mexico are in place, lack of enforcement does not provide the guarantees that enterprises need. The absence of competition also decreasescompanies’ interest to invest in R&D [12]. Many enterprises do not feel pressured to create a new product or find a new way to produce more efficiently. As shown in Figure 1, most are trapped in a comfort zone called the “competitive tolerance zone” where manufacturing low value-added products is profitable, and enterprises do not challenge themselves to create “new, better imaginable” goods to be at the forefront of their sector. In Mexico, entrepreneurial culture is limited and not fostered enough. Cultural tradition, where taking risks and the fear of failure are to be punished,limits entrepreneurship. Individuals are not empowered to conceptualize how research can be turned into marketable ideas. Most entrepreneurs lack liquidity and access to risk capital, so they select “easier” projects that can be tested quickly, have relatively high success potential and a quick positive, if modest, cash-flow [14]. In Mexico, 29% of the working population belongs to informal economy [15], and although entrepreneurs from this sector are subject to permanent adaptation, they do not interact with academic institutions and do not integrate innovation processes in their activities [16]. Finally, to a lower degree, unavailability of scientists and engineers in some high-technology sectors raises the cost of R&D investment for some Mexican firms, as they have to recruit foreign talent.

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Figure 1. Competitive tolerance zone and innovation capability; Source: [17]

3 Potential of Mexican science parks The word synergy comes from the Greek and means cooperation or working together. A highly-developed synergy between academic institutions and enterprises is one of the bases for an innovation-driven economy and it should work as a win-win arrangement. The capacity of companies to interact with universities is as important as the ability of universities to work with companies. University research may be fruitless if the resulting intellectual property languishes and is never spun out into the private sector. On the other hand, companies can raise production and profitability integrating scientific knowledge and generating leading-edge products. Mexican business entrepreneurs and researchers have to start building a mutual trust and understanding. To achieve this, they need a clear innovation policy from the government that procures enough research investment in science and technology, contributes to the development of a new culture of entrepreneurship, and supports investment in technology-based companies. The government has already begun taking steps and is currently stimulating the creation of Technology Transfer Offices (TTOs) in universities or research centers to identify potential knowledge-based commercial projects that can be sold or licensed to the private sector. It also develops Patent Offices to improve the process for intellectual protection and licensing technologies.

In this context, science parks can play an essential role as they represent a bridge between industry and academic institutionsstimulating innovation and providing networking opportunities. By providing a location in which researchers and companies operate in close proximity, science parks also create an environment that fosters collaboration

and promotes developing transfer and technology commercialization [18].In Mexico, there arearound 10 science parks. Most are fairly new or are under construction. From those, about 3 focus their development on the computer and communication sectors, 1 on the automotive and aerospacesectors, and 3 on biotechnology and natural resources. A network of science parks is being developed to further their role in the country. The goal of this network is to establish synergies between science parks and contribute to national public and private innovation policies. BioHelis® is the Innovation and Technology Park developed by CIBNOR, the State Government of B.C.S., and the National Research Council for Science and Technology (CONACYT). Its goals are to generate 10 new knowledge-based enterprises in the next 6 years and be fully operational by 2015. Withthis scenario, the park should be profitable in 6 years and should have generated3,000 total jobs by 2030. Similar trends are expected for the other nascent parks. It is expected that the country continues to develop science parks for the foreseeable future, which should contribute to increase the gross domestic product.

4 Conclusion In conclusion, future economic growth in Mexico will depend on the ability to innovate andremove the obstacles for linking better business entrepreneurs and researchers. Science parks will play an important role in the development of knowledge-based companies that generate value-added products, which should be reflected in more high-quality, good-paying jobs, and diversification of the

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industrial base in the country with sustainable, eco-efficient, and new options.

5 Acknowledgements We are grateful to Diana Dorantes who provided editorial services.

References:

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