Victor Sánchez
President
Red OTT México
/
Expert Contributor

Is Innovation a Priority Issue in Mexico? No. But it Should Be

By Victor Gabriel Sánchez | Tue, 04/12/2022 - 13:00

Various countries around the world develop technological solutions to address their current and future problems and exploit innovation to boost their economies. This task should not be the sole responsibility of Mexican governmental actors who, since 2016, have reduced the public budget focused on innovation. Innovation should be a joint responsibility among industry, academia, and private players. Published by the Organisation for Economic Co-operation and Development (OECD), the following graph shows research and development spending as a percentage of national Gross Domestic Product (GDP), with an emphasis on five countries. The goal is to analyze, from a financial angle, their national strategies to promote and strengthen innovation.

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Chart provided by the expert

Israel

Within the OECD group, Israel is the country that has invested the most in research and development as a percentage of GDP in the last 20 years, maintaining a gradual increase in its percentage, from 3.9 percent in 2000 to 4.9 percent in 2019. Israel’s global leadership in technology-based companies, investment funds per capita and academic technology advancement have allowed this country to streamline the process between science and innovation with the support of its technology transfer offices. The country’s priority sectors include agricultural technology, artificial intelligence, cybersecurity, computer science, and life sciences.

South Korea

South Korea is the nation with the highest growth (in percentage terms) in its investment and development spending, moving from 2.1 percent in 2000 to 4.6 percent in 2018 as a percentage of GDP. From 2019 to 2020, this indicator grew 9.5 percent. The private sector contributes 76.9 percent, while the public sector invests 21.4 percent. Another key feature is the close collaboration among government, industry, and academia. South Korea’s strategic technology sectors are artificial intelligence, consumer electronics, neurosciences, communications, biotechnology, quantum, and aerospace.

China

Through its short-term five-year and its midterm 15-year strategies, China aims to become the world leader in science, technology, and innovation in 2050. In the last 20 years, China moved from investing 0.9 percent of GDP to 2.44 percent and, in 2021 it posted growth of 14.2 percent in the amount of investment as compared to 2019. China’s R&D expenditure is divided as follows: 6 percent in basic research, 11.3 percent in applied research, and 82.7 percent in technological development. This last component demonstrates how important it is for Chinese actors to focus on technological applications to solve current and future problems through existing knowledge. The key industrial sectors within the country are health, aerospace, industry 4.0, and semiconductors.

US

Investment in research and development has been up and down over the past 18 years in the US. In 2000, the North American nation invested 2.6 percent of GDP in this area, while in 2018 it invested 3.0 percent. A major factor that helps investment is the diversity of funding sources (e.g., private businesses, the federal government, nonfederal governments, higher education institutions, and nonprofit organizations), with the private sector investing the most (75 percent). Of this budget, 17 percent is allocated to basic research, 19 percent to applied research, and 64 percent to technological development.  The priorities of the current government are concentrated in the following “sectors of the future:” artificial intelligence, quantum information sciences, advanced communication networks (including 5G networks and beyond), and advanced manufacturing.

Mexico

According to data from the OECD, nowadays Mexico invests in research and development at the same percentage of GDP as it did 20 years ago (3 percent), showing its highest level in 2010 (4.9 percent). Investment in R&D comes primarily from public financing, at about 60-70 percent; private funding is about 20 percent. The decrease in CONACYT’s budget in recent years has directly, and negatively, impacted the number of calls (convocatorias) and, as such, the number of potential projects focused on technological development. Industrial players have not been able to find a way to increase investment in innovation, either on an individual basis or at the sector level. It will be important to analyze the actions the innovation commissions of the most important business chambers in Mexico are carrying out to promote scientific and technological development within the country. Another chief barrier is the government’s decision to prioritize strategic problems over technological strengthening. The Mexican authorities have defined as major strategic areas water, health, security, energy and climate change, food sovereignty, toxic agents, culture, education, housing, and socio-ecological systems.

The good practices implemented by the leading countries in innovation are relevant pieces of evidence that may pave the way for Mexico to bolster its importance and address the following major issues: promote collaboration among the actors within the ecosystem; strengthen technology-based entrepreneurship; align long-term planning with concrete actions in the short- and medium term; and stimulate investment in research and development from different sources. Fortunately, there are relevant examples in Mexico that can raise awareness and lead a greater number of actors within the country to bet on innovation and increase the potential economic and social impact: REDOTTMX's collaboration with the pharmaceutical industry to strengthen capacities in innovation and inter-institutional linkage; the UNAM – ITESM – CEMEX scientific consortium for technological development and linkage with the industry; the “Industry Challenges” program between COECYTJAL and Fundación INCIDE to promote scientific and technological development in the health industry; and the collaboration between Universidad Panamericana and Siemens to identify high-potential technological ventures in the energy sector. In the short term, it will be necessary to monitor the impact generated by these programs as well as their dissemination to generate more and better cases that give innovation the priority it should have in our society.

Photo by:   Victor Sánchez