It’s great news for Mexico that Guillermo del Toro’s movie “The Shape of Water” got the most nominations for the upcoming Oscars. Many other Latin American countries should be equally proud of having hundreds of similar world-class innovators at home and abroad. But a new ranking of the world’s most innovative countries should give them cause for concern.
The Bloomberg 2018 Innovation Index says there is not one single Latin American country among the world’s 50 most innovative nations. The 10 top countries on the list are South Korea, Sweden, Singapore, Germany, Switzerland, Japan, Finland, Denmark, France and Israel. The United States is ranked No. 11.
Among other countries on the list are Great Britain (17,) China (19,) Russia (25,) and Spain (29). Toward the bottom of the ranking are Tunisia (43,) South Africa (48,) Iran (49) and Morocco (50.)
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That should be raising alarm bells in Latin America, and be a cause of concern for President Trump and other U.S. officials who are obsessed with illegal immigration. Countries that don’t innovate and produce increasingly sophisticated goods face a mediocre economic future, poverty and continued emigration.
Unlike other rankings that take into account wider economic criteria such as the bureaucratic hurdles that entrepreneurs face, this one focuses strictly on innovation. It weighs things such as countries’ research and development expenditures as a percentage of their economies, the number of patents per 1 million inhabitants and their percentage of high-tech companies.
Considering the size of their economies, Latin American countries should be doing much better in this ranking: Brazil and Mexico are among the world’s 15 biggest economies, and Argentina and Colombia are not too far behind.
In a recent interview, I asked Alec Ross, author of “The industries of the Future” and former top innovation adviser to the State Department during the Obama administration, if he is surprised by the absence of Latin American countries in this 50-nation innovation index.
“It’s not surprising, but it’s sad,” Ross told me. “And the reason for it is that, while there are some great entrepreneurs in Chile, Brazil or Mexico City, too often the great talent leaves the country. They go to California, they go to Texas, they go to London.”
He added that Latin America should become more entrepreneur-friendly. “The region needs to create an environment so that a 23-year-old genius from Buenos Aires does not feel like she needs to move to California to start her company,” Ross said. “The problem is not that the people are not innovative, but that it’s too difficult to do it in their own countries.”
Ross, who is running for governor of Maryland, told me that one of the biggest problems for innovators in Latin America, in addition to excessive regulations, is lack of access to capital.
“One criticism I have of Latin American countries is that what’s more important than anything else when you are trying to get investment is who’s your family, who’s your mother, who’s your father, and whether your family has business relationships,” he said.
He added, “In the United States, that’s not the case. Nobody cares who your father is. Nobody cares who your mother is. Investors only care about your idea. All they want is to make money.”
Ross concluded: “In Latin America, issues of access to capital are too rooted in a traditional hierarchy. So I think that governments, working with the private sector, working with the banks, working with venture capitalists, need to address what I believe are some of these cultural constraints.”
I agree. But, more important, Latin American countries should start by putting innovation and modernization at the center of their political agendas.
The fact that the new Bloomberg innovation ranking went almost unnoticed in the region is worrying. The index is either wrong, in which case it should be shown to be mistaken, or it should be the No. 1 topic of discussion in many countries – and a wake-up call for the region.
Andres Oppenheimer is a Latin America correspondent for the Miami Herald. He can be contacted at email@example.com.