Science, technology and innovation policy

Chile should boost innovation to drive economic growth, says OECD


08/11/2007 - Chile needs to invest more in research and development (R&D), improve its education system, promote public-private partnerships and foster business-sector innovation, notably among small and medium-sized firms, in order to sustain economic growth, according to a new OECD report.

Chile - OECD Review of Innovation Policy reviews the strengths and weaknesses of Chile's innovation system and recommends steps the government could take to increase the impact of innovation on the country's future prosperity and social well-being.

Presenting the report at a seminar in Santiago de Chile, OECD Secretary-General Angel Gurría noted that Chile has been a pioneer among developing economies in terms of reforms and openness to international trade and investment. This, together with its rich mineral reserves, has helped to drive its current economic growth. As Chile embarks on membership negotiations to join OECD, however, it needs to adjust its economic policies to ensure balanced growth in other areas as well.

"In this context," Mr. Gurria observed, "fostering innovation is one of the keys to improved prosperity and successful incorporation into OECD. Chile needs to boost innovation if it is to achieve high and sustainable growth while further reducing poverty and persistent income inequality. Improving Chile's education system should be a priority as the lack of skilled human resources is a major bottleneck for Chile's social and economic development."

OECD analysis suggests that education is an important driver of growth, Mr. Gurría noted. Vocational training should be encouraged, he said, as well as improved training in management skills and business leadership. Policies such as scholarships to attract talented foreign students and boost the number of Chilean students studying abroad could help.

The government should promote public-private partnerships to increase co-operation between the private and public sectors, the report recommends. The recent introduction of a new tax incentive for private-sector R&D sends a strong signal about government commitment to research and innovation. But to have long-term impact, this needs to be accompanied by more reforms to encourage private-sector innovation, particularly among SMEs.

The report also recommends that Chile strengthen coordination and co-operation among policy agencies dealing with innovation. The recent creation of the National Innovation Council for Competitiveness and of the National Innovation Fund for Competitiveness (FIC) should help.

Publication of Chile - OECD Review of Innovation Policy follows a decision by OECD countries in May to launch a world-wide study on the impact of innovation on economic growth and how innovation can best be encouraged.

Chile's investment in R&D as a percentage of GDP is low in comparison with OECD countries - 0.67% of GDP in 2004 compared to the OECD average of 2.25%. Most R&D in Chile is financed by the government and carried out in universities. At the same time, the vast majority of small and medium-sized firms (SMEs) do not carry out any R&D and innovation.

OECD countries have launched a drive to engage more closely with emerging economies worldwide. Chile is one of several countries, also including Estonia, Israel, Russia and Slovenia, which have been invited to open membership negotiations. OECD has also launched a process of "enhanced engagement" with major emerging economies including Brazil, China, India, Indonesia and South Africa, with a view to strengthening mutual links.

The report is available to journalists on the password protected website or on request from OECD's Media Division  (tel.+ 33 1 45 24 97 00). For further information, journalists are invited to contact Gernot Hutschenreiter of the OECD's Science, Technology and Industry Directorate (tel. + 33 1 4524 8452). Chile - OECD Review of Innovation Policy can be purchased in paper or electronic form through the OECD's Online Bookshop. Subscribers and readers at subscribing institutions can access the online version via SourceOECD.


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