Bridging the Skills and Innovation Gap to Boost Productivity in Latin America The Competitiveness Lab: A World Economic Forum InitiativePrepared in Collaboration with DeloitteJanuary 2015Insight Report World Economic Forum91-93 route de la CapiteCH-1223 Cologny/GenevaSwitzerlandTel.: +41 (0)22 869 1212Fax: +41 (0)22 786 2744Email: contact@weforum.orgwww.weforum.orgWorld Economic Forum® © 2014 – All rights reserved.No part of this publication may be reproduced orTransmitted in any form or by any means, includingPhotocopying and recording, or by any informationStorage and retrieval system.REF 050115 3The Competitiveness Lab: A World Economic Forum InitiativeContentsPrefaceDiscussions at the World Economic Forum’s Annual Meeting at Davos and other fora among leaders from public and private sectors as well as civil society have indicated participants’ keen interest in deepening their understanding and engaging in an informed multi-stakeholder dialogue on effective ways to boost competitiveness. In response to this growing interest, the World Economic Forum launched the Competitiveness Lab initiative in 2013, with the objective of organizing an informed multi-stakeholder process to inform and advance the competitiveness agenda of a country or region. The Competitiveness Lab - Latin America focuses on two specific and interrelated competitiveness challenges at the regional level, namely the skills and innovation gap. Competitiveness is a key driver for sustaining prosperity and raising the well-being of the citizens of a country. The relevance and applicability of the Competitiveness Lab initiative, therefore, extends beyond the Latin American region and this report. This report is the output of our first regional Competitiveness Lab focused on Latin America. It offers ten recommendations elaborated by the Steering Board of the initiative, suggesting collaborative approaches to begin bridging the identified gaps. It also provides an overview of the current state of skills development and innovation capability in the region, a root-cause analysis for the existing challenges, and selected examples of initiatives that are helping to successfully tackle such challenges. We hope that this report will provide Latin American leaders a useful tool with which to boost Latin America’s competitiveness and inspire a strategic dialogue among stakeholders across sectors and national boundaries. Collaboration among policy-makers, businesses, and civil society leaders, as well as cooperation at a regional level, are crucial elements of successfully addressing the region’s productivity challenge, and we recognize the members of the Competitiveness Lab - Latin America Steering Board for their contributions to this report. We wish to thank the authors of the Competitiveness Lab report from the World Economic Forum’s Competitiveness and Benchmarking and Latin America teams, as well as Deloitte for their support. Finally, we would like to convey our gratitude to our network of Partner Institutes worldwide, and particularly in Latin America, without whose valuable input this report would not have been possible.3 Preface4 Contributors5 1. Executive Summary5 1.1 Context and Objective5 1.2 Structure of this Report5 1.3 Summary of the Current State and Root Cause Analysis7 1.4 Summary of the Recommendations8 2. Recommendations to Bridge Latin America’s Skills and Innovation Gap8 2.1 Introduction9 2.2 Strengthen Framework Conditions9 2.3 Enhance the Efficiency of Investment10 2.4 Increase the Level of Investment10 2.5 Build Stronger Public-Private Collaborations11 2.6 Foster Intra-regional Cooperation12 2.7 Employ a Flexible Implementation Approach12 2.8 Conclusion13 3. Annex: Current State and Root Cause Analysis of Latin America’s Skills and Innovation Gap13 3.1 Background and Context16 3.2 Current State of Latin America’s Skills and Innovation Challenges24 3.3 Root Causes of Skills and Innovation Gaps in Latin America29 3.4 Overcoming the Skills and Innovation Gaps: Examples37 3.5 Conclusion38 3.6 AppendixEspen Barth Eide Managing Director, Centre for Global Strategies, World Economic ForumPhilipp Rösler, Managing Director, Centre for Regional Strategies, World Economic Forum 4Bridging the Skills and Innovation Gap to Boost Productivity in Latin America ContributorsCompetitiveness Lab – Latin America Steering Board Alejandro Ramírez, Chief Executive Officer, CinepolisAlfredo Capote, Managing Director and Head, Investment Banking, Citi MexicoArturo Condo, President, INCAE Business SchoolCarlos Arruda, Associate Dean, Business Partnership and Director, Competitiveness and Innovation Center, Fundação Dom CabralDiego Molano Vega, Minister of Information Technologies and Communications of ColombiaElizabeth Tinoco, Assistant Director-General and Regional Director, Latin America and the Caribbean, International Labour Organization Eugenio Madero, Chairman and Chief Executive Officer, San Luis RassiniIldefo