Business Innovation: Essential for growth

A competitive environment generates incentives for innovation.

The competitive environment and open markets are extremely important incentives for business innovation processes. Although not exclusive of other factors are: policies that promote growth and increased productivity through the generation and adoption of new technologies(big data, machine learning, process automation). According to international standards, when measuring business innovation, Colombia is located at Place 128 between 144 countries. Meanwhile, in the favorable environment for market competition, Colombia ranks 136th out of 144 countries.

Low investment in research and development (R & D) affects growth potential. The R & D expenditure is 0.22 of GDP, below the LAC average, which is located at 0.75 and the OCDE average, which is 2.36.

The participation of the private sector in R & D financing reaches about 30. What is insufficient if compared to more advanced countries and the frontier of knowledge, where the participation of companies exceeds 60 (eg. Finland, Korea, Israel).

Innovation

For its level of development, the availability of qualified human capital for R & D is insufficient in Colombia. Colombia has 346 researchers per million inhabitants, compared to 4,712 in Spain, 1,514 in Argentina, and 872 in Brazil.

In turn, the 62 of those companies that had the intention of innovating found as an obstacle to innovation the lack of qualified personnel. Meanwhile, the insufficient availability of human resources can become a limitation of the innovation system’s capacity.

http://minciencia.gov.co The system’s institutional frameworkis complex and disjointed . There is no clear separation between the strategic functions of policy design and policy implementation. In other words, the political decision-making level coexists with the execution level within the same institutions (i.e., ministries, Ministry of Commerce). The result is low policy effectiveness and implementation.

To improve business innovation, the IDB proposes:

The development of more competitive markets is a recommendation in many of the proposals for the various areas of this EBP. The following are policy actions suggested specifically to stimulate innovation:
(i) progressively increase investment in the sector to 2.3% of GDP, close to the OECD. This requires maintaining or increasing the budgets of public entities that leverage private investment;
(ii) increase private sector participation with new financial and non-financial instruments similar to those used by other countries in the region, such as Brazil and Chile;
(iii) develop human capital with a massive scholarship program to reach 4,000 new researchers per year, relying on existing national schemes (Colfuturo and Colciencias); and (iv) develop human capital with a massive scholarship program to reach 4,000 new researchers per year, relying on existing national schemes (Colfuturo and Colciencias).
(iv) rearranging the institutional structure by separating and differentiating the functions of strategy and policy formulation, on the one hand, and execution by another.

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