“Peru is at a critical juncture politically, economically and socially,” says Dr. Michiko Iizuka. “Their economy has been growing significantly for the past 10-15 years and during that period, poverty has decreased – but now economic growth is slowing due to the decline in commodity prices. This means that productivity gains, via increasing innovation, are crucial to maintain the current pace of development. In other words, Peru’s newly-elected president, Pedro Pablo Kuczynski, needs to increase innovation and start-ups to enhance productivity and strengthen science and technology through research. Otherwise development is likely to stall.”
Our latest workshop on the ‘Design and Evaluation of Innovation Policies’ (DEIP) was co-hosted in Lima, Peru, in February 2017 by UNU-MERIT, the Consortium of Economic and Social Research (CIES), the National Council of Science, Technology and Innovation (CONCYTEC), the Ministry of Production (PRODUCE), and the Universidad del Pacifico — which provided the venue. This five-day course gathered around 40 policymakers from Peru, as well as innovation experts from around the world. To put things in perspective, we spoke with Juana Kuramoto from the non-profit organisation GRADE, as well as DEIP Programme Coordinator Dr. Michiko Iizuka.
Juana Kuramoto, Associate Researcher, Group for the Analysis of Development (GRADE), Lima, Peru
What are the particular challenges for Peru in terms of Science, Technology and Innovation?
Peru and other countries in the region have been growing over the last 10-15 years, some more than others, but Peru has been leading the growth rates. However, there has been no structural change in the economy. Peru is still dependent on natural resources and there is no diversification in production structures.
Compared to other countries in the region we are lagging in terms of innovation in Peruvian firms. When you look at innovation surveys, Peru seems to doing fine, but in reality we are very much lagging behind on the innovation front. Most of the innovation is organisational in nature, but we have not yet managed to tap innovative products and processes. So the question should really be: how can we encourage innovation in firms?
Over the last two years the Peruvian Government has set up tax incentives for Research and Development, which I think will help encourage firms to perform innovative activities and unveil what is happening in the productive sector. For the rest, some innovative firms have learned a lot from Chile, in particular. We are quite similar countries, but they took the first step – betting on reforms and investments first. They simply started their STI policies much sooner than we did.
What’s the regional history in STI policy? Who’s learning from whom?
Most of Latin America started their privatisation policies in the 1990s, but Chile began to think about major economic reforms back in the 1980s. They really are pioneers in the field of innovation, although of course other countries have invested in this field; countries like Argentina, Brazil and Mexico. For Peru in particular, I think there is an opportunity to learn from Mexico, Colombia and Chile because we are members of the Pacific Alliance. We are sharing a lot of information, opportunities and increasing our capacity for STI. We are collaborating more and that is a good thing. Of course we are learning a lot from the region both in terms of best and worst practices.
What are the examples of worst practices and other shortcomings?
Eight years ago, for example, Chile wanted to attract major research institutes to country – so they founded branch institutes from Australia and Germany. Sadly, the outcome was not very positive because the linkages among these centres and the Chilean R&D institutions were not very good.
They therefore changed the model afterwards to a kind of “catapult model” whereby they combined the efforts of universities, international centres and firms. We replicated this second model in Peru and included lessons learned. We made specific changes to the model in order to adapt those policies to our own environment. In other words, all countries are learning from each other.
Did the international actors not tailor their approach to the Latin American context? What exactly was the problem?
Even though Chile has more capacity, the “European model” simply didn’t work because the vast majority of Chilean firms are small and medium firms that cannot hire such specialised R&D centres; also, local R&D centres still lack the capacities to interact with the productive sector. These interactions had to be induced via incentives. In Peru it definitely wouldn’t have worked, as there are even fewer firms as potential clients for these R&D centres and they tend to be risk averse in terms of innovation. We are trying to change things, though, mainly with R&D tax incentives.
What we really need is a proper framework. That is under construction now, but it does need a lot of modification. There are some policy instruments, like subsidies, which can push certain agencies to join initiatives. We have launched several of these instruments, but overall we are trying to adapt things to our own environment and trying to figure out if we truly have the capacity and money to implement these policies.
How long has it taken for these policies to gain traction?
It all started about 10-12 years ago with loans from the Inter-American Development Bank, with which we set up the first innovation fund. Back then we had the money but no applicants; we really had to encourage firms to apply. Right at the start we had just two or three applications for each grant, but over the last few years things have improved. We now have six or seven applications per grant.
It’s a similar story for universities, especially in a country like Peru, where research budgets are very low. We decided to turn the loan into an incentive in order for universities to work in a multidisciplinary manner while they do their academic research.
How did you find the workshop itself? Was there added value in gathering many different players?
It was really useful in that most of the attendants were people who work in the public sector, and also in some universities. Most of these people, especially those from the public sector, are dealing with how to monitor and evaluate policies. There were also quite a few from Peru’s Council of Science, Technology and innovation (CONCYTEC) who were very happy with the monitoring and evaluation techniques presented in the seminar. Together with Peru’s Ministry of Industry we are now launching policy instruments, which we will have to monitor and evaluate. This is something we think about a lot and where we apply learning from the IDB.
In terms of the individual sessions, we were very happy with the lectures delivered by Pierre Mohnen and Gustavo Crespi – they were very good. We also enjoyed the lectures on innovation systems. The introduction given by Michiko Iizuka was very comprehensive; it prepared us well for the lecture by Gabriela Dutrénit. Overall the experience was great!
What’s next for Peru? What are the challenges to overcome in the field of STI?
Well, the innovation system has become much more dynamic and behaviours have certainly changed. However, we still need to convince the government in terms of funding. This tends to change drastically whenever there is a new administration. For example, if we hadn’t got loans ($300-400m) for the next few years we would be going backwards right now.
We really have a large shortfall; we are one of the countries that invest less in terms of GDP. There seems to be some disconnect with the top of government, especially with the Ministry of Finance. They simply “do not get it” – their vision is very short-termist. In Peru and some parts of Latin America, everything focuses on the next six months. Two years is considered long-term. We are used to making do with short-term visions. Our biggest challenge is that we lack a long-term approach which would allow us to develop a fully-fledged innovation policy.
Dr. Michiko Iizuka, Researcher and DEIP Programme Coordinator, UNU-MERIT
The DEIP Peru workshop was made possible thanks to the collaboration of various people associated with UNU-MERIT. A Peruvian GPAC2 PhD fellow, Mr. Gonzalo Neyra, from the Ministry of Finance and Economy was the person who connected us with Mr. Javier Portocarrero, the Director of our counterpart, the Consorcio de investigacion Economica y Social (CIES), a network of research institutions in Peru.
In designing the programme for DEIP Peru, we sought input from our counterpart, the CIES, as well as advice from people in our extensive network of innovation policy in Latin America and especially Peru. Experts such as Ms. Juana Kuramoto, former PhD fellow at UNU-INTECH and currently a research fellow at GRADE; Ms. Claudia Suazunabar, officer at the Inter-American Development Bank; Prof. Carlo Pietrobelli, University of Roma Tre, UNU-MERIT and University of George Washington and the abovementioned Mr. Gonzalo Neyra.
As Juana’s interview described very well, Peru is at critical juncture politically, economically and socially. Their economy has been growing significantly for the past 10-15 years and during that period, poverty has decreased – but now economic growth is slowing due to the decline in commodity prices. This means that productivity gains, via increasing innovation, are crucial to maintain the current pace of development. In other words, Peru’s newly-elected president, Pedro Pablo Kuczynski, needs to increase innovation and start-ups to enhance productivity and strengthen science and technology through research. Otherwise development is likely to stall.
What’s the added value of DEIP?
If any innovation policy is to be successfully implanted, good coordination among actors in the innovation ecosystem – such as researchers at universities and the public and private sectors – are essential. In this sense, it was good to see a broad range of participants in the workshop sharing knowledge and getting to know each other through lively interactions during our week-long workshop.
DEIP Peru was very fortunate to have top experts on innovation policy from international, regional and national levels on topics that are relevant to Peru, today. For instance, we had experts on mining innovation from Canada, on the global value chain from Italy, and on policy evaluation from the IDB office in Uruguay, as well as UNU-MERIT – thus covering both the theoretical and practical aspects of the subject.
We also had an expert from Mexico speaking on institutions that implement innovation policy; this provided not only an international comparison but also a case study of university-industry collaboration in a third country. Additionally, a national expert on agricultural innovation in Peru shared his experience at the workshop. The workshop also covered a range of fundamental issues that are core to innovation in Peru, today.
At the opening ceremony we also had the great honour of hosting the President of CONCYTEC, Dr. Gisella Orjeda, as well as the Vice Minister from the Ministry of Production, Mr. Juan Carlos Mathews: to give an overview of the current activities of both organisations. At UNU-MERIT we will continue to support work on innovation policy in Peru; meanwhile we hope that the event created lasting a platform for all participants to share any and all expertise on innovation policy.
MEDIA CREDITSFlickr / Consorcio de Investigación Económica y Social CIES
NOTA BENEThe opinions expressed here are the authors’ own; they do not necessarily reflect the views of UNU.