Innovation and catching-up in Latin American's exporting sector: an empirical examination of Brazilian, Chilean, Colombian and Mexican firms

Abstract

The general goal of this research is to empirically determine the different set of opportunities and challenges that Latin American firms face to catch-up with highly industrialized economies. Catching-up is here understood as the process whereby less developed economies manage to successfully reduce their economic, technological, productivity and income gap with respect to highly industrialized countries (Lee and Malerba, 2018). To account for these processes, our project will study innovation trends at the exporting sector of major Latin American countries (Brazil, Chile, Colombia and Mexico) with particular emphasis on the dynamics observed within natural resource-based industries, as these represent a sizeable share of the total output generated by the exporting sector within these four nations. We will conduct this analysis both at the aggregate and at the micro-level. At the aggregate level (group of firms), we aim to understand the relevance of the exporting sector on innovation trends relative to those reported by domestic producers (i.e., manufacturing firms mostly producing for the country's domestic market). At the micro-level, our objective is to study the process by which innovation systems at the exporting sector are influenced by the large heterogeneity of firms operating therein. This objective implies accounting for different firms' features including size (small, medium and large), ownership (domestic or foreign owned), type of manufacturing specialization in the production for exports (intermediate or final goods), type of value chain organization, (local or global), type of position within the value chain (direct or indirect exporter), type of innovation strategy being implemented (process, product, organizational innovation), composition of R&D expenditures, use of highly skilled labor and, so forth. This analysis will go from 1995 to 2017 which is a period of time marked by major events such as the increasing fragmentation of manufacturing activity (i.e. the emergence of global value chains during the early 2000's), the global financial recession (late 2000's), the signing of major free trade agreements for the countries here considered (i.e., the signing of MERCOSUR and of the North American Free Trade during the early 1990's, the US-Chile agreement in 2003 and the US-Colombia agreement signed in 2012), among others. (AU)