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Local Innovation Systems in Emerging Economies
                           Study Case: Córdoba, Argentina
                                      By: Jorge Boiola




ABSTRACT


Systems of innovation are highly dependent on local conditions, where national boundaries
give the general platform to it, but local systems play a key role in the path to development.
In the developing world this is even more important, becoming national centralized
governments a limitation to the development.


Córdoba, Argentina, is the case of a developing region in a developing country. The study
goes in the direction of gathering and interpreting data from the three mayor players of its
innovation system: government, universities and private companies; assessing the links
among them and establishing conclusions about how they work as a system. Finally, it
makes a proposal for the improvement of the local system of innovation to the different
forces and the policymakers of the province. The study shares a common ground with
similar regions around the world and its lessons are able to be applied to them.




                                                                                            1
1. INTRODUCTION


At the beginning of the 20th Century, the economist and Harvard professor Joseph
Schumpeter (1934) stated that when an economy is in a static equilibrium, it doesn’t
generate value. In such situation, the incomes would be only good enough to pay for the
means of production. Therefore, the added value only would be possible under the
precondition of the imbalance of the economic system.


The leading forces of such imbalances are spontaneous changes in the preconditions of an
industry, in the techniques used, and in the productive organization. Therefore,
development proceeds from the spontaneous and discontinuous changes in the circular
economic flow, not in its equilibrium. One way to break that equilibrium is through
innovation.


Following his line of thinking it can be said that the closer a market is to perfect
competition, the lesser are the benefits for the companies. As its corollary, since innovation
has no competition at the beginning, the price, whole or partially, acts under the principles
of the monopoly.


He listed as sources of innovation: (1) the introduction of a new good; (2) the introduction
of a new method of production; (3) the opening of a new market; (4) the conquest of a new
source of supply of raw materials or half-manufactured goods; (5) the creation of a new
organization of any industry.


Schumpeter also said that through time some of the different roles that the entrepreneur has
in the development process could be progressively replaced by some sort of
“automatisation” of them. Therefore, part of the entrepreneurial process could rest in
different forces, acting as an entrepreneur.


Between the end of 1980s and the beginning of the 1990s Freeman (1987), Lundvall
(1992), and Nelson (1993) go further with this concept of “automatisation” of the



                                                                                            2
innovation / development activity, reducing the role of the entrepreneur and putting it in the
hands of an interlinked system. They established the leading principles of what was
recognized as the theoretical framework of the national innovation system (NIS).


According to Lundvall (1992), a national innovation system ‘is constituted by elements and
relationships which interact in the production, diffusion and use of new and economically
useful knowledge […]’; Freeman (1987) described it as “[…] the network of institutions in
the public -and private sectors- whose activities and interactions initiate, import, modify
and diffuse new technologies”.


A well-organized system of innovation may enable a country in a pre-developed stage to
make very rapid progress through appropriate combinations of imported technology and
local adaptation and development. According to OECD (1997), there are a number of
factors that interact to make the innovation activities more or less dynamic. Among them,
we can find the institutional framework, the development of the S&T system, the transfer
factors and the innovation capacity inside the companies. These elements can give us an
idea about the complexity of the innovation systems.


                                 FRAMEWORK CONDITIONS
                            The general conditions and institutions
                       which set the range of opportunities for innovation


                                      TRANSFER FACTORS
                                Human, social and cultural factors
                               influencing information transmission
                                   to firms and learning by them



                                    INNOVATION DYNAMO
                                    Dynamic factors shaping
                                       innovation in firms




                            SCIENCE AND ENGINEERING BASE
                      Science and technology institutions underpinning the
                                      innovation dynamo

                            The innovation policy terrain (OECD, 1997)


                                                                                            3
In the 90s, Michael Porter (1990b) wrote a new chapter establishing the way in which
countries and regions compete, creating competitive advantage through a systemic process.
Innovation has a key role in that process. Porter’s studies lead to the definition of a model
of four forces acting simultaneously: the structure of rivalry among firms, the factor
conditions, the demand conditions and the related and supporting industries. In a world of
fierce competition, nations and regions have become more important than in the past. As
the economic wealth is shifting from productive to knowledge based processes, the
creation, dissemination, and the economic appropriation of the knowledge has increased the
importance of the national framework in which all forces move. Government and chance
have a role too in its model. Government has the duty to create part of the framework
conditions indispensable for the system to operate.




                              The national diamond (Porter, 1990a)


Knowledge, created or learned at the inside of the diamond, is not always possible to be
transmitted. Knowledge is not necessarily exchangeable with information. It differentiates
from the information in its accessibility and capacity to be transmitted. The second can
move easily form place to place, but the first is highly attached to the minds of the people
and the localized systems. As a consequence, great part of the competitive advantage of one
country is highly dependant on small geographical areas –clusters, which are immersed in



                                                                                           4
national and region values, culture, legal and economic rules and regulations, institutions,
etc.- and are not possible to be delocalized without losing its intrinsic values.


But what is important in Porter’s approach is that he underlined the national characteristics
of the innovation systems. He has argued that it is in a specific country where the essential
competitive advantage of the enterprise is created and sustained; that country is the place
where the strategy of the company is set, where the core product and process technology is
created and maintained, and where the most productive jobs and most advanced skills are
located.


He also says that when the national environment permits and supports the most rapid
accumulation of specialized assets and skills –sometimes simply because of a greater effort
and commitment, the nation gain a competitive advantage; that when the national
environment affords better ongoing information and insight into product and process needs,
it gain a competitive advantage as well. Finally, when the national environment pressures
companies to innovate and invest, companies both gain a competitive advantage and
upgrade those advantages over time.


This national environment creates the conditions for the development of the competitive
advantage. Innovation is a cornerstone of his model, creating a genuine, long lasting gap
with the competitors (as Schumpeter said: under the principles of the monopoly).
Companies get innovation through new technologies and new ways to do the old things.
For Porter, acts of innovation include among others: a new product design, a new
production process, a new marketing approach, or a new way of conducting training, etc.
Finally, permanent innovation is the only way to maintain a long lasting competitive
advantage.


From a different approach, Jorge Niosi (2000) gives the public institutions a more active
role, mainly at the beginning of creation of science and technology based industries. From
his point of view, this role declines later (probably approaching to Porter’s model), being in
all moments an important brick in the development and promotion of the system.



                                                                                             5
According to him (1999), research and development is one of the best ways for companies
to capture new knowledge. R&D is financed and developed by three main actors:
universities, government, and companies. This was originally described by Jorge Sábato
(1975) and long ago popularized as the Sabato’s Triangle.


Niosi (2002) also advocates for the national/ local role of innovation systems. According to
him, capital can easily cross national or regional boundaries; instead, knowledge flows less
easily, because of the tacit character of much of it, which is embodied in human brains. In
his work, it is also stated that human capital means tacit knowledge, which is difficult to
transfer without moving people. The less mobile factors of production and the most crucial
for innovation are human capital, governmental regulations, public and semi-public
institutions, and natural resources. He stresses that, for all these factors, borders and
locations matter.


For Richard Nelson (1993), there are three major institutional actors playing an important
role in a national innovation system, industry, universities and government. But, ultimately,
R&D depends upon the researchers that are the real producers of it. Through different
means, such as policy instruments, vision, and perspectives of the future, national and
regional governments have a coordinator role of the research community.


But national borders can not explain the process completely. It is inside the countries –as it
was stated by Porter in his concept of clusters- that things happen. And not all things
happen in the same way or at same speed. It can be clearly seen in the contemporary China,
where the booming economies of Beijing and Shanghai share the national landscape with
the impoverished Northwest. And that it is not exclusive from China, it is also possible to
see the same pattern all around the world, from South East Asia to Latin America.


As part of the developing world, Argentina also has that disparity of development in the
different regions. The accumulation of knowledge, abilities and resources trough long
periods of time had a key role in the development of those regions. Nowadays, and among
others, it is possible to see the winery industry in Cuyo, the software and car manufacturing



                                                                                             6
in Córdoba, and the financial services and cultural industries in Buenos Aires. For the
researchers the questions to be answered are: what make some regions more developed
than others in some specific field? and how we can do to improve or accelerate that
development?


To give some answers to this kind of questions it is necessary to study the innovation
systems from a local perspective. Local and national levels interact in a way that can be
beneficial or damaging, depending upon many factors. National laws, regulations and
culture can help local economies to develop themselves; the opposite is also possible, that
the national background become in a heavy burden for local economies. Dynamic local
economies can also be an example for other regions, pushing the changes in the national
framework.


Different regional innovation systems of one country share the general background of that
country, culture, language, national institutions, national law, economic regulations, etc.
That shared ground is not enough to explain the differences in development and economic
dynamism among regions. Nothing is truer than in the Latin American context, where
Argentina is not the exception.


These systems have many linkages that only exist at a sub-national level. The basic
components of these local systems of innovation are the same than in the National
Innovation Systems (NIS), the institutions and their mutual links: private firms,
universities, and governments. These institutions promote research, development and
innovation (R+D+I) under the umbrella of the general culture and institutional framework,
nationally and locally.


As it was explained by Porter, the physical distance among the actors is a leading factor.
When forces and institutions, such as companies with research units, research universities,
government, etc., are confined in a small space, sharing the same culture, language, social
and legal framework, etc., they tend to interact strongly, becoming an adaptable-learning
system. The learning ability of these systems should not be diminished, it makes easer to



                                                                                         7
copy and disseminate the acquired new knowledge towards the closest actors and
competitors in the cluster. Incentives, competition, cooperation, and learning are the
engines that maintain the systems rolling.


If the development is based on a national platform but its main components are local, it
gives us a new perspective of some political issues. It is the case of federalism. If the politic
– economic decision making system is highly centralized, as it happens in most emerging
economies, it would put a strong restriction on the local developing process. It doesn’t
mean that centralized politic systems can not develop at all; it means that they will do it at a
lesser pace, since local governments are only one of the components of the innovation
system. It also means that centralization could be good enough in an earlier stage of
development, but not so good at a later stage, when the economy were getting closer to the
frontier of development.


Other mechanisms of the system could take relevance as well, such as the information.
Information, not only for the government but also for the private sector, associations,
universities, etc., is an important source for the decision making process. If it is only
available at national aggregates, with national standards and points of view, the ability to
use it at local level, for local purposes, is quite weak. It could be said that one potential
ways to measure development in a country, or a region, would be to measure the quality
and use of information at local level.


This approach, closest to the local history and forces, could explain the particular stories
spread all around the world, such as: the Silicon Valley and the Route 128 in USA; the
cities of Shanghai and Hong Kong in China; the city of Bangalore in India (and many
others in South East Asia); and the cases of some cities in the new emerging economies of
Latin America (Sao Paulo, for instance). In particular, in Argentina we can find traces of
this in Buenos Aires, Córdoba, Rosario and Mendoza, but also and in a smaller scale in the
North West part of the county and in Tierra del Fuego.




                                                                                               8
The advantages of having deeper understanding of these local systems have triggered a
number of studies in Latin America. These are the cases of a comprehensive book
coordinated by Casiolatto (2003), where the innovation systems of Brazil are explored, and
the Inter-American Development Bank, currently engaged in the same direction with a
wider scope. In the specific case of Cordoba, even taking in consideration its importance in
the S&T and productive national system, there is little literature describing or trying to
explain the dimension, synergies and contribution of its regional/ local innovation system.




2. THE DESCRIPTION OF THE SYSTEM OF INNOVATION OF CORDOBA


2.1. THE NATIONAL CONTEXT IN S&T


Argentina has delayed the investment in S&T for decades, undermining its regional
position in the Latin American context. The country is not only growing slower than the
world leaders but also is losing positions in the regional context. At the same time that
Argentina invests 0.52% (2008) of its GDP in R&D and is looking for a healthier 1%, in
the neighboring countries that number is not any longer a utopia. Brazil, the regional leader,
has already surpassed it with 1.09% (2008); Chile is closer with 0.67% (2004); and Spain,
an unavoidable point of reference for the Latin-American countries, has 1.38 (2008)
[exhibit 1].


In the leading countries, these numbers have been left behind long time ago. Considering
that 50% of the GDP of the major OECD countries is produced by knowledge-based
companies (Chang, 2004) pointless is to stress how important is the investment in R&D for
those countries. In the last decade, a growing sum of capital has been flooding the R&D
activity in different ways. One was through private investment inside companies; the other,
through public and private investment in the R&D centers of universities. In the specific
case of US, it shouldn’t be underestimated the contributions made by the military budget of
the Federal Government, alternative almost inexistent in other economies.




                                                                                              9
Knowledge based economies need to invest heavily in R&D as a way to push the rest of the
economy ahead. It was understood by Canada, where they are putting 1.84% (2008) of its
GDP in it. In the same line of thinking, but more aggressively, other members of the OECD
group have gone beyond. That is the case of Europe, where France accounts 2.02% (2008)
and Germany 2.53% (2007); in the other side of the Atlantic, US is doing it with 2.77%
(2008). But the most astonishing cases are Sweden 3.75 (2008), Finland 3.46 (2008), and
Japan 3.44 (2007), all of them quite above than 3%. In comparison, Argentina (and
Cordoba) is investing seven times less than that, and roughly half of the regional leader,
Brazil [exhibit 1].


But the landscape is not so gloomy if we let aside the funding side and look in the direction
of the human capital. In comparison, the number of researchers currently working in
Argentina shows healthier shape than most of the Latin American and the Caribbean
countries (LAC). For every thousand people of the economic active population (EAP)
Argentina has 2.56 (2008) researchers; Chile and Brazil are close with 2.00 (2004), the
first, and 2.09 (2008) the second; but far ahead of Uruguay, with 0.72 (2008); and Mexico,
0.88 (2007). What is more, Argentina doesn’t look bad in the mirror of the recently
developed or developing economies, such as the cases of Spain and Italy that accounts 5.54
(2007), and 3.80 (2008) per thousand, respectively. Which are in a privileged position, far
ahead, are: Japan, 10.7 (2007); the US, 9.40 (2006); Australia, 8.10 (2006); France, 7.60
(2007); Portugal 7.18 (2008); and Germany, 7.00 (2007) [exhibit 2].


These numbers show that the most important component of the S&T system, the human
factor, is alive and healthy, but with a long road ahead. It is potentially a powerful source of
development, able to be empowered by adequate governmental policies and private
entrepreneurship. In any case, the improvement of the investment, public and private,
should be a priority.




                                                                                             10
2.2. THE COLLEGE SYSTEM OF CÓRDOBA


The college system is one of the most important components of the Cordoba’s system of
innovation and plays a decisive role in it. Its emblematic institution, the National University
of Cordoba was established in 1613, the second in America, and it is today the second most
important of the country. Currently, the province hosts more than 180.000 students in
disciplines so diverse as medicine, aeronautic, philosophy, or physics [exhibit from 5 to 8].


In the province are located eight different universities, public and private, in four different
cities. The city of Córdoba, with six of them, is the cornerstone of the whole educational
system: 1. Universidad Nacional de Córdoba –UNC- (National University of Cordoba); 2.
Universidad Tecnológica Nacional – Facultad Regional Córdoba –UTN FRC- (National
Technological University – at Cordoba); 3. Universidad Católica de Córdoba –UCC-
(Catholic University of Cordoba); 4. Instituto Universitario Aeronáutico –IUA- (Aeronautic
Institute); 5. Universidad Blas Pascal –UBP- (Blas Pascal University); and 6. Universidad
Empresarial Siglo 21 –US21- (21th Century University).


The rest, are spread in the other three mayor cities of the province; such as Villa María:
Universidad Nacional de Villa María –UNVM- (National University of Villa Maria) and
Universidad Tecnológica Nacional – Facultad Regional Villa María –UTN FRVM-
(National Technological University – at Villa Maria); San Francisco: Universidad
Tecnológica Nacional – Facultad Regional San Francisco –UTN FRSF- (National
Technological University – at San Francisco) and Río Cuarto: Universidad Nacional de Río
Cuarto –UNRC- (National University of Rio Cuarto).


In the province there are eight universities, five public and three private. In the first case we
have: IUA, UNC, UNRC, UNVM, and UTN. Private universities are 100% located in the
city of Cordoba, where it is possible to find: UBP, UCC, and UES21.


This academic supply has an unequal distribution in the provincial map, fitting perfectly
well with the development map of the region. The people from the North and West have to



                                                                                              11
migrate to another part of the province to get access to college services [map 1]. It is not
difficult to understand why these two regions are quite behind the rest in terms of
development. Development and education go hand with hand. This is one of the aspects
that the policymakers should put their attention in the near future.


This unbalance is also noticeable between the public and private sector. The student
population in the public sector accounts 79.39% of the total and the private, 20.61%
[exhibit 7]. This process of concentration is also perceptible between the population of
students of its capital city (Cordoba) and the rest of the province. The city gathers 88.15%
of the students of the province, and the rest shares only the left 11.85% [exhibit 8].


Among the universities the same distribution pattern is replicated, being the UNC several
times bigger than the rest [exhibit 5 & 6]. One potential explanation for this is that for more
than three centuries the UNC was the only university in the province. Even today, it is by
far the most diversified in term of careers, having 12 different colleges.




2.3. THE SYSTEM OF SCIENCE AND TECHNOLOGY OF CORDOBA


The province of Cordoba presents a number of groups, centers, and institutes of research
and development working in a wide spectrum of fields. There are also a great number of
less formalized groups that give the system dynamic, diversity, and wideness. Most of the
centers and institutes located in the province are part of the structure of national public
organisms of science and technology. That is the case of CONICET1 (mathematics,
chemistry, biology, vegetal biology, physic–chemistry, and medicine), CONAE2 (space),
CONEA3 (atomic energy), INTA4 (agriculture), INA5 (water), and INTI6 (industry). Let’s
take a look of these leading institutions:


1
  CONICET: Consejo Nacional de Investigaciones Científicas y Técnicas.
2
  CONAE: Consejo Nacional de Actividades Espaciales.
3
  CONEA: Consejo Nacional de Energía Atómica.
4
  INTA: Instituto Nacional de Tecnología Agropecuaria.
5
  INA: Instituto Nacional del agua
6
  INTI: Instituto Nacional de Tecnología Industrial.


                                                                                            12
CONICET
This national institution has in the province six R&D centers and institutes, the 5% of the
national total. These are:
    •    CEVE7, Experimental Center for the Economical Dwelling;
    •    CIEM8, Study and Research Center of Mathematic of Cordoba;
    •    CIQUIBIC9, Research Center in Biological Chemistry of Cordoba;
    •    IMBIV10, Multi-field Institute of Vegetal Biology;
    •    INFIQC11, Research Institute of Physic-Chemistry of Córdoba; and
    •    INIMEC12, Medical Research Institute "Mercedes y Martín Ferreira".


Four of them, IMBIV, INFIQC, CIQUIBIC, and CIEM, are centers shared with the UNC,
made possible for an agreement between this institution and CONICET.


        CEVE
        This research center created in 1967 looks for the developing, transferring, and
        teaching technologies related to the dwelling field. In its payroll the center accounts
        60 researchers and technicians. The CEVE mission is to promote a comprehensive
        and progressive development for the poor majority of the population, giving solutions
        in the dwelling and unemployment area.


        CONAE
        The National Commission of Space Activities has in Falda del Carmen (a small town
        nearby the city of Cordoba) the Space Center Teófilo Tabanera (CETT) and the
        Gullich Institute. The Space Center Teófilo Tabanera is located in the Cordoba Earth
        Station of Satellite Data Acquisition, with antennas capable of following the
        international tele-observation satellites. The Space Center works as well in the
        mission control of the SAC-C, the third Argentinean satellite. The Gullich Institute is


7
  CEVE: Centro Experimental de la Vivienda Económica.
8
  CIEM: Centro de Investigación y Estudios de Matemática de Córdoba.
9
  CIQUIBIC: Centro de Investigaciones en Química Biológica de Córdoba.
10
   IMBIV: Instituto Multidisciplinario de Biología Vegetal.
11
   INFIQC: Instituto de Investigaciones en Físico-Química de Córdoba.
12
   INIMEC: Instituto de Investigación Médica "Mercedes y Martín Ferreira".


                                                                                            13
located inside the CETT. This institute is the result of an agreement between
       CONICET and the National University of Cordoba. Its main mission is to train human
       resources in R&D in the space field.


       CNEA
       The National Commission of Atomic Energy has in the province a nuclear energy
       plant. The R&D activities are made in Dioxitek SA, a company created in the city of
       Cordoba by CNEA to commercialize its products of powder of dioxide of uranium.
       The R&D activities of this company are mostly related to the chemistry of the
       uranium.


       CIEM
       The Research and Study Center of Mathematics of Cordoba was originally a
       CONICET program, created in 1983 under the Program of Mathematics of IMAF13 of
       the National University of Cordoba, today FAMAF14. It is a center co-administrated
       by CONICET and UNC.


       CIQUIBIC
       The Research Center in Biological Chemistry of Cordoba is co-administrated by
       CONICET and UNC and it is located in the College of Chemical Sciences of the
       UNC.


       IMBIV
       The Multi-field Institute of Vegetal Biology is a shared institute of CONICET and
       UNC, with offices in the College of Exact, Physic and Natural Sciences15 of the UNC.


       INFIQC
       The Research Institute of Physic-Chemistry of Córdoba is a shared institute of



13
   IMAF: Instituto de Matemática Astronomía y Física
14
   FAMAF: Facultad de Matemática Astronomía y Física
15
   FCEFyN: Facultad de Ciencias Exactas, Físicas y Naturales


                                                                                         14
CONICET and UNC with offices in the College of Chemical Sciences16 of the UNC.
       It has three main areas of research: chemical kinetics, electrochemistry and organic
       physic-chemistry.


       INIMEC
       The Medical Research Institute "Mercedes y Martín Ferreira" is a non-profit, private
       institution that works in medical sciences. The institute was created in 1947 as a
       private institution and since 1961 receives support from a number of federal and
       provincial public institutions. Around thirty full time professionals work there,
       including researchers, grantees and technicians. The lines of research are: normal and
       pathological expression of the brain in two dimension of analysis: integrated
       (systemic) and isolated (cellular and sub-cellular).


       INA
       One of the five centers of the National Institute of the Water and Environment, the
       Center of the Semi-Arid Region (CIRSA17), is located in the province with offices in
       the city of Córdoba and Carlos Paz. The CIRSA has as its objective to promote
       research to take full advantage, control and preservation of the water resources and
       the environment of the central semi-arid region of the country. This institute develops
       its activities in the provinces of Cordoba, San Luis, Santiago del Estero, Catamarca,
       and La Rioja.


       INTA
       The National Institute of Agricultural Technology has in the province a research
       center and two experimental centers, the 6% of the national facilities. These are: the
       Institute of Phytopathology and Vegetal Physiology –IFFIVE18-, the Agricultural
       Experimental Center of Marcos Juarez and the Agricultural Experimental Center of
       Manfredi. In the IFFIVE they work in basic research and technological developments



16
   FCQ: Facultad de Ciencias Químicas
17
   CIRSA: Centro de la Región Semiárida.
18
   IFFIVE: Instituto de Fitopatología y Fisiología Vegetal.


                                                                                           15
to overcome or reduce the negative effects produced by the pathogenic of the plants
         and for unfavorable environmental conditions for the production of the plants.


         INTI
         The National Institute of Industrial Technology has one R&D Regional Center in the
         province, the Cordoba Regional Center (CEMCOR-CIMM19). The mission of this
         center is to assist the industry, mainly the SME, in technical issues, technological
         developments of products and processes, calibration, and trials. The center pursues to
         elevate the technological level, improve the competitiveness, and facilitate the
         catching up of the new technologies. It research activities are in mechanics, flaw
         analysis, surface engineering, magnetic materials, soldering, metallurgic, analytic
         chemistry, corrosion, electronics, non-destructive trials, technical services of
         documentation and human resources training.


         CEPROCOR20
         Originally, the Center for the Excellence of Products and Processes Cordoba was part
         of the Ministry of Science and Technology of the government of the province of
         Cordoba, but since 2009 it has become autonomous institution, depending on the
         same government. Its mission is to lead the S&T policy in the province. This center
         develops and transfers technology and services to the public and private sector. It is
         currently engaged in R&D and services in the field of: food, water, microbiology, and
         DNA.


In 2008, the R&D investment in the province, public and private, reached the amount of
AR$ 367.56 millions. This represented the 6.79% of the national cake [exhibits 9 & 11],
and 0.47% of the Cordoba’s GDP [exhibit 10]. These numbers are far from the 1%
established as a goal. In terms of human resources, the province counts 4,849 researchers,
grantees and technicians FTE (2,774 researchers), what represents the 8.51% (9.0%) of the
national pull [exhibit 9 & 12].


19
     CEMCOR-CIMM: Centro Regional Córdoba.
20
     CEPROCOR: Centro para la Excelencia en Procesos y Productos Córdoba.


                                                                                            16
2.4. THE SYSTEM OF PRODUCTION OF CORDOBA


In the private sector, a conglomerate of small and medium enterprises (SME) works in a
very competitive market, part of it pulled by global corporations such as: FIAT (cars,
tracks, car engines, and spare parts), Renault (cars), Volkswagen (spare parts), ARCOR
(candies, cookies and food), Intel (microprocessors), Motorola (software for cellular
phones), EDS (software), and AGD (vegetal oil and food). This sector also has a number of
the associations and chambers: Union of Industries of Córdoba (UIC21), Stock Exchange of
Cordoba, Chamber of Foreign Commerce of Cordoba (CaCEC22), and the Cluster Córdoba
Technology (electronics and software).


In the side of the provincial government the key institutions for the industrial policies are:
the Ministry of Production, the Ministry of Finance, the Ministry of Science and
Technology, and ProCor. At federal level different governmental institutions have strong
impact in the province.


The industrial sector is responsible for the 57.70% (2009) of the total exports of the
province [exhibit 15]. Comparing the total exports, US$ 5.96 Billions (2009), with the
provincial GDP, US$ 22.20 billions23 in the same year [exhibit 10]. It is possible to see that
the exports represent 26.86% of the provincial GDP. It gives us an idea about the strength
of this economic sector.


There are a number of clusters in the territory in a broad range of economic fields. The
most notorious are: cars, engines and spare parts; IT; aeronautics; food; agricultural
machinery; agriculture; tourism; health; and education [map 2].




21
   UIC: Unión Industrial de Córdoba.
22
   CaCEC: Cámara de Comercio Exterior de Córdoba.
23
   PBG Córdoba (2009) = AR$ 84.14 Billions = US$ 22.20 Billions [US$ 1 = AR$ 3.7983; 07/01/2009; BCRA].


                                                                                                          17
2.5. THE MILESTONES OF CORDOBA IN THE PAST 10 YEARS


The provincial scenario has been changing in the last years, taking place a number of public
and private actions. The provincial government has had three main goals: to promote the
settlement of IT/ R&D companies; to consolidate the S&T sector through governmental
actions and to cooperate with the local universities. Through governmental initiatives and
the intrinsic characteristics of the province it was possible to go in that direction. Part of
those initiatives can be seen in the following timeline:


Year 2000: it is created Agencia Córdoba Ciencia S.E. (Cordoba Science Agency – state
owned corporation). This institution replaced the Under-Secretariat of Science and
Technology, giving the S&T sector more relevance and visibility, and allowing for the first
time to have its own policy. The main mission of the agency was to promote the
development of the science and technology in the province. This institution enjoyed a great
deal of independence based on the way that the decisions were taken, with high level of
independence of the central provincial government.


Year 2001: the Motorola’s Software Development Center arrives. Starting an era of
international settlements in Cordoba, the US’ company Motorola opens a software R&D
center in the province. The primary purpose of the firm was to develop software programs
for the company cell phones. The company planned to hire 500 software engineers in a
period of 5 years. At the beginning of the 2002 this center started to send the first software
solutions to United States. In 2007, the Cordoba Center reached the quality certification
CMMI level 5, the highest possible. Today, the center counts with more than 250
professionals.


Year 2001: it is launched the SAC-C (3rd Argentinean satellite). This represents one of the
pick points of the S&T system of Argentina in the last decades. Great part of this satellite,
launched by an American carrier, was developed and built in the Teófilo Tabanera Center
of Cordoba. This center has also the responsibility of mission control, communication, and
data acquisition.



                                                                                           18
Year 2003: a new law for the promotion of local industries is approved. This law, putted in
place two years after the arrival of Motorola, is intrinsically the result of the path open by
the company. Not long after it, an important number of international IT companies establish
their R&D centers in the province. That was the case of EDS (US), Intel (US) and Datasul
(Brazil). Four were the main benefits obtained for the new companies: the payment of part
of the salaries of each new hired employee, the access to a preferential electrical bill fare,
the exception for twenty year of all provincial taxes, and the access to subsidized rate
credits.


Year 2006: EDS arrives. Electronic Data System (EDS) opened in 2006 its eighth global
operations-and-development center in Cordoba, the first of this kind of facilities in Latin
America. The complete list includes three centers in India, two in China, and two more in
Hungary. This Global Service Center allows the company to offer end-to-end capabilities,
with a wide spectrum of services ranging from high-value consulting to business process
implementation and maintenance.


Year 2006: Intel arrives. That year, Intel opened its Argentina Software Development
Center (ASDC) in Cordoba. This center is one of the only three outside US and the first in
Latin America. The main areas of work for the company are: infrastructure software, Web
services protocols, and Web services security. Currently working with 60 employees, most
of them engineers, the company plans to increase its payroll up to 500 engineers in the next
5 years.


Year 2008: it is created the Ministerio de Ciencia y Tecnología de Córdoba - Ministry of
Science and Technology of Cordoba. This new governmental institution came to replace
Agencia Cordoba Science SE, (Cordoba Science Agency – state owned corporation) giving
the sector of science and technology a great deal of recognition and visibility. The
constitution of this ministry followed the same initiative taken by the national government
shortly before. This initiative must be understood in its own dimension, this is the only
ministry of S&T in a provincial government in Argentina. Never before, in Argentina and
in Cordoba, S&T has had the same governmental rank that education and production. Its



                                                                                           19
mission is to define, propose, implement and manage the policy of science, technology, and
innovation in the province of Cordoba.


Year 2011: it is planned for mid June to be launched the SAC-D/Aquarius (4th Argentinean
satellite). Some parts of this satellite, launched by an American carrier, were developed in
the Teófilo Tabanera Center of Cordoba. This center will have under its responsibility the
mission control, the communications, and the data acquisition.




3. STRENGTHS AND WEAKNESSES


The three sectors, universities, government, and companies have a role in the local system
of innovation. All of them, independently considered, can show a good level of
development in comparison with its peers in the rest of the country. But, that is only a part
of the picture we want to observe. The question to be answered is how efficient they are
working together.


Considered as a system, the actions of companies, government and universities presents a
number of strengths and weaknesses that should be underlined.


Strengths:
       •   The system of S&T has a long tradition.
       •   There is a strong interaction between universities and the government.
       •   There is a great number of grad and undergrad students.
       •   The private sector is extended and diversified.
       •   There is a strong interaction between the MS&T (former ACC24) and the rest of the
           government.


       •   The system of S&T has a long tradition: as one of the most important constituents
           of the Cordoba’s system of innovation, the system of education, science, and

24
     ACC: Agencia Córdoba Ciencia SE.


                                                                                          20
technology plays a key role. The National Academy of Sciences was founded in the
            city of Cordoba in 1869, and in 1871 the first astronomic observatory was built in
            the same city. The first director was the world renowned American astronomer Dr.
            Benjamin Gould. Today, Cordoba is the third most important center of the country
            in R&D activity, congresses, and seminars.


       •    There is a strong interaction between universities and the government: there are
            many and strong links between the government and the universities. Two examples
            can prove this. One is the forum created in 2000 between the MS&T and the
            universities. This forum looks for establishing a dialog between these two main
            actors of the system in order to create a common ground in policies and programs.
            The second example is a program that promotes applied research and cooperation
            among universities with co-shared funding coming from those universities, the
            national, and the provincial governments.


       •    There is a great number of grad and undergrad students: as it was stated previously,
            Cordoba is recognized nationally for the extension and diversity of its academic
            offer. To have an idea of its dimension, it can be said that the province has 10.96%
            of the students of Argentina [exhibits 3 and 7]25.


       •    The private sector is extended and diversified: the industrial activity that is around
            Cordoba is one of the most intensive and spread of the country. Originally, the city
            hosted the Fábrica Militar de Aviones (Military Factory of Planes); nowadays:
            Fábrica Argentina de Aviones (FAdeA) (Argentinean Factory of Planes). At the
            first decades of working, this factory spun-off a great numbers of metal-mechanic
            companies and later, the car factories. Today, apart from that sector, there is a great
            conglomerate of SME in software and electronics, tourism, entertainment,
            education, etc. [map 2].




25
     Argentina: 1,650,150; Córdoba: 180,874.


                                                                                                21
•   There is a strong interaction between the MS&T (former ACC26) and the rest of the
           government: a growing number of shared activities have been taken place in the last
           years between the MS&T and the rest of ministries and agencies of the government.
           Some of the main programs / activities developed were: “Cordoba without PCB (a
           cancerous substance)”, with the Environmental Cordoba Agency, “Total Quality
           Management in the SME”, with the Ministry of Production, etc.


Weaknesses:
       •   There are scarce funds for R+D.
       •   There is little interaction between the system of S&T and the private sector.
       •   The research activities are extremely oriented to basic research.
       •   The sources of information of the system of innovation itself are almost inexistent.
       •   There is scarce R+D activity and funding inside the companies.
       •   There is almost complete absence of venture capital (VC) at local level and very
           low at national level.


       •   There are scarce funds for R+D: the level of founding of the system is very low in
           comparison with the developed countries and even for Latin American standards.
           For Cordoba, it is 0.47% (2008) of the GDP [exhibit 10].


       •   The interaction between the system of S&T and the private sector is scarce: this
           missing link and the absence of venture capital (VC) are probably the main
           weaknesses of the system. The interaction between the private sector and the S&T
           system is quite weak. There is not a common language or understanding between
           these two sectors.


       •   The research activities are extremely oriented to basic research: the S&T sector of
           Argentina is highly oriented to basic research, without an alternative model in the
           applied research and the commercialization of the technology. It is notorious the
           absence of engineers in the R&D process in opposition to what is happening in

26
     ACC: Agencia Córdoba Ciencia SE


                                                                                              22
other parts of the world. The lack of incentive and better job opportunities seems to
    be the more logical explanation for their absence. On this regard, a more proactive
    process of commercialization of the technology could help to lure this group of
    professionals.


•   The sources of information of the system of innovation itself are almost inexistent:
    the system doesn’t count with organized, reliable and comprehensive sources of
    information for the agents in order to take decisions in a more efficient, rational, and
    transparent way. Without good sources of information the process of decision-
    making tends to be more driven by personal or group visions and less by a social or
    collective consensus.


•   There is scarce R+D activity and funding inside the companies: the activity of R&D
    developed in private companies is lower with its counterparts in other parts of the
    world. The investment of the private sector represents 77.7% (2007) of the total
    R&D in Japan, 67.9 (2007) in Germany, 67.3% (2008) in US, 44.7% (2007) in
    Brazil, and only 29.3% (2007) in Argentina [exhibit 14]; Cordoba follows the
    country closely.


•   There is almost complete absence of venture capital (VC) at local level and very
    low at national level: venture capitals are the base of a system that promotes
    entrepreneurship in R&D companies and a first step in a healthy innovative system.
    Argentina does not count with that instrument, neither does Cordoba. The sources of
    funding in the private sector are concentrated in less risky endeavors and the public
    sector does not have the resources or the understanding to take this task in its hands.
    There are parts of the world that have built their competitive advantage based in
    these kinds of instruments. That is the case of Boston or the Silicon Valley in US.




                                                                                          23
4. CONCLUSIONS


The system of innovation of Cordoba is strong, with a long tradition, and wide and
disseminated R&D centers and institutions. The private sector is one of the most important
in the country, not only in terms of big companies but also in the sector of SME. More than
25% of the GDP of Cordoba comes from the foreign trade, contrasting on that regard with
the less successful story of Argentina.


What could be said without hesitation is that the three main components of the Sabato’s
Triangle, universities, government, and companies are quite strong, separately considered.
Some of the links among these three sectors are strong, such as between the provincial
government and the universities, or between the Government and the private sector. But the
circle is not complete. The missing link is between the universities (and R&D centers) and
the companies. Universities don’t have enough researchers in key fields, such as IT, and the
relationship with the industry is weak, reducing the contribution that the S&T sector could
bring to the development of the province.


What is normal in the American system, or even in the European, it is not in the
Argentinean. The cultural divorce between researchers and businesspeople is not new.
Researchers have always worked for the academia and the peers’ recognition. Exactly there
resides one of the main sources of strength and weakness of the system. This mindset
allowed the system survives in the worst moments, but is incapable of becoming a
cornerstone of the productive system and therefore, be a substantive source of competitive
advantage and wealth for the province.


In the mind of the businessmen of Argentina, wealth is not an R&D issue. R&D is for the
universities, a playground for scholars and researchers out of the standards of time and
quality that the competitive market needs. But it is also a matter of scale. R&D requires
time and money, two resources that most of the SME do not have. Argentinean
businesspeople, most of the time, are not able to take advantage of the new knowledge
created; international corporations are. Reinforcing to that vision, there is not a big



                                                                                         24
paradigmatic success story of collaboration between academia and the private sector. The
innovation is active in Cordoba, but the reality is that that innovation doesn’t come from the
R&D centers.


Another important element of the system of innovation of Cordoba is the weakness of the
venture capital industry. VCs are the cornerstone of the successful stories of US in recent
years, and the most important link between colleges and markets. Innovation is in part
associated with the spin-offs irradiated from S&T careers and R&D centers. Without VCs,
there are not spin-offs.




5. PROPOSAL


The purpose of this section is to make some suggestions for the development of the local/
regional system of innovation of the province of Cordoba. But, considering that the
problems of that region are almost the same around the developing world, these guidelines
could be helpful for other policymakers. The main actions possible to tackle the problems
are:
       •   Increment the synergy;
       •   Scale up the value chain;
       •   Provide information;
       •   Protect and promote intellectual property (IP); and
       •   Increment the number of R&D companies.


       •   Increment synergy: as it was previously stated, the synergy between R&D
           centers and companies is weak. The success of every innovation system relies on
           the principle that what is done in the lab can be converted in cash flow in the
           companies. If this link is missing, the incentive of the companies to invest in
           R&D disappears. It should be top priority for the policymakers to promote, up to
           the possible limits, the gathering of researchers and business people and the




                                                                                           25
reorientation of the technical careers to promote entrepreneurship. The
    government has the means and the power to do it.


•   Scale up the value chain: incorporating R&D as part of the value chain, from the
    lab to the sales desk. A great deal of what is done in the labs should find its way
    to the commercial market. To do that, it is essential the reorientation of part of
    the R&D funds from basic to applied research and the creation of special offices
    to be the link between the academia and private sector.


•   Provide information: all the actors of the system, public and private, need to
    work with different intensity in a number of activities: diagnosis, planning,
    execution and evaluation. All of them have the same need: comprehensive,
    reliable, and organized information. It is indispensable to count with quantitative
    data useful to compare different periods and to develop new strategies and
    policies. As part of those tools, many countries have developed a number of
    indicators of science, technology, and innovation. Those indicators, properly
    organized, will allow the agents to have a more accurate picture of the system. In
    the public sector, it is indispensable to have updated and reliable information. It
    is the base to build more predictable, transparent, efficient and rational
    institutions.


•   Protect and promote intellectual property (IP): IP is the instrument to make
    possible the commercialization of the technology and the patent system the
    vehicle through which it is possible to reap profits from a discovery. A patent is
    a monopoly granted by the state to impede others to use or commercialize an
    invention. In most countries, the period of protection is 20 years; period good
    enough to recover the original investment in R&D. IP has been since ever a
    powerful instrument in the hands of developed countries, and US the most
    notorious. However, in the last years it comes up that it can be a great instrument
    to promote the development in peripheral economies as well. But IP must be
    protected to become an incentive for the companies to invest in it. The


                                                                                    26
suggestion is to put more funds to promote local entrepreneurship based on IP
    development and to reinforce its protection as a vehicle of economic
    development.


•   Increment the number of R&D companies: venture capital is the way to afford
    risky business. Among them, the R&D companies make possible to push new
    knowledge and discoveries into the market. Risky R&D companies can not be
    funded by normal financial instruments. On the contrary, they need a different
    approach. That is what has been happening in Boston, Massachusetts, where
    VCs play an active role in the R&D spin-offs. That Schumpeterian creative-
    destructive approach has made from Boston one of the most vibrant economies
    in the world. For developing economies, VCs are even more necessary. It could
    help to close the gap between them and the developed nations, speeding up the
    creation of R&D companies, bringing more development and capturing better
    jobs.




                                                                                27
6. EXHIBITS


Exhibit 1: expenditures in research and development as a percentage of the GDP, in
selected countries:
                                                        ER&D/
                             Country          Year
                                                       GDP (%)
                         Sweden               2008       3.75
                         Finland              2008       3.46
                         Japan                2007       3.44
                         United States        2008       2.77
                         Germany              2007       2.53
                         France               2008       2.02
                         Australia            2006       2.06
                         Canada               2008       1.84
                         Norway               2008       1.62
                         Portugal             2008       1.51
                         Spain                2008       1.38
                         Italy                2008       1.18
                         Brazil               2008       1.09
                         Chile                2004       0.67
                         Argentina            2008       0.52
                         Uruguay              2007       0.44
                         Mexico               2007       0.37
                         Ecuador              2008       0.25
                         Panama               2007       0.20
                         Colombia             2008       0.15
                         Paraguay             2005       0.09
                         Source: UNESCO and RICyT. Selected
                         countries.




                                                                                28
Exhibit 2: number of researchers Full Time Equivalent (FTE) every 1000 people of the
              Economic Active Population (EAP), in selected countries:

                                                  Country       Year      Researchers
                                            Japan               2007             10.70
                                            United States       2006              9.40
                                            Australia           2006              8.10
                                            France              2007              7.60
                                            Canada              2007              7.96
                                            Portugal            2008              7.18
                                            Germany             2007              7.00
                                            Spain               2007              5.54
                                            Italy               2008              3.80
                                            Argentina           2008              2.56
                                            Brazil              2008              2.09
                                            Chile               2004              2.00
                                            Uruguay             2008              0.72
                                            Mexico              2007              0.88
                                            Colombia            2008              0.35
                                            Panama              2008              0.25
                                            Paraguay            2008              0.15
                                            Source: RICyT and UNESCO.



              Exhibit 3: undergrad and grad students, freshmen, and alumni of Argentina, period 2000-
              2009:
                                                  Undergrad + grad – Argentina
  Year          2000        2001         2002       2003        2004       2005        2006        2007        2008        2009
Students     1,339,740    1,412,999   1,462,319   1.489,243 1,536,653 1,553,700      1,586,520   1,569,065   1,600,522   1,650,150
Freshmen       352,605      347,691     359,266     365,892    372,492    361,648      358,763     362,690     365,227     387,603
 Alumni          63,259      65,104      74,960      78,429     83,890      86,879      84,785      86,528      94,909      98,129
Source: ME, 2009


              Exhibit 4: Ph.D. students and alumni, Argentina, 2009:

                                                        Ph.D. - Argentina
                                                         Year       2009
                                                       Students     13.549
                                                       Alumni          937
                                                       Source: ME, 2009




                                                                                                                 29
Exhibit 5: undergrad and grad students of Córdoba, by institution, period 2000- 2009:

                                                Undergrad + grad students – Córdoba
    Year /                     Public &
                     City                 2000     2001      2002      2003     2004       2005       2006      2007      2008        2009
  Institution                  Private**
UNC            Córdoba         Pu         112,063  113,614   113,296   116,627  114,012    110,961    106,735   105,162   102,684     103,616
UCC            Córdoba               PR     6,063    6,332     5,666     6,208    6,591       6,773     7,636     7,987     8,318         8,394
IUA            Córdoba         Pu           4,090    5,216     5,182     6,038    5,589       5,665     5,800     6,957     7,060         6,945
UBP            Córdoba               PR     3,460    3,927     4,186     4,803    5,517       6,279     7,188     8,314     9,459      10,293
UES21          Córdoba               PR     2,548    2,486     2,633        ---      ---      3,879     5,457     6,707    10,710      18,589
UNVM           Villa María     Pu           2,252    2,999     3,230     3,078    2,427       2,545     2,709     2,846     2,886         4,099
UNRC           Río Cuarto      Pu          15,405   16,734    19,725    20,172   20,244     19,197     18,573    17,533    16,434      16,138
UTN-FRC*       Córdoba         Pu              ---  11,600        ---       ---      ---         ---       ---       ---       ---          ---
UTN-FRVM        Villa María    Pu              ---      ---       ---       ---      ---         ---       ---       ---       ---          ---
UTN-FRSF*       San Francisco  Pu              ---   1,200        ---       ---      ---         ---       ---       ---       ---          ---
TOTAL                                          --- 164,108        ---       ---      ---         ---       ---       ---       ---          ---
Source: ME, 2009; * UTN-FRC (2001) and UTN-FRSF (2001) data provided by the own universities; ** Pu: public, PR: private.



    Exhibit 6: number of undergrad and grad students of Córdoba, by institution, 2009:

                   Students

                   120000

                   100000

                    80000

                    60000

                    40000

                    20000

                          0
                                                            *




                                                                                                              *
                                               RC
                              C




                                                                               C


                                                                                         A
                                      21




                                                                     P




                                                                                                 VM
                                                         RC




                                                                                                             F
                                                                                       IU
                           UN




                                                                            UC
                                                                  UB




                                                                                                          RS
                                     S

                                            UN




                                                                                              UN
                                                       -F
                                  UE




                                                                                                       -F
                                                    N




                                                                                                      N
                                                  UT




                                                                                                   UT




                                 * UTN-FRC (2001) and UTN-FRSF (2001) data were provided by the own universities.




                                                                                                                                     30
Exhibit 7: undergrad and grad students of Córdoba, by public or private sector, 2009:


                                                              2009
                                                                                                    Private
                               Public &                                                              21%
                                                         #              %
                                Private
                             Public                  143,598            79.39
                             Private                  37,276            20.61
                             TOTAL                   180,874              100
                             Public: UTN-FRC (2001) and UTN-FRSF (2001)                                                            Public
                             data were provided by the own universities; UTN-                                                       79%
                             FRVM: data no available; %: made by the author.
                             Source: ME, 2009.




            Exhibit 8: undergrad and grad students of Córdoba, by city, 2009:

                                                               2009
                                 City
                                                           #                  %
                        Córdoba*                          159,437             88.15                                 Rest**
                                                                                                                     12%
                        Río Cuarto                         16,138              8.92
                        Villa María**                       4,099              2.27
                        San Francisco***                    1,200              0.66
                        TOTAL                             180,874               100
                        Córdoba: UTN-FRC (2001) data provided by the own university;
                        ** Villa María: UTN-FRVM: data no available; *** San Francisco:
                                                                                                                                            Córdoba*
                        UTN-FRSF (2001) data provided by the own university; %: made                                                          88%
                        by the author.
                        Source: ME, 2009;




            Exhibit 9: indicators of R&D in Córdoba:

                                                                           Cordoba
                                                             2001         2002            2003            2004          2005         2006              2007      2008
Total (researchers + grantees +      Quantity                  3,048        3,016           3,279           3,494          3,685      4,115              4,488     4,849
       technicians), FTE             %**                        8.14         8.06            8.32            8.23           8.12       8.34               8.44      8.51
                                     Quantity                  1,761        1,767           1,771           1,847          2,114      2,280              2,676     2,774
       Researchers, FTE                                         8.43         8.33            8.15            7.99           8.57       8.60               9.22      9.00
                                     %**
                                     AR$ x 1000              102,001      102,211         123,798         148,984        170,367    239,640            339,138   367,564
            ER&D*                                               8.94         8.41            8.03            7.71           6.95       7.40               8.22      6.79
                                     %**
* ER&D: Expenditures in R&D; ** Made by the author based on the MinCYT, 2010 data; FTE: Full Time Equivalent; %: Córdoba vs. Argentina.
Source: MinCYT, 2010.




                                                                                                                                                         31
Exhibit 10: ER&D/ GDP (%) in the province of Córdoba:

                                                               Cordoba
             Year                      2001       2002         2003    2004      2005      2006    2007     2008        2009
             GDP
                                      19,320      25,515       28,904   31,807   38,834   46,056   60,240   78,565      84,147
     AR$ millions (current)
          ER&D*
                                          102        102         123      148      170       239     339      367          ---
     AR$ millions (current)
        ER&D/ GDP
                                         0.52       0.40         0.43     0.47     0.44     0.52     0.56     0.47         ---
            (%)**
ER&D: Expenditures in R&D; ** Made by the author based on MinCYT and DGEyC data.
Source: MinCYT, DGEyC (Cordoba’s government)27.




      Exhibit 11: expenditures in R&D for the complete group of provinces of Argentina, 2008.

                                                                          ER&D* (2008)
                                                 Provinces
                                                                           AR$     %**
                                        1       Buenos Aires             1,751,119 32.38
                                        2       CABA28                   1,545,995 28.58
                                        3       Córdoba                    367,564  6.79
                                        4       Santa Fe                   314,621  5.82
                                        5       Mendoza                    185,704  3.43
                                        6       Tucuman                    174,442  3.22
                                        7       San Luis                   131,180  2.43
                                        8       San Juan                   106,112  1.96
                                        9       Río Negro                  105,946  1.96
                                        10      Entre Ríos                  83,981  1.55
                                        11      Corrientes                  71,716  1.33
                                        12      Salta                       67,160  1.24
                                        13      Misiones                    66,688  1.23
                                        14      Chubut                      56,117  1.04
                                        15      Neuquén                     55,341  1.02
                                        16      Jujuy                       51,870  0.96
                                        17      Catamarca                   49,937  0.92
                                        18      La Pampa                    46,586  0.86
                                        19      La Rioja                    43,878  0.81
                                        20      Santiago del Estero         42,420  0.78
                                        21      Formosa                     24,886  0.46
                                        22      Chaco                       24,742  0.46
                                        23      Tierra del Fuego            22,922  0.42
                                        24      Santa Cruz                  18,742  0.35
                                                  TOTAL                  5,409,669   100
                                      * In thousands; ** made by the author based on the
                                      MCYT, 2010 data.
                                      Source: MinCYT, 2010.




      27
           DGEyC: Dirección General de Estadística y Censos.
      28
           CABA: Ciudad Autónoma de Buenos Aires.


                                                                                                                   32
Exhibit 12: number of people dedicated to R&D for the complete group of provinces of
Argentina, 2008.

                                             Total*, FTE          Researchers, FTE
                      Provinces
                                           Quantity    %**        Quantity    %**
                1   Buenos Aires             17,984    31.56          8,926    28.96
                2   CABA                     14,429    25.32          7,291    23.66
                3   Córdoba                   4,849     8.51          2,774     9.00
                4   Santa Fe                  3,825     6.72          2,277     7.41
                5   Tucuman                   2,427     4.26          1,354     4.42
                6   Mendoza                   2,222     3.90          1,252     4.09
                7   San Juan                  1,303     2.29            905     2.96
                8   San Luis                  1,253     2.20            864     2.82
                9   Río Negro                 1,203     2.12            652     2.14
               10   Salta                       990     1.74            620     2.03
               11   Corrientes                  913     1.61            497     1.64
               12   Entre Ríos                  895     1.58            570     1.87
               13   Chubut                      700     1.23            381     1.26
               14   Catamarca                   503     0.89            360     1.19
               15   Neuquén                     495     0.86            386     1.28
               16   Misiones                    483     0.84            279     0.93
               17   Santiago del Estero         473     0.83            337     1.12
               18   La Pampa                    394     0.69            268     0.89
               19   Jujuy                       359     0.62            264     0.88
               20   Chaco                       328     0.57            115     0.40
               21   La Rioja                    299     0.52            153     0.52
               22   Santa Cruz                  262     0.45            144     0.49
               23   Tierra del Fuego            202     0.35             80     0.28
               24   Formosa                     196     0.34            112     0.39
                       TOTAL                 56,987      100        30,861       100
              Researchers + grantees + technicians; ** made by the author based on the
              MCYT, 2010 data; FTE: Full Time Equivalent; year: 2008.
              Source: MinCYT, 2010.




                                                                                         33
Exhibit 13: expenditures in R&D made by the government sector in selected countries,
proportionally to the national expenditure, period 2000-2009:

                                                  %
           Government
                          2000 2001 2002 2003 2004        2005     2006     2007     2008 2009
          Argentina        70.7 74.3 70.2 68.9 64.5        65.3     66.9     67.6       ---  ---
          Brazil           54.1 54.8 53.3 54.2 53.5        49.7     50.4     52.9       ---  ---
          Mexico           63.0 59.1 55.5 56.1 50.3        49.2     50.3     50.2       ---  ---
          Portugal         64.8 61.0 60.5 60.1 57.5        55.2     48.6     44.6       ---  ---
          Chile            70.3 68.9 54.6 43.2 44.4          ---      ---      ---      ---  ---
          Spain            38.6 39.9 39.1 40.1 41.0        43.0     42.5     43.7       ---  ---
          France           38.7 36.9 38.3 39.0 38.7        38.6     38.5     38.3     39.4   ---
          Colombia         23.3 21.5 22.5 26.2 31.0        37.8     38.5     37.7       ---  ---
          Australia        45.5   --- 41.2  --- 40.3         ---    37.3       ---      ---  ---
          Canada           29.3 29.2 31.6 31.4 30.9        31.6     31.4     32.9     33.0 33.1
          Germany          31.4 31.4 31.6 31.2 30.5        28.4     27.7     27.7       ---  ---
          United States    25.8 27.2 29.1 30.0 30.8        30.2     29.3     28.3     27.0   ---
          Japan            19.6 19.0 18.4 18.0 18.1        16.8     16.2     15.6       ---  ---
          Source: UNESCO (UIS).




Exhibit 14: expenditures in R&D made by private companies in selected countries,
proportionally to the national expenditure, period 2000-2009:

              Private                                %
            companies     2000 2001 2002 2003     2004    2005     2006     2007     2008 2009
          Japan            72.4 73.1 74.1 74.6     74.8    76.1     77.1     77.7       ---  ---
          Germany          66.0 65.7 65.5 66.3     66.6    67.6     68.2     67.9       ---
          United States    69.4 67.7 65.2 64.3     63.8    64.4     65.4     66.2     67.3   ---
          Australia        46.3   --- 50.7  ---    54,6      ---    58.3       ---      ---  ---
          France           52.5 54.2 52.1 50.8     50.7    51.9     52.3     52.0     50.5   ---
          Canada           44.9 50.3 51.5 50.3     50.0    49.1     49.5     47.8     47.6 47.5
          Portugal         27.0 31.5 31.6 31.7     34.2    36.3     43.0     47.0       ---  ---
          Spain            44.9 47.2 48.9 48.4     48.0    46.3     47.1     45.5       ---  ---
          Mexico           29.5 29.8 34.7 34.7     38.6    41.5     44.8     45.1       ---  ---
          Brazil           44.7 43.8 45.0 43.8     44.5    48.3     47.7     44.7       ---  ---
          Chile            23.0 24.9 33.2 43.6     45.8      ---      ---      ---      ---  ---
          Argentina        23.3 20.8 24.3 26.3     30.7    31.0     29.4     29.3       ---  ---
          Colombia         29.8 30.9 29.1 25.3     26.2    27.2     28.0     27.2       ---  ---
          Source: UNESCO (UIS).




                                                                                                   34
Exhibit 15: exports of Cordoba, by sector, 2009-2010:

                                                     2009             2010
                           Sector               US$              US$
                                                          %                %
                                              (millions)       (millions)
                 Commodities                       1,540 25.82      3,491 42.30
                 Agricultural Manufactures         2,974 49.87      3,054 36.97
                 Industrial Manufactures           1,450 24.31      1,708 20.73
                 Total                             5,964  100       8,254   100
                 Source: DGEyC with INDEC data and ProCor.



                               Industrial
                              Manufactures
                                 21%
                                                                Commodities
                                                                   42%

                                                    s


                               Agricultural
                              Manufactures
                                  37%
                                                  2010



7. MAPS
Map 1: location of cities with universities:




                                                                                    Córdoba



                                                                                  San Francisco




                                                                                   Villa María




                                                                                   Río Cuarto




                                                                                              35
Map 2: location of main clusters:


                                        Aeronautic,
                                    electronics, IT, cars,
                                    car spare parts, and
                                           health




                                          Agriculture
                                          machinery




                                         Food industry




                                           Agriculture:
                                          Center, South
                                            and East




                                        Tourism: center
                                           and west




                                                             36
8. REFERENCES


Casiolatto, J. et al. (2003), Systems of Innovation and Development, Evidence from Brazil. Edward Elgar
               Publishing Limited: Cheltenham.
Chang, Y. & Chen, M. (2004), Comparing Approaches to Systems of Innovation: The Knowledge Perspective.
               Technology in Society 26 (pp. 17-37), Elsevier Ltd.
Freeman, C. (1995), The National Innovation System in historical perspective, Cambridge Journal of
               Economics 19 (1), 41–60. Cambridge.
Freeman, C. (1988), Japan: a new national system of innovation? in: Dosi, G. (Ed.), Technical Change and
               Economic Theory. Pinter Publishers: London.
Freeman, C. (1987), Technology Policy and Economic Performance: Lessons from Japan. Pinter: London.
DGEYC (2010), Producto Geográfico Bruto de la provincia de Córdoba 1993-2009. DGEYC: Córdoba.
Intarakumnerd, P. et al. (2002), National Innovation System in Less Successful Developing Countries: The
               Case of Thailand, Research Policy 31. Elsevier Science B.V.
Johnson, Bjorn (2009), Aprendizaje institucional, pp.33-56, in: Lundvall, B-A (Ed): Sistemas nacionales de
               innovación. UNSAM Edita: San Marín, Argentina.
Lundvall, B. (Ed.) (2009), Sistemas nacionales de innovación – Hacia una teoría de la innovación y el
               aprendizaje por interacción. UNSAM Edita: San Marín, Argentina.
Lundvall, B.A˚. (Ed.) (1992), National Systems of Innovation. Toward a Theory of Innovation and Interactive
               Learning. Pinter: London.
ME (2009), [ME: Ministerio de Educación - Área de Publicaciones de la Secretaría de Políticas
                 Universitarias] Anuario 2009 - Estadísticas universitarias. ME: Buenos Aires.
MECYT (2007), [MECYT: Ministerio de Educación Ciencia y Tecnología - Área de Publicaciones de la
               Secretaría de Políticas Universitarias] Indicadores de Ciencia y Tecnología - Argentina 2006.
               MECYT: Buenos Aires.
MECYT (2006), Indicadores de ciencia y tecnología – Argentina 2005. MECYT: Buenos Aires.
MECYT (2005a), Anuario 00-04 de estadísticas universitarias. MECYT: Buenos Aires.
MECYT (2005b), Indicadores de ciencia y tecnología – Argentina 2004. MECYT: Buenos Aires.
MECYT (2004), Indicadores de ciencia y tecnología – Argentina 2003. MECYT: Buenos Aires.
MECYT (2003), Indicadores de ciencia y tecnología – Argentina 2002. MECYT: Buenos Aires.
MECYT (2002), Indicadores de ciencia y tecnología – Argentina 2001. MECYT: Buenos Aires.


MinCyT (2010), [MinCyT: Ministerio de Ciencia, Tecnología e Innovación Productiva de la Nación]
               Indicadores de ciencia y tecnología – Argentina 2008. MinCyT: Buenos Aires.
MinCyT (2008), Indicadores de ciencia y tecnología – Argentina 2007. MinCyT: Buenos Aires.
Nelson, R.R. (Ed.) (1993), National Innovation Systems - A Comparative Analysis. Oxford University Press:
               Oxford.



                                                                                                         37
Nelson, R.R. (Ed.) (2005), Technology, Institutions and Economic Growth. Harvard University Press:
              Cambridge.
Niosi, J. (1999), Fourth-Generation R&D: From Linear Models to Flexible Innovation, Journal of Business
              Research 45, pp. 111–117. Elsevier Science Inc.: New York.
Niosi, J. (2000), Science-Based Industries: a New Schumpeterian Taxonomy, Technology in Society 22.
              Elsevier Science Ltd.
Niosi, J. (2002), National Systems of Innovations Are “x-efficient” (and x-effective); Why Some Are Slow
              learners, Research Policy 31. Elsevier Science B.V.
OECD (1997), Oslo Manual - Proposed Guidelines for Collecting and Interpreting Technological Innovation
              Data. OECD: Paris.
Porter, M. (1990a), The Competitive Advantage of Nations. Macmillan: New York.
Porter, M. (1990b), The Competitive Advantage of Nations. Harvard Business Review, March – April (pp. 73-
              91): Cambridge.
RICYT (2010), El Estado de la Ciencia - Principales Indicadores de Ciencia y Tecnología - Iberoamericanos
                 / Interamericanos. RICYT/ CYTED/ OEA/ REDES: Buenos Aires.
Sábato, J. (1975), El pensamiento latinoamericano en la problemática ciencia–technología–desarrollo-
              dependencia. Paidós: Buenos Aires.
Schumpeter, J.A. (1934), The Theory of Economic Development: An Inquiry into Profits, Capital, Credit,
              Interest and the Business Cycle. Transaction Publishers: New Brunswick (USA).
Schumpeter, J.A. (1942), Capitalism, Socialism and Democracy. Harper and Brothers: New York.




WEBSITES

DGEYC                                                                http://estadistica.cba.gov.ar/
ProCor                                                               http://www.procordoba.org/
UNESCO, UIS                                                          http://stats.uis.unesco.org/unesco/




                                                                                                           38

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Local Innovation in Emerging Economies: A Case Study of Córdoba, Argentina

  • 1. Local Innovation Systems in Emerging Economies Study Case: Córdoba, Argentina By: Jorge Boiola ABSTRACT Systems of innovation are highly dependent on local conditions, where national boundaries give the general platform to it, but local systems play a key role in the path to development. In the developing world this is even more important, becoming national centralized governments a limitation to the development. Córdoba, Argentina, is the case of a developing region in a developing country. The study goes in the direction of gathering and interpreting data from the three mayor players of its innovation system: government, universities and private companies; assessing the links among them and establishing conclusions about how they work as a system. Finally, it makes a proposal for the improvement of the local system of innovation to the different forces and the policymakers of the province. The study shares a common ground with similar regions around the world and its lessons are able to be applied to them. 1
  • 2. 1. INTRODUCTION At the beginning of the 20th Century, the economist and Harvard professor Joseph Schumpeter (1934) stated that when an economy is in a static equilibrium, it doesn’t generate value. In such situation, the incomes would be only good enough to pay for the means of production. Therefore, the added value only would be possible under the precondition of the imbalance of the economic system. The leading forces of such imbalances are spontaneous changes in the preconditions of an industry, in the techniques used, and in the productive organization. Therefore, development proceeds from the spontaneous and discontinuous changes in the circular economic flow, not in its equilibrium. One way to break that equilibrium is through innovation. Following his line of thinking it can be said that the closer a market is to perfect competition, the lesser are the benefits for the companies. As its corollary, since innovation has no competition at the beginning, the price, whole or partially, acts under the principles of the monopoly. He listed as sources of innovation: (1) the introduction of a new good; (2) the introduction of a new method of production; (3) the opening of a new market; (4) the conquest of a new source of supply of raw materials or half-manufactured goods; (5) the creation of a new organization of any industry. Schumpeter also said that through time some of the different roles that the entrepreneur has in the development process could be progressively replaced by some sort of “automatisation” of them. Therefore, part of the entrepreneurial process could rest in different forces, acting as an entrepreneur. Between the end of 1980s and the beginning of the 1990s Freeman (1987), Lundvall (1992), and Nelson (1993) go further with this concept of “automatisation” of the 2
  • 3. innovation / development activity, reducing the role of the entrepreneur and putting it in the hands of an interlinked system. They established the leading principles of what was recognized as the theoretical framework of the national innovation system (NIS). According to Lundvall (1992), a national innovation system ‘is constituted by elements and relationships which interact in the production, diffusion and use of new and economically useful knowledge […]’; Freeman (1987) described it as “[…] the network of institutions in the public -and private sectors- whose activities and interactions initiate, import, modify and diffuse new technologies”. A well-organized system of innovation may enable a country in a pre-developed stage to make very rapid progress through appropriate combinations of imported technology and local adaptation and development. According to OECD (1997), there are a number of factors that interact to make the innovation activities more or less dynamic. Among them, we can find the institutional framework, the development of the S&T system, the transfer factors and the innovation capacity inside the companies. These elements can give us an idea about the complexity of the innovation systems. FRAMEWORK CONDITIONS The general conditions and institutions which set the range of opportunities for innovation TRANSFER FACTORS Human, social and cultural factors influencing information transmission to firms and learning by them INNOVATION DYNAMO Dynamic factors shaping innovation in firms SCIENCE AND ENGINEERING BASE Science and technology institutions underpinning the innovation dynamo The innovation policy terrain (OECD, 1997) 3
  • 4. In the 90s, Michael Porter (1990b) wrote a new chapter establishing the way in which countries and regions compete, creating competitive advantage through a systemic process. Innovation has a key role in that process. Porter’s studies lead to the definition of a model of four forces acting simultaneously: the structure of rivalry among firms, the factor conditions, the demand conditions and the related and supporting industries. In a world of fierce competition, nations and regions have become more important than in the past. As the economic wealth is shifting from productive to knowledge based processes, the creation, dissemination, and the economic appropriation of the knowledge has increased the importance of the national framework in which all forces move. Government and chance have a role too in its model. Government has the duty to create part of the framework conditions indispensable for the system to operate. The national diamond (Porter, 1990a) Knowledge, created or learned at the inside of the diamond, is not always possible to be transmitted. Knowledge is not necessarily exchangeable with information. It differentiates from the information in its accessibility and capacity to be transmitted. The second can move easily form place to place, but the first is highly attached to the minds of the people and the localized systems. As a consequence, great part of the competitive advantage of one country is highly dependant on small geographical areas –clusters, which are immersed in 4
  • 5. national and region values, culture, legal and economic rules and regulations, institutions, etc.- and are not possible to be delocalized without losing its intrinsic values. But what is important in Porter’s approach is that he underlined the national characteristics of the innovation systems. He has argued that it is in a specific country where the essential competitive advantage of the enterprise is created and sustained; that country is the place where the strategy of the company is set, where the core product and process technology is created and maintained, and where the most productive jobs and most advanced skills are located. He also says that when the national environment permits and supports the most rapid accumulation of specialized assets and skills –sometimes simply because of a greater effort and commitment, the nation gain a competitive advantage; that when the national environment affords better ongoing information and insight into product and process needs, it gain a competitive advantage as well. Finally, when the national environment pressures companies to innovate and invest, companies both gain a competitive advantage and upgrade those advantages over time. This national environment creates the conditions for the development of the competitive advantage. Innovation is a cornerstone of his model, creating a genuine, long lasting gap with the competitors (as Schumpeter said: under the principles of the monopoly). Companies get innovation through new technologies and new ways to do the old things. For Porter, acts of innovation include among others: a new product design, a new production process, a new marketing approach, or a new way of conducting training, etc. Finally, permanent innovation is the only way to maintain a long lasting competitive advantage. From a different approach, Jorge Niosi (2000) gives the public institutions a more active role, mainly at the beginning of creation of science and technology based industries. From his point of view, this role declines later (probably approaching to Porter’s model), being in all moments an important brick in the development and promotion of the system. 5
  • 6. According to him (1999), research and development is one of the best ways for companies to capture new knowledge. R&D is financed and developed by three main actors: universities, government, and companies. This was originally described by Jorge Sábato (1975) and long ago popularized as the Sabato’s Triangle. Niosi (2002) also advocates for the national/ local role of innovation systems. According to him, capital can easily cross national or regional boundaries; instead, knowledge flows less easily, because of the tacit character of much of it, which is embodied in human brains. In his work, it is also stated that human capital means tacit knowledge, which is difficult to transfer without moving people. The less mobile factors of production and the most crucial for innovation are human capital, governmental regulations, public and semi-public institutions, and natural resources. He stresses that, for all these factors, borders and locations matter. For Richard Nelson (1993), there are three major institutional actors playing an important role in a national innovation system, industry, universities and government. But, ultimately, R&D depends upon the researchers that are the real producers of it. Through different means, such as policy instruments, vision, and perspectives of the future, national and regional governments have a coordinator role of the research community. But national borders can not explain the process completely. It is inside the countries –as it was stated by Porter in his concept of clusters- that things happen. And not all things happen in the same way or at same speed. It can be clearly seen in the contemporary China, where the booming economies of Beijing and Shanghai share the national landscape with the impoverished Northwest. And that it is not exclusive from China, it is also possible to see the same pattern all around the world, from South East Asia to Latin America. As part of the developing world, Argentina also has that disparity of development in the different regions. The accumulation of knowledge, abilities and resources trough long periods of time had a key role in the development of those regions. Nowadays, and among others, it is possible to see the winery industry in Cuyo, the software and car manufacturing 6
  • 7. in Córdoba, and the financial services and cultural industries in Buenos Aires. For the researchers the questions to be answered are: what make some regions more developed than others in some specific field? and how we can do to improve or accelerate that development? To give some answers to this kind of questions it is necessary to study the innovation systems from a local perspective. Local and national levels interact in a way that can be beneficial or damaging, depending upon many factors. National laws, regulations and culture can help local economies to develop themselves; the opposite is also possible, that the national background become in a heavy burden for local economies. Dynamic local economies can also be an example for other regions, pushing the changes in the national framework. Different regional innovation systems of one country share the general background of that country, culture, language, national institutions, national law, economic regulations, etc. That shared ground is not enough to explain the differences in development and economic dynamism among regions. Nothing is truer than in the Latin American context, where Argentina is not the exception. These systems have many linkages that only exist at a sub-national level. The basic components of these local systems of innovation are the same than in the National Innovation Systems (NIS), the institutions and their mutual links: private firms, universities, and governments. These institutions promote research, development and innovation (R+D+I) under the umbrella of the general culture and institutional framework, nationally and locally. As it was explained by Porter, the physical distance among the actors is a leading factor. When forces and institutions, such as companies with research units, research universities, government, etc., are confined in a small space, sharing the same culture, language, social and legal framework, etc., they tend to interact strongly, becoming an adaptable-learning system. The learning ability of these systems should not be diminished, it makes easer to 7
  • 8. copy and disseminate the acquired new knowledge towards the closest actors and competitors in the cluster. Incentives, competition, cooperation, and learning are the engines that maintain the systems rolling. If the development is based on a national platform but its main components are local, it gives us a new perspective of some political issues. It is the case of federalism. If the politic – economic decision making system is highly centralized, as it happens in most emerging economies, it would put a strong restriction on the local developing process. It doesn’t mean that centralized politic systems can not develop at all; it means that they will do it at a lesser pace, since local governments are only one of the components of the innovation system. It also means that centralization could be good enough in an earlier stage of development, but not so good at a later stage, when the economy were getting closer to the frontier of development. Other mechanisms of the system could take relevance as well, such as the information. Information, not only for the government but also for the private sector, associations, universities, etc., is an important source for the decision making process. If it is only available at national aggregates, with national standards and points of view, the ability to use it at local level, for local purposes, is quite weak. It could be said that one potential ways to measure development in a country, or a region, would be to measure the quality and use of information at local level. This approach, closest to the local history and forces, could explain the particular stories spread all around the world, such as: the Silicon Valley and the Route 128 in USA; the cities of Shanghai and Hong Kong in China; the city of Bangalore in India (and many others in South East Asia); and the cases of some cities in the new emerging economies of Latin America (Sao Paulo, for instance). In particular, in Argentina we can find traces of this in Buenos Aires, Córdoba, Rosario and Mendoza, but also and in a smaller scale in the North West part of the county and in Tierra del Fuego. 8
  • 9. The advantages of having deeper understanding of these local systems have triggered a number of studies in Latin America. These are the cases of a comprehensive book coordinated by Casiolatto (2003), where the innovation systems of Brazil are explored, and the Inter-American Development Bank, currently engaged in the same direction with a wider scope. In the specific case of Cordoba, even taking in consideration its importance in the S&T and productive national system, there is little literature describing or trying to explain the dimension, synergies and contribution of its regional/ local innovation system. 2. THE DESCRIPTION OF THE SYSTEM OF INNOVATION OF CORDOBA 2.1. THE NATIONAL CONTEXT IN S&T Argentina has delayed the investment in S&T for decades, undermining its regional position in the Latin American context. The country is not only growing slower than the world leaders but also is losing positions in the regional context. At the same time that Argentina invests 0.52% (2008) of its GDP in R&D and is looking for a healthier 1%, in the neighboring countries that number is not any longer a utopia. Brazil, the regional leader, has already surpassed it with 1.09% (2008); Chile is closer with 0.67% (2004); and Spain, an unavoidable point of reference for the Latin-American countries, has 1.38 (2008) [exhibit 1]. In the leading countries, these numbers have been left behind long time ago. Considering that 50% of the GDP of the major OECD countries is produced by knowledge-based companies (Chang, 2004) pointless is to stress how important is the investment in R&D for those countries. In the last decade, a growing sum of capital has been flooding the R&D activity in different ways. One was through private investment inside companies; the other, through public and private investment in the R&D centers of universities. In the specific case of US, it shouldn’t be underestimated the contributions made by the military budget of the Federal Government, alternative almost inexistent in other economies. 9
  • 10. Knowledge based economies need to invest heavily in R&D as a way to push the rest of the economy ahead. It was understood by Canada, where they are putting 1.84% (2008) of its GDP in it. In the same line of thinking, but more aggressively, other members of the OECD group have gone beyond. That is the case of Europe, where France accounts 2.02% (2008) and Germany 2.53% (2007); in the other side of the Atlantic, US is doing it with 2.77% (2008). But the most astonishing cases are Sweden 3.75 (2008), Finland 3.46 (2008), and Japan 3.44 (2007), all of them quite above than 3%. In comparison, Argentina (and Cordoba) is investing seven times less than that, and roughly half of the regional leader, Brazil [exhibit 1]. But the landscape is not so gloomy if we let aside the funding side and look in the direction of the human capital. In comparison, the number of researchers currently working in Argentina shows healthier shape than most of the Latin American and the Caribbean countries (LAC). For every thousand people of the economic active population (EAP) Argentina has 2.56 (2008) researchers; Chile and Brazil are close with 2.00 (2004), the first, and 2.09 (2008) the second; but far ahead of Uruguay, with 0.72 (2008); and Mexico, 0.88 (2007). What is more, Argentina doesn’t look bad in the mirror of the recently developed or developing economies, such as the cases of Spain and Italy that accounts 5.54 (2007), and 3.80 (2008) per thousand, respectively. Which are in a privileged position, far ahead, are: Japan, 10.7 (2007); the US, 9.40 (2006); Australia, 8.10 (2006); France, 7.60 (2007); Portugal 7.18 (2008); and Germany, 7.00 (2007) [exhibit 2]. These numbers show that the most important component of the S&T system, the human factor, is alive and healthy, but with a long road ahead. It is potentially a powerful source of development, able to be empowered by adequate governmental policies and private entrepreneurship. In any case, the improvement of the investment, public and private, should be a priority. 10
  • 11. 2.2. THE COLLEGE SYSTEM OF CÓRDOBA The college system is one of the most important components of the Cordoba’s system of innovation and plays a decisive role in it. Its emblematic institution, the National University of Cordoba was established in 1613, the second in America, and it is today the second most important of the country. Currently, the province hosts more than 180.000 students in disciplines so diverse as medicine, aeronautic, philosophy, or physics [exhibit from 5 to 8]. In the province are located eight different universities, public and private, in four different cities. The city of Córdoba, with six of them, is the cornerstone of the whole educational system: 1. Universidad Nacional de Córdoba –UNC- (National University of Cordoba); 2. Universidad Tecnológica Nacional – Facultad Regional Córdoba –UTN FRC- (National Technological University – at Cordoba); 3. Universidad Católica de Córdoba –UCC- (Catholic University of Cordoba); 4. Instituto Universitario Aeronáutico –IUA- (Aeronautic Institute); 5. Universidad Blas Pascal –UBP- (Blas Pascal University); and 6. Universidad Empresarial Siglo 21 –US21- (21th Century University). The rest, are spread in the other three mayor cities of the province; such as Villa María: Universidad Nacional de Villa María –UNVM- (National University of Villa Maria) and Universidad Tecnológica Nacional – Facultad Regional Villa María –UTN FRVM- (National Technological University – at Villa Maria); San Francisco: Universidad Tecnológica Nacional – Facultad Regional San Francisco –UTN FRSF- (National Technological University – at San Francisco) and Río Cuarto: Universidad Nacional de Río Cuarto –UNRC- (National University of Rio Cuarto). In the province there are eight universities, five public and three private. In the first case we have: IUA, UNC, UNRC, UNVM, and UTN. Private universities are 100% located in the city of Cordoba, where it is possible to find: UBP, UCC, and UES21. This academic supply has an unequal distribution in the provincial map, fitting perfectly well with the development map of the region. The people from the North and West have to 11
  • 12. migrate to another part of the province to get access to college services [map 1]. It is not difficult to understand why these two regions are quite behind the rest in terms of development. Development and education go hand with hand. This is one of the aspects that the policymakers should put their attention in the near future. This unbalance is also noticeable between the public and private sector. The student population in the public sector accounts 79.39% of the total and the private, 20.61% [exhibit 7]. This process of concentration is also perceptible between the population of students of its capital city (Cordoba) and the rest of the province. The city gathers 88.15% of the students of the province, and the rest shares only the left 11.85% [exhibit 8]. Among the universities the same distribution pattern is replicated, being the UNC several times bigger than the rest [exhibit 5 & 6]. One potential explanation for this is that for more than three centuries the UNC was the only university in the province. Even today, it is by far the most diversified in term of careers, having 12 different colleges. 2.3. THE SYSTEM OF SCIENCE AND TECHNOLOGY OF CORDOBA The province of Cordoba presents a number of groups, centers, and institutes of research and development working in a wide spectrum of fields. There are also a great number of less formalized groups that give the system dynamic, diversity, and wideness. Most of the centers and institutes located in the province are part of the structure of national public organisms of science and technology. That is the case of CONICET1 (mathematics, chemistry, biology, vegetal biology, physic–chemistry, and medicine), CONAE2 (space), CONEA3 (atomic energy), INTA4 (agriculture), INA5 (water), and INTI6 (industry). Let’s take a look of these leading institutions: 1 CONICET: Consejo Nacional de Investigaciones Científicas y Técnicas. 2 CONAE: Consejo Nacional de Actividades Espaciales. 3 CONEA: Consejo Nacional de Energía Atómica. 4 INTA: Instituto Nacional de Tecnología Agropecuaria. 5 INA: Instituto Nacional del agua 6 INTI: Instituto Nacional de Tecnología Industrial. 12
  • 13. CONICET This national institution has in the province six R&D centers and institutes, the 5% of the national total. These are: • CEVE7, Experimental Center for the Economical Dwelling; • CIEM8, Study and Research Center of Mathematic of Cordoba; • CIQUIBIC9, Research Center in Biological Chemistry of Cordoba; • IMBIV10, Multi-field Institute of Vegetal Biology; • INFIQC11, Research Institute of Physic-Chemistry of Córdoba; and • INIMEC12, Medical Research Institute "Mercedes y Martín Ferreira". Four of them, IMBIV, INFIQC, CIQUIBIC, and CIEM, are centers shared with the UNC, made possible for an agreement between this institution and CONICET. CEVE This research center created in 1967 looks for the developing, transferring, and teaching technologies related to the dwelling field. In its payroll the center accounts 60 researchers and technicians. The CEVE mission is to promote a comprehensive and progressive development for the poor majority of the population, giving solutions in the dwelling and unemployment area. CONAE The National Commission of Space Activities has in Falda del Carmen (a small town nearby the city of Cordoba) the Space Center Teófilo Tabanera (CETT) and the Gullich Institute. The Space Center Teófilo Tabanera is located in the Cordoba Earth Station of Satellite Data Acquisition, with antennas capable of following the international tele-observation satellites. The Space Center works as well in the mission control of the SAC-C, the third Argentinean satellite. The Gullich Institute is 7 CEVE: Centro Experimental de la Vivienda Económica. 8 CIEM: Centro de Investigación y Estudios de Matemática de Córdoba. 9 CIQUIBIC: Centro de Investigaciones en Química Biológica de Córdoba. 10 IMBIV: Instituto Multidisciplinario de Biología Vegetal. 11 INFIQC: Instituto de Investigaciones en Físico-Química de Córdoba. 12 INIMEC: Instituto de Investigación Médica "Mercedes y Martín Ferreira". 13
  • 14. located inside the CETT. This institute is the result of an agreement between CONICET and the National University of Cordoba. Its main mission is to train human resources in R&D in the space field. CNEA The National Commission of Atomic Energy has in the province a nuclear energy plant. The R&D activities are made in Dioxitek SA, a company created in the city of Cordoba by CNEA to commercialize its products of powder of dioxide of uranium. The R&D activities of this company are mostly related to the chemistry of the uranium. CIEM The Research and Study Center of Mathematics of Cordoba was originally a CONICET program, created in 1983 under the Program of Mathematics of IMAF13 of the National University of Cordoba, today FAMAF14. It is a center co-administrated by CONICET and UNC. CIQUIBIC The Research Center in Biological Chemistry of Cordoba is co-administrated by CONICET and UNC and it is located in the College of Chemical Sciences of the UNC. IMBIV The Multi-field Institute of Vegetal Biology is a shared institute of CONICET and UNC, with offices in the College of Exact, Physic and Natural Sciences15 of the UNC. INFIQC The Research Institute of Physic-Chemistry of Córdoba is a shared institute of 13 IMAF: Instituto de Matemática Astronomía y Física 14 FAMAF: Facultad de Matemática Astronomía y Física 15 FCEFyN: Facultad de Ciencias Exactas, Físicas y Naturales 14
  • 15. CONICET and UNC with offices in the College of Chemical Sciences16 of the UNC. It has three main areas of research: chemical kinetics, electrochemistry and organic physic-chemistry. INIMEC The Medical Research Institute "Mercedes y Martín Ferreira" is a non-profit, private institution that works in medical sciences. The institute was created in 1947 as a private institution and since 1961 receives support from a number of federal and provincial public institutions. Around thirty full time professionals work there, including researchers, grantees and technicians. The lines of research are: normal and pathological expression of the brain in two dimension of analysis: integrated (systemic) and isolated (cellular and sub-cellular). INA One of the five centers of the National Institute of the Water and Environment, the Center of the Semi-Arid Region (CIRSA17), is located in the province with offices in the city of Córdoba and Carlos Paz. The CIRSA has as its objective to promote research to take full advantage, control and preservation of the water resources and the environment of the central semi-arid region of the country. This institute develops its activities in the provinces of Cordoba, San Luis, Santiago del Estero, Catamarca, and La Rioja. INTA The National Institute of Agricultural Technology has in the province a research center and two experimental centers, the 6% of the national facilities. These are: the Institute of Phytopathology and Vegetal Physiology –IFFIVE18-, the Agricultural Experimental Center of Marcos Juarez and the Agricultural Experimental Center of Manfredi. In the IFFIVE they work in basic research and technological developments 16 FCQ: Facultad de Ciencias Químicas 17 CIRSA: Centro de la Región Semiárida. 18 IFFIVE: Instituto de Fitopatología y Fisiología Vegetal. 15
  • 16. to overcome or reduce the negative effects produced by the pathogenic of the plants and for unfavorable environmental conditions for the production of the plants. INTI The National Institute of Industrial Technology has one R&D Regional Center in the province, the Cordoba Regional Center (CEMCOR-CIMM19). The mission of this center is to assist the industry, mainly the SME, in technical issues, technological developments of products and processes, calibration, and trials. The center pursues to elevate the technological level, improve the competitiveness, and facilitate the catching up of the new technologies. It research activities are in mechanics, flaw analysis, surface engineering, magnetic materials, soldering, metallurgic, analytic chemistry, corrosion, electronics, non-destructive trials, technical services of documentation and human resources training. CEPROCOR20 Originally, the Center for the Excellence of Products and Processes Cordoba was part of the Ministry of Science and Technology of the government of the province of Cordoba, but since 2009 it has become autonomous institution, depending on the same government. Its mission is to lead the S&T policy in the province. This center develops and transfers technology and services to the public and private sector. It is currently engaged in R&D and services in the field of: food, water, microbiology, and DNA. In 2008, the R&D investment in the province, public and private, reached the amount of AR$ 367.56 millions. This represented the 6.79% of the national cake [exhibits 9 & 11], and 0.47% of the Cordoba’s GDP [exhibit 10]. These numbers are far from the 1% established as a goal. In terms of human resources, the province counts 4,849 researchers, grantees and technicians FTE (2,774 researchers), what represents the 8.51% (9.0%) of the national pull [exhibit 9 & 12]. 19 CEMCOR-CIMM: Centro Regional Córdoba. 20 CEPROCOR: Centro para la Excelencia en Procesos y Productos Córdoba. 16
  • 17. 2.4. THE SYSTEM OF PRODUCTION OF CORDOBA In the private sector, a conglomerate of small and medium enterprises (SME) works in a very competitive market, part of it pulled by global corporations such as: FIAT (cars, tracks, car engines, and spare parts), Renault (cars), Volkswagen (spare parts), ARCOR (candies, cookies and food), Intel (microprocessors), Motorola (software for cellular phones), EDS (software), and AGD (vegetal oil and food). This sector also has a number of the associations and chambers: Union of Industries of Córdoba (UIC21), Stock Exchange of Cordoba, Chamber of Foreign Commerce of Cordoba (CaCEC22), and the Cluster Córdoba Technology (electronics and software). In the side of the provincial government the key institutions for the industrial policies are: the Ministry of Production, the Ministry of Finance, the Ministry of Science and Technology, and ProCor. At federal level different governmental institutions have strong impact in the province. The industrial sector is responsible for the 57.70% (2009) of the total exports of the province [exhibit 15]. Comparing the total exports, US$ 5.96 Billions (2009), with the provincial GDP, US$ 22.20 billions23 in the same year [exhibit 10]. It is possible to see that the exports represent 26.86% of the provincial GDP. It gives us an idea about the strength of this economic sector. There are a number of clusters in the territory in a broad range of economic fields. The most notorious are: cars, engines and spare parts; IT; aeronautics; food; agricultural machinery; agriculture; tourism; health; and education [map 2]. 21 UIC: Unión Industrial de Córdoba. 22 CaCEC: Cámara de Comercio Exterior de Córdoba. 23 PBG Córdoba (2009) = AR$ 84.14 Billions = US$ 22.20 Billions [US$ 1 = AR$ 3.7983; 07/01/2009; BCRA]. 17
  • 18. 2.5. THE MILESTONES OF CORDOBA IN THE PAST 10 YEARS The provincial scenario has been changing in the last years, taking place a number of public and private actions. The provincial government has had three main goals: to promote the settlement of IT/ R&D companies; to consolidate the S&T sector through governmental actions and to cooperate with the local universities. Through governmental initiatives and the intrinsic characteristics of the province it was possible to go in that direction. Part of those initiatives can be seen in the following timeline: Year 2000: it is created Agencia Córdoba Ciencia S.E. (Cordoba Science Agency – state owned corporation). This institution replaced the Under-Secretariat of Science and Technology, giving the S&T sector more relevance and visibility, and allowing for the first time to have its own policy. The main mission of the agency was to promote the development of the science and technology in the province. This institution enjoyed a great deal of independence based on the way that the decisions were taken, with high level of independence of the central provincial government. Year 2001: the Motorola’s Software Development Center arrives. Starting an era of international settlements in Cordoba, the US’ company Motorola opens a software R&D center in the province. The primary purpose of the firm was to develop software programs for the company cell phones. The company planned to hire 500 software engineers in a period of 5 years. At the beginning of the 2002 this center started to send the first software solutions to United States. In 2007, the Cordoba Center reached the quality certification CMMI level 5, the highest possible. Today, the center counts with more than 250 professionals. Year 2001: it is launched the SAC-C (3rd Argentinean satellite). This represents one of the pick points of the S&T system of Argentina in the last decades. Great part of this satellite, launched by an American carrier, was developed and built in the Teófilo Tabanera Center of Cordoba. This center has also the responsibility of mission control, communication, and data acquisition. 18
  • 19. Year 2003: a new law for the promotion of local industries is approved. This law, putted in place two years after the arrival of Motorola, is intrinsically the result of the path open by the company. Not long after it, an important number of international IT companies establish their R&D centers in the province. That was the case of EDS (US), Intel (US) and Datasul (Brazil). Four were the main benefits obtained for the new companies: the payment of part of the salaries of each new hired employee, the access to a preferential electrical bill fare, the exception for twenty year of all provincial taxes, and the access to subsidized rate credits. Year 2006: EDS arrives. Electronic Data System (EDS) opened in 2006 its eighth global operations-and-development center in Cordoba, the first of this kind of facilities in Latin America. The complete list includes three centers in India, two in China, and two more in Hungary. This Global Service Center allows the company to offer end-to-end capabilities, with a wide spectrum of services ranging from high-value consulting to business process implementation and maintenance. Year 2006: Intel arrives. That year, Intel opened its Argentina Software Development Center (ASDC) in Cordoba. This center is one of the only three outside US and the first in Latin America. The main areas of work for the company are: infrastructure software, Web services protocols, and Web services security. Currently working with 60 employees, most of them engineers, the company plans to increase its payroll up to 500 engineers in the next 5 years. Year 2008: it is created the Ministerio de Ciencia y Tecnología de Córdoba - Ministry of Science and Technology of Cordoba. This new governmental institution came to replace Agencia Cordoba Science SE, (Cordoba Science Agency – state owned corporation) giving the sector of science and technology a great deal of recognition and visibility. The constitution of this ministry followed the same initiative taken by the national government shortly before. This initiative must be understood in its own dimension, this is the only ministry of S&T in a provincial government in Argentina. Never before, in Argentina and in Cordoba, S&T has had the same governmental rank that education and production. Its 19
  • 20. mission is to define, propose, implement and manage the policy of science, technology, and innovation in the province of Cordoba. Year 2011: it is planned for mid June to be launched the SAC-D/Aquarius (4th Argentinean satellite). Some parts of this satellite, launched by an American carrier, were developed in the Teófilo Tabanera Center of Cordoba. This center will have under its responsibility the mission control, the communications, and the data acquisition. 3. STRENGTHS AND WEAKNESSES The three sectors, universities, government, and companies have a role in the local system of innovation. All of them, independently considered, can show a good level of development in comparison with its peers in the rest of the country. But, that is only a part of the picture we want to observe. The question to be answered is how efficient they are working together. Considered as a system, the actions of companies, government and universities presents a number of strengths and weaknesses that should be underlined. Strengths: • The system of S&T has a long tradition. • There is a strong interaction between universities and the government. • There is a great number of grad and undergrad students. • The private sector is extended and diversified. • There is a strong interaction between the MS&T (former ACC24) and the rest of the government. • The system of S&T has a long tradition: as one of the most important constituents of the Cordoba’s system of innovation, the system of education, science, and 24 ACC: Agencia Córdoba Ciencia SE. 20
  • 21. technology plays a key role. The National Academy of Sciences was founded in the city of Cordoba in 1869, and in 1871 the first astronomic observatory was built in the same city. The first director was the world renowned American astronomer Dr. Benjamin Gould. Today, Cordoba is the third most important center of the country in R&D activity, congresses, and seminars. • There is a strong interaction between universities and the government: there are many and strong links between the government and the universities. Two examples can prove this. One is the forum created in 2000 between the MS&T and the universities. This forum looks for establishing a dialog between these two main actors of the system in order to create a common ground in policies and programs. The second example is a program that promotes applied research and cooperation among universities with co-shared funding coming from those universities, the national, and the provincial governments. • There is a great number of grad and undergrad students: as it was stated previously, Cordoba is recognized nationally for the extension and diversity of its academic offer. To have an idea of its dimension, it can be said that the province has 10.96% of the students of Argentina [exhibits 3 and 7]25. • The private sector is extended and diversified: the industrial activity that is around Cordoba is one of the most intensive and spread of the country. Originally, the city hosted the Fábrica Militar de Aviones (Military Factory of Planes); nowadays: Fábrica Argentina de Aviones (FAdeA) (Argentinean Factory of Planes). At the first decades of working, this factory spun-off a great numbers of metal-mechanic companies and later, the car factories. Today, apart from that sector, there is a great conglomerate of SME in software and electronics, tourism, entertainment, education, etc. [map 2]. 25 Argentina: 1,650,150; Córdoba: 180,874. 21
  • 22. There is a strong interaction between the MS&T (former ACC26) and the rest of the government: a growing number of shared activities have been taken place in the last years between the MS&T and the rest of ministries and agencies of the government. Some of the main programs / activities developed were: “Cordoba without PCB (a cancerous substance)”, with the Environmental Cordoba Agency, “Total Quality Management in the SME”, with the Ministry of Production, etc. Weaknesses: • There are scarce funds for R+D. • There is little interaction between the system of S&T and the private sector. • The research activities are extremely oriented to basic research. • The sources of information of the system of innovation itself are almost inexistent. • There is scarce R+D activity and funding inside the companies. • There is almost complete absence of venture capital (VC) at local level and very low at national level. • There are scarce funds for R+D: the level of founding of the system is very low in comparison with the developed countries and even for Latin American standards. For Cordoba, it is 0.47% (2008) of the GDP [exhibit 10]. • The interaction between the system of S&T and the private sector is scarce: this missing link and the absence of venture capital (VC) are probably the main weaknesses of the system. The interaction between the private sector and the S&T system is quite weak. There is not a common language or understanding between these two sectors. • The research activities are extremely oriented to basic research: the S&T sector of Argentina is highly oriented to basic research, without an alternative model in the applied research and the commercialization of the technology. It is notorious the absence of engineers in the R&D process in opposition to what is happening in 26 ACC: Agencia Córdoba Ciencia SE 22
  • 23. other parts of the world. The lack of incentive and better job opportunities seems to be the more logical explanation for their absence. On this regard, a more proactive process of commercialization of the technology could help to lure this group of professionals. • The sources of information of the system of innovation itself are almost inexistent: the system doesn’t count with organized, reliable and comprehensive sources of information for the agents in order to take decisions in a more efficient, rational, and transparent way. Without good sources of information the process of decision- making tends to be more driven by personal or group visions and less by a social or collective consensus. • There is scarce R+D activity and funding inside the companies: the activity of R&D developed in private companies is lower with its counterparts in other parts of the world. The investment of the private sector represents 77.7% (2007) of the total R&D in Japan, 67.9 (2007) in Germany, 67.3% (2008) in US, 44.7% (2007) in Brazil, and only 29.3% (2007) in Argentina [exhibit 14]; Cordoba follows the country closely. • There is almost complete absence of venture capital (VC) at local level and very low at national level: venture capitals are the base of a system that promotes entrepreneurship in R&D companies and a first step in a healthy innovative system. Argentina does not count with that instrument, neither does Cordoba. The sources of funding in the private sector are concentrated in less risky endeavors and the public sector does not have the resources or the understanding to take this task in its hands. There are parts of the world that have built their competitive advantage based in these kinds of instruments. That is the case of Boston or the Silicon Valley in US. 23
  • 24. 4. CONCLUSIONS The system of innovation of Cordoba is strong, with a long tradition, and wide and disseminated R&D centers and institutions. The private sector is one of the most important in the country, not only in terms of big companies but also in the sector of SME. More than 25% of the GDP of Cordoba comes from the foreign trade, contrasting on that regard with the less successful story of Argentina. What could be said without hesitation is that the three main components of the Sabato’s Triangle, universities, government, and companies are quite strong, separately considered. Some of the links among these three sectors are strong, such as between the provincial government and the universities, or between the Government and the private sector. But the circle is not complete. The missing link is between the universities (and R&D centers) and the companies. Universities don’t have enough researchers in key fields, such as IT, and the relationship with the industry is weak, reducing the contribution that the S&T sector could bring to the development of the province. What is normal in the American system, or even in the European, it is not in the Argentinean. The cultural divorce between researchers and businesspeople is not new. Researchers have always worked for the academia and the peers’ recognition. Exactly there resides one of the main sources of strength and weakness of the system. This mindset allowed the system survives in the worst moments, but is incapable of becoming a cornerstone of the productive system and therefore, be a substantive source of competitive advantage and wealth for the province. In the mind of the businessmen of Argentina, wealth is not an R&D issue. R&D is for the universities, a playground for scholars and researchers out of the standards of time and quality that the competitive market needs. But it is also a matter of scale. R&D requires time and money, two resources that most of the SME do not have. Argentinean businesspeople, most of the time, are not able to take advantage of the new knowledge created; international corporations are. Reinforcing to that vision, there is not a big 24
  • 25. paradigmatic success story of collaboration between academia and the private sector. The innovation is active in Cordoba, but the reality is that that innovation doesn’t come from the R&D centers. Another important element of the system of innovation of Cordoba is the weakness of the venture capital industry. VCs are the cornerstone of the successful stories of US in recent years, and the most important link between colleges and markets. Innovation is in part associated with the spin-offs irradiated from S&T careers and R&D centers. Without VCs, there are not spin-offs. 5. PROPOSAL The purpose of this section is to make some suggestions for the development of the local/ regional system of innovation of the province of Cordoba. But, considering that the problems of that region are almost the same around the developing world, these guidelines could be helpful for other policymakers. The main actions possible to tackle the problems are: • Increment the synergy; • Scale up the value chain; • Provide information; • Protect and promote intellectual property (IP); and • Increment the number of R&D companies. • Increment synergy: as it was previously stated, the synergy between R&D centers and companies is weak. The success of every innovation system relies on the principle that what is done in the lab can be converted in cash flow in the companies. If this link is missing, the incentive of the companies to invest in R&D disappears. It should be top priority for the policymakers to promote, up to the possible limits, the gathering of researchers and business people and the 25
  • 26. reorientation of the technical careers to promote entrepreneurship. The government has the means and the power to do it. • Scale up the value chain: incorporating R&D as part of the value chain, from the lab to the sales desk. A great deal of what is done in the labs should find its way to the commercial market. To do that, it is essential the reorientation of part of the R&D funds from basic to applied research and the creation of special offices to be the link between the academia and private sector. • Provide information: all the actors of the system, public and private, need to work with different intensity in a number of activities: diagnosis, planning, execution and evaluation. All of them have the same need: comprehensive, reliable, and organized information. It is indispensable to count with quantitative data useful to compare different periods and to develop new strategies and policies. As part of those tools, many countries have developed a number of indicators of science, technology, and innovation. Those indicators, properly organized, will allow the agents to have a more accurate picture of the system. In the public sector, it is indispensable to have updated and reliable information. It is the base to build more predictable, transparent, efficient and rational institutions. • Protect and promote intellectual property (IP): IP is the instrument to make possible the commercialization of the technology and the patent system the vehicle through which it is possible to reap profits from a discovery. A patent is a monopoly granted by the state to impede others to use or commercialize an invention. In most countries, the period of protection is 20 years; period good enough to recover the original investment in R&D. IP has been since ever a powerful instrument in the hands of developed countries, and US the most notorious. However, in the last years it comes up that it can be a great instrument to promote the development in peripheral economies as well. But IP must be protected to become an incentive for the companies to invest in it. The 26
  • 27. suggestion is to put more funds to promote local entrepreneurship based on IP development and to reinforce its protection as a vehicle of economic development. • Increment the number of R&D companies: venture capital is the way to afford risky business. Among them, the R&D companies make possible to push new knowledge and discoveries into the market. Risky R&D companies can not be funded by normal financial instruments. On the contrary, they need a different approach. That is what has been happening in Boston, Massachusetts, where VCs play an active role in the R&D spin-offs. That Schumpeterian creative- destructive approach has made from Boston one of the most vibrant economies in the world. For developing economies, VCs are even more necessary. It could help to close the gap between them and the developed nations, speeding up the creation of R&D companies, bringing more development and capturing better jobs. 27
  • 28. 6. EXHIBITS Exhibit 1: expenditures in research and development as a percentage of the GDP, in selected countries: ER&D/ Country Year GDP (%) Sweden 2008 3.75 Finland 2008 3.46 Japan 2007 3.44 United States 2008 2.77 Germany 2007 2.53 France 2008 2.02 Australia 2006 2.06 Canada 2008 1.84 Norway 2008 1.62 Portugal 2008 1.51 Spain 2008 1.38 Italy 2008 1.18 Brazil 2008 1.09 Chile 2004 0.67 Argentina 2008 0.52 Uruguay 2007 0.44 Mexico 2007 0.37 Ecuador 2008 0.25 Panama 2007 0.20 Colombia 2008 0.15 Paraguay 2005 0.09 Source: UNESCO and RICyT. Selected countries. 28
  • 29. Exhibit 2: number of researchers Full Time Equivalent (FTE) every 1000 people of the Economic Active Population (EAP), in selected countries: Country Year Researchers Japan 2007 10.70 United States 2006 9.40 Australia 2006 8.10 France 2007 7.60 Canada 2007 7.96 Portugal 2008 7.18 Germany 2007 7.00 Spain 2007 5.54 Italy 2008 3.80 Argentina 2008 2.56 Brazil 2008 2.09 Chile 2004 2.00 Uruguay 2008 0.72 Mexico 2007 0.88 Colombia 2008 0.35 Panama 2008 0.25 Paraguay 2008 0.15 Source: RICyT and UNESCO. Exhibit 3: undergrad and grad students, freshmen, and alumni of Argentina, period 2000- 2009: Undergrad + grad – Argentina Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Students 1,339,740 1,412,999 1,462,319 1.489,243 1,536,653 1,553,700 1,586,520 1,569,065 1,600,522 1,650,150 Freshmen 352,605 347,691 359,266 365,892 372,492 361,648 358,763 362,690 365,227 387,603 Alumni 63,259 65,104 74,960 78,429 83,890 86,879 84,785 86,528 94,909 98,129 Source: ME, 2009 Exhibit 4: Ph.D. students and alumni, Argentina, 2009: Ph.D. - Argentina Year 2009 Students 13.549 Alumni 937 Source: ME, 2009 29
  • 30. Exhibit 5: undergrad and grad students of Córdoba, by institution, period 2000- 2009: Undergrad + grad students – Córdoba Year / Public & City 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Institution Private** UNC Córdoba Pu 112,063 113,614 113,296 116,627 114,012 110,961 106,735 105,162 102,684 103,616 UCC Córdoba PR 6,063 6,332 5,666 6,208 6,591 6,773 7,636 7,987 8,318 8,394 IUA Córdoba Pu 4,090 5,216 5,182 6,038 5,589 5,665 5,800 6,957 7,060 6,945 UBP Córdoba PR 3,460 3,927 4,186 4,803 5,517 6,279 7,188 8,314 9,459 10,293 UES21 Córdoba PR 2,548 2,486 2,633 --- --- 3,879 5,457 6,707 10,710 18,589 UNVM Villa María Pu 2,252 2,999 3,230 3,078 2,427 2,545 2,709 2,846 2,886 4,099 UNRC Río Cuarto Pu 15,405 16,734 19,725 20,172 20,244 19,197 18,573 17,533 16,434 16,138 UTN-FRC* Córdoba Pu --- 11,600 --- --- --- --- --- --- --- --- UTN-FRVM Villa María Pu --- --- --- --- --- --- --- --- --- --- UTN-FRSF* San Francisco Pu --- 1,200 --- --- --- --- --- --- --- --- TOTAL --- 164,108 --- --- --- --- --- --- --- --- Source: ME, 2009; * UTN-FRC (2001) and UTN-FRSF (2001) data provided by the own universities; ** Pu: public, PR: private. Exhibit 6: number of undergrad and grad students of Córdoba, by institution, 2009: Students 120000 100000 80000 60000 40000 20000 0 * * RC C C A 21 P VM RC F IU UN UC UB RS S UN UN -F UE -F N N UT UT * UTN-FRC (2001) and UTN-FRSF (2001) data were provided by the own universities. 30
  • 31. Exhibit 7: undergrad and grad students of Córdoba, by public or private sector, 2009: 2009 Private Public & 21% # % Private Public 143,598 79.39 Private 37,276 20.61 TOTAL 180,874 100 Public: UTN-FRC (2001) and UTN-FRSF (2001) Public data were provided by the own universities; UTN- 79% FRVM: data no available; %: made by the author. Source: ME, 2009. Exhibit 8: undergrad and grad students of Córdoba, by city, 2009: 2009 City # % Córdoba* 159,437 88.15 Rest** 12% Río Cuarto 16,138 8.92 Villa María** 4,099 2.27 San Francisco*** 1,200 0.66 TOTAL 180,874 100 Córdoba: UTN-FRC (2001) data provided by the own university; ** Villa María: UTN-FRVM: data no available; *** San Francisco: Córdoba* UTN-FRSF (2001) data provided by the own university; %: made 88% by the author. Source: ME, 2009; Exhibit 9: indicators of R&D in Córdoba: Cordoba 2001 2002 2003 2004 2005 2006 2007 2008 Total (researchers + grantees + Quantity 3,048 3,016 3,279 3,494 3,685 4,115 4,488 4,849 technicians), FTE %** 8.14 8.06 8.32 8.23 8.12 8.34 8.44 8.51 Quantity 1,761 1,767 1,771 1,847 2,114 2,280 2,676 2,774 Researchers, FTE 8.43 8.33 8.15 7.99 8.57 8.60 9.22 9.00 %** AR$ x 1000 102,001 102,211 123,798 148,984 170,367 239,640 339,138 367,564 ER&D* 8.94 8.41 8.03 7.71 6.95 7.40 8.22 6.79 %** * ER&D: Expenditures in R&D; ** Made by the author based on the MinCYT, 2010 data; FTE: Full Time Equivalent; %: Córdoba vs. Argentina. Source: MinCYT, 2010. 31
  • 32. Exhibit 10: ER&D/ GDP (%) in the province of Córdoba: Cordoba Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 GDP 19,320 25,515 28,904 31,807 38,834 46,056 60,240 78,565 84,147 AR$ millions (current) ER&D* 102 102 123 148 170 239 339 367 --- AR$ millions (current) ER&D/ GDP 0.52 0.40 0.43 0.47 0.44 0.52 0.56 0.47 --- (%)** ER&D: Expenditures in R&D; ** Made by the author based on MinCYT and DGEyC data. Source: MinCYT, DGEyC (Cordoba’s government)27. Exhibit 11: expenditures in R&D for the complete group of provinces of Argentina, 2008. ER&D* (2008) Provinces AR$ %** 1 Buenos Aires 1,751,119 32.38 2 CABA28 1,545,995 28.58 3 Córdoba 367,564 6.79 4 Santa Fe 314,621 5.82 5 Mendoza 185,704 3.43 6 Tucuman 174,442 3.22 7 San Luis 131,180 2.43 8 San Juan 106,112 1.96 9 Río Negro 105,946 1.96 10 Entre Ríos 83,981 1.55 11 Corrientes 71,716 1.33 12 Salta 67,160 1.24 13 Misiones 66,688 1.23 14 Chubut 56,117 1.04 15 Neuquén 55,341 1.02 16 Jujuy 51,870 0.96 17 Catamarca 49,937 0.92 18 La Pampa 46,586 0.86 19 La Rioja 43,878 0.81 20 Santiago del Estero 42,420 0.78 21 Formosa 24,886 0.46 22 Chaco 24,742 0.46 23 Tierra del Fuego 22,922 0.42 24 Santa Cruz 18,742 0.35 TOTAL 5,409,669 100 * In thousands; ** made by the author based on the MCYT, 2010 data. Source: MinCYT, 2010. 27 DGEyC: Dirección General de Estadística y Censos. 28 CABA: Ciudad Autónoma de Buenos Aires. 32
  • 33. Exhibit 12: number of people dedicated to R&D for the complete group of provinces of Argentina, 2008. Total*, FTE Researchers, FTE Provinces Quantity %** Quantity %** 1 Buenos Aires 17,984 31.56 8,926 28.96 2 CABA 14,429 25.32 7,291 23.66 3 Córdoba 4,849 8.51 2,774 9.00 4 Santa Fe 3,825 6.72 2,277 7.41 5 Tucuman 2,427 4.26 1,354 4.42 6 Mendoza 2,222 3.90 1,252 4.09 7 San Juan 1,303 2.29 905 2.96 8 San Luis 1,253 2.20 864 2.82 9 Río Negro 1,203 2.12 652 2.14 10 Salta 990 1.74 620 2.03 11 Corrientes 913 1.61 497 1.64 12 Entre Ríos 895 1.58 570 1.87 13 Chubut 700 1.23 381 1.26 14 Catamarca 503 0.89 360 1.19 15 Neuquén 495 0.86 386 1.28 16 Misiones 483 0.84 279 0.93 17 Santiago del Estero 473 0.83 337 1.12 18 La Pampa 394 0.69 268 0.89 19 Jujuy 359 0.62 264 0.88 20 Chaco 328 0.57 115 0.40 21 La Rioja 299 0.52 153 0.52 22 Santa Cruz 262 0.45 144 0.49 23 Tierra del Fuego 202 0.35 80 0.28 24 Formosa 196 0.34 112 0.39 TOTAL 56,987 100 30,861 100 Researchers + grantees + technicians; ** made by the author based on the MCYT, 2010 data; FTE: Full Time Equivalent; year: 2008. Source: MinCYT, 2010. 33
  • 34. Exhibit 13: expenditures in R&D made by the government sector in selected countries, proportionally to the national expenditure, period 2000-2009: % Government 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Argentina 70.7 74.3 70.2 68.9 64.5 65.3 66.9 67.6 --- --- Brazil 54.1 54.8 53.3 54.2 53.5 49.7 50.4 52.9 --- --- Mexico 63.0 59.1 55.5 56.1 50.3 49.2 50.3 50.2 --- --- Portugal 64.8 61.0 60.5 60.1 57.5 55.2 48.6 44.6 --- --- Chile 70.3 68.9 54.6 43.2 44.4 --- --- --- --- --- Spain 38.6 39.9 39.1 40.1 41.0 43.0 42.5 43.7 --- --- France 38.7 36.9 38.3 39.0 38.7 38.6 38.5 38.3 39.4 --- Colombia 23.3 21.5 22.5 26.2 31.0 37.8 38.5 37.7 --- --- Australia 45.5 --- 41.2 --- 40.3 --- 37.3 --- --- --- Canada 29.3 29.2 31.6 31.4 30.9 31.6 31.4 32.9 33.0 33.1 Germany 31.4 31.4 31.6 31.2 30.5 28.4 27.7 27.7 --- --- United States 25.8 27.2 29.1 30.0 30.8 30.2 29.3 28.3 27.0 --- Japan 19.6 19.0 18.4 18.0 18.1 16.8 16.2 15.6 --- --- Source: UNESCO (UIS). Exhibit 14: expenditures in R&D made by private companies in selected countries, proportionally to the national expenditure, period 2000-2009: Private % companies 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Japan 72.4 73.1 74.1 74.6 74.8 76.1 77.1 77.7 --- --- Germany 66.0 65.7 65.5 66.3 66.6 67.6 68.2 67.9 --- United States 69.4 67.7 65.2 64.3 63.8 64.4 65.4 66.2 67.3 --- Australia 46.3 --- 50.7 --- 54,6 --- 58.3 --- --- --- France 52.5 54.2 52.1 50.8 50.7 51.9 52.3 52.0 50.5 --- Canada 44.9 50.3 51.5 50.3 50.0 49.1 49.5 47.8 47.6 47.5 Portugal 27.0 31.5 31.6 31.7 34.2 36.3 43.0 47.0 --- --- Spain 44.9 47.2 48.9 48.4 48.0 46.3 47.1 45.5 --- --- Mexico 29.5 29.8 34.7 34.7 38.6 41.5 44.8 45.1 --- --- Brazil 44.7 43.8 45.0 43.8 44.5 48.3 47.7 44.7 --- --- Chile 23.0 24.9 33.2 43.6 45.8 --- --- --- --- --- Argentina 23.3 20.8 24.3 26.3 30.7 31.0 29.4 29.3 --- --- Colombia 29.8 30.9 29.1 25.3 26.2 27.2 28.0 27.2 --- --- Source: UNESCO (UIS). 34
  • 35. Exhibit 15: exports of Cordoba, by sector, 2009-2010: 2009 2010 Sector US$ US$ % % (millions) (millions) Commodities 1,540 25.82 3,491 42.30 Agricultural Manufactures 2,974 49.87 3,054 36.97 Industrial Manufactures 1,450 24.31 1,708 20.73 Total 5,964 100 8,254 100 Source: DGEyC with INDEC data and ProCor. Industrial Manufactures 21% Commodities 42% s Agricultural Manufactures 37% 2010 7. MAPS Map 1: location of cities with universities: Córdoba San Francisco Villa María Río Cuarto 35
  • 36. Map 2: location of main clusters: Aeronautic, electronics, IT, cars, car spare parts, and health Agriculture machinery Food industry Agriculture: Center, South and East Tourism: center and west 36
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