Innovation and Innovation Policy in the Periphery: Latin America and Central and Eastern Europe Compared
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In this paper we argue that there are three reasons for contrasting global trends: First, techno-economic paradigm change connected, second, with macro-economic environment created by the Washington Consensus policies and, third, innovation and industrial policies created by many developing countries. All of these changes took place in 1990s and this historical coincidence (compounded by the collapse of the Soviet Union) created enormous dynamic forces in the global economy that explain the described trends. We will also try to show what needs to be done in order to give these dynamic forces a somewhat different direction for a more equitable form of global capitalism to take shape. In order to do this, we try to show in this essay how Latin American (LA) and Central and Eastern European (CEE) innovation policies, despite the remarkable differences in history and geography, are converging and exhibiting very similar features and failing on very similar issues. This is obviously not an easy comparative task in terms of methodology and data. Indeed, first methodological obstacle is whether one can and should compare LA and CEE in the first place? Despite huge differences, we argue that there are also significant similarities: 1) both regions experienced rapid liberalization in late 1980s and in 1990s after decades of high protectionism; 2) both regions are geographically peripheral to big and developed markets (the US and the EU respectively); 3) during 1990s, both CEE and LA received and followed highly similar policy advice in terms of economic and innovation policies, but also in the areas of public administration reform; 4) in both regions economic integration into much wealthier economic areas (EU, NAFTA) is crucial economic driver. These and further similarities make the comparative approach highly interesting, especially as LA is seen largely as a failure (see, e.g., Amsden 2007, 6; also Chang 2007)), CEE in turn is seen as a success story; so for instance, at the end of 2005, Business Week ran a cover story (incidentally for one of the last issues of its European edition) titled “Central Europe – Rise of a Powerhouse”. However, both CEE and LA are, first, in themselves highly diversified regions and, second, there are hardly any studies or datasets that include both regions. Availability of comparative data is clearly a problem for this study. Thus, we propose to look at the following data and stylized facts: 1) Dynamics of economic structure of the economy, value-added in industry and services since 1990 or earliest available (using World Bank data); 2) stylized facts from literature and case studies on outsourcing, clustering, enclave economies, regional inequality, etc; 3) historical overview of macroeconomic and in particular innovation policy developments since 1990s. There is one further key area, namely the developments in policy design and management, in short the impact of administrative reforms on innovation policy, that we cannot deal with any great detail here due to lack of significant empirical studies. The impact of integration into the EU and NAFTA respectively will be treated rather briefly.