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Executive Summary

The second edition of the Signs of Competitiveness in the Americas (SCA) report is a product of the collaboration between Authorities and Councils on Competitiveness of the Americas and the institutions that support the work of the Inter-American Competitiveness Network (RIAC). It is comprised of two main sections, one which offers a panorama of infrastructure, the challenges and opportunities we face as a region; and a second, which includes more than sixty experiences of countries and institutions related to the ten general principles of competitiveness.

The Competitiveness Decalogue forms part of the Consensus of Santo Domingo approved by representatives from thirty countries in October 2011 during the Annual Meeting of the RIAC. The Meeting took place within the framework of the V Americas Competitiveness Forum (ACF) in the Dominican Republic and adopted the Consensus and its principles as a central element to the 2020 vision for the Americas.

The Secretariat for Economic Affairs and Competitiveness in the Ministry of the Presidency of the Republic of Panama, as Chair Pro Tempore of the RIAC and host of the VII ACF, chose the theme of infrastructure as a priority for 2013. Therefore, the institutions that support the work of the RIAC as well as other collaborators have prepared special contributions for the report, the majority of which focuses on the central theme of VII Americas Competitiveness Forum: “Infrastructure and Technology: Shaping the Countries of Today”.

The multilateral and academic institutions that contributed technical documents and experiences for the report are the Economic Commission for Latin America and the Caribbean – ECLAC, Tec de Monterrey, the Central American Bank for Economic Integration – CABEI, the Development Bank of Latin America – CAF, and the Compete Caribbean Program.

The National Council of Innovation for Competitiveness (CNIC) of Chile and Orkestra – Basque Institute of Competitiveness – Deusto Business School, as well as Barbara Kotschwar from the Peterson Institute for International Economics (PIIE), also produced documents on infrastructure.

Some of the speakers of the Americas Competitiveness Forum in Panama shared their expertise through interviews for this section. They are the international specialist in Higher Education, Jamil Salmi; the Director of the Metropolitan Policy Program at the Brooking’s Institution, Robert Puentes; the President of INCAE Business School in Costa Rica, Arturo Condo; the Schneider National Chair in Transportation and Logistics at George Tech in Atlanta, Chelsea White; and the Sub-Administrator of the Panama Canal, Manuel Benitez.

The contribution of the Economic Commission on Latin America and the Caribbean (ECLAC) demonstrates that investment in infrastructure projects contributes and increases coverage and quality of public services, access to markets for goods and inputs, and welfare in general. Therefore, the development of infrastructure constitutes a central element of the economic system of a country. ECLAC confirms that the reduction in infrastructure investment in the region has caused a growing deficit of infrastructure and related services, and with the exception of telecommunications, the provision of services is below that of developed countries and other emerging economies. The result of this delay becomes a reduction in productivity of economic agents and of competitiveness of industries and economies in the region. Amongst the main challenges for Latin America and the Caribbean is the lack of comprehensiveness in addressing policies regarding infrastructure and services, institutional and regulatory barriers , lack of sustainability criteria, and limitations on access to finance, as well as the lack of effective public-private partnerships.

Tec de Monterrey indicates that the development and competitiveness of Latin American economies cannot have a solid and sustainable basis for the long-term if there is no viable infrastructure that is functional and sustainable. It is argued that the true sense of infrastructure should be centered on its function. Infrastructure in this context is key, not only for economic growth but also for its impact in overcoming poverty and inequality. As part of the strategies to address the needs in infrastructure, the Tec de Monterrey recommends also investing in “soft” infrastructure, i.e. institutional development and human capital, as an integral part of infrastructure programs to advance hand in hand with investment in big projects.

The National Council of Innovation for Competitiveness (CNIC) of Chile highlights that those technological systems we know as infrastructure are the structures over which the collective lives of people are organized. As technologies evolve they generate possibilities for growth and opportunities for some players while producing loss of power and obsolescence for others. This reflection from the CNIC tells us that any current infrastructure project has to come with a greater degree of consciousness over its impact and resulting technologies in people’s lives. Hence the importance of, beyond resolving technical problems, taking charge of human concerns, the implications of coexistence, for the environment and the changes it is undergoing. Amongst the considerations from the CNIC are proposals for fundamental change in policy, in the way we understand and develop technology, in the type of education for engineers. The end goal should consider new forms of learning and generate development from schemes more closely linked to the concerns and values of communities.

Barbara Kotschwar from the Peterson Institute for International Economics (PIIE) provides a comparative view between the conditions of infrastructure development in Latin America and the Caribbean and some Asian countries, and provides evidence on the impact that costs and deficiencies in infrastructure represent in terms of trade for regional partners. She discusses three important roles for infrastructure: as a platform for development, as a factor in the promotion of trade, and finally as enhancing competitiveness, especially for MSMEs. Among the findings she indicates that inadequate infrastructure is a barrier to trade, growth and competitiveness.

ORKESTRA – Basque Institute on Competitiveness talks about knowledge infrastructure, characterizing innovation as a social process. The paper focuses on two key elements: the production and dissemination of knowledge, and on education, skills generation, and training. On the role of universities in the innovation process, they indicate that in addition to education and research, its third mission - transmission of knowledge - has evolved to include technology transfer activities, creation of new businesses, and management of intellectual property and knowledge. They recommend that universities in emerging countries have a differentiated strategy, with a basis on profiles adjusted to the economic and business structures of their country or of the region. Amongst the new type of research institutions that have recently been created, you find more flexible organizations with interdisciplinary specialties centered on the goal of resolving concrete problems and less concerned about the advancement of knowledge in itself. Knowledge infrastructure is a key component to all innovation systems.

The editorial section of the report also features interviews with distinguished experts in infrastructure, education and logistics, who contributed their ideas to the VII Americas Competitiveness Forum. Jamil Salmi emphasizes that there exists no world-class universities in Latin America or the Caribbean, no excellence in teaching, no research and scientific production. He identifies the governance of public universities as one of the great challenges and recommends focusing on talent creation and the transformation of teaching and learning methods to improve quality. The Director of the Metropolitan Policy Program at the Brookings Institution, Robert Puentes reflects on the importance of infrastructure development to support economic growth and prosperity. He explains the concept of global fluency of metropolitan areas and provides recommendations on how to promote competitiveness through urban planning. The Schneider National Chair in Transportation and Logistics at George Tech in Atlanta, Chelsea White analyzes the evolution of value chains and the position of countries in the Americas amongst the world in terms of logistics and competitiveness. He also discusses the importance of attracting and retaining creative talent as an economic development strategy. The President of INCAE Business School in Costa Rica, Arturo Condo, points out that the three main weaknesses of education in Latin America and the Caribbean are “quality , quality and quality “ in three dimensions . He offers proposals on how to experiment with new forms of governance in schools through greater “localization” of management and the involvement of parents and communities. He also offers some thoughts and ideas as to why entrepreneurs are not seen as role models or “heroes” in the social and professional mind frame of the countries of the region. The Deputy Administrator of the Panama Canal, Manuel E. Benítez comments on the impact the expansion of the Panama Canal will have on international trade and logistics. He also shares some lessons that Panama has accumulated as part of the learning and experience that has been generated with the Panama Canal expansion project.

Other institutions of the RIAC contributed their programs and practices which are included in the second section of this report, after the profiles of experiences of countries. CAF, Development Bank of Latin America shares with us an update on its Competitive Cities Program in Cuenca, Ecuador, Fortaleza in Brazil, and in Barranquilla, Colombia, cities which have achieved, based on productive development strategies and publicprivate partnership, substantive progress in innovation and entrepreneurship.

The Compete Caribbean Program describes the latest developments of their experiences in the design of a donor coordination effort to address competitiveness priorities in the Caribbean and the important results achieved so far.

The Mesoamerica Project contributes an initiative with support from the Inter-American Development Bank (IDB) called LAC Flavors, which is involved primarily in the promotion of trade in the food sector for SMEs in the Mesoamerican region.

The Inter-American Committee on Ports presents a group of initiatives and experiences in six countries in the region focused about the promotion of port competitiveness.

The OAS-ARTCA Project shares collaborative efforts in science and technology to promote education and collaborative innovation in the Americas.

The section on “Experiences in the Americas“ of this report provides an overview of the initiatives developed by eighteen countries: Belize, Bolivia, Chile, Colombia, Dominican Republic, El Salvador, Grenada, Guatemala, Honduras, Jamaica, Mexico, Panama, Peru, Suriname, St. Lucia, Trinidad and Tobago, United States and Uruguay.

The experiences that are included in this section refer to the 10 General Competitiveness Principles and in particular to the central theme of VII Americas Competitiveness Forum; principle number five regarding the development of infrastructure - across and within countries - modern and efficient.

The experiences presented by countries are grouped into five subsections: (i) Infrastructure; (ii) SMEs, Innovation, and Entrepreneurship; (iii) Development of Human Capital; (iv) Regulatory Framework, Business Climate, and Trade; (v) Energy.

In general, the content in the summary of each experience refers to its primary objective, relevance, results and highlights specific opportunities that exist for collaboration with other members of the RIAC. In every experience we indicate what each institution can offer (i.e. information sharing, technical assistance, or experts), and what would be desirable to receive from other countries (i.e. knowledge about similar experiences and successful methodologies that add / or supplement to components of the program, etc.). This process seeks to increase the impact of projects in each country and to provide feedback on the work and mechanisms needed to ensure the success of regional cooperation initiatives.