Page 72 - STRATEGY Magazine
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SPECIAL INSIGHT: INNOVATION AND R&D
Innovation and
Investment South
 of the Border
After decades of reliance on oil exports, it is time for Mexico to develop a domestic innovation sector. Education, infra- structure, and technology are improving, thanks to reforms— investment is the final piece of the puzzle.
Is there any funding to be found in to- day’s Mexico? According to a study conducted by EY and the G20, 72 percent of Mexican entrepreneurs
need cash—particularly venture capi- tal—to grow their businesses. For such an active member of both the OECD and the G20, this number is unusually low. While Mexico regularly takes the lead on global issues such as free trade and climate change, the nation still has room for progress before it operates fully like a modern economy.
COMING FROM BEHIND
Some of the best universities in Latin America are in Mexico, and the nation is known for its increasing technical sophistication. Nonetheless, Mexico falls far behind OECD averages in R&D investment. While the typical OECD country spends 2.38 percent of GDP on research and development, Mexico sits at just 0.54 percent. Other international rankings are similarly low.
Mexican business leaders know that significant opportunities in R&D await investors. The nation has many of the right ingredients—scientific universities such as the National Autonomous Uni- versity of Mexico (UNAM), government support for innovation in the Nation- al Council for Science and Technology (CONACYT), and a rank of 17 in the Global Innovation Index for Graduates in Science and Engineering. Restrictions on market activity hampered private R&D investment for decades, but this is a new Mexico, one in which business leaders like José Menchaca, CFO of AT&T México, can point to increased competition as a driver of innovation.
STRATEGIES FOR STRENGTH
Politicians are not simply sitting around waiting for change to come. According to Dr. Enrique Cabrero Mendoza, Direc- tor General of CONACYT, the Science and Technology Law proactively directs government strategy “to mobilize in- vestment in scientific research and ex- perimental development.” One approach is to use public-private partnerships to boost private–sector activity. Another is to establish business incubators that promote entrepreneurship; Mexico’s recently established National Institute of the Entrepreneur (INADEM) has created more than 500 such incubators around the country, although they exist primarily in highly developed areas like México City and the states of Jalisco and Nuevo León.
Innovation clusters—groupings of businesses, research institutions, uni- versities, suppliers, and customers—also encourage entrepreneurialism and in- vestment. According to Enrique Jacob, President of INADEM, the government does not have an official cluster policy. That is why his organization partnered with others to issue a national cluster map that “helps to identify smart spe- cializations, promote private industry investment, support new public policies in innovation, and foster global value chains” in 2016.
CONNECTIVITY IS KEY
As companies look to fund R&D, execu- tives will keep the focus on real-life ap- plications. President of Samsung Elec- tronics México HS Jo looks to highlight these applications in public–private research partnerships—for instance, a
virtual reality proj- ect that could share the beautiful envi- ronments of Mexi-
co with people from
all over the world.
A similar theme of connectivity drives in- novation at United Air- lines, where Coun- try Manager Rolf Meyer strives
to empower passengers
at each step
of the flight experience in
order to improve efficiency and satis- faction.
If the first decades
of the 21st century are
any indication, Mexico
will look much differ-
ent in 50 years. AT&T’s
Menchaca sees vast inno-
vative potential in the In-
ternet of Things, smart cit-
ies, and self-driving vehicles.
As Claude Gobenceaux, the
Vice President of the Central
and South Region of the Mexi-
can Federation of Aerospace Indus- tries put it, the job of political leaders is primarily “to get things done together with others.” It will be collaboration— between domestic and multinational businesses, between universities and companies, and between the public and private sector—that shapes the results of R&D investment for the coming de- cades.
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