INTRODUCTION

It is universally accepted that the majority of new jobs in the economy are created by small and medium size enterprises (SMEs). They contribute between 60-80% of a nation’s total employment. It is also recognized that ‘micro’ enterprises create immediate income sources. Hence, most governments have policies, at least on paper, to promote the small, medium and micro enterprise (SMME) sector. Unfortunately, many of the policies do not look at the problem in a holistic sense and policies are constructed top-down with very little consultation with other stakeholders. At present, ‘micro financing’ is in vogue; however, little consideration is given to other needs of this sector such as technology, quality, training, management and book-keeping practices, etc.

SMMEs, which in most developing countries are owned by individuals or families, are very conservative in thinking. In most cases, methods of operation (production or service functions) are based on age old ‘proven’ methods. It worked for the grandparents and parents, hence it works for the present owners. These methods have survived over time and have evolved in response to local economic, social and environmental uncertainties. It does not provide for increased productivity due to introduction of technological change. The mentality here can be compared to that of subsistence farmers.

When there is technological change, it is based on imported technological packages. In many instances the technology is not adapted to local conditions. The enterprise is dependent on foreign suppliers for training packages and operations manuals, as well as for spare parts. The SMMEs in general are isolated from their own national or regional capacity in science and technology. The linkages between national research institutions and the productive sector are few and far between. Such a linkage could help enterprises in the selection of technology, adaptation of technology and training, tailored for local conditions, in the case of imported technologies. It could also, however, be more beneficial for the enterprises as a source of scientific thinking which would lead to the development of incremental or even radical innovations. This partnership between enterprises and research institutes, which includes universities, is the key to sustainable change.

This paper deals primarily with the role of governments in encouraging SMMEs’ participation in R&D efforts. It is understood that not many such firms will have in house R&D capability and therefore will be working with institutions with research capabilities. It then gives some examples of existing national programmes in the region as well as selected regional examples of programmes which introduces Science and Technology (S&T) in the productive sector. Finally, it describes some target areas for policy and a suggestion for policy making which involves giving different stakeholders ownership in new policies.

The several actions that a country needs to use to promote innovation should focus on creating an ‘enabling policy environment’ to stimulate the application of research and development (R&D) activity among small and medium enterprises (SMEs) in the region. Productivity performance remains a concern for many OECD governments(1), while today’s societies confront new challenges as they adapt to globalization, trade liberalization and technological change. These changes in the global economy strongly emphasize a need for promoting and facilitating investment in R&D among SMEs. Governments’ roles in support of innovation need to evolve in order to address these new challenges facing new knowledge-based economies. These challenges are varied within the region, and the specific nature of an economy’s history, culture, educational system, geography and industrial infrastructure need to be accounted for in creating enabling policy environments. There is no simple way to boost productivity growth; however, attention to existing conditions, including the degree of competition and market openness, are important areas where government policy can contribute significantly, as are education and training, international cooperation and linkages between research institutes and industry. Nonetheless, private industries, in particular SMEs, remain the ultimate actor in achieving high rates of productivity and growth.

A KNOWLEDGE-BASED ECONOMY IN THE AMERICAS

In the knowledge-based economy, human, rather than material resources, are the most important factors of production and the principal source of competitive edge(2). Highlights from the OECD’s Science and Technology Outlook 1998 describe a continuing shift towards service and knowledge based industries. Investments in intangible capital – such as R & D, training and information – are of growing importance. Workers are becoming better skilled, triggering an increase in productivity, enabling cost reductions in several sectors(3). It is generally accepted that knowledge-based skills are the key to competitiveness and economic growth in the forseeable future and need to be accounted for in creating an enabling policy environment. The information age and the globalization process with their related complex technological, environmental, and commercial transactions, production systems, changing organizational structures and relationships place a premium on the use of specialized consultants and the out-sourcing of professional services(4). Countries of South East Asia made a commitment to educate the population many years ago and they were ready to satisfy the changing labour needs of the productive sector as the countries moved from agragrian to industrial societies. The same is true for Europe, as well as some Latin American countries such as Chile, Mexico and Costa Rica. The recently held meeting of the heads of states of the Americas in Santiago emphasized the importance of investing in education.

It is clear that governments have a key role in creating the conditions that facilitate the acquisition of knowledge by all members of society. For example, a recent upswing in R&D spending in the United States is contributing to positive economic trends. The annual level of R&D expenditures is estimated to have reached a record-setting high in 1997, exceeding $200 billion for the first time. In addition, the rate of growth in R&D investment is the highest it has been since the 1980’s. Simply stated, many firms are reaping record profits, which is creating a profitable climate for investment in innovation. The two major sources of financial support for R&D are industry and the federal government, which together supply approximately 95 percent of all funds spent on R&D performed in the United States. The remaining 5 percent is provided by universities and colleges and nonprofit organizations(5). Governments have to consider the characteristics of their economies’ entire knowledge system, including knowledge creation, acquisition, development, transfer, diffusion and use, as well as looking at marketplace framework. Human dimensions of government policy include the support of human capital and entrepreneurship by investing in education; enhancing the trained pool of highly qualified individuals, and directing attention to infrastructure and public awareness strategies. Innovation in adopting and diffusing the best technologies and strategies to achieve new levels of excellence in business practices depends on the intellectual capacity of the economy. Survival and growth demand the acquisition, nurturing, development and rewarding of human resources through a commitment to continuous learning by individuals, firms, institutes and governments. In this time of increased competitiveness, a nation’s success no longer depends on natural resources or on capital itself, but on the talent they have, can attract or create. Today, as an agency of the Brazilian government, linked to the Ministry of Science and Technology (MCT), FINEP’s (Agency for Financing Studies and Projects) mission is to convert knowledge into an instrument for building Brazil’s future. "Our business is the generation, diffusion and use of knowledge."(6)
 
 

WHAT IS AN ENABLING POLICY ENVIRONMENT?

An ‘enabling policy environment’ can be characterized by the opportunities and means for linking research and industry through long-term national policies, linkage systems, specific technical support services and creative financial mechanisms. The government is a key player in creating the favourable investment climates needed to attract knowledge assets and innovate commercial activity to encourage better performance and increased investment in innovative activities by SMEs.
 
 

COMPONENTS OF AN ENABLING POLICY ENVIRONMENT

Many countries in the region have programmes that provide some assistance to support human resources training and industrial R&D. Most of them, however, require an investment by the firms or the sector as well. The key word here is >investment=. If the firms wish to improve their profitability by improving their competitiveness and productivity, they need to invest in innovative activities. There needs to be an emphasis on the importance of the application of science and technology toward efforts to improve competitiveness and productivity in the private sector and to encourage SMEs in the region to invest in research and development. To make this happen will require a change in the perceptions of many SMEs in order for them to recognize the value of investment in innovative activities; and, governments need to create a policy environment that will encourage this change in perception. Successful, enabling policies should not only provide some fiscal benefits, but must also create conditions that will encourage firms to invest in innovative activities. Conditions such as:

• the identification of key players and a definition of their roles in order to form strategic partnerships;
• the definition of short term versus long term relationships to establish commitment for strategic planning;
• endogenous technological capacity building of the firm through a holistic, dynamic process to promote self-sustaining activities;
• an understanding of the absorptive capacity of firms in the economy; and,
• access to information regarding market characteristics and processes of technological change,

Developing a culture of innovation in enterprises is of great importance as it relates technology policy. The enterprise does not innovate for innovation’s sake, but to achieve clearly defined market objectives.(9) Promotion of innovation in SMEs needs to take place on a variety of levels such as, within the enterprise, in its relations with the scientific and technical environment, in governmental initiatives and with respect to international cooperation. The majority of failures in innovation processes are attributable to a lack of interaction among those who contribute to the interfaces forming and implementing the innovation. As a result, key players need to be identified and interaction among these players strengthened. Vital relationships between Development Banks, International Organizations and National Science and Technology Programmes must be created to consolidate isolated efforts to promote the effective management of innovation in SMEs.

EFFORTS TO IMPROVE ACCESS TO SCIENTIFIC KNOWLEDGE FOR SMEs IN THE REGION

The above-described conditions will vary according to regional differences, for different nations will require an enabling policy environment unique to their needs. In most Latin American countries, different limitations are imposed upon SMEs, for domestic R&D are the prerequisites for efficient assimilation and adaptation of foreign technology, and the development of competitive production of consumer and capital goods for domestic and international markets. R&D is expensive and requires expensive facilities and highly trained personnel. Since the 1970’s, governments in the region have more or less intensified their support of research and development (R & D) activities; however, neither the economical productivity nor the citizens’ quality of life have reached the desired growth in lesser developed countries, and the same applies to the participation of private enterprises and organizations in R & D investment. A big question is not simply whether to provide the resources (financial, human, and institutional) to invest in more research activity, but whether research effort is directed toward development needs.(10) For example, the majority of enterprises in the Latin American industrial sector, especially SMEs, lack the mechanisms to respond to the region’s socio-economic challenges. They lack the internal capacity to design and implement changes to improve productivity, level of technology, and organizational structure to form their own competitive strategies in this new, knowledge-based economy. This is largely due to the structure of research institutions (including universities) in developing countries which pattern their operations after the earlier models in the industrialized countries without having the necessary accompanying downstream institutional follow-up and industrial climate to develop workable ideas and prototypes into marketable products.(11)  As a result, the main reason why some of the technological solutions developed by hardworking researchers are never applied, is because they do not solve the firm’s specific problems. That pool of creative resources in research in such countries must be directed towards more immediate industrial applications as defined by firms or sectors, in order to introduce technological change. The creation of stable and productive employment opportunities constitutes the most effective medium for structurally reducing poverty. The small enterprise sector has major possibilities for generating employment in many necessary areas. The expansion of the small enterprise sector, including the growth of existing firms and the creation of new ones, defines the central element of policies for attacking poverty. Direct beneficiaries are a) the institutions responsible for economic policy formation and social relations based on reducing poverty and the creation of new employment opportunities, and, b) the small enterprises who will encounter new promotional tools, facilitating the enhancement and creation of new enterprises.

NATIONAL EXPERIENCES IN POLICIES AND PROGRAMMES

The Case of Brazil

Many aspects of the Brazilian situation in science resemble those in a number of other Latin American countries.(12)  This section, however, will briefly focus on specific, recent initiatives supporting technological development in Brazil. In the nineties, FINEP started to change its operation, due to the big changes in the Brazilian economy. Besides financing R&D, it started to fund quality management and information within firms. Other initiatives include financing the education of industrial employees and environmental management. FINEP is also currently investigating new methods of stimulating the management of intellectual assets among firms. In order to better participate in market activities, FINEP has defined some general products; technological development (ADTEN), quality management (AGQ), education for competitiveness (PROEDUC), environmental management (FINEP VERDE). Firms are encouraged to choose one or more products, depending on their investment project. The main objective is to help Brazilian firms to improve their ability to compete. There exist financial and participation instruments to help achieve this goal, where financial return is determined before project commencement, and the return is proportional to the project results. FINEP uses its own funds for these operations and is also responsible for managing several government funds in non-refundable operations. FINEP recognizes that for those firms whose business strategies are focused on technological innovation, these financing mechanisms are not adequate. These firms are highly dynamic, and it is not possible to make plans simply at the project level. FINEP is thus implementing a new product called a ‘technological partnership’, exclusive to technology-based firms. Rather than providing support to the project, it supports the firm, or its business plan. Instead of loans, it receives equity. The return is based on the net revenue of the firm, over a declared period of time. In 1997, FINEP spent US$ 420 million in loans and equity operations and US$ 90 million in non-refundable operations. Presently, there are 186 loan requests being assessed, 115 in the process of contract preparation and 250 already in operation.(13)

The Case of Chile

Chile also has strong policies and programmes to encourage investment in R&D by the private sector. There is the Comisión Nacional de Investigaci\ n CientR fica y Tecnológica (CONICYT) which funds R&D as well as helps in policy formulation. Financial support mechanisms for the development of science and technology in Chile include:

• the Fondo Nacional de Desarrollo y Producci\ n (FONTEC), which focuses on promoting, guiding and supporting research and technological development projects, infrastruture acquisition and technological innovation;
• the Fondo Nacional de Desarrollo CientR fico y Tecnol\ gico (FONDECYT), wherein the goal is to finance projects and research programs and establish a permanent system to promote national science and technology research; and,
• the Fondo de Fomento al Desarrollo CientR fico y Tecnol\ gico (FONDEF), which focuses on gearing and improving research, technological development and services towards production and technology transfer through a network of identified key players.

The Case of Canada

Canada has succeeded in changing the perception of government as a surrogate of industrial R&D to a partner in ensuring a healthy innovative climate with the private sector increasingly investing in knowledge, and with local communities and regions taking responsibility for this activity.(15)

Programmes to assist SMEs include the National Research Council’s Industrial Research Program (IRAP), which has provided continuous and valuable assistance to Canada’s business in acquisition and development of advanced technology skills and best practice technologies. Presently, IRAP is a national network of approximately 260 Industrial Technology Advisors (ITAs), working in close collaboration with various national, provincial and local organizations to strengthen the technology capabilities of some 40,000 business clients, primarily SMEs. ITAs work closely with firms, helping them to identify and understand their product and process technology requirements, and devise plans to either purchase or develop the required new technologies. They also assist businesses in the acquisition, adoption or adaptation of new technologies.(16)

As a key new element of the Federal science and technology strategy, the Technology Partnerships Canada (TPC) program is a funding approach aimed at helping firms in Canada compete in high technology industries. TPC leverages increased private sector R&D investment.(17)  In support of near-market R&D, every investment is conditionally repayable, conditional upon a commercial result. The government shares with the private sector in both the rewards and the risks, by retaining a proportion of royalties where technologies developed are highly successful. This focus on enabling technologies will result in benefits for all of Canada’s industrial sectors, enhancing their efficiency, productivity and competitiveness.(18)

The federal government has also created and funded the Networks of Centres of Excellence in order to link R&D in Canadian Universities to wealth creation in the private sector. They stimulate leading-edge research in emerging areas of critical importance, and help train and educate world-class scientists essential to Canada’s economic growth.

Recently, the Government of Canada has acted as a catalyst in launching a series of technology roadmaps by describing to industry groups the roadmap process and interesting them in conducting such a process themselves. Technology roadmaps are a mechanism for identifying the new critical technologies required by an industry to meet future market demands. Specifically, roadmaps identify anticipated markets, identify the technologies that will be required to meet the market needs, and set priorities for private and public investment in selected areas of technology.(19)

In the case of SMEs, businesses can apply to the Canadian Advanced Technology Association (CATA) Alliance, which has particular objectives aimed at benefiting the small to medium enterprise. These include:

• a management team that works with companies to identify potential customers and partners, find investment sources and boost their profile and awareness,
• advocacy in areas such as R&D tax policy, capital formation, human resource development and trade policy,
• connections to the business network creating opportunities to boost their influence and build partnerships,
• business builder services, i.e. management training programmes, bench marking surveys for salary/compensation, best practice reports,
• information on industry and government legislative trends and current developments affecting the enterprise.

REGIONAL EXPERIENCES IN POLICIES AND PROGRAMMES

Current market globalization demands competitiveness, which can only be sustained with product and service quality. This quality is not achieved without adequate quality control, and this control is not accomplished without measurements, and so on. Also related are clean technologies, for on a worldwide basis there is interest in avoiding or reducing environmental pollution of all types. These technologies do not produce contaminants and they involve energy efficient processes, using advances in catalysis, reaction engineering, separations, and the use of renewable resources. Based on these regional issues, metrology, standardization, accreditation and quality, as well as, clean technologies are important areas supporting the development of SMEs.

The Inter-American System of Metrology, Standardization, Accreditation, and Quality Programme (OAS)

The programme, "The Inter-American System of Metrology, Standardization, Accreditation and Quality", has organized and sponsored activities under these four important concepts in light of SME development in the region. In terms of metrology, the project has contributed to the organization of three advanced schools of metrology as part of a human resources training program. It has also organized forms of technical assistance to some parts of the region and contributed to a worldwide congress, certain publications, fellowships and a series of inter-comparison exercises on electric units and temperature. Concerning standardization, training workshops have been organized on standards applications and contributions made to provide international consultants and support counterparts. With respect to accreditation, seminars on principles and practices, as well as meetings have been planned within the region. The quality component has been addressed through consultation services and courses for training development in the area.

OAS/GTZ Regional Programme (Germany): Quality Systems for the Small and Medium Enterprise

This particular programme encourages technological and administrative assistance to elevate the productivity and the competitiveness of micro, small, and medium enterprises, to help strengthen their internal capacity. This requires the continual improvement of operations, efficient use of resources, elimination of waste, teamwork, and improvement of communications. To satisfy these needs, enterprises must be aware and make use of metrology, standardization, technological information, and consultation services.

In operation for approximately ten years, this programme on quality and productivity in SMEs aims to demonstrate that modern techniques for achieving total quality can be applied to SMEs by satisfying the following objectives:

• To provide support for groups of small and medium sized enterprises through recommendations and training, in order to improve their total quality and management quality systems.
• To confirm that it is possible to apply the Japanese practices of total quality to small enterprises, and to extend the total quality philosophy and techniques to other subsectors and industries, by using pilot plants as models.
• To train participating technical institutions in establishing successful programs that, in collaboration with business associations, provide support to industry in total quality.

Inter-American Programme for Environmental Technology Cooperation in Key Industry Sectors

This programme is an initiative which responds to the challenges faced by small and medium size enterprises in Latin America and Caribbean countries to adopt cost-effective, environmentally sound technologies and management practices. The main objective of the program is to better equip industry associations to deal with environmental management concerns of their membership, and bring them together with organizations which can assist them with follow up initiatives, thus creating a support network in the hemisphere. The following regional roundtables have been supported by the OAS and host institutions:

• Policies and activities in the area of environmental sound technologies for small and medium-sized enterprises ( Ottawa, Canada- November, 1995)
• Textiles and leather sectors: More competitive companies and clean environment( Montevideo, Uruguay, June, 1996)
• Agri-food ( San Jose, Costa Rica, August, 1997)
• Metal plating( Bogot< , Colombia)
• Energy efficiency( Kinsgton, Jamaica, December, 1997)
• Municipal water( Vancouver, Canada, March, 1998)
• Municipal solid waste( Bahia, Brasil, September, 1998)
• Forestry and paper industry( Santiago, Chile, November, 1998)

Based on the context provided above, some of the policy options which could be used to increase performance of and investment in R&D by SMEs will be discussed in the remainder of this paper. Some of these policy instruments have been successfully applied by some countries or are being considered as future options to stimulate increases in private sector funded R&D in their countries. Each one requires strong government leadership in formulating legislation to promote Science & Technology, through policy dialogue between state and private sector, academic and non-governmental organizations (NGOs). This will lead to well-formulated strategies, and deliberate implementation actions on industrial technology development, creating an enabling policy environment. The following are some examples of the above mentioned policy options.

1. Defining science and technology priorities through the participation of different stake-holders. At present in most countries of the region these priorities are set on the basis of political needs and or bureaucratic perceptions. The stake-holders do not have an opportunity to >buy into= the decision making process, and as such the process of the implementation of the decisions arrived at by the politicians or bureaucrats.

In Mexico, experience gained at the Centro para la Innovacion Tecnologica (CIT) indicates that the members of receiving organizations (including firms) usually refuse to accept ideas or practices where they have not played an active role. This situation, in particular, applies to lack of participatory development methods associated with recent, experimental linkages between universities and enterprises forged through the Industrial linkage office within the CIT.(20)

In other countries, however, a more consensual approach is being taken to set national priorities. In the United Kingdom, the 1993 White Paper on Science A-Realizing Our Potential@-announced the Technology Foresight Programme. This led to a process which used scientific methodology in formulating policy for science and technology and arrived at national priorities with participation of the policy makers, scientists, private sector and other non governmental organizations. These priorities although set during the Conservative Party Government, because of the mechanism used to set these priorities which did not reflect the political goals of the party in power, have also been accepted by the Labor Party which is presently in power in the UK.(21)  Such conditions of stability provide confidence to the firm and encourages them to invest in the future.

2. Availability of data related to Scientific Research and Experimental Development. Many countries in the world including several from this region are collecting data on Science, Technology and Innovation Indicators. In this region a project funded by the Programa Iberoamericano de Ciencia y TecnologR a para el Desarrollo (CYTED) of Spain, the Organization of American States (OAS) and UNESCO, provides training for collection of data and publishes Ibero-American and Inter-American Science and Technology Indicators. Availability of such data helps firms in their decision-making processes. They can determine what is their own R&D position compared to their sector average and become familiar with market trends. Such data could be used as an important tool for strategic planning by the firms. The documentation and awareness of ‘best practices’ may serve as models for adoption by smaller, perhaps less experienced firms. Particularly in those areas of the developing world where there are many small countries unable to achieve a critical mass of their own expertise, a few regional centres of excellence could provide the most realistic option for developing a vital science and technology community.(22)

3. Scientific Research and Experimental Development (SR&ED) Tax Credit. Several countries have introduced mechanisms which provides tax credit to firms investing in R&D activities. In Canada the Federal Government provides tax credit of up to 35% (enriched rate) (23) to Canadian controlled corporations with less that $200,000 taxable income for qualifying SR&ED activities. Other Canadian corporations, firms and trusts can receive a tax credit of up to 20% for qualifying SR&ED activities. In addition, some of the Canadian provinces either in collaboration with the Federal Government or on their own have other tax incentives. A similar tax credit programme also exists in the U.S.A. and there was a proposal by the President to make Athe Research and Experimentation (R&E) tax credit permanent@. The argument presented that the R&E activities by nature are long term endeavors and as such the firms needed to be sure that the tax credit will be available during the life of the research and development phases(24) is an essential component for the successful application of this policy.

According to the Canadian Advanced Technology Association (CATA), however, there is room for development in this area. Accountability, client orientation and responsiveness to the way individual companies manage their R&D should be emphasized. In addition, codes or standards for administration audits, and for client rights need to be developed and published specifically for the program. Participation of both the government agency and the private sector is also required in developing these codes/standards.(25)

4. Industrial Extension Programmes. Most of the Small and Medium Size Enterprises (SMEs) do not have the internal capacity to under take Research and Development (R&D). In many countries the SMEs ( as well as most of the local larger firms) do not have a culture of using science and technology to solve problems or to improve products or processes. This is one of the reasons that there exists such a lack of linkage between research institutions such as Universities and the productive sector. Strategic partnerships with Universities need more attention, for they offer a breeding ground for simple and cost-effective "appropriate technologies". It is not a problem which is unique to the countries of the Latin America and the Caribbean, it also is a problem in Asia, Africa and even in North America and Europe. In later cases the problem may not be as severe but it does exist. To improve this gap and to encourage innovative activities especially in the SMEs, some countries have established agencies which are proactive in nature. The staff from these institutions visit enterprises instead of waiting for the enterprises to approach them. Canada=s Industrial Research Assistant Program (IRAP) based in the National Research Council, provides technical advise, as well as provides technical and financial assistance for R&D projects and research related to adaptation of existing technologies. Similar programmes-- manufacturing extension centers--also exist in the U.S.A. at both federal and state levels and are operated by the federal Department of Commerce.

Universities continue to play an essential part in national innovation systems, and increased demands for economic relevance have boosted their role in transferring knowledge to the private sector. However, there is a limit to the amount of R & D financing that Universities can expect from the private sector. Many aspects of University research have few, if any, commercial applications, even in the long run. Support for research at Universities will thus continue to be largely the responsibility of governments.(26)

A successful example of government, university, and private enterprise linkages is a Costa Rican project on the development of software for elementary school education (IYULU). With funding from the Science and Technology Program at the Interamerican Development Bank and the government of Costa Rica, the Technological Institute of Costa Rica (University sector) and the Consejo Nacional de Investigaciones CientR ficas y Tecnol\ gicas (CONICIT), on behalf of the government sector, were able to achieve the development of a highly commerciable product. IYULU is a reflection of valuable collaboration among key organizations, the effective implementation of research activity and the quality results produced at Universities in the country. The project benefits the nation in an infinite number of ways through its educational content and costs much less than using imported technological software.

5. Availability of long term Venture capital. SMEs especially start-ups, in the areas of high technology very often require equity investment. Private venture capital as a rule takes equity position and leave when another better opportunity arrives or when they believe that they have made reasonable profit. Their commitment is very rarely for long term. Most of the high technology starts ups require continuous R&D to upgrade their product line. The kind of equity capital these companies require need to stay with them for a longer period of time. Such capital can only be available through public funding, from multilateral or bilateral agencies or from foundations. The National Academy of Sciences in the U.S.A. recommended the establishment of a publicly funded, privately run civilian technology corporation >to increase the time-horizon of investments.(27)  Singapore, a country which has many high technology start-ups every year, shows that the public agencies are moving away from providing grants to taking equity position in such firms. Among these public bodies are Singapore Institute of Standards and Industrial Research (SISIR) an agency which pioneered public sector involvement in venture capital investment, National Science and Technology Board, National Computer Board and the Economic Development Board. In Brazil, FINEP, besides providing subsidized loans, risk-sharing instruments, also, to a lesser extent acquires equity position to encourage local firm=s technological activities.

6. Public Sector Procurement Policy. Many countries, such as Canada, require R&D activities related to any major military or civilian procurement by the government from local or foreign sources, to be undertaken within the country. This policy encourages R&D investment in the private sector, especially in the local firms subcontracted by the major supplier to undertake some specific jobs.

7. Incentives for acquiring new equipment. Most of the present R&D activities require sophisticated equipment. Some countries have successfully used investment tax credits for new equipment purchases as a mechanism to stimulate innovative activity in the private sector. In some cases, however, it will be more efficient to take advantage of existing research facilities within the countries to solve problems and to improve existing production, management and marketing practices.

8. Professional Services Sub-Sector (PSS) development. This sub-sector is a largely under-utilized form of human capital in Developing Countries, in large measure due to the mindset that knowledge-based resources come only from the North. PSS describes that part of the Services Sector that provides higher knowledge-based services, advanced training, specialized consulting, engineering, management and other professional services. To overcome this developmental constraint of a negative mindset will require Developing Countries and regions to mobilize political will, institutional and other resources to promote public/private sector arrangements which will harness developmental resources to strengthen institutions, build capacity and deepen existing entrepreneurial capability in the PSS. The development of this sub-sector is imperative for the advancement of Developing Nations.(28)

9. Protection of intellectual property rights. Most industrialized countries have laws that provide protection to the inventors from illegal use or copying of their inventions. This is a strong stimulant for investment by private sector in R&D. Research is not only expensive but is also a risky business. It is reasonable for the investors in this endeavour to expect protection of the law in recovering the investment and to have reasonable return on their investment.

10. Decrease information disparities. Not all parts of the economy have the same access to information required for improving their position. In Canada, governments are increasingly in the business of providing services (brokerage, venture capital, and information) to strengthen linkages to SMEs.(29)  In smaller states with especially vulnerable economies, information on technological advances, which are likely to disrupt their economic base, is vital to their survival. The Community Access Programme (CAP) initiated by Industry Canada reaches out to Canada’s rural and remote communities with affordable public access to the Internet and the skills to utilize it effectively. The unique program is a joint venture based on the cooperative efforts of governments at all levels, the private sector, and local community-based partnerships. The rationale behind the project is that access to the Information Highway will help create new and exciting opportunities for jobs and growth, by providing target audiences with the ability to communicate with one another, conduct business, enhance job skills or simply exchange ideas and information.(30)

The above policy options are by no means an exhaustive list. There are many others such as rules and regulations, trade and transportation policies etc. which could be designed to encourage investment in innovative activities. The countries from which examples are given are not the only countries who are applying >enabling policies=. There are other countries in the region who do have some of these policies in force. It is just that the countries cited have had a history of applying a combination of these policies and have been relatively successful in increasing the portion of R&D funded and undertaken by the private sector, even without taking into account the R&D activities undertaken for military use.

CONCLUSION

Today, successful policies for competitiveness will be those primarily aimed at supporting the aspects of intangible investment infrastructures and collective governance which are outside the purview of individual firms and at facilitating the formation of linkages, networks and interactive mechanisms.(31)  Economies in the region are experiencing many changes, especially under the globalization phenomenon. Targeting the development SMEs by providing enabling policy environments and forming strategic partnerships can create beneficial opportunities for improving conditions within the Americas. The objectives and instruments of the policies outlined in this document will differ according to the specific characteristics of each country, including size, industrial structure, technological specialization and institutional arrangements. In general, however, Science and Technology programmes and priorities must be derived from a national dialogue among the stake-holders on needs and opportunities, rather than be driven by the "suppliers" of science and technology, whether domestic or external. There must be a much enhanced partnership between economic and social policy-makers and science and technology professionals, but the defining and coordinating role should be assigned to the former, not to the latter. Systems of consultation and organization have to be created which generate involvement and commitment to change as a multi faceted, interactive endeavour across the whole spectrum of the community and its institutions, including non-governmental actors.(32)   Linkages between research institutes (Universities) and industries are key instruments in ensuring access to new technologies and information for SMEs and stimulating long term viability through awareness, training and continual development. It is clear through the examples provided, that there is a recognition by governments to improve these linkages, which need to be strengthened throughout the region. There is also the recognition among governments that investing in education and training rests at the forefront of building a knowledge-based society. "What you are really exporting is talent, talent for making things better and cheaper. The products are a consequence of the entrepreneurial talent of many people and specialists, and that is what you export, not the products. Products are created by talent, so at the end, talent is what is being sold."(33)

A noteworthy feature of technology policy is also the application of practices based on eco-efficiency principles in productive processes. Eco-efficiency is a management philosophy designed to encourage businesses to become more competitive, more innovative and more environmentally responsible. Eco-efficiency links business and environmental excellence through the vision: ‘produce more from less’. It links the desired goals of business excellence and environmental excellence to achieve measurable commercial and social benefits.(34)

In addition, new conceptual trends in technology policy development are proving to involve the incorporation of basic scientific method principles. Such applications include technology-foresight projects, which are among some recent initiatives at the OAS.

NOTES

1  www.oecd.org/news_and_events/;  “Science, Technology and Industry Outlook – 1998 Highlights”, OECD
2  Paul Dufour, “National Technology Policies: Comments on Canada’s Experience with a New Knowledge-Based Economy/Society”, Paper presented at the Conference on Technology, International Trade and Economic Growth: Why Latin American Industry Must Invest in Innovation, Santiago, Chile, April 21-23, 1998.

3  www.oecd.org/news_and_events/;  “Science, Technology and Industry Outlook – 1998 Highlights”, OECD

4  Adapted from the paper: “Smart Partnerships – Exploring Synergies between RTO’s and the Professional Services Sub-sector in Developing Countries” presented by Clement Imbert & Hollis Charles at the Conference on Science and Technology Development in the Caribbean, University of the West Indies, St. Augustine, Trinidad & Tobago, September 23-25, 1998.

5  National Science Board, Science and Engineering Indicators – 1998. Arlington, VA: National Science Foundation, 1998 (NSB 98-1), p.4-4 – 4-5.

6  Hugo Tulio Rodrigues, “Availability of Financial Resources for R & D”, Paper presented at the Conference on Technology, International Trade and Economic Growth: Why Latin American Industry Must Invest in Innovation, Santiago, Chile, April 21-23, 1998.

7  D.J. Teece, “Technological Development and the Organization of Industry”, Technology and Productivity – The Challenge for Economic Policy, OECD, Paris, 1991, p. 409.

8  D.J. Teece, “Technological Development and the Organization of Industry”, Technology and Productivity – The Challenge for Economic Policy, OECD, Paris, 1991, p. 409.

9  Jacques Marcovitch and Sim?o Davi Silber, “Technological innovation, competitiveness and international trade”, REDES, Universidad Nacional de Quilmes, Buenos Aires, marzo,1998, n?mero especial, p. 208.

10  Adapted from the paper: “Smart Partnerships – Exploring Synergies between RTO’s and the Professional Services Sub-sector in Developing Countries” presented by Clement Imbert & Hollis Charles at the Conference on Science and Technology Development in the Caribbean, University of the West Indies, St. Augustine, Trinidad & Tobago, September 23-25, 1998.

11  Adapted from the paper: “Smart Partnerships – Exploring Synergies between RTO’s and the Professional Services Sub-sector in Developing Countries” presented by Clement Imbert & Hollis Charles at the Conference on Science and Technology Development in the Caribbean, University of the West Indies, St. Augustine, Trinidad & Tobago, September 23-25, 1998.

12  Erno I. Paulinyi, “Brazil: Experiments in the Design of New Programs”, E. Jeffrey Stann (Ed.), Science and Technology in the Americas: Perspectives on Pan American Collaboration, American Association for the Advancement of Science, Washington, D.C., 1994, P. 57.

13  Hugo Tulio Rodrigues, “Availability of Financial Resources for R & D”, Paper presented at the Conference on Technology, International Trade and Economic Growth: Why Latin American Industry Must Invest in Innovation, Santiago, Chile, April 21-23, 1998.

14  For a detailed discussion of different existing programs to support R&D in the Americas see, RICYT, Principales Indicadores de Ciencia y Tecnologia, Buenos Aires: Instituto de Estudios Sociales de la Ciencia y la Tecnologia, Universidad Nacional de Quilmes,1998.

15  Paul Dufour, “National Technology Policies: Comments on Canada’s Experience with a New Knowledge-Based Economy/Society”, Paper presented at the Conference on Technology, International Trade and Economic Growth: Why Latin American Industry Must Invest in Innovation, Santiago, Chile, April 21-23, 1998.

16  For more information visit http://info.ic.gc.ca.

17  http://tpc.ic.gc.ca; “Technology Partnerships Canada Fact Sheet”, Industry Canada – Technology Partnership Canada, January 20, 1998.

18  Paul Dufour, “National Technology Policies: Comments on Canada’s Experience with a New Knowledge-Based Economy/Society”, Paper presented at the Conference on Technology, International Trade and Economic Growth: Why Latin American Industry Must Invest in Innovation, Santiago, Chile, April 21-23, 1998.

19  Ibid.

20  Jose Antonio Esteva Maraboto, “Circuits in the transfer of research results to potential users”, paper presented at the Conference on Science and Technology Development in the Caribbean, University of the West Indies, St. Augustine, Trinidad & Tobago, September 23-25, 1998.

21  For further details of the UK?s Foresight Programme see, Luke Georghiou, ? The United Kingdom Technology Foresight Programme - Implementation, Collaboration and Potential as a Model?, UNIDO, the National Academy of Sciences, Bolivia, Proceedings: Expert Group  Meeting on Technology Forecasting and Foresight, La Paz: National Academic of Sciences, July 1997, p. 95-118.

22  OECD, “New Technology, Latecomer Industrialisation and Development”, Technology and the Economy – The Key Relationships, Paris, 1992, p. 281.

23   The reference to ?enriched? in the context of SR&ED tax credits for SMEs generally refers to the fact that SMEs are entitled to a tax credit rate of 35% higher than the 20% rate that applies for other business and that the tax credit earned at the 35% rate are fully refundable. The tax credits earned by large firms on their R&D expenditures are non-refundable.

24  William J. Clinton and Albert Gore, Jr., Technology for America?s Economic Growth, A New Direction to Build Economic Strength, Washington D.C. February 22,1993, p. 12.

25  www.cata.ca/cata/advocacy/federal-system2.htm; “The Federal System of SR&ED Tax Incentives: Summary and Recommendations”.

26  www.oecd.org/news_and_events/;  “Science, Technology and Industry Outlook – 1998 Highlights”, OECD

27  William J. Clinton and Albert Gore, Jr., op.cit. p.13.

28  Adapted from the paper: “Smart Partnerships – Exploring Synergies between RTO’s and the Professional Services Sub-sector in Developing Countries” presented by Clement Imbert & Hollis Charles at the Conference on Science and Technology Development in the Caribbean, University of the West Indies, St. Augustine, Trinidad & Tobago, September 23-25, 1998.

29  Paul Dufour, “National Technology Policies: Comments on Canada’s Experience with a New Knowledge-Based Economy/Society”, Paper presented at the Conference on Technology, International Trade and Economic Growth: Why Latin American Industry Must Invest in Innovation, Santiago, Chile, April 21-23, 1998.

30   For more details visit http://cap.unb.ca.

31  OECD, “Technology and Competitiveness”, Technology and the Economy – The Key Relationships, Paris, 1992, p. 254.

32  OECD, “New Technology, Latecomer Industrialisation and Development”, Technology and the Economy – The Key Relationships, Paris, 1992, p. 280.

33  Ramon de la Pena Manrique, “Education: Vision of the Future”, Paper presented at the Conference on Technology, International Trade and Economic Growth: Why Latin American Industry Must Invest in Innovation, Santiago, Chile, April 21-23, 1998.

34  www.wbcsd.ch/speech.htm#top; “Eco-Efficiency”