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We have an incredible store of talents in this country, many prestigious universities, and all sorts of talented people working in a wildly diverse set of fields. But what do the numbers tell us about the realities of Mexico’s innovation landscape? The money being spent in Mexico’s R&D sector is simply not paying out what it could or should.

Fig. 1 Percent GDP invested in R&D for selected countries

First, we look at what selected countries are investing in R&D as a percent of their Gross Domestic Product (GDP). The OECD average for 2015 was 2.38%, with Israel and Korea spending 4.23%, the United States 2.79%, China 2.07%, and Mexico 0.534%, as seen in Fig. 1. [1]  However, these percentages are only a small part of the story. One may be tempted to consider excusing Mexico’s poor showing on a generally smaller economy relative to the OECD countries and therefore the financial priorities must be adjusted. The data allow us to infer alternative explanations. When adjusting the GDP to purchasing power parity (PPP, USD Projected 2017) on a per-capita basis, these differences are not as large as expected. [2] Korea and Israel are roughly 2:1 to Mexico and the USA is approximately 3:1, as seen in Fig. 2. 

From the OECD, we can glean some more information as to the effectiveness of the invested money. For example, Mexico and Israel spend about the same total annual money on R&D (10.99 vs. 11.11 Billion USD), but Israel’s technological sector is vastly more developed, employing 17.4 people in R&D per thousand employees in the country vs. Mexico’s 0.61, 28.5 times more people per thousand employed as seen in Fig. 3. [2]

Fig. 2 GDP (PPP, USD, 2017)

  Fig. 3 R&D Employees per Thousand Employed

Israel, a country of only 8.38 million people, awarded 14,470 patents in 2015. [3] Mexico, a country of 127 million people, awarded 2,508 patents in 2015. [4] For the same year, 2015, Israel filed 20,093 patent applications, making the filings:awards ratio 1.39:1, while in Mexico 18,071 patent applications were filed, making the filings:awards ratio 7.21:1. This large difference in ratios is not directly proof of quality as patents awarded will lag patents filed by sometimes years. On a bulk overview basis, however, one may infer a likely lower quality on average per application in the Mexican system, leading to lower success rates in obtaining the patents.

On a per-capita basis, Israel is filing 16.8 times more patents than Mexico. The comparison to Korea is even more dire, with 284,464 patent applications in 2015 yielding per-capita patent applications 39.6 times greater than Mexico, as seen in Fig. 4. [5] These large differences are occurring in countries with only 2-3 times the wealth per capita vs. Mexico.

So, what is driving this vast gulf in effectiveness in R&D expenditures to results in Mexico vs. some of its OECD peers? As with any macro-scale economics and development question, there is no single and simple answer. However, one component that is uniquely Mexican and is likely to be an important culprit in this disparity is the National Researcher System (SNI by its Spanish acronym). The system has stagnated to the point where a primary indicator matters: Publishing in ISI-indexed journals. Because of the tremendous time and effort involved in patenting (3-5 years) and the very short review periods for remaining in the SNI (3-4 years), most researchers choose to publish their findings and move on to the next paper rather than invest in technological development.

Even with the 2016 reform to the law that would “greatly emphasize” technological development work, these products are still highly under-valued. The SNI system has a 40-year proven track record of being inefficient at generating technology transfer. From 1991-2016 Mexico has paid out between 350,000 and 450,000 years of this science fellowship. [6] Over that same period all Mexican universities and their SNI researchers produced 2868 patents. [6] This is over 150 years of fellowship paid out for every patent produced over this 25-year period. This rate of return is unsustainable and anti-growth.

One important reform to this system that the SNI’s governing body, the National Council for Science and Technology (CONACYT) could implement would be a system of blind review for all science and technology funding, including the SNI system. As difficult as it could be to implement this change, it would be hard to present a strong case for maintaining a non-blind science funding system. A second but much more politically untenable move would be to eliminate the SNI funding altogether and divert that money to funding blindly-evaluated research proposals where the researchers could obtain release time salary as a reward for presenting high-quality research proposals.

In the 1980’s, Korea and Mexico were peers along many different economic and development dimensions with Israel only slightly ahead. [7] [8] [9] Korea decided to invest heavily in education, innovation, and technology and is currently the world’s #4 innovator. [5] Mexico has the talent, people, institutions, and resources to be a global powerhouse in innovation. We have seen this investment in innovation play out in economic development at large scales in countries that we reviewed here like Israel, Korea, and the United States. Making the national research and innovation system effective is a vital catalyst for economic growth and a profound transformation of Mexico’s future. 

It will require bold leadership and the painful and politically difficult breaking of old habits and traditions, but I am certain that Mexico has what it takes – and I will be an active part of that transformation in whatever capacity I can. Are you willing to take on this challenge as well? 

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