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Abstract:
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This study evaluates the role of intellectual property rights, fiscal incentives, and public
funding in supporting research and development (R&D) activities, with particular attention to R&D
activities in the Latin America and the Caribbean (LAC) region. The study bases its evaluations on
case studies of individual countries and on cross-country empirical analyses.
The study initially compares R&D activities in LAC to other regions (for example, U.S., Europe,
East Asia) and finds the level of R&D activity in LAC to be comparatively low. The study then
proceeds to examine how different R&D policies might impact on R&D activities in LAC. Strong
conclusions are hard to draw given the limitations with the theory and empirical evidence, but the
evaluations seem to suggest the following. First, a strengthening of intellectual property rights,
particularly patent rights, will likely impact significantly on R&D and total factor productivity in
LAC. Secondly, the success of fiscal incentives for R&D is not as clear for the LAC region, unless
inefficiencies in the system of public finance can be dealt with. Thirdly, public R&D funding has
the potential to stimulate private R&D, but currently the size of the public research sector in LAC
may be “too large” from an efficiency point of view. A greater balance is needed between public and
private R&D. Thus, an R&D matching grant program which raises public and private R&D
spending in tandem (and coordinates them) will likely be a good starting point. |