Innovation in the Global Economy: Opening-Up Latin American Innovation Systems

Using different country-level datasets, this paper studies the relationship between innovation and economic integration in the global economy. The macroeconomic evidence exploits the fact that different countries liberalized international trade at different moments to look at the evolution of innovation. The evidence indicates that trade reforms have not been relevant to increase country-level innovation outcomes. We found that these results are robust to controlling for other determinants of innovation results. On the other hand, our findings also suggest that integration in the global economy has strong potential for technology transfer but that some explicit complementary innovation policies are needed. We close this paper with some innovation policy recommendations that can be implemented in order to improve the impacts of trade liberalization on LAC innovation systems.