Reclaiming the Lost Century of Growth

               I have a YouTube channel, here is the link.  https://www.youtube.com/@lucianofietto4773/videos. Since the creation of this channel its visualization counter doesn't work, the same has been happening with the counter of this blog since its creation in 2010.    This post is a summary of the book with the title above, published in 2025 at https://openknowledge.worldbank.org/server/api/core/bitstreams/cbff530e-59b2-4f9c-b84e-e33e7f1f0a53/content

                   The growth strategy of the Latin America region has come under scrutiny. The indisputable fact is that growth in the region, even in the best-performing countries, remains too low to generate quality jobs and social progress. From 2010 to 2018, GDP grew on average 2.2%. Forecasts today are scarcely better, hovering around 2.5%. Further, the region tends to remain underdiversified and dependent on commodities. This disappointing performance is not a recent problem, nor are its causes new, nor is it particular to one economic model, nor will it be cured by a return to the industrial policies of the past. The region's history is full of missed opportunities for productivity growth and diversification that extends to recent decades. LA has experienced a prolonged income trap over a very long period of time. This volume argues that the cause lies in the region's frustrated process of becoming "learning economies." Development is fundamentally an experimental process of learning about new tech or ideas that can lead to  firms and areas comparative advantage. It is not enough for information to flow, countries need to learn how to assimilate these tech and to be able expanding the tech gap between advanced economies and exploit new opportunities for growth. In LA's lost century of growth arose because t did not "learn how to learn" about the new advances arriving in the second industrial revolution. LA inablity to follow suit resulted in a lack of competitiveness that led not only to low growth, but also to an acute sense of dependency and demands for protection that morphed into distortive industrial policies that compounded the shorfalls in capabilities, rather than remedying them. LA countries invest far less than the advanced economies in innovation of all types. One explanation for this lack of investment is the absence of complementary factors, ranging from credit to skilled labor, and ther elements of the enabling environment. What does this imply for a 21st century growth strategy? Such strategy will require a set of reforms related to developing this learning capacity and actively seeking insertion in the global knowledge economy. Learning to use and leverage frontier knowledge requires participation of both the source and the receiving country. This focus on learning is even more relevant with the emerging trade in services, which is likely to be more important going forward than manufacturing, because the link between value added and the capabilities of the workforce is more direct. About 90% of Chinese patents, for example, are joint with Taiwanese or US companies suggesting that they should be seen more as "exports" of high-end engineering services. India is also upgrading from call centers to technical services exports with major US firms relocating there. The reason for the disappointing growth performance is straightforward: LA entered the second industrial revolution unarmed and unable to assimilate new technologies and manage the associated risk. Though in 1950s, foreign libraries were a better source of knowledge about LA mining than ones in LA. Further, throughout LA, there was a lack of demand for new technologies, and for the engineers necessary to exploit them. LA continues to be the child for the innovation paradox, ranking below average in innovation performance, from basic education outcomes to R&D, despite returns to nvestment that, in theory, could exceed 60%. Universities develop advanced skills through education and produce new knowledge through research. But they also have a third mission, to provide knowledge public goods with respect to innovation, technology, and firm capabilities. They serve as antennae to identify new ideas, help adapt and diffuse knowledge and bring new knowledge to market by serving as seedbeds for new industries. Universities in LA fall short in their 3 mission. In education, to be fair, LA problems begin early on, with foundational skills. LA continues to lag comparable countries in basic math and writing. Learning proficiency (the fraction of children 10-14 years old who can understand a text) in the median LA is 41%, roughly half that of East Asia and Europe. Similar deficits exist in higher education. Further, though access to higher education is high, only half of enrolled students graduate, among graduates, only 17% obtain a degree in a field related to science, tech, engineering and math,(STEM) thus tying LA with Sub-Saharan Africa for last place among regions. Research output is low relative to comparable countries and has little impact. In the SCImago Institutions Ranking for innovation, which gives equal weight to the number of patent applications, % of publication output cited in patents, and number of publications cited in patents, LA accounts for only 0,5% of the world's top 1,000 universities. This % is second to last after Sub-Saharan Africa. The third mission is largely absent among LA universities. Firms in LA report less interaction with industry in R&D activities than in any other region. Joint academic-industry patents per 100,000 people over the last 6 years reached 0.5 in LA compared to close to eight for Spain and US. Whatever the drivers, the collaboration between universities and the private sector is not only a driving force in innovation ecosystems such as Silicon Valley in the US, but has also been critical to the Asian and Nordic success stories in every sector, from forestry to microchips. Taking a focus on technology-based firms the number of startups has increased, but their prevalence remains low. The region has also experienced a rise in unicorns (firms with capitalization of more than US$1 billion) to 52 in 2022 from a mere four 5 years earlier. While this is good news, NYC alone is home to 9,000 tech startups worth over US$189 billion, and the low value of unicorns as a share of GDP in LA, at 1.4%, is above only one region, Sub-Saharan Africa. There is increasing evidence that progress can be made in increasing the supply of  entrepreneurs. The region, however, starts from a disadvantage: both the weak educational fundamentals and the low density of STEM graduates means that there is a weak pipeline of potential tech entrepreneurs. A 2024 report by the European Commission on competitiveness in Europe points to weighty government regulation and labor market rigidities as barriers to entrepreneurship, and LA ranks poorly in both. Large firms in Brazil have more staff dedicated to taxes than to R&D. Increasing productivity growth and diversification through innovation is the only long-term solution to alleviating poverty and promotion social mobility. To conclude, growth occurs only by a process of informed bets on new tech, processes, products, and markets that, if well selected, generate gains in value added over time. Development might be thought of as the process through which economies and societies learn how to learn. This requires learning on the part of the private sector, but also on the part of the government that needs to begin setting an enabling environment that facilitate technological adoption and then encourages learning by firms and potential entrepreneurs.