Although most Latin American and Caribbean countries have greatly increased their exports during the early 1990s, the goal of moving towards higher value added products in their export structure is proving as elusive as during the import substitution industrialisation period. This paper brings together ideas about and indicators of the region's capacity to compete in advanced industries or introduce products in the international marketplace, particularly in comparison with the performance of the most developed countries (the Group of Seven), the Asian tigers (Hong Kong, Korea, Singapore and Taiwan), the potential Asian tigers (China, Indonesia, Malaysia and Thailand) and the newly industrialised European countries (Greece, Ireland, Portugal, Spain and Turkey). It presents an index of the technological specialisation in the region's exports to the most sophisticated markets (i.e., the OECD countries) and accounts for variations in specialisation based on the performance of national systems of innovation attributes such as public policy, technological infrastructure, human capital formation, and the internal articulation of the system, as well as on the dynamics of investment in innovation, including aggregate expenditure on research and development (R & D) and its structure, and investment of human resources and enterprise. The paper addresses policy issues that impact on the region's performance with respect to investment. Specifically, it puts forward ideas regarding ways to tackle problems related to the lack of Schumpeterian entrepreneurs, asymmetrical information and the incentive system in the region's national systems of innovation.
