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Over the past decade, Mexico has made significant progress towards macroeconomic stability and has launched important structural reforms to open the economy further to trade and investment and improve the functioning of markets for goods and services. However, potential GDP growth remains much too low to bridge the wide gap in living standards with wealthier OECD countries and reduce widespread poverty. Mexico increasingly struggles to compete with many other large emerging economies, which are building their capabilities to harness the benefits of globalisation at a much faster pace.
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Mexico’s economic performance in terms of growth of GDP per capita has been respectable but still insufficient to close the gap vis-à-vis the most advanced OECD countries in terms of the population’s living standards, and overcoming widespread poverty. To shift the economy to a path of higher, sustainable growth, Mexico’s economic policy needs to boost productivity growth. In the past, it has been sluggish. Given the salient role of innovation in driving longer-term productivity growth, the challenge is to encourage innovation throughout the Mexican economy. Achieving this goal will require significant, broad-based reform and dedicated efforts.
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The way innovation systems are defined has major implications for the balance and mix of policies needed to improve innovation system performance and for the amount of communication and co-ordination required to create holistic innovation policies. To the extent that countries operate within the confines of a narrow “innovation system map” focused on science and technology and the formal R&D system, they are likely to be guided into making policy choices that optimise the formal part of the system at the expense of the whole. However, over the last decade or so, a broader perspective on innovation systems has emerged, which increasingly underpins attempts by governments to develop more holistic innovation and research policies.
With this broader perspective in mind, this chapter provides an overall assessment of the innovation and research activities of the business sector, the public science and education systems, and the stock and flow of human resources. It begins with the central actors in any well-functioning innovation system – business firms – and further explores explanations for low levels of R&D spending but also broadens the perspective on firm innovation by taking into account non-R&D and non-technological innovation. The chapter then considers the public-sector research system, starting with the public research centres (PRCs). This is followed by an exploration of Mexican higher education institutions, which perform the largest share of publicly funded R&D in Mexico and are responsible for tertiary education. A final section covers the human resource dimension of innovation.
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This chapter first briefly reviews the evolution of Mexico’s S&T and innovation policy over the last four decades, describes and assesses recent policy initiatives concerning the institutional framework and the support programmes, and proposes some strategic orientations to improve the efficiency of policy design and delivery and achieve higher innovation performance by the Mexican economy.
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