IDB Advises Chilean Firms to Invest in ICT Rather than R&D

Investment in R&D may fuel the growth of manufacturing sector, but when it comes to the services sector, ICT is the main stimulant.

The Inter-American Development Bank (IDB) has suggested that Chilean firms should invest generously in information and communications technology (ICT) in order to stimulate innovation and enhance productivity in the services sector.

In a recent study entitled The Impact of R&D and ICT Investment on Innovation and Productivity in Chilean Firms, IDB says it is abundantly clear that ICT is a significant determinant of innovation in services industries in developing countries, more so than R&D.

The IDB recognizes that the services industry has gained importance in Latin American countries, but says the region has a large productivity gap when compared to the sector in developed countries. This gap is glaringly evident in Chile’s services industry.

“There is a concern that this productivity slowdown will persist and the gap will increase. Closing the technological gap may be crucial to increasing productivity in Chile,” the report noted.

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Investment in R&D may fuel the growth of the manufacturing sector, but when it comes to the services sector, ICT is the main stimulant. Therefore, it is better that Chile invests in ICT rather than pour money into research and development (R&D) centers, particularly for the growth of its services industry, according to the report.

The increased investment in ICT will also stimulate innovation in the services sector, generating thousands of jobs for the country’s educated youths.

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