By Andres Oppenheimer
The biggest headlines in our part of the world are focusing on President Donald Trump’s foreign policy blunders. But, to me, the most important news has gone virtually unnoticed: new statistics showing that Asia is becoming the world’s top innovation hub, while the United States is lagging behind and Latin America is falling off the map.
The U.N.’s World Intellectual Property Organization (WIPO) report shows that Asia’s global share of patent applications for new inventions — a key measure of innovation — over the past 10 years has soared from 51% to 67% of the world total.
Meantime, North America’s global share of new patent applications has fallen from 26% to 19% over the same period. And Latin America and the Caribbean’s share has dropped from 3.1% to a dismal 1.7%, the new WIPO report says.
“It’s quite clear that Asia has had the greatest growth in what I would call the innovation economy, meaning research and development,” WIPO’s chief economist, Carsten Fink, told me in a telephone interview. “There has been a shift of the innovation economy toward Asia.”
Fink added that, “In Asia, there has been a high-level government commitment to investments in science and technology since the 1990s, and that’s paying off today.”
The latest figures are key indicators of likely future growth, because we are living in a global knowledge economy, where new technological inventions — from a new smartphone application to a new pharmaceutical product or industrial robot — have a much higher market value than raw materials such as oil or soybeans.
It’s no coincidence that the world’s biggest companies today no longer are oil corporations, but big tech firms such as Apple, Alphabet and Microsoft.
Of the 3.3 million patent applications filed around the world in 2018, 1.5 million were filed in China, 597,000 in the United States, 313,000 in Japan and 209,000 in South Korea. The U.S. share of the world’s total fell by 1.6% last year, Fink told me.
But the most devastating data in the WIPO report are the numbers for Latin America. And that’s not just because the region — which accounts for about 6% of the global economy — represents only 1.7% of the world’s new annual patent applications.
Latin America’s patent applications have dwindled to the point of becoming almost an asterisk in the global scene. Last year, only 25,800 patent applications were filed in Brazil, 16,400 in Mexico, 3,600 in Argentina, 3,100 in Chile and 2,200 in Colombia, according to the WIPO figures.
To put that in perspective, all 33 countries of Latin America and Caribbean together filed fewer than half as many patent applications as South Korea last year.
Worse, Latin America is the only region that is producing a smaller number of patent applications today than 10 years ago.
The total number of patents filed in the region fell from 59,000 in 2008 to 56,000 in 2018, the WIPO figures show. These numbers reflect all patent applications filed in each country and submitted by their respective patent offices to the WIPO.
The reason may have to do with the region’s continued reliance on commodity exports, especially in South America. That has created a climate of complacency and has not helped encourage investments in research and development of non-traditional exports.
In addition, the region’s chronic economic instability, often caused by commodity price-related booms and busts, has scared away investments in research and development.
Granted, Asia’s patent application boom may be partly due to the fact that Chinese entrepreneurs have a huge market in their own country and are eager to protect their inventions from rampant piracy. In Latin America, there’s less of a patenting culture, and judicial systems are so discredited that many inventors don’t even bother to patent their inventions.
Whatever the reason, the new figures should trigger alarm bells throughout the Americas. Unless countries in the region invest more in quality education, science and technology, it’s going to be increasingly difficult to compete with China.