Latin American Subnational Innovation Competitiveness Index 2.0
The Latin American Subnational Innovation Competitiveness Index (“LASICI”) ranks the innovation competitiveness of more than 200 regions across Argentina, Brazil, Chile, Colombia, Mexico, Peru, and the United States on 13 commonly available indicators. The report provides a comparative assessment of these regions’ innovation performance and offers policymakers a guide to bolstering the innovation capacity of their nations and regions.
Key Takeaways
The United States claims the top 28 regions, with Massachusetts, California, and Washington ranking the top three.
The top performing Latin American regions are Boyacá, Colombia, in 29th, Mexico City, Mexico, in 33rd, and Baja California Sur, Mexico, in 38th.
While Latin American regions lag behind U.S. regions in their overall scores, there is less variation in regional scores in Latin America.
The highest-scoring regions in Latin America tend to be manufacturing powerhouses, such as Boyacá and Cauca, Colombia, or major autonomous cities such as Mexico City and Ciudad Autónoma de Buenos Aires (CABA).
The future of innovation policy in Latin America and the United States will be highly dependent on how policymakers navigate trade tensions, tariffs, and the growth of artificial intelligence.
Policymakers must continue to increase investment in research and development, education, and entrepreneurship to develop a resilient economy with greater opportunities for growth and innovation.
Introduction
Latin America holds significant untapped potential to position itself as a driver of global growth. Accounting for 8 percent of the world’s population and 7.3 percent of global gross domestic product (GDP), along with holding extensive reserves of the world’s copper, lithium, gold, and other critical minerals, the region has the opportunity to become increasingly influential to global trade and supply chains in the coming decades. However, this potential is not new to the region. Countries in Latin America have been stuck in the “middle-income trap” for decades, and previous efforts to upgrade their economies have been seen as a “case of frustrated development.”
The Americas’ economies are now entering a more challenging phase. The rapidly shifting global trade environment, set into motion by the sweeping tariffs implemented by the second Trump administration, is expected to increase the cost and complexities of trade. And while Latin America’s strategic resources make it a natural candidate to attract investment, the ongoing uncertainty and institutional instability appear as roadblocks. Additionally, the changing political landscape, caused by social polarization, populist movements, and the largest internal migration in the region’s history, adds to the growing uncertainty surrounding the stability of these nations as economic partners and allies.
The world is also entering into an era of accelerated technological change. The rapid growth of artificial intelligence (AI) could rapidly increase the gap between rich and developing economies—Latin American countries could fall into the latter category if they continue to underinvest in innovation. On the other hand, AI has the potential to increase productivity in the region, fostering economic growth and innovation. As the Information Technology and Innovation Foundation (ITIF) highlighted in a previous report, maintaining economic strength and international significance depends significantly on promoting innovation and embracing technological progress, which are essential for achieving growth in per-capita GDP.
To fully understand the dynamics of innovation in these countries, it’s critical to explore the subnational factors that contribute to their landscapes. Regional differences in policy, industry, workforce skill levels, and geography—which are often hidden by broad national analyses—influence the economic success and innovativeness of a region. Latin America is one of the world’s most unequal regions; this is also reflected in subnational disparities in technology adoption and global competitiveness. Understanding these regional differences allows policymakers to develop more targeted strategies with a greater chance of success.
The Global Innovation Index (GII) is a prominent tool that provides comprehensive assessments of innovation performance on a global and regional scale. The GII offers a multidimensional perspective on innovation, evaluating factors such as research and development (R&D) investments, human capital, and business sophistication, which collectively contribute to a country’s innovation capacity. In line with the GII, ITIF has contributed significantly to the discourse on innovation competitiveness through its series of insightful subnational innovation competitiveness reports, which provide nuanced insights into the intricate relationships between innovation, economic development, and regional competitiveness, offering valuable perspectives for policymakers, businesses, and researchers alike. For instance, ITIF’s “State New Economy Index” report series delves into the role of innovation in driving U.S. state-level economic growth and highlights the transformation of industries through technological advancements. ITIF has further conducted analysis of the U.S. share of a variety of advanced technology industries relative to other nations, and also has conducted that analysis at a more granular level in the United States with the State Hamilton Index.
The previous “Latin American Subnational Innovation Competitiveness Index (LASICI)” report, published in 2023, delves into innovation dynamics in the Latin American region, one that has been under-analyzed in comparison to other parts of the world. This study aims to once again showcase the continent’s subnational innovation capabilities, opportunities, and potential future direction by examining the subnational innovation capacity of the same Latin American countries assessed in 2023—Brazil, Chile, Colombia, Mexico, and Peru—in addition to Argentina. These results are compared to U.S. states.
The Index
The Latin American Subnational Innovation Competitiveness Index (“LASICI”) captures the innovation performance of more than 200 regions across 7 countries: Argentina (24 provincias), Peru (24 departments), Brazil (27 states), Chile (16 regions), Mexico (32 states), Colombia (33 departments), and the United States (50 states). In this report, we refer to states, provinces, departments, and autonomous cities as regions to simplify the comparative analysis.
This report consists of 13 indicators representing the relevant determinants of a successful innovation ecosystem, grouped into three categories:
Knowledge Economy: Indicators measure the educational attainment of the workforce; immigration of knowledge workers; employment in professional, technical, and scientific (PTS) activities; and manufacturing sector productivity.
Globalization: Indicators measure high-tech exports and inward FDI.
Innovation Capacity: Indicators measure a region’s share of households subscribing to broadband Internet, expenditures on R&D, the number of R&D personnel, the creation of new businesses, patent output, the extent of progress toward decarbonization, and venture capital (VC) investment.
The most important category of the LASICI is innovation capacity, which accounts for 55 percent of the index’s weight, while the knowledge economy indicators account for 33 percent of the index’s weight, and the globalization indicators account for the remaining 12 percent.
Due to variations in data availability across nations and regions, some indicators may include data from varying years by country. For some indicators where subnational data was not available, proxies were created with available data. More information on the proxies used can be found in Appendix C.