Cultivating Innovation: How AgTech Can Transform Latin America

Agricultural technology (AgTech) is an area where innovation capacities differ significantly from other technological domains. Unlike sectors requiring advanced complexity, AgTech presents a more accessible entry point for many countries. LAC countries show a diverse range of innovation capabilities. While some nations have emerged as global leaders in specific sectors, others are still developing their technological foundations. This uneven landscape highlights both the challenges and the opportunities within the region, particularly in the realm of AgTech, where innovation can be more accessible and impactful.

In Latin America and the Caribbean (LAC), regional innovation capacities reveal two key patterns:

1. Lagging Behind Global Leaders: LAC holds only 35% of the 626 mapped global innovation capacities in production, science, and technology. In comparison, Europe holds 100% of these innovation capabilities. While the LAC region has gained technological capacities (increasing from 12% to 18% since 2000), it has lost production capabilities over the same period.
2. Strength in AgTech: The region excels in AgTech, covering 92% of all capacities in this subset. However, these capacities are unevenly distributed, with Brazil accounting for over half of them. Countries like Mexico, Chile, and Colombia also demonstrate diversity, while Argentina leads in agricultural capacity proportionally.

Opportunities for diversification

For LAC countries to enhance their innovation ecosystems, diversifying capacities beyond agriculture is critical. AgTech innovation often relies on adjacent fields, making cross-sector linkages essential. The "relatedness" between existing and missing capacities allows countries to map opportunities and assess the risks and rewards of pursuing new specializations. For example, a country with expertise in biotechnology could develop capabilities in seed engineering or precision farming technologies.

Brazil’s leadership in AgTech provides insights into building innovation capacities. By combining investments in diverse specializations with efforts to integrate advanced technological fields, the country has established itself as a leader. Other nations in the region can follow Brazil’s model by identifying opportunities that increase their ecosystems’ overall complexity while reducing risk through related fields.

Policy driven success: São Paulo's bioethanol transformation

São Paulo's transformation into a global leader in bioethanol production underscores the importance of aligning policy, innovation, and market opportunities. With the government’s National Alcohol Program (Proálcool), the state shifted its agricultural focus, leveraging sugarcane cultivation to produce ethanol at scale. The combination of favorable natural resources, robust infrastructure, and targeted government incentives spurred this diversification. Today, the state stands out for its competitive edge, producing sugarcane-based ethanol more efficiently and cost-effectively than its global counterparts. This success is bolstered by the collaborative efforts of public institutions like EMBRAPA, which drove research and technology transfer to private enterprises.

The role of the private sector in scaling innovation has been equally crucial. Multinational companies such as Monsanto, Syngenta, and Shell established a presence in San Pablo, benefiting from the region’s cutting-edge research on second-generation (2G) bioethanol technology. This advanced process uses sugarcane residues, or bagasse, to create a more sustainable product, addressing both environmental and industrial demands. Moreover, local startups like CanaVialis and Alleyx, founded by researchers from renowned institutions, exemplify the synergy between academia and enterprise. This vibrant ecosystem has positioned San Pablo as a hub of agricultural innovation, balancing collaboration, competition, and technological advancement.

San Pablo’s success illustrates how a strategic mix of policy, innovation, and collaboration can unlock economic potential and serve as a model for other LAC countries.

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