Innovation System in Development: The Case of Peru

Despite an exceptional economic performance achieved over the last decade, Peru still lags behind other middle-income Latin American economies in terms of per capita income and productivity. The Peruvian economy remains relatively undiversified, largely dependent on natural resources. The national innovation system is under development, weakly integrated, and underfunded, with few incentives for its actors to engage in innovation activities and collaborate with others. This note summarises the current state of innovation in Peru and reviews the capacity of the innovation system to generate new competitive advantages in industry. It briefly discusses policies and policy gaps in research and innovation and benchmarks national innovation competences to other relevant economies, based on available indicators and surveys. Following a sequential approach, a strengthened policy agenda for innovation should tackle fundamental weaknesses of the innovation system and set the basis for its expansion and a better articulation. Examples of policy actions to improve research performance and business innovation are provided. The paper concludes with suggestions for reforming the innovation system and provides examples of policy actions.