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Academia de Ciencias Administrativas, A.C. Congreso Anual Internacional 5 al 7 de mayo, 2004 Building Competencies In Human Resources: The Role Of Highly Skilled Human Resources As A Key Policy For The Mexican Innovation System Hector C. Parker Rosell Centro de Investigación Científica y Estudios Superiores de Ensenada [email protected] The most productive and fastest growing economies are developing innovative solutions, building and strengthening capabilities as central part of corporate and public-sector strategies. To reach these, the competencies in terms of knowledge, skills and abilities that the human resources provide needs to be consider as key factors to face these new challenges. This paper is focus on the development of Highly Skilled Human Resources (HSHR) and its absorption by the productive sector in order to strengthen the performance of the Mexican Innovation System (MIS). The guideline of this paper will be the analysis of two main problems related to the educative performance; (a) insufficient amount of HSHR; (b) and the supply of HSHR whose are not efficiently absorbed by the National Productive System. The objectives: (1) to identify the flows of HSHR inside the MIS; and (2) to gain a deeper policies understanding of the formation and development of HSHR and mechanisms implemented to persuade firms to deal with HSHR to facilitate innovation and gain competitiveness. I will make emphasis in the flow of HSHR into the productive sector in order to create organizations with the principal aim of design new arrangements, incorporating mechanisms to ensure the achievement of technological and innovation objectives; and the creation of links between the three main actors (government agencies, higher education institutions and productive system) in order to carry out policies and strategies settle in the National Plan for Development. The most productive and fastest growing economies are developing innovative solutions, building and strengthening capabilities as central part of corporate and public-sector strategies. Meanwhile developing countries are looking to reinforce their efforts fostering scientific and technological activities in order to accomplish industrial competitiveness. If they do not, they can not be able to maintain their Acapulco Guerrero, México Ponencia arbitrada clave: 25-LDR-HPR

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Page 1: Building Competencies In Human Resources: The Role Of ...acacia.org.mx/busqueda/pdf/17-025_Hector_Parker_Rosell.pdf · that the human resources provide needs to be consider as key

Academia de Ciencias Administrativas, A.C. Congreso Anual Internacional 5 al 7 de mayo, 2004

Building Competencies In Human Resources: The Role Of Highly Skilled Human Resources As A Key Policy For The

Mexican Innovation System

Hector C. Parker Rosell Centro de Investigación Científica y Estudios Superiores de Ensenada

[email protected]

The most productive and fastest growing economies are developing innovative solutions, building and strengthening capabilities as central part of corporate and public-sector strategies. To reach these, the competencies in terms of knowledge, skills and abilities that the human resources provide needs to be consider as key factors to face these new challenges. This paper is focus on the development of Highly Skilled Human Resources (HSHR) and its absorption by the productive sector in order to strengthen the performance of the Mexican Innovation System (MIS). The guideline of this paper will be the analysis of two main problems related to the educative performance; (a) insufficient amount of HSHR; (b) and the supply of HSHR whose are not efficiently absorbed by the National Productive System. The objectives: (1) to identify the flows of HSHR inside the MIS; and (2) to gain a deeper policies understanding of the formation and development of HSHR and mechanisms implemented to persuade firms to deal with HSHR to facilitate innovation and gain competitiveness. I will make emphasis in the flow of HSHR into the productive sector in order to create organizations with the principal aim of design new arrangements, incorporating mechanisms to ensure the achievement of technological and innovation objectives; and the creation of links between the three main actors (government agencies, higher education institutions and productive system) in order to carry out policies and strategies settle in the National Plan for Development.

The most productive and fastest growing economies are developing innovative

solutions, building and strengthening capabilities as central part of corporate and

public-sector strategies. Meanwhile developing countries are looking to reinforce

their efforts fostering scientific and technological activities in order to accomplish

industrial competitiveness. If they do not, they can not be able to maintain their

Acapulco Guerrero, México Ponencia arbitrada clave: 25-LDR-HPR

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Academia de Ciencias Administrativas, A.C. Congreso Anual Internacional 5 al 7 de mayo, 2004

existing levels of economic growth and can not be able to face new and dynamic

challenges. A matter of critical importance is that it is considered at the level of the

nation or region, industry or Individual Company, technological innovation and its

effective management. To reach these, the competencies in terms of knowledge,

skills and abilities that the human resources provide need to be consider as key

factors to face these new challenges.

This paper is focus on the development of Highly Skilled Human Resources

(HSHR) - mainly people with a Master o PhD degree gotten in a National University

and/or abroad - and its absorption by the productive sector in order to strengthen

the performance of the Mexican Innovation System (MIS). The analyse will be

base on, according with some authors, the assumption that Mexico has a fragile

National Innovation System (NIS) because it has a weak economic, productive

and educative performance. The guideline of this dissertation will be the analysis of

two main problems related to the educative performance; (a) insufficient amount of

HSHR; (b) and the supply of HSHR whose are not efficiently absorbed by the

National Productive System.

This two problems are interdependent; if a country does not dedicate efforts to

elevate the quantity and quality of its human resources and does not include

policies and strategies to pursue the productive sector to employ highly skilled

personnel, then firms would not absorb what the country produces in human capital

and firms would not be able to develop technological and organizational change to

improve their performance. As a result the country would have a weak NIS

because firms would not be able to strengthen their innovative and productive

process and they will depend on international efforts, HSHR and knowledge.

In this paper two main objectives are develop: (a) to identify the flows of HSHR

inside the MIS; and (b) to gain a deeper understanding of the policies related to the

formation and development of HSHR and mechanisms implemented to persuade

firms to deal with HSHR to facilitate innovation and gain competitiveness. Taking

into consideration these objectives, this work would try to answer the following

questions:

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Academia de Ciencias Administrativas, A.C. Congreso Anual Internacional 5 al 7 de mayo, 2004

Q1. Are HSHR policies and strategies oriented to improve the development, competitiveness and performance of the productive sector? Q2. Does the Mexican productive sector have the capabilities and capacity to absorb and enrol HSHR?

In the first part of this paper I categorize the flows of Highly Skilled Human

Resources (HSHR) inside the Mexican Innovation System (MIS) in order to provide

evidence of the low production of HSHR and to identify the causes of the low

absorption of HSHR by the productive sector. Then I present the importance of the

National Innovation System (NIS) approach with the purpose of giving a framework

in which I can support the idea that the development of human resources is

important for the enhancement of technological and organizational change to

improve firm’s performance. Part 2 will analyse the Mexican Innovation System,

and its recent evolution. In addition I will analyse the behaviour that the main

actors have taken in the production of knowledge. So, part 2 will give a better

understanding (a) of what government has done related to HSHR competencies;

and (b) what are the interactions and link between the educational systems with

the productive system. Part 3 will describe the set of new mechanisms to

strengthen the links and networks between the educational system and the

productive sector to enhance industrial competitiveness.

1.1 Highly Skilled Human Resources Flows In order to recognize the causes of the low production of HSHR and the low

absorption of HSHR by the productive sector; is necessary to start describing how

the human resources flows are done inside the MIS (Figure 1). I identify two main

flows, X and Y. X are students whose after the tertiary level do graduate studies in

higher education institutions (HEIs) outside Mexico1; Y are students whose after

the tertiary level do graduate studies in National HEIs. Three different flows after

the graduate studies can be distinguish: (1) the flows that go to work inside the

1 Mainly in the US, UK, France, Spain and Canada.

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Education System (X1 & Y1); (2) the flows that go to work inside the productive

sector (X2 & Y2); and (3) the flows that go to work inside the Government (X3 &

Y3). The next equations can be establish: X + Y = NOT ENOUGH X1 & Y1 = HIGH DEMAND BUT FACES LIMITS TO HIRE AND RETAIN X2 &Y2 = NOT ABSORBED EFFICIENTLY BY THE PRODUCTIVE SECTOR X3 & Y3 = NOT RELEVANT FOR THIS ANALYSIS

HSHR FLOWS INSIDE THE MIS

Figure 1. X + Y = NOT ENOUGH

Y3

Y2

X3

X2

EDUCATION

SYSTEM

PRODUCTIVE

SECTOR

GRADUATE

ABROAD

GRADUATE NATIONAL

TERTIARY

LEVEL

Y

X

Y1

X1

GOVERNMENT

According to Parada2 Mexico, that by its population, territory and GDP is the

eleventh nation of the world, occupies in the global context the place 36 by its

income per capita (7,847.54); the place 42 by its low effort in Science and

Technology (S&T); and the place 31 by the low effort of its productive sector in

R&D. The following indicators demonstrate these. The first refers to expenditure of

2 General Director of the National Council for Science and Technology (CONACYT)

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S&T as a percentage of Gross Domestic Product (GDP). Mexico’s Research and

Development (R&D) expenditure is about the 0.4% of GDP (Figure 23). While in

Korea are about 2.7%, Brazil 0.91% and Spain 0.9%, so the percentage of GDP

spent on R&D, is the second lowest in the Organization for Economic Cooperation

and Development (OECD).

Figure 2

R&D expenditure as a proportion of GDP y GDP per capita

Country R&D/GDP GDP per capita USD Position

Canada 1.58% 26,441.54 9

Brazil 0.91% 8,206.08 31

Spain 0.9% 18.106.30 23

Korea 2.7% 12,607.56 27

Mexico 0.4% 7,847.54 36

Source: OECD, Main S&T Indicators, Vol. 1-2001.

The second indicator corresponds to R&D expenditures by source fund (Figure 34).

In Mexico, the majority of the funds assigned to R&D activities comes from the

government, approximately the 68.2%, meanwhile the expenditure by the private

sector is only 0.1% of the GDP, while in Korea the majority of the financial

resources for R&D comes from private funds.

Figure 3

Expenditure in S&T by source of fund.

Million of US Dollars

PRIVATE SECTOR

PUBLIC SECTOR

PRIVATE SECTOR

PUBLIC SECTOR

PRIVATE SECTOR

PUBLIC SECTOR COUNTRY

1980 1980 1990 1990 1999 1999

Brazil 134 571 555 2,247 2,194 3,291

Korea 303 323 3,769 907 7,317 2,706

Spain 201 757 2,069 2,297 2,521 2,541

3 CONACYT, 2002, 36 4 CONACYT, 2002, 38 - 52

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Mexico 45 514 60 606 483 1,617

Canada 1,110 1,923 3,470 4,891 4,938 5,098

Source: OECD, Main S&T Indicators, Vol. 1-2001.

The third indicator and the one that confirms that Mexico has insufficient HSHR

corresponds to the number of HSHR involved in S&T activities (Figure 45). In

countries with more dynamic economies and a higher R&D expenditure, personnel

devoted to these activities are counted in thousands per million of populations,

while in Mexico there are approximate 286 engaged in these activities.

In addition, Mexico has the lowest concentration of researchers per population of

OECD members, with only 6 researchers per 10,000 inhabitants vs. 48 in Korea

and 29 in Poland. Moreover, Mexico has the lowest absolute number of S&T

personnel (Valenti Varela and del Castillo, 2000).

The fourth and last indicator refers to the number of people devoted to S&T in the

productive sector. Mexico has only 4,846 people devoted to S&T activities working

in the productive sector, while Korea has 134,568. Even more revealing than the

sheer number of people is the fact that only 19.04% of the total personnel engaged

in S&T is within the productive sector in Mexico, whereas this sector accounts for

up to 50% of such personnel in other countries.

Figure 4

People dedicate to S&T activities by sector 1980 - 1999

1980 1990 1999 Country Public

Sector Private Sector

Total Public Sector

Private Sector

Total Public Sector

Private Sector

Total

Mexico 2,883 212 3,095 12,441 1,559 14,000 20,596 4,846 25,442

Brazil 0 19,868 1,673 21,541 44,994 3,787 48,781

Spain 13,494 4,829 18,323 47,057 19,525 66,582 85,866 30,729 116,595

Korea 6,230 13,441 19,671 22,328 48,175 70,503 42,618 91,950 134,568

Canada 20,613 18,377 38,990 34,787 31,013 65,800 39,676 51,134 90,810

Source: OECD, Main S&T Indicators, and Vol. 1-2001.

Conacyt, Indicadores de Actividades Cientificas, 1990 - 1999

5 CONACYT, 2002, 46

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A comparative analysis of the four indicators in their totality shows that Mexico

budgets does not have enough financial resources for S&T activities, and is

deficient of private funding sources. So, human resources are insufficient

according with International standards. However, the rate of growth of HSHR

(12.7%) is very significant (CONACYT, 2002). In addition, according to Valenti et

al. (2000) Mexico shows one of the highest annual growth rates (15%) for S&T

expenditures probably reflecting the greater effort that Mexico has made to

improve their capacities in the last years.

X1 & Y1 ≠ X2 &Y2

HSHR are mainly employed by the education system (universities and research

centres) approximately 68% (X1 & Y1); 19% work for the productive sector (X2 &

Y2) and only 13% are hire by the government (X3 & Y3) (CONACYT, 2000).

According to Parada, these tendencies are explained because there was a lack of

a well-defined and continuous S&T policy for the country related with the

development and formation of HSHR. Also he argues that Mexico did not have an

integrated innovation system in S&T that contribute to increase industrial

competitiveness. Cimoli and Valenti et al (2000) argue that the low hiring of high quality human

resources by firms is due to a lack of coordination between the productive sector

and the education system. They highlight that there is plenty of empirical evidence

clearly showing that technological improvement inside Mexican Firms requires

investment in human resources, while maintaining high quality, and advanced

curricula inside HEIs throughout different technical subjects. Moreover, they

recognized that in order to produce human resources with formal qualifications

regard to production and innovation activities, not only depends on the education

system, it needs to be done in relation with the productive sector. They point out

that the education system covers only partially the requirements for creating skills

and the job training and learning provided by the firms are also important in the

formation of HSHR.

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For Rocha-Lackiz the inefficiently absorption of HSHR by the industry is explained

by two reasons (a) policies were hold in great scale with the special aimed to

support the national graduate programmes and not attend policies that linkage the

education system with the productive one; and (b) the absence of a “demand pull”

from the Mexican productive system. She argues for the first point, that HEIs policy

pursued quantitative over qualitative and it makes by consequence, that the

formation and training of specialized personnel that fully satisfy industrial needs

were relegated. By consequence, these policies make insufficient education

quality in HEIs programmes that satisfied industrial needs, therefore there were not

a hard linkage between the graduate students that HEIs produce and the

specialized personnel that firms required. Rocha-Lackiz pointed out, in relation to

the second rason, that there were a low participation of private funds in S&T

activities because industry did not care in the benefits that R&D can provide, and

because the productive sector looks out for its necessities instead to look inside.

As a result Mexican industry forgot to enhance collaboration with the national

education system.

According to the World Bank, the low absorption of HSHR is because exists a

scare connection between the education system with the productive sector of

social needs and private sector does not make use of the research infrastructure

available at universities and technological institutes. One result is that university-

based researchers perform only 1.4 percent of R&D funded by the private sector

(second lowest percent among OECD members). So, for the World Bank, the

Mexican NIS is weak because it is not able to produce HSHR in quantity and

quality capable to provide the ways to innovate in R&D and fulfil satisfy industrial

needs.

1.2 What is a National Innovation System?

Nowadays it is generally accepted that a society’s economic development is based

on its capacity to generate and absorb innovation processes. The National

Innovation System approach is based on the analysis of the strategic alliances and

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interactions between firms, research centres, HEIs and Government. In fact,

innovation is seen as a social process that depends in the promotion and

production of knowledge infrastructure (Cimoli, 2000).

Lundvall (1992) defines a NIS as a set up of elements and relations that interact

within the national boundaries, in the production, diffusion and use of economically

useful new knowledge. Nelson and Rosenberg (1993), on the other hand, consider

a NIS to be a set of institutions whose interactions determine the innovative

performance of firms. They define innovation in a broad sense as the process by

means of which firms manage and put into practice product designs and new

parallel manufacturing processes. Their conception is not limited to the behaviour

of firms on the technological frontier or to institutions that perform advanced

scientific research, but includes all factors that determine national technological

capabilities (Rocha-Lackiz 2000).

For Rocha-Lackiz (2000) the NIS is focused in a national dimension that stress the

importance of the structure and interactions of firms, the educational and research

subsystems, the institutional framework and the diverse governments’ policies.

Also she argues that the different elements that constitute the system make

complementary contributions to the innovation process by informal and formal

relationships that facilitate knowledge flows and stimulate the creativity of agents,

improving the depth and quality of these connections. For her, networking, that is

the establishment of semi-permanent relations between agents, seems to be the

most adequate mechanism to allow such flows.

The purpose of the NIS approach would be: (a) to identify the main threads that

link technology, institutions and economic performance; (b) to provide mechanisms

that increase the systems’ capacity to accumulate, distribute, transform and

generate knowledge; (c) and to give a framework in which the mechanisms that

support technical change and innovation can be understood.

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1.3 Why human resources are so important for the NIS?

Human Resources are the competitive source that determines the abilities and

experience an organisation can be able to have in important decisions, such as

purchasing, adaptation, improvement and creation of technology efficiently. Inside

a NIS, the nation’s human resources are the result of a mixed of processes of

various institutions and policies with the aim that through them the nation is able to

carry out the economic performance.

The three main actors in the process of developing Human Resources

competencies are government agencies, higher education institutions (universities

and research centres) and productive system (firms and sectors). Governments

establish norms and policies that rule the behaviour of the system and also impact

the education and productive system. The role of the HEIs is to produce HSHR in

quantity and quality and provide the ways to innovate in research and

development. The productive system plays different roles, firstly firms address

specific requirements for production activities, these requirements can be fulfil by

HEIs, therefore firms absorb what the educational system produce; secondly firms

that invest in R&D activities employ highly skilled personnel with a specialization in

the firms production needs; thirdly firms are the ones that innovate, therefore firms

need HSHR to be competitive in order to satisfy the technological needs and

market competitiveness. The NIS works if the government establish norms that

enhance economic growth and HSHR formation; if HEIs have programmes that

fully satisfy industrial needs and encourage the study of a graduate degree; and if

firms innovate, develop market competitiveness and provide work for HSHR, so a

satisfactory interplay of the principal actor of a NIS takes place.

On the other hand, a weak NIS is when government creates policies to correct

market failures and did not take much care in its human resources base; HEIs

pursued quantitative over qualitative education; and the productive system did not

innovate and develop technological change therefore HSHR are not efficiently

absorbed by firms. Nevertheless, Valenti, et al. (2000) affirmed that if firms include

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in their strategies the investment in HSHR they would be more apt to develop

technological and organizational change and to improve their performance.

Consequently firms would encourage HEIs to modify their programmes according

to industrial needs and together would force government to invest and support

R&D activities and HSHR formation. In other words, firms will be able to innovate

and influence in a positive way the NIS.

Due to these, it can be pointed out that there are three important elements that

configure the NIS; (a) HSHR competencies are, at the first stage a function of

government and HEIs policies; (b) firms abilities to adapt and use technological

capabilities are associated with the development of HSHR competencies at the

production and managerial levels; and (c) it needs to be a positive and

interdependent relationship between competencies relative to HEIs and the

knowledge skills and abilities required by the productive system (Valenti, et al.

2000).

2.1 The evolution of the HSHR inside the Mexican Innovation System The Mexican innovation “system”, that encompassed the firms, universities, and

other public and private institutions involved in the generation, diffusion, and

application of knowledge for productive purpose, remains inefficient in channelling

S&T investment into productive applications (WB, 1998). Mexican industry has

been developed in an environment in which enhancements in quality and

technology were largely un-rewarded. Even large firms apparently invested low

amounts in adapting and developing new technologies.

Similarly, the academic and public research sectors developed largely in isolation

from the needs of industry. Furthermore, institutions that could serve as bridges

between universities and firms including the system of SEP-CONACYT6 centres

6 27 research centres integrate the SEP-CONACYT system: 9 in Exact and Natural Sciences; 9 in Humanities and Social Sciences; and 9 in Engineering and Technology.

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have been operated as academic research centres rather than firm-oriented

service organizations.

What is also evident in the last decade was the absence of incentives schemes for

the diffusion of knowledge and the creation of technology based firms; and was left

to private agents the responsibility to conduct the innovation and technology

modernization processes. The only concerned of the government during this time

were to strengthen the education system, X1 & Y1, and so on the formation of

HSHR, but the government did not create any policy, programme or plan to

incorporate this force of knowledge to the productive system, X2 & Y2, and

enhance the built of links and networks between these sectors.

We can said that the Mexican Innovation System (MIS) during the last decade was

hold in the internationalisation process, based on the external performance, so

Mexican industry was oriented towards exports and specialization in manufactured

commodities, acquiring, assimilating and adapting foreign technology. In other

words, the Mexican production system has modernized part of the economy by

capturing the effects of opening up the economy (Cimoli, 2000). But there was not

a development and stimulation of the indigenous technology due to those R&D

activities - that were carry out in national institutions - and these did not resolve the

problems that firms face during this transformation. So, this provokes that the

productive sector moved away from the education system; consequently the

productive sector looked outside to satisfy its technological and human resources

needs.

2.2 Educations and Human Resources Behaviour According to Cimoli and Constantino in a knowledge-based economy, economic

improvement is related to the efficacy and efficiency of using and producing

knowledge. In this context, the growing specialization of knowledge induces the

stimulation of a great interdependence between the actors. At the same time, this

fact creates conditions for the emergence of a system of networks, as an

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expression of the social arrangements for capturing the benefits derived from the

knowledge exchange and diffusion of innovation. These conditions are derived

from the role played in the creation of different competences inside government,

the education system and the productive sector. However, high educational

competencies are necessary conditions for skills, technical experience and

innovative efforts within industrial activities; such as, the interaction between

government, the educational and productive system is the main issue explored

throughout this section. For this analysis is important to see the evolution and

importance that each actor has taken in the production of knowledge, thereby the

formation of HSHR.

Inside Government7

The effectiveness of Mexican investment in S&T activities may be viewed as a

function of productivity of researchers in terms of publications, and human

resources investment. Regarding the productivity, significant improvement in

productivity of Mexican research has occurred in recent years, as evidenced by the

12.8% per annum increase in scientific and technological publications in

specialized international journals during 1995-2000. Despite this impressive

growth, productivity remains low in international terms at 0.64% of publications by

Mexican researchers. Human resources formation, a critical output of research

projects, also remains disappointingly low.

The proportion of students in higher education has increased since the 1970s while

graduate enrolments (X & Y) have shown a more recent growth, about 12.7% per

year. The number of doctoral programmes has increased from 117 in 1990 to 446

in 1999. The greatest percentage (23.5%) of these in 1999 was in the area of the

exact sciences and administration, 18.8% in engineering and technology, 14.2% in

education and the humanities, 11% in the health sciences, and 10.3% in the

agricultural sciences (CONACYT, 2000). 7 All figures and indicators presented in this section were taken out from CONACYT, (2000). 30 years of CONACYT’s scholarship program: evolution, results and impact. Mexico DF: Consejo Nacional de Ciencia y Tecnología.

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The total number of doctoral degrees awarded from 1990-1999 was in the order of

5,200. The increase average per year during this period was 17.3%. In spite of

this growth, the number of doctoral degrees awarded in Mexico was still lower than

others OECD countries. Meanwhile, the number of doctoral students graduated

per year is around 1,000 in Mexico; Brazil graduated is 6,000; Spain 5,900; Korea

4,000; and the United States 45,000.

The number of student loans8 “becas-credito” given by CONACYT over the last 30

years amounted to more than 100,000 increasing from 580 in 1971 to 6,800 in

2000. It was not until the 1990s that the support for doctoral programmes was

given priority, and as a result two-thirds of the awards have been given to Master’s

students. Seventy-five percent of the loans were awarded for postgraduate studies

within the country (Y), and the rest supported studies abroad (X). It is more

common for CONACYT to support education abroad at the PhD and Postdoc

levels than at the Master’s level. While in the period from 1971 to 1979 only 44%

of all grantees completed their studies, this figure rose dramatically to 97% for the

period 1995-2000.

While in the period from 1971 to 1973 more than 50% of the scholarships were for

study abroad, from 1998 to 2000 more than 80% went to support national

programmes. This is due to the increasing number and quality of postgraduate

courses available in the country. More recently for every 100 scholarships

awarded, 28 were in the field of engineering, 23 in the basic and natural sciences,

19 in the social sciences and administration, 14 in applied biology, 10 in the

humanities and in the behavioural sciences, and 6 in the health sciences. As of

2000, approximately four of every five former grantees worked in the public sector,

the majority inside the education system (X1, X3 & Y1, Y3). According to

CONACYT it is due that inside the education system is where the largest

proportion of research efforts is carried out. This try to explain flow X1 & Y1. 8 These loans are called “becas-credito”. Rather than repay the value of the loan, loans may also be forgiven in the scientist returns to a institute of higher education or research centre and works for a time period that duplicate the duration of the loan.

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It deserves special mention the concern and the determination that the SEP-

CONACYT Centres have put in the formation of human resources of high level;

there are 34 programs of doctorate and 45 of masters. During 1997, 2,769

students were in the different programs; almost 400 graduated, 1049 articles and

200 books were published, 471 technological projects were produced and 362

were commercialised; also, 8.469 companies receive consultancy and together

were lent more than 50 thousand services of different degrees of complexity.

As it has been seen, the government through CONACYT had made an important

effort in the creation and formation of HSHR (X & Y flows), However, it is still

insufficient according to OECD indicators.

Inside HEI System

During the 1970s the government paid special attention to higher education

focused on quantitative rather than qualitative results. In the 1980s, the economic

crisis caused significant reduction in the funding assigned to higher education

specially affecting public HEIs whose received 90% of their income from

government subsidies. During the period 1990-2000 the government supported

public universities with extraordinary resources destined to the improvement of

different institutional elements: the teaching staff, through the Teaching Staff

Improvement Programme (PROMEP); the infrastructure, through the Higher

Education for Modernization Fund9 (FOMES); the management, through the

Administrative Normalization Programme (PRONAD); the cooperation between

institutions, through University Support and Development Programme (PROADU);

and the construction and equipment of physical spaces, through the Multiple

Contribution Fund (FAM). Also these policies were supported by three

9 Fondo para la Modernización de la Educación Superior, which grants additional support to the HEI on the basis of specific projects directed towards the improvement of institutions.

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mechanisms: (a) the SNI; (b) the Excellent Graduate Programmes Register10; (c)

and the creation of a new type of HEI, the Technological University11.

According to Valenti, et al (2000) the enrolment rates in national research graduate

level is still low, since the vast majority of students at the tertiary level select

business and social sciences instead of engineering and technological science.

This is due to the fact that students tend to be greatly influenced by the job

opportunities available in the labour market. Also students increasingly prefer to

choose certain programmes offered by private HEIs than in public HEIs, this

change in trends is explained by (a) the preference for a particular type of private

HEI, in which programmes are more closely linked with the productive system and;

(b) the prestige that some private HEIs have, caused by the fact that firms prefer to

employ students from these HEIs. In addition, this consequence is also a symptom

of the problems that public HEIs might still have in solving their operational

problems as well as their bureaucratic process that do not allow them to have an

efficiently linkage with industry needs.

Although the collaborative relations between HEIs and firms trend towards growth,

it seems that programs created inside HEIs to link the technological development

and the production of knowledge with the productive system still seems atypical.

Furthermore and in spite of some HEIs that have established relations with SMEs,

it seems that there are not formal programs that link R&D activities with the

productive system. As well, the relationship between National Research Centres

and private business appears to be more problematic than with universities.

Research centres expect to be able to guide their own research independently, and

they are unsatisfied with industry’s short-term perspectives and desire to influence

the research project. Private Sector tends to want short-term solutions, which

researchers are not usually able to provide. Moreover Mexican government

10 This classifies those academic programmes that due to their quality deserve special financial support from the government. Of almost the 2.500 graduate programs that by their characteristics could be part of it, only 430 have been recognized by their good quality. 11 These universities are based on close relationship with local industry in different parts of the nation.

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through SNI12 encourages the misunderstanding by rewarding researchers for

research and publications that are often irrelevant to the natural resource problems

faced by the productive system.

A growing number of Mexico’s largest and most important centres for graduate

training have acknowledged that their educational and research programs need to

be changed in order to better meet the needs of a modern economy. Students

tend to take a very long time to complete their degrees. As new PhD become

researchers they face unnecessary delays establishing themselves. Salary

incentives at the national and university levels give the priority to publishing over

training.

In summary, the general policy implemented during the last decade has

beneficiated national graduate programmes; also has notably stimulated through

scholarship programs13 professors interest in graduate level studies, and has

achieved an improvement in the wages paid to professors (SNI). However and

even the number of HSHR has increased in some areas, firms have not fully felt

the direct impact on their innovation performance. Firms still have a low demand

for highly skilled personnel, these shows that the effort that government and HEIs

have done still need to be improved so actually HEIs still have a weak linkages

with the productive sector.

Inside the Productive System Mexican policy to support firm-level technological enhancement has been reduced

in effectiveness due to a variety of factors, including: a narrow definition of

individual program objectives; inadequate integration of support services provided

by various public and private agencies; a tendency toward centralized control by

12 The SNI is generally looked upon as a “necessary evil”, although the pressure of having to maintain the required level of productivity, particularly in international journals, is influencing the scientists’ research agendas and priorities. 13 The Ministry of Education in 1998 create two scholarship programs: PROMEP (for public HEIs) and SUPERA (private HEIs), to encourage professors to obtain a PhD degree abroad. These due to the fact that national universities need to actualise and modernize their teaching system.

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federal agencies; and an over-emphasis on the creation of the supply of services

versus incentives for articulation of demand. Since Mexican firms show low R&D and hire few professional employees and even

fewer highly trained human resources (X2 & Y2), there is a poor absorption rate for

HSHR within firms. This low human resources profile has greatly hindered proper

linkages with the productive system within the Mexican NIS at a time when firms’

performance often depends on the cognitive and technological competencies of

their human resources. Empirical evidence has shown that the firms that hire

larger proportions of engineers and professionals show a greater propensity to

introduce modern technology and innovate. The opposite is also true: the firms

that have fewer professionals within their labour force seem to have rather

stagnant innovation and technological profiles. (Valenti, et. al 2000, 150)

Few firms in Mexico are in this dynamic of change so the country still has a

vulnerable productive plant. This is explained because of the 2.8 million companies

approximately established in Mexico, 99% has a level of emergent

competitiveness; 3,377 counts with quality systems like ISO 9000; 2.500 are

exporters and less than 30014 do some type of R&D. This explains the low

competitive position that Mexico has respect to Korea and Brazil.

Collaboration between researches and users/producers is very important for both

parts. However, they recognise that it is a difficult partnership. The Private Sector

has an unwillingness to invest in long-term projects. They assume that the

research results belong to the state and that production of knowledge is a public

good for which they do not have to pay for.

The support received from the industry to R&D activities and for the formation of

HSHR is extremely deficient. As it was said above, Private Sector tends to want

short-term solutions and researchers are not usually able to provide it, furthermore

the relation between these two sectors tends to back off when it comes to invest

money. But, links with local industry are vital for both parts, for the researchers to

understand the problems that the producers have and for the producers to 14 Together they represent the 64% of the incomes of the GNP. The rest is produce by the 99% of firms.

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understand how can research help them. In general, researchers are unaware of

the needs of the industry. So, the problem is partly cultural but also due to that

SMEs do not have enough capital for research.

In summary, adjustments must still need to be made to apply the basic NIS

scheme, that means to increase effort to improve human resources competencies;

training in complex skill, experience and conscious that permit a country’s

enterprises efficiently to buy, use, adapt, improve and create technologies in order

to capture the specific dynamic of the interactions, linkages and networks among

the actors in the Mexican Innovation System (Cimoli, 2000). Moreover, the future of

Mexico's economic success depends in large part of the development of effective

strategies and policies for science, technology and innovation in both the public

and private sectors. HSHR needs to be considering as the principal key to achieve

these objectives.

3.1 Present and Required Transitions

Mexican S&T capacity has expanded considerable in recent years. Today, Mexico

has a strong system of higher education and research institutions with a number of

advanced research centres of excellence. R&D infrastructure has been expanded

and access to telecommunications is widespread within the universities’ system.

The National System of Graduate Education15 is in a position to train an increasing

number of graduate students. Institutional arrangements have become more

flexible, particularly within the leading universities16 and research centres, and

priority has been given to developing technological and innovation activities.

A number of research funding schemes have also been created (Fondos Mixtos y

Sectoriales) in the recent past, new tax incentives17 have been made and firms that

are involve in R&D activities are allowed to import research inputs free of duties.

15 A significant number of the professors who teach inside it have obtained their highest degree abroad mainly in the US, UK, and France. 16 UNAM, CINVESTAV, UAM, IPN, UPN. 17 In 1999 there was emended the 15 article of the Federation’s Income Law, to allows for tax break and incentives to the privates that incrementally spend on technology innovation activities.

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What is more, is the creation of a new Scientific and Technological Research Law18

and the establishment of a special board composed of representatives of the

scientific and business communities to advise the executive on S&T policies and

programmes. International flows of trade, knowledge and people have been

considered as essential inputs for the major national innovation endeavours,

already in progress (Valenti et al, 2000).

In spite of the important progress that had been made, other issues are still being

addressed. Although the numbers with graduate training have increased in recent

years, there is a continuing need for more young people to pursue advanced

courses of study in the best national and foreign institutions specially in the science

and engineering fields. Decentralisation of research facilities continues to be a key

issue in spite of the progress made.

Mexico is still highly dependent on technology imports, technology adoption and

diffusion; that are still considered more important than local research. Mexican

R&D activities need to have more emphasis on projects directed towards solving

problems of national importance; for that, it is necessary to strengthen effective

links between academic and industry and the need for a greater diversification of

funding sources including increased participation of private investment and the

implementation of a powerful national strategy for innovation. (Valenti et al, 2000).

In other words, more research funding needs to come from the industry and more

joint research between public research institutions and the productive sector needs

to be done, this would enhance flow X2.

All the recent effort and the recognition of the weaknesses have made known that

Mexico have recognised the value of the development of S&T and its importance to

economic growth and innovation performance. Moreover, it seems that the

creation, formation, training and development of HSHR are taken as innovative key

policy to enhance the organizational change and technological development inside

the Mexican Innovation System (X2).

18 This law provides additional budgetary flexibility for research centres and allows firms that make some R&D activities to apply for funds. Also creates a national S&T database.

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International Organisations such as the World Bank and the OECD have

suggested most of the recent programmes implemented in Mexico19. One of this

project was designed to support productivity growth and to improve the

effectiveness of the creation in knowledge. Its principal aim was “to promote the

generation, diffusion, and application of knowledge for innovation in support of

economic and social development” (World Bank, 1998, 2).

These recommendations seem to be the base of some of the sectional

programmes of the National Plan for Development 2001-2006 (NPD). The NPD

conceived policies in order to coordinate activities among academy, industry and

government to strengthen the domestic innovation system, an issues that are

certainly crucial to the development and the economic growth of the country. The

NPD tries (a) to increase the effectiveness of investment in innovation; (b) to

strengthen the formation of HSHR; (c) to generate knowledge with potential

applications to economic and social development; (d) to encourage enterprise

investment; (e) to increase involvement between industry with universities; (f) to

support bridge institutions; (g) to finance joint university-industry projects; (h) to

develop new fields, which are relevant to Mexico’s needs; (i) to strengthen

scientific and technological capacity and; (j) to develop Venture Capital Fund

(Presidency, 2001)

CONACYT, the Ministry of Education (SEP) and the Ministry of Economy (SE) are

the principal bodies that are in charge to carry out the S&T strategies. These

bodies will establish the mechanisms of coordination and collaboration necessary

to support and strengthen jointly the formation and training of HSHR; the graduate

studies, putting special attention to the increase of their quality; the consolidation of

academic-industry research groups; and the involvement of the productive sector

in R&D and technological development in all the areas of knowledge with the aim

19 The Knowledge and Innovation Project was signed in 1998, and it gave to Mexico around $300 Million USD. The principal actions suggested were (a) increase the availability of scientific and technological human capital; (b) the creation of a pilot private sector-led venture capital scheme and (c) enhance linkages between university-industry to foster the development of technology within firms through financial support for joint activity and technical assistance to bridge institutions; In other words, to improve the performance of the Mexican innovation system (World Bank, 1998).

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of increase the competitiveness and innovation activities inside the NIS

(Presidency, 2001).

The Special Programme of Science and Technology 2001-2006 (S&T programme)

principal goal is to settle down the national investment in R&D activities that will

need to be 1% of the GNP by 2006, considering that the Federal Government will

invest the 60% and the productive sector the rest. Figure 5 compares the current

cost in R&D activities and the projections for the 2006. Figure 5

National Expenditure in S&T 2000 (Thousand of million MXP 2001)

Public Sector Activity Total

$ Conacyt

$

HEI Private Sector

$

Foreign Sector

$

TOTAL $

% %

GNP

Expenditure In R&D

14.0 1.7 2.5 5.7 1.3 23.5 68.5 0.40

Graduate Education

4.6 1.3 2.1 4.6 13.4 0.08

S&T Services

6.2 0.2 0.1 6.2 18.1 0.11

TOTAL 24.8 3.2 4.7 5.7 1.3 34.3 100 0.59

Source: CONACYT Projection

National Expenditure in S&T 2006 (Thousand of million MXP 2001)

Public Sector Activity Total

$ Conacyt

$

HEI Private Sector

$

Foreign Sector

$

TOTAL $

% %

GNP

Expenditure In R&D

42.7 10 2.6 31.1 1.3 77.7 67.1 1

Graduate Education

13 8.5 5.5 4.5 17.4 15.1 0.2

S&T Services

11.2 2.9 2 9.5 20.7 17.9 0.3

TOTAL 66.9 21.4 10.1 45.1 1.3 115.9 100 1.5

Source: CONACYT Projection

Also the Programme raises the strategies, the action lines and the sectional

programmes of S&T to allow that these goals would be reached with cost efficiency

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and high quality. Moreover, it establishes the necessity to increase substantially

its personnel dedicated to R&D activities and the technological development; for

that, the S&T programme suggests to increase from 25,000 to 80,000 the number

of researchers (figure 6), while 30,000 will work inside the productive sector. In

other words the S&T programme is designed in order to promote among

entrepreneurs the idea that the formation, absorption and retention of HSHR is an

advance to increase productivity and foster innovation (CONACYT, 2001).

Figure 6

Total of Graduate Personal in R&D activities, 2001 - 2006

2001 2006 SECTOR

ESP. MASTERS PHD TOTAL ESP. MASTERS PHD TOTAL

Researchers in the Academic* Sector Total

7,290 5,210 12,500 17,807 10,218 28,025

SEP-CONACYT R. C. 1,050 1,200 2,250 3,116 2,725 5,841

Public Research Centres 2,925 2,325 5,250 8,681 5,279 13,960

TOTAL 3,975 3,525 7,500 11,797 8,004 19,801

FIRMS TOTAL 1,515 3,030 455 5,000 27,000 3,896 1,278 32,174

TOTAL IN R&D 1,515 14,295 9,190 25,000 27,000 33,500 19,500 80,000

* Include personal dedicate to R&D activities

Source: CONACYT, Survey in Technology R&D, 2000, and ANUIES, Annual Report of Graduate Studies, 2000

The Programme establishes a structural change in the efficiency and efficacy use

of the resources. There are four main structural change suggested: (1) to support

projects oriented to the industry problem-solution with the endorsement of the

government agencies in charge to solve it and that involve research groups instead

of individual researchers in order to generate networks between the different

centres and agencies; (2) to promote a higher education of high quality with the

specific aim to create specialists, scientists, humanists, technologists and

researchers able to innovate and to transmit knowledge; (3) to support projects

oriented to enhance competitiveness inside the productive sector and that

generate research partnerships between companies, research centres and HEIs

without neglecting the basic research; and (4) to support projects that have a direct

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impact in the regional development to accelerate the decentralization of the S&T

activities (CONACYT, 2001).

Related to the formation and strengthen of HSHR, the programme puts forward

that it is necessary (a) to give annually an increasable number of no reimbursable

scholarships to enhance technicians studies until reaching 300,000 in the 2006; (b)

to give annually a increasable number of “becas-crédito” for do master and PhD

programmes from 6,000 that are giving in this year until reaching 22,400 in 2006;

(c) to obtain that from 1,187 students who graduate annually in the level of PhD in

the 2000 goes to 2,300 in the 2006; (d) to obtain that by the 2006 the number of

networks of interchange and collaboration between academic bodies of national

institutions have been increased (CONACYT, 2001).

By the other hand The National Programme of Enterprise Development 2001-2006

enhances the productive sector to increase the investment in S&T activities from

5.7 to 45.1 thousands of millions of MXP by the 2006 (figure 5), which includes the

formation and training of highly skilled personnel - it suggests that the productive

sector needs to hire by the 2006 more than 32,000 HSHR in contrast with the

5,000 that are already in; the development of technological services; and the

investment in R&D activities (SE, 2001).

The Ministry of Economy with the intention to support SMEs and to increase its

productivity and competitiveness, has designed the following programmes: (1) The

Technological Forums, which allow to tie directly SMEs with centres and institutes

of applied research and technological development of the country, in order to solve

their problems of technological character. This way, the technological culture of

the enterprise sector is fomented and it helps to its modernization and increase of

its productivity and competitiveness. (2) The System of Quality with base in Norm

ISO 9000 Programme20, its objective is to give support and advice to SMEs that

wish to implement a System of Quality (SE, 2001). (3) The Technical Education 20 The National Committee of Productivity and Technological Innovation, A.C. (COMPITE) organism without profit aims, is the one in charge to manage the resources transferred by the SE as well as the income received by concept of Diagnosis, Consultancy, Revision of Advance and Qualification that the Program offers.

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and Training Modernization Project, its objective is to initiate a process of structural

change in which the formation and training of human resources becomes the

central axis of the increase of the productivity and competitiveness of the firms. To

reinforce this programme the Ministry of Economy in relation with the Ministry of

Labour has created the Industrial Training Programme (PECE21) to support SMEs,

in spite of that, these programmes are not directly related with HSHR, together

promote the cultural change because allow Firms to train their workers in the

operation of new technology (SE, 2001).

In summary The National Programme of Enterprise Development suggests that

through a cultural change focused in technological development and the creation of

technological base firms, the productive sector will be able to hire more HSHR;

therefore will allow firms to innovate and compete advantageously in benefit of all.

Also the National Plan of Development tries to (a) establish the right business

climate to innovate and invest in HSHR; (b) strengthen the national capabilities

(infrastructure) and enhance the creation and transmission of knowledge (HEIs and

Research Centres); and (c) promote collaboration in the science and innovation

systems between the three actors. These will put Mexico in conditions for

successfully participate in the new economy which is characterized to be highly

competitive and opened.

CONCLUSIONS

In Mexico it appears to be a public misunderstanding of the value of science and

technology to the welfare of firms and society. It seems that Mexico has a poor

performance system for knowledge and innovation; low productivity

growth/investment in firm upgrading; lack of demand-driven technological support

institutions; low effectiveness of research programs; and inadequate research and

graduate training policy at universities. But even these arguments, Mexico has

recognised the value of the development of S&T and its importance to economic

21 Nowadays there are 6,746 firms register in the programme and 1,373,874 workers have been beneficed. The Inter-American Development Bank finances the PECE.

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growth and innovation performance. Indeed, Mexico has made efforts to

restructure its knowledge and innovative processes. As a result, the new S&T

policy can effectively be implemented to improve firms’ competencies, so firms will

be able to efficiently buy, use, adapt, improve and create new technologies.

The formation of HSHR is what truly allows a country to be competitive; reason

why HSHR need to represent the leading investment of the country. For this

reason, it is necessary to set out that the creation of knowledge needs to represent

the key motor for the development. In Mexico, the creation, formation, training and

development of HSHR is taken as innovative key policy to enhance the

organizational change and technological development.

In my perception the strategies and policies to strengthen the countries capabilities

are well orientated, particularly the ones related with the formation of HSHR, but it

is still an unknow if all these objectives and strategies would increase the demand

of HSHR in the labour market (X2 & Y2), specially in the productive sector.

However, to create these, it is necessary that the Government brings firms and

businesses closer to the Programmes of HSHR formation to strength and speed

the flow of high-level human resources to all sectors of the economy. So, sharing

cost through signing collaborative agreements, firms will be able to efficiently

absorb what the country produces in HSHR.

In summary the future of Mexico's economic success depends in large part of the

technology and innovation development in both, the public and private sectors and

in considering as a principal key factor to achieve these objectives the formation of

Highly Skilled Human Resources.

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BIBLIOGRAPHY AND REFERENCE

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Bell, M. M. Hobday, S.Abdullah, N.Ariffin and J. Malik (1995) Aiming for 2020: a Demand-Driver Perspective on Industrial Technology Policy in Malaysia, SPRU, Brighton.

Boldu, J. and R. de la Fuente (eds) (1993) Science Policy in Developing Countries: The Case of Mexico, FCE, Mexico.

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ELECTRONIC RESOURCES Mexican Ministry of Economy (SE) http://www.economia.gob.mx/ Mexican National Bank for Exterior Commerce (BANCOMEXT) http://www.bancomext.com Mexican Ministry of Education (SEP) http://www.sep.gob.mx/ National Council for Science and Technology (CONACYT) http;//www.conacyt.mx/ Mexican Ministry of Labour (STPS) http://www.stps.gob.mx/ Mexican Ministry of Foreign Affairs (SRE) http://www.sre.gob.mx/ Sistema de Información Empresarial Mexicano (SIEM) http://www.siem.gob.mx Mexican Presidency http://www.presidencia.gob.mx World Bank http://www.worldbank.org Organization for Economic Cooperation and Development http://www.oecd.org Inter-American Development Bank http://www.iadb.org

Acapulco Guerrero, México Ponencia arbitrada clave: 25-LDR-HPR