Interplay between innovation barriers and cooperation in Latin America: lessons for public policy

Using data from the Harmonized Latin American Innovation Surveys Database (LAIS), this paper investigates whether innovation-active manufacturing firms in Latin America that face more innovation barriers are more likely to engage in cooperative innovative efforts with other partners. Our findings robustly suggest that cooperation is a coping strategy for innovation obstacles: firms perceiving obstacles tend to cooperate more, especially with research institutions. We also find a positive relationship between financial barriers and cooperation with other firms, as well as between market obstacles and cooperation with research institutions. These results suggest that, from a public policy perspective, efforts to increase innovation should extend beyond a financial market failure approach and adopt a more comprehensive systemic failure perspective.