Innovation in Latin America

Andrés Velasco, the very popular former Finance Minister of Chile, wrote an op-ed very critical of the way business is done in Chile, and in Latin America overall. A tiny  and closed elite, often made up of an extended family, makes it impossible to move beyond the traditional commodity extraction model.

However good your startup business plan may be, obtaining the necessary financing is nearly impossible if you do not have the right connections or did not attend the right school. Bogotá, Buenos Aires, Lima, and Santiago have their networking parties and incubators. But all too often they resemble an alumni reunion for posh academies, rather than a gathering of hungry, lift-yourself-up-by-your-own-bootstraps types. 

And, if their startup fails, young entrepreneurs don’t tell the story with pride at the next party, as they might have done were they in Palo Alto, Helsinki, or Tel Aviv. In Latin America, bankruptcy and fraud are still inextricably linked in too many people’s minds.

Quite a bit to ponder. One problem, though, is that it is not simply "culture" we're talking about, but rather a deeply entrenched, historically rooted socio-economic system based on inequality. This isn't just about changing people's ideas. It also highlights the fact that a "free market" is not really very free.

But it is a good thing to have elites like Velasco talk more openly about how the apparently wonderful growth in Latin America is ephemeral and marks much less economic advance than claimed. In 1960, Chile had a small political and economic elite, and depended on copper. In 2012, Chile had a small political and economic elite, and depends on copper. And Chile is supposed to be the economic model for the region.

h/t Tuerto Magazine Twitter feed