VZCZCXYZ0000
RR RUEHWEB

DE RUEHBO #0168/01 0211559
ZNR UUUUU ZZH
R 211559Z JAN 09
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC 6536
INFO RUEHBR/AMEMBASSY BRASILIA 8589
RUEHCV/AMEMBASSY CARACAS 1551
RUEHLP/AMEMBASSY LA PAZ JAN LIMA 6920
RUEHZP/AMEMBASSY PANAMA 2903
RUEHQT/AMEMBASSY QUITO 7622

UNCLAS BOGOTA 000168 
 
SIPDIS 
SENSITIVE 
 
OES/STC FOR KDELAK; WHA/EPSC FOR FCOLON 
 
E.O. 12958: N/A 
TAGS: ECON TSPL KCIS PGOV EINV CO
SUBJECT: COLOMBIA'S NEW S&T LAW HIGHLIGHTS PUSH FOR 
INNOVATION-LED ECONOMIC DEVELOPMENT 
 
¶1.  (SBU) SUMMARY: In December 2008 the Colombian Congress 
approved a Science, Technology and Innovation (STI) Law, with 
the intention for STI to become a major driver of Colombian 
productivity and long-term economic stability.  The law 
increases GOC funding available for STI activities and 
research, elevates the Colombian Institute for the 
Development of Science & Technology (Colciencias) to 
quasi-ministerial status, and creates a public-private fund 
to ensure sustained STI investment.  Local experts note that 
present national spending on STI -- 0.47 percent of GDP -- is 
not sufficient to promote innovation-led development, and 
praise this law's goal of increasing spending to 1 percent of 
total GDP by 2010.  Local experts cite the lack of incentives 
and sustained funding within the present system, as well as 
brain drain resulting from historic political instability, as 
primary causes for Colombia's lack of STI development.  END 
SUMMARY. 
 
A New Priority In National Policy 
--------------------------------- 
 
¶2.  (U) On December 16 the Colombian Senate gave final 
approval for a Science, Technology and Innovation (STI) Law, 
which reforms the existing law of 1968.  According to 
Colciencias Director Juan Francisco Miranda, this law 
converts STI from a theoretical concept to an explicit 
component of the social and economic development of the 
country.  The GOC will now include STI targets in official 
planning documents, and each year Colciencias will have to 
submit a national STI policy to Colombia's National Planning 
Department (DNP).  Miranda characterized the law as an 
indication of the GOC priority that Colombia increase its 
productive apparatus to move away from illicit activities and 
ensure long-term economic stability.  Guillermo Perry, a 
former Finance Minister and senior analyst at leading 
economic think tank Fedesarollo concurred that the law raised 
the political salience of STI, explicitly making STI a tool 
for addressing Colombia's shortfalls in competitiveness and 
production. 
 
Increased National Investment In STI 
------------------------------------ 
 
¶3.  (U) GOC spending on STI has historically been low.  In 
2007 national spending was 0.47 percent of GDP, below 
neighboring countries such as Argentina, Brazil, Chile and 
Venezuela.  Miranda said Colombia is behind Latin American 
countries in numerous STI indicators -- including research 
and development expenditures, number of Ph.D. science 
students, and number of patents.  The new law hopes to 
address these deficits by increasing overall STI expenditures 
to 1 percent of overall GDP by 2010.  Rather than depend upon 
foreign technology, local experts state that Colombia must 
begin to develop its own. 
 
Colciencias Bureaucratic Status to Rise 
--------------------------------------- 
 
¶4.  (SBU) One of the main components of the law is the 
elevation of Colciencias from an institute within DNP, to an 
independent quasi-ministerial body equal to DNP.  (NOTE: 
These quasi-ministerial bodies, such as DNP or the National 
Statistics Department (DANE), are called "departamentos 
administrativos" and have essentially the same authority as 
cabinet level organizations but are not technically federal 
ministries.  Local contacts tell us Colciencias was elevated 
to an "departamento administrativo" because, under the Uribe 
Administration's practice of reducing government bureaucracy, 
it is not politically tenable to create new ministries.  END 
NOTE.)  The Director of Colciencias will now participate in 
ministerial meetings and have a greater voice in STI policy 
formation.  Along with augmented status, the budget of 
Colciencias will increase to USD 90 million in 2009--a 69 
percent increase since 2006. 
 
Investment Fund To Secure STI Resources 
--------------------------------------- 
 
¶5.  (U) The law creates a public fund with initial 
capitalization of USD 50 million to secure sustained and 
autonomous resources in support of national STI policies. 
Colciencias will have oversight of the fund, with a private 
investment firm providing direct management. Miranda stated 
 
that presently, the national STI system is inefficient and 
difficult to maneuver.  Every government entity, be it a 
federal, regional or local body, relies upon its own R&D 
mechanisms and research.  The GOC expects the new fund to 
increase STI investment, by providing an efficient, expedient 
and centralized use of resources.  Likewise, Colciencias will 
have the authority to instruct ministries to increase their 
fund investment and the President's Office reserves the right 
to make contributions mandatory in the future. 
 
¶6.  (SBU) Miranda also noted that private entities can invest 
in the fund, recognizing the crucial role of the private 
sector in securing future investment.  According to Miranda, 
less than 40 percent of STI research expenditures presently 
come from the private sector, which is not sufficient for 
innovation.  While the initial USD 50 million contribution to 
the fund will come from the National Royalty Fund, a public 
source, Colciencias hopes that private investments will 
eventually equal or surpass public sector funding. 
International bodies, such as the World Bank or the 
Inter-American Development Bank, may also invest.  This fund 
will focus only on STI projects and activities and cannot 
legally finance Colciencias administrative costs or any other 
public entity. 
 
¶7.  (SBU) Perry cautioned to us, however, that while this 
fund does increase STI resources, in the long-term a more 
sustainable source of funding will be necessary.  To secure 
long-term progress in and funding for STI, he stated that 
government cannot have direct, everyday control and 
supervision over the field.  Perry stated that the private 
and academic sectors need to have genuine authority and serve 
in more than STI advisory positions to the government.  Since 
future governments, less committed to STI, could simply 
eliminate the fund, Perry called for the same independence 
and institutionality presently enjoyed by the Central Bank to 
be provided STI institutions. 
 
Targeting Academic Goals 
------------------------ 
 
¶8.  (SBU) Representatives from the Ministry of Education and 
SENA -- the national technical education system -- have 
publicly stressed the need to increase the number of Ph.D. 
students, researchers and research centers within Colombia. 
They cite Colombia's graduation of less than 100 Ph.D.'s in 
2007 as evidence of the lack of prioritization in Colombia on 
high level research and academic promotion.  Insufficient 
research funding and a brain drain caused by historic 
political instability are often cited as the primary causes 
of this deficit.  According to 2006 Ministry of Education 
statistics, less than 5 percent of students who received 
Ph.D. scholarships remained in Colombia.  To address this 
phenomenon, the STI law intends to increase the research 
opportunities for students and researchers, and sets a target 
of increasing new Ph.D. candidates by 500 each year. 
Colciencias Director Miranda acknowledged the target as low, 
but nonetheless a huge challenge for Colombia. 
 
Tough Road Ahead 
---------------- 
 
¶9.  (SBU) While Miranda is a leading advocate for the law and 
the STI philosophy it entails, he also admitted to us that he 
was "completely terrified" of the new responsibilities his 
institution must assume.  With the same number of personnel 
-- the law does not allow for increased hiring due to GOC 
attempts to limit bureaucracy -- Colciencias will assume the 
added obligations and pressure of a quasi-ministerial body. 
While maintaining normal functions, Colciencias will now have 
to take the lead on developing national STI policy, manage an 
investment fund and convince other involved actors that STI 
investment is essential to Colombia's development.  Miranda 
and other senior officials at Colciencias welcome the 
challenge but admit that sustained support from the 
President's Office and greater participation by the private 
sector are necessary if this initiative is to succeed. 
BROWNFIELD