Uruguay looks to Israel as an example and wants to become a global innovation hub

In front of an auditorium full of businessmen and international investors, the president of Uruguay, Luis Lacalle Pou, ended his presentation on the reasons why the country is attractive to receive foreign business, telling an anecdote about a Brazilian.

According to him, a man from São Paulo went to Uruguay in search of investment opportunities and, while he attended meetings, his wife and children took advantage of their free time to go for a walk. When choosing whether or not to return to Brazil, the man was undecided about business, but chose to stay in the country after hearing the good experience his family had. “In the end, it all comes down to human feelings.”

Lacalle Pou himself admitted not knowing if the story was true, but the anecdote was part of a larger argument: Uruguay is safe, pleasant and politically stable — characteristics that would make the country a fertile place for global ventures.

The president’s statement was made during Test & Invest, an event organized by the Uruguayan government in partnership with the IDB (Inter-American Development Bank), held in the first week of November, and whose objective was to project Uruguay as an innovation hub not only in Latin America, but worldwide.

Regionally, the country already has a certain protagonism in areas such as logistics technology, agriculture and cybersecurity, in addition to leading the list of the largest software exporters per capita in Latin America — followed by Argentina, Chile and Brazil.

The technology industry, however, still accounts for a fraction of the economy. According to the latest available data, from 2019, the sector generated more than US$ 1.9 billion (R$ 9.6 billion) in business, which represents 3% of GDP (Gross Domestic Product). Agribusiness, services and tourism continue to be the activities with the greatest weight.

Although changing this economic dynamic is complex, Uruguay has already managed to emphasize sectors linked to innovation. In 2012, for example, the technology industry accounted for just 1.6% of GDP —which represents an 85% jump in seven years.

The country wants to attract business and investors using its political stability, its good social indicators and the tax advantages offered to entrepreneurs as a showcase.

The strategy of putting these attractions on the international showcase is already bearing fruit. Recently, Microsoft announced that it will install its first artificial intelligence and internet of things laboratory in Latin America in the country, while Harvard University announced that it will move its Latin American Research Center from Buenos Aires to Montevideo.

The government’s bet is that companies use Uruguay as a platform for expanding their services to the rest of the world, taking advantage not only of tax advantages, but also of the country’s infrastructure — which prides itself on having been the first to launch the 5G network in Latin America and have a clean energy matrix.

Uruguay is guided by the example of Israel, which has become one of the most famous technological centers in the world through incentives for entrepreneurship, investments in research and state initiatives to support new businesses and reduce the risk of international investors.

To approach this model, the government has launched new programs, such as the Uruguay Innovation Hub, announced during Test & Invest. The project aims to strengthen the country’s position as an innovation center, through instruments to attract international startups.

In addition to encouraging the creation of open laboratories, the program plans to inaugurate an innovation campus and stimulate the local technological ecosystem through public-private investment funds. The idea is that entrepreneurs can access technology quickly and without demanding time and own capital.

“We want the country to become a place to test new products, invest and develop projects”, says the Minister of Industry, Omar Paganini.

Mercado Livre is one of the companies that have invested in Uruguay. Founded in Argentina, the e-commerce giant now has more than 1,500 employees working in the country, a good part of them being developers and programmers.

It was in Uruguay that the company created its first technology team outside Argentina, which provides services to Brazil and Latin America.

In 2019, the CEO and co-founder, Marcos Galperín, decided to move to the country, making it clear that the stability and quality of life were decisive motivators.

Karen Bruck, vice president of marketplace at Mercado Livre, explains that Uruguay is already an example of how a country with such a small market can serve an entire region. “The institutions are stable, the rules of the game are clear, and the talent is highly qualified, because the universities are public, there are many graduates,” she says.

Manpower is a challenge for Uruguay

Although the qualification level is high, Uruguay faces a labor bottleneck. Of the 3.5 million inhabitants, around 2 million are of working age.

To become a global technology hub, Uruguay needs to attract qualified professionals, something that is already on the government’s radar.

During Test & Invest, Lacalle Pou said he is working on a legal framework that allows bringing talent from abroad, whether they are Uruguayans who live abroad or foreign workers.

Mariana Ferreira, manager of competitive intelligence at Uruguai XXI, the country’s state investment promotion agency, says that the government has already received professionals from other countries.

“We are also working with other institutions to develop specific programs to train people in information technology, such as engineers and programmers”, he says.

According to her, the perspective is that the sector will continue to grow in the coming years, to the point of, who knows, coming close to the Israeli model.

“At the ministerial level, Israel is taken as an example, seeing above all which policies were carried out or how the programs and incentives worked, so that they can be replicated in Uruguay”, he explains.

The reporter traveled at the invitation of the Uruguay XXI agency