In this context, employment rose significantly, and unemployment fell to the historically low rate of below 7 percent. In 2010, unemployment was about 7 percent, and the unemployment rate of workers with tertiary education was 4.2 percent. The participation of the latter group in the labor force has grown slowly, reaching the current level of 25 percent. In comparative terms, Uruguay has made less progress in human capital accumulation. The proportion of workers who have completed tertiary education has remained relatively stagnant, while in the rest of the MERCOSUR 4 countries it has grown steadily. Since 2005, when Uruguay began the reform of its innovation promotion system, investment in R&D has grown substantially. According to the Network for Science and Technology Indicators (RICYT), the ratio of R&D investment to GDP rose from 0.36 percent in 2006 to 0.64 percent in 2008. Nevertheless, investment in innovation in Uruguay is still quite low. Two-thirds of all investment in innovation originates in the public sector. Only 30 percent of firms in Uruguay, including both the manufacturing and services sectors, engage in innovation. Investment in innovation is higher in the manufacturing sector (9.3 percent of the sector’s GDP) than in the services sector (2.6 percent of the sector’s GDP) (ANII, 2009a and ANII, 2009b).
2.2 Policy Landscape and Recent Evolution In 2005, the Uruguayan government redesigned the entire innovation promotion system. In the 1990s, multiple agencies were responsible for the Uruguayan national innovation system, resulting in an inefficient administration of the scarce resources devoted to R&D and other innovation activities (Rubianes, 2005).
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The full members of the Common Market of the South (MERCOSUR) include Argentina, Brazil, Paraguay, and Uruguay.
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