Technological capacity-building in unstable settings: Manufacturing firms in Argentina and Brazil

From the 1970s onward, the macroeconomic context in Argentina and Brazil was characterized by drastic economic changes and instability. Numerous studies have documented the generally negative effect of this environment on the innovation capacities of the manufacturing sector. This paper, however, analyses the possible emergence of new innovation capacities in the period, bringing two important phenomena to light. First, a quite substantial number of firms, even in unstable settings, redoubled their innovation efforts. Second, these firms are mainly found in a small group of sectors associated with the countries’ static advantages or in sectors favoured by specific sectoral regimes. The findings, although exploratory, are a contribution to the debate on the development of innovative capacities in unstable macroeconomic contexts and the ability of sectors associated with the two countries’ static advantages to generate spaces of innovation and value creation.