surveyed companies had established cooperation agreements with universities and about 5 percent had done so with public research institutes (Melo 2001). Similarly, an Argentine innovation survey from 2002 shows that the most important external partners for firms involved in R&D are suppliers, clients and consultancies. Universities and training institutions, public and private laboratories, technology transfer offices (TTOs), and government S&T promoting agencies are much less the partner of choice for private innovators (SECyT 2003).

In addition to real or perceived low relevance of academic research, cooperation is hampered by lack of incentives for public researchers to address private sector knowledge needs. Experience from Latin America suggests that the inward orientation of academia is reinforced by hiring and promotion rules, which put extensive stress on academic publications (Lundvall 2002). Reward structures in the region generally do not recognize the value of non-academic collaboration, and faculty who take part in industry-sponsored projects risks weakening their academic career prospects. Moreover, bureaucratic rigidities make inter-sectoral mobility and public-private partnerships cumbersome and costly.

Experience from the OECD shows that knowledge and technology transfer is often driven by personal entrepreneurship and initiative (BHEF 2001). Hence, strengthening university-industry linkages in Latin America hinges to a large degree on the ability of policy makers and university leaders to make it more attractive for individual faculty members to engage in outreach activities and partnerships with industry. One of the most important challenges in this regard is to update hiring, promotion and reward structures to fully recognize factors such as participation in publicprivate research projects and effectiveness in attracting external funding.

## **1.4 Tension in university—industry relationship**

Interaction between universities and industry raises the concern to what extent such activities are consistent with the public service function of universities. Universities and industry have fundamentally different missions, values, and cultures, and face different financial and temporal constraints. In academia, open scrutiny of research results, techniques and methodologies by peers is considered a critical element in upholding high quality standards. Moreover, university researchers generally engage in long-term research projects and are expected to push the knowledge frontier forward by making results publicly available. Firms, on the other hand, tend to focus on short-term, specific research activities and have an interest in concealing new knowledge from potential competitors at least until the research is evaluated and a patent application has been filed (Dasgupta and David 1987).

For university leaders in Latin America conflicts of interest are a legitimate concern. While universities can obtain external financial support and broaden the experience of students and faculty by working with the productive sector, they must also guard against devolving into contract research organizations indebted to their sponsors. Nonetheless, evidence suggests that the concern at this point is too little collaboration rather than too much. The majority of universities in Latin America are still in the early phases of opening up to partnering with private businesses. As will be discussed in section 4.2.5 it is important to develop clear internal regulation in this process to protect the ability of universities to produce unbiased knowledge in the public interest.

# **2 Advanced education**

The production of highly skilled human capital is undoubtedly the main contribution universities make to national innovation systems. Efforts to upgrade the technological infrastructure and 6