“Uruguay is one of those places in Latin America that people should pay more attention to”

After decades studying innovation ecosystems around the world, MIT Sloan professor Michael A. Cusumano has seen how cities and countries transform research, talent and entrepreneurship into global companies. During his recent visit to Uruguay to participate in UM Connects, he identified several characteristics that, in his view, position the country as an interesting environment for innovation and investment.

“I would describe Uruguay as a small advanced country in Latin America, in South America in particular, where the standard of living is high, people seem well educated, universities seem good, and the government seems very stable and very interested in creating a better future for everyone,” he said.

Cusumano, who has worked with around 100 regions and cities worldwide through the MIT Regional Entrepreneurship Acceleration Program (REAP), emphasized that strong universities are one of the central pillars of successful innovation ecosystems. “It's very, very hard to have a true innovation ecosystem without universities in the middle of it,” he explained, noting that universities play a critical role not only in basic research but also in applied research that can lead to new products, companies and industries.

Another key factor, he said, is government support for innovation and economic development. “A government that supports innovation and economic development, research and education is very important,” he said, pointing out that investors often evaluate regulatory frameworks, incentives for research and development, and the broader legal environment before entering new markets.

During his visit to Montevideo and Punta del Este, Cusumano said he was particularly struck by Uruguay’s international reputation and institutional stability. “What impresses me most is the reputation of the country as a very stable democracy, which I think is very important,” he said. “You want to have a predictable and reliable government, particularly when it comes to different technologies.”

From the perspective of investors and technology companies, predictability is often a decisive factor. “Stability is very important, and it’s kind of at the center of a number of other variables,” he noted, although he added that it must be accompanied by economic growth and increasing productivity, often driven by the effective use of new technologies.

Cusumano also highlighted Uruguay’s strong tradition in education and digital literacy, which he believes could support new opportunities in emerging technologies. “Uruguay has a long history of literacy and information technology, and you should become a leader in South America in understanding how to use artificial intelligence,” he said, suggesting that the country could build new applications and startups using global technology platforms.

Another aspect he considers an advantage is the country’s strategic geographic position. “Even if Uruguay itself is small, your position is very strategic,” he said, noting that the country sits between two major regional markets, Brazil and Argentina. The situation, he suggested, is somewhat similar to Ireland, which leveraged its location and talent to become a technology hub connected to larger markets.

During the UM Connects event organized by the University of Montevideo, Cusumano also observed the country’s capacity to bring together key actors from across the innovation ecosystem. “It seemed to me that many of the most important people in the country were in that one room,” he said, referring to the gathering of entrepreneurs, academics, investors and public-sector leaders. “Many countries cannot do that,” he added, explaining that larger economies often struggle to coordinate actors across government, academia and industry. For smaller countries, he believes this ability can become a strategic advantage.

“There is a concept we call ‘judo strategy’, where you turn your disadvantages into advantages,” he said. In smaller countries, he explained, it is often easier to mobilize people and build consensus around initiatives that support innovation and economic development. Looking ahead, Cusumano believes that countries like Uruguay should focus on building strengths in a limited number of strategic areas. “You cannot do everything,” he said. “But you might want to pick one or two areas that could be special areas of investment for the country, leveraging what your strengths are and thinking ahead ten or twenty years.”

Despite the challenges faced by smaller economies in a rapidly evolving global landscape, the MIT professor believes Uruguay has significant potential. “It’s one of the maybe not so well-known places in Latin America that I think people should pay more attention to,” he said.