South America is one of the most peaceful continents in the world, which has seen little armed conflict in the 21st century. It ranks in the middle of the world's most populated regions, as its 430 million population is less than the number of people present in either India or China - and only 100 million more than the number that lives in the U.S.
Unlike other continents, which have dozens of countries - the two notable examples being Asia and Africa, South America has only 12 countries. More than half of its landmass is occupied by Brazil, which is also naturally the largest economy on the continent. In fact, Brazilian dominance is evident from the fact that according to Deloitte, 80% of manufacturing in South America falls in either Argentina or in Brazil.
Since manufacturing is relatively capital and particularly technologically intensive, South Americans also rely on mining for their economic growth. A wide variety of natural resources are produced in the region, such as iron ore, gold, lead, zinc, bauxite, tin, and copper. The region has large oil and gas reserves as well, with Venezuela having the largest proved oil reserves in the world, and Brazil being among the top 20 largest producers of crude oil.
However, unlike Europe, Asia, and North America, South America is still relatively behind in the technological age. For instance, McKinsey shares that when it comes to Brazil and Colombia, the two countries are held back on the global stage because they do not have the middle sized businesses for economic growth or a strong middle class that can buy products and services en masse. Adding Mexico to the list, the consulting company reveals that for the three countries, one quarter of the population is responsible for 60% of the overall consumption. Mexico is not a part of South America and is often grouped together with the South American countries as part of a region called Latin America - whose populations primarily speak Latin derived languages.
The relatively nascent nature of technology in South America opens up the potential for companies to target new markets. For instance, one highly growing yet under exploited sector is the software as a service (SaaS) market. This industry enables companies and everyday users to access a wide suite of services anywhere on the globe simply by logging into an online portal. Some sectors that are highly lucrative in the South American market are the payments sector, logistics, and augmented reality. Overall, the Latin American SaaS market is expected to grow at a compounded annual growth rate (CAGR) of a whopping 24.7% between 2018 to 2023, underlying the strong potential for the industry. Brazil, located in South America, is the strongest player in the SaaS market, fueled by its vibrant startup ecosystem. Some Brazilian SaaS startups are Ebanx S.A., Ambar Tech, Hi Platform, Neoway, and Nuvemshop’s Cloud Shop.
However, as you'll find out below, Brazil isn't the only advanced South American country, even though it gets most of the coverage. A great example of government effort in the startup ecosystem bearing fruit is that of Chile. Chile's government initiated the incubator program called Start Up Chile in 2010. According to data, since then, Start Up Chile has supported more than 2,200 new businesses across a wide variety of industries. This makes the platform the perfect 'pulse' to gauge where the startup ecosystem in one of South America's most advanced countries is heading, and it has also led to some great companies being formed such as Endurance Electric, QUEMPIN SpA, and Aerial Power.
Just as there are startups in South America, there are large companies as well. Apart from Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR), which is Brazil's state owned oil company, the region's mining, finance, e commerce, coffee, and other industries have allowed it to produce corporate behemoths such as Vale S.A. (NYSE:VALE), MercadoLibre, Inc. (NASDAQ:MELI), Ambev S.A. (NYSE:ABEV), and Itaú Unibanco Holding S.A. (NYSE:ITUB).
10 Most Advanced Countries in South America
Our Methodology
When analyzing a topic that is as highly subjective as 'most advanced countries', unfortunately, the ranking criteria is primarily a judgment call. There are a wide variety of metrics that can be used, including the number of patents applied for and published, research and development as a percentage of gross domestic product, rankings from websites such as Global Finance Magazine's most technologically advanced countries, and data from the World Innovation Index. Each has its own pros and cons. For instance, while the magazine takes care to ensure that it has used sufficient data, this leads to eliminating some South American countries from the mix. For this piece, after analyzing all these sources, we had to go along with the Innovation Index. This is because the end rankings support an intuitive assessment of the situation - Brazil and Chile are, after all, ranked the highest in South America. However, even this index alone is insufficient, as it lists only the top eight South American countries. So, for the last two nations, we have used the relatively older International Innovation Index and R&D as a percentage of GDP.
10 Most Advanced Countries in South America
10. Bolivarian Republic of Venezuela
World Innovation Index Ranking: 108
R&D as a percentage of GDP in 2014: 0.34%
The Bolivarian Republic of Venezuela is a developing country in South America that has seen significant internal strife for the past couple of decades to economic experimentation by governments. This leaves it with a relatively small economy despite having the world's largest oil reserves. As such, it is one of the least advanced countries in South America and ranks above Guayana and Suriname simply because it is a very large country and the second largest on the continent in terms of land mass. Venezuela's primary oil company is the Petróleos de Venezuela, S.A. (PDVSA).
9. Plurinational State of Bolivia
World Innovation Index Ranking: 96
R&D as a percentage of GDP in 2014: 0.16%
The Plurinational State of Bolivia is a landlocked country that has a $118 billion economy - fourth from the bottom of the continent. However, this does not mean that the country is not taking aim at technology and innovation. For instance, in cooperation with the Swiss government, Bolivian engineers have designed and implemented a machine based respiratory resuscitation device which targets 70 rural areas in one of the poorest countries in South America to help save lives.
8. Republic of Ecuador
Global Innovation Index (2022) Ranking: 98
The Republic of Ecuador has a $229 billion GDP and is a prime example of why massive resources and capital are often not necessary for scientific and technological advancements. For instance, the Ecuadorian chemist José Aurelio Abelardo Dueñas Borja is known for having invented a method that lets users restore lost color to textiles. Another renowned Ecuadorian is the lawyer and physician Francisco Javier Eugenio de Santa Cruz y Espejo who was one of the first to understand the role that microorganisms have in the spreading of diseases. Some large Ecuadorian companies are Corporación Favorita C.A., Ecua-Andino Hatsm, and EP Petroecuador - a founding member of the OPEC.
7. Republic of Paraguay
Global Innovation Index (2022) Ranking: 91
The Republic of Paraguay is another landlocked South American nation, and also one of the poorest on the continent. However, despite this, it is one of the handfuls of South American countries that has designed its own satellite which launched from U.S. soil in 2021. Paraguay is also known for other key innovations such as poverty reduction software that is now used globally. Another little known fact about Paraguay is that it is one of the world's largest exporters of hydroelectric electricity, as all of its electricity is produced from dams and similar plants, with the excess left after domestic use exported to countries such as Brazil, Argentina, and Uruguay,
6. Argentine Republic
Global Innovation Index (2022) Ranking: 69
The Argentine Republic is the first big jump on the innovation index. While countries below it are ranked under 90, it tops them at 69, gaining points particularly due to the strength of its infrastructure, business sophistication, and creative outputs. The Argentine economy is also one of the largest in the world and is it currently worth $1.2 trillion. Its advanced nature is evident from the fact that close to one fifth of Argentina's exports come through the manufacturing sector, with products such as vehicles, auto parts, steel, biodiesel, and home appliances each having their share. The country also has a large potential for wind power generation, with estimates suggesting that Argentina is capable of generating 300 Gigawatts of electricity through wind farms. Argentina's largest energy company, Pampa Energía S.A. (NYSE:PAM), is a key player in the wind power market.
Some dominant Argentinian companies are Ternium Argentina S.A. (BCBA:TXAR.BA), Aluar Aluminio Argentino S.A.I.C. (BCBA:ALUA.BA), and Grupo Financiero Galicia S.A. (NASDAQ:GGAL).
