This document reviews the conditions for innovation in Latin America and the Caribbean and tackles the question of how innovation and technology can contribute to creating increased prosperity in these countries. The document is a contribution from the Inter-American Development Bank (IDB) to the process of policy dialogue and identification of priorities to boost cooperation in science, technology and innovation between the European Union (EU) and Latin America and the Caribbean. Europe has historically played a major role in the development of science, technology and higher learning in Latin America and the Caribbean. The aim of this document is to serve as the basis for a discussion of expanded opportunities for collaboration between the two regions.