Brazil has a lot in common with other developed countries: a huge territory, a variety of climatic and natural zones, multinationalism and mixing of different ethnic groups, the history of the development of new lands, leading regions and donor regions – and a multimillion population, which is unevenly distributed among them. Of the BRICS countries, we are probably the closest mentality to each other, despite the distance between us about 15 thousand kilometers.
Our countries’ tasks and challenges are similar in the development of innovations, science, education, and increasing global competitiveness. For example, like Russian universities, Brazilian universities are faced with entering the rankings of the 100-200 best universities in the world.
Universities and companies should forge partnerships expected to result in more small innovative businesses, patents, licenses, and in-demand services and products. Our countries are also similar in that, on the one hand, we have a significant amount of money for innovation, on the other hand, there are not enough quality teams to implement innovative technological ideas, there is no variety of start-ups; there are difficulties in the interaction of participants in the innovation ecosystem, venture businesses.
Country structure and what it means for the economy and innovation
In Brazil, five macro-regions are distinguished – the South (unites three southern states, in the capitals of which – Florianopolis, Porto Alegre and Curitiba – people most want to live, in addition to Rio de Janeiro), South-East (4 states), Central West (5 states), Northeast (8 states) and North (5 states in the Amazon region).
The most economically developed are the Southern and Central macro-regions; they provide a larger GRP. The northern macro-regions are still subsidized. In the presidential elections held in October 2014, the regions were distributed precisely according to the economic principle: The South and the Center of the country voted for the business-oriented candidate Aesio Neves (48%), the north – for the socially-oriented Dilma Rousseff (she won by 3%) …
At the end of 2014, more than 203 million people live in Brazil (the population has grown by about 2 million compared to 2013). Most of the capitals of the Brazilian states are million-plus cities, or rather, agglomerations, with a population of 2 to 5 million people and all the challenges that come with it: insufficient infrastructure, traffic jams and, of course, favelas, which everyone has heard of.
Favelas are arbitrarily seized territories, often located on slopes of mountains or hills inconvenient for building. Still, close to the city center – they seem to cling to unpretentious land, like a flower, after which they are named.
Houses in favelas are wall-to-wall or even stacked on top of each other, usually without basic supply systems (water supply, sewerage). People settle there because this is an option to be in the center, where real estate is expensive, closer to jobs. It happens, the favelas are home to 300 thousand or more.
Favela residents are considered poor, but they often have housekeepers, women do manicures and use the services of hairdressers, and children go to school. Favelas have a higher crime rate than other parts of cities, which extends to the neighborhoods closest to them. A special favela resettlement program is currently underway – but it is progressing slowly.
Brazil’s “Golden Triangle” is formed by three cities – Sao Paulo (12 million inhabitants in the city and 20 million inhabitants in the metropolitan area), Rio de Janeiro (6.5 million and 12 million) and Belo Horizonte (2.5 million and 5.5 million). These are the capitals of three states that are part of the Central West macro-region, together they create about 55% of all Brazil’s GDP. There is an hour flight between these cities.
In general, Brazil is a country of aircraft and aviation: many airports, three of its airlines – TAM, Azul, Gol, operating local and international flights. The plane is perceived as a taxi; from São Paulo airport they take off every 5 minutes. Another way to get around the country is by road. There are a few railways.
The general attitude and attitude towards entrepreneurship and innovation
Brazilians feel and behave like representatives of a developed economy: confident, relaxed, defining the game’s rules, outwardly not even particularly competing with other countries.
Starting and running your own business is a typical topic of conversation in the family circle. But there are three episodes to which the public is wary: for example, the growth of a company to the level of big business, the building of an internationally oriented company, the development of technologically innovative companies. What are the reasons?
Companies’ development too big business is hampered by strong corruption; most of the corporate leaders have been or are in prison. Of course, people do not want such consequences, so they are afraid to scale their business.
The building of globally oriented companies is “hindered” by its large internal market. Usually, when it comes to the international market, Brazilians concentrate on what is closer – the countries of South and Latin America.
Of course, there are exceptions: thanks to her connections in the international fashion world, Gisele Büdchen develops Ipanema, a manufacturer of beach and sports shoes, which uses new types of rubber and constantly invests in design, snatching pieces of the market from another Brazilian company – the international giant – Havaianas. Or SEMCO introduces management innovation when people, including from production personnel, flexibly plan their work schedule. Or Brazilian banks with their digital technologies for all segments of the population, which is now being recommended by the World Bank.
The development of innovative and technology companies is hampered by the country’s lack of engineering personnel: there are not enough graduates of technical specialities. They are dismantled by companies already in the 3-4 year of university. An engineer in Brazil is a highly paid and scarce profession. Brazil annually allocates significant sums to attract engineers from different countries to their jobs.
Where are Brazilians already doing well in terms of innovation and technology? I will highlight four blocks:
- In interdisciplinary and cross-sectoral directions. For example, in bioengineering, medicine for beauty and health + products and services for this, plant research, agriculture, infection control, marine development and research, offshore research, banking. Brazilians integrate knowledge from different faculties, different universities (including from other states), several companies and several universities. For more than 15 years, they have been investing in developing solutions at the intersection of different disciplines, which has now begun to yield results.
- In the development of low-cost, scalable solutions and technologies for socially vulnerable segments of the population. The topic is relevant for Brazil. Helps quickly adopt these people to modern world technologies, “pull up” them on atypical issues (for example, a program to track their health status through cell phones). These innovations are supported at the government level – both legislatively and special programs of non-repayable financing for large sums ($ 30-60-100 million).
- In design and advertising, Brazilians have won numerous international competitions as one of the trendsetters of innovation.
- In the development of products and services that are comfortable for people (Embraer aircraft, Azul services, Marco polo buses). Brazilians strive to create solutions that integrate human care into technology.
Innovation support infrastructure, or Who gives money
Innovation in Brazil is supported at different levels: federal, state, company and diaspora levels.
At the same time, business is often put at the forefront of developing and assessing innovations. For example, the federal bank BNDES invests in innovation development across Brazil. But he is forbidden to give money directly to universities, and the money is received by a company that orders research in conjunction with the university. Similarly, with the evaluation of the results of projects: if the company, the customer of the development or research, is satisfied – this is a criterion for a positive assessment of the project at the government level.
The Lei do Bem law, which provides tax incentives for companies that conduct fundamental, applied research and hire international specialists for such work, greatly influences working with R&D and innovation.
Several states introduced mandatory tax deductions for industry R&D development several years ago. What does it look like? 1% of all companies’ taxes in oil and gas or medicine and health care necessarily go to research within the state on this topic. This money is taken from taxes paid by the company and is not assigned additionally.
According to the opinions of representatives of universities and heads of R&D organizations, such taxation has sharply increased the volume of funds for conducting systemic, long-term research. It has made it possible to touch upon completely different topics.
Every state has organizations that work with innovation. The states do not cooperate well with each other. Rather, they compete for the location of research and production centers on their territory, providing better co-financing for such projects, creating more highly skilled jobs, attracting advanced specialists and receiving modern equipment of the latest generations.
It is noteworthy that, first of all, we are not talking about reducing tax payments for corporations, but about co-financing R&D centers to increase the competitiveness of residents, and receive smart orders.
Brazil seeks to internationalize its innovation development programs and attract international business at large corporations and the start-up level. In this regard, the SEED Minas acceleration program is interesting, which is engaged in developing start-ups (manufacturing, biotechnological, ICT), not only from Brazil but also from other countries – without Brazilians’ participation. Over the past two years, the program has attracted 80 start-ups, of which one third are international (USA, India, Spain. Poland.
All start-ups receive funding for $ 35 thousand for the four months that the program is running and space for work and training. Start-ups automatically accept a two-year work visa, and in case of successful completion of the program, a life visa to work in Brazil.
More than 100 venture capitalists from different states of Brazil and even other countries came to the demo day in November 2014. The program is funded by the State Government and the State Research Support Fund.
“By attracting international start-ups, we bring an international spirit of innovation and quality standards to the city, state and country,” comments André Barranz, Program Manager for the Government of the State of Minas Gerais.
With the same goal – to feel the international spirit of innovation – Brazil holds international events in the field of technological development: in 2013, the International Conference of Science and Technology Parks was born in Recife (such a conference was won in 2016 by Moscow ), in the 2015 World Congress on robotics, at the 2018 ICAS International Aeronautics Conference.
Funding for innovation also comes directly from companies: metal giant Vale, oil company Petrobras (Brazilian Gazprom), aviation company Embraer, agricultural corporation Embrapa are creating laboratories, often bringing together several universities faculties to develop complex solutions.
For example, three São Paulo State Universities are involved in research in the Airplane Comfort Laboratory for the aircraft manufacturer Embraer.
Moreover, projects last for several years and unite different generations. A research laboratory on a company’s topic is an important format for teaching senior students; now, Brazilian companies are looking for professors to lead such processes.
Another source of funding for innovation is diasporas and communities: people who have come here from different countries want to contribute to Brazil’s development to make life better.
This approach is not just declared; it is practised by different diasporas and communities: Portuguese, Italians, Germans, Catholics and many others. Thus, the PUC group of universities, created and developed at the expense of Catholic organizations, invests in developing services for the disadvantaged.
They deliberately build universities in “disadvantaged” areas, and then develop solutions (this is how students undergo practical training in their speciality) and provide services to local residents, increasing the standard of living. Another example:
The Albert Einstein Treatment Center, funded by Jewish donations from the Jewish diaspora, works with start-ups in the medical field, finances research and then implements it. (This center is included in the list of the world’s best treatment centers, in addition, the two presidents of Brazil – Lula and Rousseff – chose it for the treatment of oncology; the presidents, by the way, have been cured, now in Brazil, cancer is perceived in society as curable.)
Education for innovation
The best in Brazil – the University of São Paulo (USP, the largest in Latin America – 95 thousand students, 20 thousand professors and teachers); UFMG University with the largest engineering school in Latin America and the largest number of licenses; University of Campinas – Unicamp – with the largest number of patents; the group of private Catholic universities PUC (it has the largest number of social innovations); IATA University (specializing in aeronautics). All universities try to make a social contribution to improving the lives of the territories where they are located – this is part of their philosophy.
Nevertheless, during the Opening of Innovative Brazil program, which we conducted in November 2014 together with RVC, the heads of the Dom Cabral business school (included in the ranking of 6 key business schools in the world, located in Belo Horizonte) were asked “What would they change in Brazil to develop innovation in the country?”, Without saying a word, answered: “Education.”
The change in education has several aspects: in Brazil, about 20% of the country’s inhabitants cannot read and write. Education is late and does not prepare young people for global competition for new sciences.
Yes, universities have their luminaries – people come to them to study, conduct research, and defend dissertations from different cities of Brazil and other countries. But the number of these leaders should be dramatically increased. As the Director of the Faculty of Business Partnerships at the Dom Cabral business school Carlos Arruda comments on Brazil and the global market. “
In addition, Brazilian education has a specific disadvantage that hinders the development of technological innovation. Engineers don’t know English – they don’t teach it to techies how they do not teach the creation and management of a technology business. Add to this the opportunity to get a guaranteed high-paying job from corporations (which we wrote about earlier) – here will be the answer why representatives of engineering specialities do not create their own companies.
Now Brazil is actively investing in the Science Without Borders program, according to which undergraduate students go to different countries. Having won the competition, they get the right to choose a country and three universities where they would like to study for a year in their speciality.
They are given a super-exclusive scholarship with unlimited access to all the world’s best courses. The program pays for everything, including travel, accommodation, good computers and equipment, clothing, and literature. After a year, students return to their Brazilian university to complete their studies, bringing with them knowledge, new experiences and connections.
Science is respected in Brazil. They are trying to develop both fundamental and applied research. Basic research is carried out, for example, by the USP.
Companies locate their R&D centers in cities where strong universities are located. For example, after finding that more than 50% of its engineers have graduated from UFMG, Embraer has located its Engineering Center in Minas Gerais and is now setting up a second.
A similar factor also guided the ThyssenKrupp corporation – the provision of staff with the necessary qualifications – by locating its global R&D center in Sao Paulo’s state between two cities – Sao Paulo and Campinas, close to two universities.
Obtaining patents and licenses for scientific results is difficult. There are Brazilian patents – focused on domestic use (most patents obtained in Brazil) and international.
For example, Professor Marcos Pinotti (UFMG, Adviser to the Office of the President of Brazil for Technological Development and Head of the American-Brazilian Program “Future of Engineering”), is the author of 56 patents, advocates an increase in the number of international patents to protect and promote products created in Brazil on global markets.
By the way, Brazilian universities receive royalties from the implementation of licenses developed by them – it is 1–2% during the entire period of use of the license. There are few such precedents in Brazil, but they do exist.
What should be considered when working with Brazilians in terms of scientific cooperation and joint research? The need to do everything in advance. As part of the fight against corruption, Brazil has adopted a series of protective laws and regulations. As a result of which the duration of obtaining confirmation of support or obtaining equipment, biomaterials for research have significantly increased.
They can take six months or even a year to receive equipment costing $ 400-500. These measures also imply an increased bureaucratic burden on professors and laboratory managers to oversee all activities. This turned out to be an overkill of good goals.
Corporations and small businesses
The key customers for innovation are corporations. The executors are universities. Small and medium-sized companies find it difficult to work with large ones directly due to Brazilian legislation; they have to act through universities.
On the one hand, this is not a bad thing – universities are developing and gaining access to new technologies and topics. On the other hand, it significantly increases the cost of solutions. Now Brazilians are actively discussing changes in this area.
Brazil focuses on creating its products, and the distribution of imports is limited, in particular, by the introduction of local standards in electrical engineering, aviation, etc. Many rules make it financially attractive for foreign companies to do business with Brazilians.
For example, when importing finished machine tools, the retail price on the domestic market is 50–70% higher than if only some of the components are imported into the country. Brazilian parts are added to it, and then the machine is assembled in Brazil. These are the conditions for foreign companies to enter a market with 200 million consumers. In the wake of creating their products, import substitution projects appear: somewhere successful, and somewhere not very successful – reinventing the wheel and using outdated technologies (for example, using computer programs in 2007 for a cardiological center and improving them on their own, instead of taking software last generations).