Innovations and Technological Development in Brazil

According to the report on the world competitiveness ranking Global Competitiveness Report 2010-2011, published in the World Economic Forum (2011) materials, Brazil is in 58th place among 139 countries.

However, in such a parameter as “innovation and development of the knowledge economy” (innovation and sophistication), it ranks 38th. At the same time, the country lags in such basic indicators as, for example, the level of development of health care and primary education (87th place in the world).

According to experts from the World Economic Forum, the number of its developments in Brazil slightly exceeds the number of licenses purchased (29th in the world in terms of technological independence and ability to innovate), 29th place in the country also in terms of “investment of private companies in R&D”, in terms of the quality of scientific -research institutions Brazil is in 42nd place, and in terms of provision of scientific and engineering personnel – at 68th.

Certain products and technologies designed and developed in Brazil are highly competitive and appreciated in other countries: cars, aircraft, software, fiber optics, electrical appliances, etc.

History of the formation of the NIS

The construction of the national innovation system in Brazil began in the context of the state’s industrialization policy. It took place in the context of relatively closed micro-and macroeconomic processes.

In the first half of the 20th century, the Brazilian economy has traditionally been completely dependent on imports of agricultural products and world prices for coffee, grain, etc. We can speak of any noticeable growth of our industry since the beginning of the policy of protectionism and import substitution, which was pursued by the governments of Getulio Vargas (1950-1954) and Juscelina Cubichek (1956-1960).

From this period until the beginning of the 1980s, Brazil’s industrial and trade policy’s essential features were formed. At each stage of building a national innovation system, the government determined priority sectors for the development of national industries protected by the state from foreign competition – through strict licensing procedures and the introduction of high tariffs on imports.

Another important element of Brazilian industrial policy is the regulation of foreign direct investment. Brazil has always been open to multinational companies. Still, their activities in the Brazilian market did not facilitate the transfer of new technologies to local firms but only helped carry out the import substitution policy.

Protecting its producer was costly for the Brazilian economy. The government found compensatory mechanisms – tax breaks, duty refunds and other direct subsidies to increase its exporters’ competitiveness in the global market. In 1972, a special state program BEFIEX began to operate, which allowed Brazilian exporting firms to import new equipment with exemption from any duties and fees.

At the initial stage of building the NIS (until the mid-1950s), government efforts were focused on creating a network of institutions involved in research, technological and industrial projects. In 1947, the Aerospace Research Center (CTA) was established, which played a significant role in developing Brazilian aircraft construction.

In 1951, the National Council for Scientific and Technological Research (CNPq) was formed, which originally promoted nuclear programs, and is an important institution for funding public research, especially in university research centers. Development Bank of Brazil is established in 1953, which today has a larger capital base than the World Bank and remains the main institution for long-term financing in Brazil.

After the military coup (1964-85), when the stagnation trends of the early 1960s were overcome, and the economy stabilized slightly, the government initiated several investment projects under the National Development Plans (1972-74 and 1974-79).

These projects focused on bottlenecks in infrastructure and some underlying industries. Special attention to issues of scientific and technological development was characteristic of the governments of the military dictatorship.

Within the Brazilian Development Bank, in 1964, two funds were created that directly and indirectly finance technological innovation. The FUNTEC Foundation has funded the training of personnel associated with the activities of university research centers.

The FINAME Foundation directed funds to the development of mechanical engineering and the improvement of industrial equipment. In 1965, The Financing Agency for Research and Projects (FINEP) is still an important state-owned enterprise for financing innovation processes.

In the 1970s, three Science and Technology Development Plans are being implemented. The first (1973-74) focused on increasing the financial base for supporting the development of technologies. The second (1975-1979) focused financial resources on developing new technologies in new energy sources, microelectronics, and the aerospace industry. The third plan was implemented in 1980-1985. – a period of stagnation and crisis, so all actions were aimed at reorienting horizontal ties between private and state structures.

1972 was also marked by creating an important institution for regulating the innovation sphere – the Secretariat of Industrial Technologies under the Ministry of Industry and Trade. The Secretariat dealt with protecting intellectual property (patents and trademarks), coordinated scientific and technological research programs, promoted the technological development of private and public companies, and regulated technology transfer.

Despite significant institutional shifts in support of science and technology development, good indicators of economic growth (GDP grew by about 7.5% per year from 1950 to 1980), Brazil lagged significantly behind the advanced industrial and some Asian countries R&D.

More than 60% of the funds for the development of technologies came from the state. The total amount of funding for the R&D sector was slightly above 0.6% of GDP, and the technological development itself took place only in a narrow circle of companies. At the same time, Brazil also lagged significantly behind in terms of investment in human resources.

In the 1980s, Brazil pursued a policy of protectionism in the field of information technology. Companies and officials were forced to use Brazilian software and hardware. This contributed to Brazilian IT companies’ growth; however, despite their development and some successful products (such as the MSX clone and SOX Unix), Brazilian computing consumers suffered from a smaller supply compared to foreign competitors. The government gradually increased imports until the barriers were lifted. Brazil The IT industry has made remarkable strides, especially in the software area.

A new stage in the development of NIS begins in 1990 – it was impetuses by economic reforms and trade liberalization – tariffs were significantly reduced, and foreign trade barriers were removed. From 1991 to the present day, a large-scale privatization program has been implemented.

Most of the state-owned enterprises were sold to local or foreign industrial groups. The program began with the sale of the huge USIMINAS steel plant (1991) and continued with intensive disposal of infrastructure, telecommunications and other businesses. By 2003, the total privatization proceeds were $ 27 billion. Economic reforms have boosted labor productivity – between 1990 and 1997; its annual growth was about 8%.

However, the problem of external debt and stabilization of the economy, the inevitable consequences of reforms, expressed in the fall of many economic indicators did not allow governments to focus on determining long-term strategies in the innovation sphere. In part, it can be argued that the positive dynamics of the previous decades has been lost.

Brazil’s accession to the WTO required modernization of legislation, including the legislation on protecting intellectual property was brought in line with international standards. Product quality standards had to be ISO certified. The Ministry of Science and Technology and the National Institute of Metrology and Industrial Quality (Inmetro) took an active part in introducing new standards. A special Quality and Productivity Program was adopted.

In the second half of the 1990s, Brazil is attempting to return to the practice of long-term planning. Under President Cardoso, two long-term development plans are adopted (1996-1999 and 2000-2003).

They did not pay much attention to the development of the innovation sphere. To a greater extent, they were devoted to balancing the budget, introducing new management and regional integration forms. However, even implementing these plans was hampered by the difficult economic situation, inflation processes, and a decrease in the tax base.

Only with the coming to power of President Luis Ignacio Lula da Silva, the government again returns to forming a long-term state policy in the field of science and technology development. The new industrial policy results from a long academic and political debate about development priorities, methods and efficiency.

In September 2003, several key departments issued a joint document (Retro para una Agenda de Desenvolvimento), which outlined three main priorities:

1. Improvement and development of infrastructure;

2. increasing the efficiency of production, especially for export goods;

3. Growing firms’ innovative potential, especially export-oriented. Indirectly, this document recognized the lagging behind the Brazilian national innovation system,

In 2005, President Luis Inacio Lula da Silva launched the People’s Computer program to promote digital technology’s widespread use through government and a fixed minimum configuration. As part of the program, they ditched the expensive Microsoft operating system, supplying free Linux with Brazilian settings. However, plans to create low-cost Internet access have not yet been crowned with success.

2006 is marked by the adoption of the so-called Law on Innovations. The law was intended to facilitate the transfer of technology from a research center to mass production. The Brazilian government would like to see innovation as a daily routine in enterprises.

The Brazilian Development Bank has opened a special program for financing entrepreneurs and enterprises that want to increase spending on R&D, introduce new productive business processes or new high-tech products.

However, according to experts, the government’s efforts to increase the country’s innovation potential are undermined by the harsh macroeconomic conditions, high-interest rates, strict tax policy and poor coordination of actions of the main participants in the innovation process.

At the end of January 2012, the Brazilian Ministry of Science, Technology and Innovation (MCTI) published a regulation on the National Strategy for Science, Technology and Innovation for 2012-2015. The strategy defines the priority programs for the development of the industry, the main problems, funding sources, and goals for the next four years. It is planned to allocate about 40 billion US dollars for the implementation of ENCTI. Of these, $ 16 billion will come from MCTI funds, $ 12 billion from other ministries and agencies, $ 7 billion from federal state companies and $ 5 billion from state funds managed local Foundations.

About Zahid Shaukat

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