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An emerging economy, Brazil has the world’s seventh largest economy. It weathered the global economic downturn well, but growth has slowed over the last two years. To boost economic performance, the Greater Brazil Plan 2011-14, adopted in 2011, gives innovation a central role and includes proposals for significant changes in legislative frameworks.
Hot Issues are major national STI policy priorities, as self-reported by countries in their responses to the OECD STIO 2014 policy questionnaire.
Innovating to contribute to structural adjustment and a new approach to growth
The National Strategy for Science,Technology and Innovation (ENCTI) 2012-15 aims to: i) close the technological gap with developed economies; ii) support Brazil’s leadership in areas of the knowledge economy that take advantage of the country’s rich natural resources, such as green innovation, agro-business and other natural-resource-based activities; iii) strengthen the internationalisation of the national research system; iv) foster the development of a green economy; and v) address the country’s substantial social and regional inequalities. To achieve these objectives, the government targets GERD of 1.8% of GDP in 2014, up from 1.16% in 2010. Compared to other major emerging economies, Brazil’s 2010 R&D intensity is second to China’s (1.76% of GDP), ahead of India’s (0.76%, 2007) and South Africa’s (0.76%), and well ahead of Chile’s (0.33%) and Mexico’s (0.45%) of the same year.
Encouraging innovation in firms and supporting entrepreneurship and SMEs
Brazil is home to a few of the world’s largest R&D-investing firms (Panel 1e). It is also at the forefront of high-technology fields such as deep-water oil extraction. This leadership in innovation, however, has not spilled over to the Brazilian economy; the country’s overall innovation performance on non-technological innovation such as trademark registration is very weak (Panel 1g). To address this challenge, the ENCTI aims to increase BERD from 0.56% of GDP in 2010 to 0.9% in 2014. Difficult framework conditions for innovation are also responsible for weak STI performance. The 2014 World Bank’s Ease of Doing Business Index ranks Brazil 114th out of a total of 189 countries, between China (96th) and India (136th).<br />
To promote business innovation, Brazil’s innovation policy has progressively shifted from a strong focus on support for science to stronger support for business R&D. Several changes have been made in the legislative framework: the Innovation Law (Lei da Inovação 2004), the Goodwill Law (Lei do Bem, 2005), and a 2007 modification of tax exemption rules to permit direct funding and to provide more incentives for businesses to engage in innovation. On 14 March 2013, the federal government launched the Innovate Company Plan (Plano Inova Empresa) to: raise the level of R&D in companies; encourage projects with greater technological risk; combine finance (credit) with non-refundable grants and equity financing; maximise the use of the state’s purchasing power; decentralise policy implementation to reach microenterprises and SMEs and reduce administrative bureaucracy. Between 2013 and 2014, it allocated USD 21.6 billion (BRL 32.9 billion) for companies’ investment in product and processes innovation.
Innovation to contribute to addressing social challenges (including inclusiveness)
Funding agencies provide support for developing low-cost, easy-to-use applications that address social challenges. For example, HABITARE, an initiative with a budget of USD 14 million (BRL 22 million) for 2009-10, supports innovations in housing technology including for social housing. The programmes and measures to support entrepreneurship and start-ups described above can also help make innovation more inclusive, and measures for higher school enrolment rates (see below) also aim to reduce social exclusion.
Brazil’s STI policy governance has not changed significantly in recent years. Developments are underway to increase the decentralisation of instruments and strengthen the co-ordination of federal, state and private resources for innovation in the process of programmes implementation. The National Council for Industrial Development was redesigned in August 2011 to improve co-ordination and involvement of stakeholders. Ministries, the president of the National Bank for Economic and Social Development (BNDES), private businesses, and industry and labour union representatives participate in the Council.
Brazil’s STI strategy seeks to strengthen its comparative advantage in the “green” econ-omy. In environmental technologies, Brazil has an RTA above the BRIICS average, but below the OECD median; In bio- and nano-technologies, Brazil displays an advantage with respect to both the OECD and the EU28 (Panel 2). Support programmes include sectoral funds (CT-Energy, CT-Petro). In February 2012, a new Climate Fund under BNDES was announced to finance projects that help reduce greenhouse gas emissions.
Brazil has relatively few universities among the world’s top 500 (Panel 1b). Performance, measured by science and engineering publications in top-quartile scientific journals (Panel 1c) is weak by OECD standards, although Brazilian S&E articles increased on average by 6.4% a year between 2001 and 2011, according to the US National Science Foundation. The increase was, however, less than that of other major emerging economies: China (15.6%) but also India (7.6%).
Many Brazilian SMEs innovate little. Several government initiatives therefore support start-ups and provide funding support mainly in the form of grants. For example, PRIME, the Primeira Empresa Inovadora programme, supported 1 381 enterprises with USD 104 million (BRL 166 million) between 2009 and 2011. As part of the decentralisation of financing for microenterprises and SMEs, the Brazilian Innovation Agency’s (FINEP) Inovacred programme, established in September 2012, aims to improve funding support by decentralising financing operations through development banks, public research promotion agencies and state commercial banks. From 2012 to 2018, the programme plans to certify 20 financial agents and to fund approximately 2 000 firms with a total of USD 788 million (BRL 1.2 billion). In addition, the Pró-Inova programme, introduced in 2005, encourages business innovation and entrepreneurship by diffusing information about the available tools, facilities and mechanisms.
The government has strongly emphasised supporting the commercialisation of technological innovations. On 10 July 2013, FINEP issued a new USD 420 million (BRL 640 million) call to support incubators and technological parks as well as their resident companies. Public support will be provided to incubators and technological parks through loans to and equity investments in the resident companies as well as to firms having graduated in less than two years. Brazil also has several programmes to encourage cross-sector mobility of researchers (e.g. PAPPE, the Programme for Support of Research in Enterprise, and SEBRAE, the Brazilian Support Service for Small Enterprises) to facilitate knowledge flows between universities and PRIs and the business sector.
Human capital is a major innovation system bottleneck in Brazil. The share of the adult population with tertiary education is very small (Panel 1t). The education system needs improvement, and the performance of 15-year-olds in science is very poor (Panel 1v), although there were marked improvements in the OECD Pisa scores over 2003-12. Efforts have been made to increase the quality of education at all levels, including the introduction of entrance examinations for teachers. To support higher enrolment rates, funding for basic and professional education has increased and conditions for student loans have eased.