Transcript THE ROLE OF THE STATE IN NATIONAL SYSTEMS OF INNOVATION Brazil

THE ROLE OF THE STATE IN
NATIONAL SYSTEMS OF
INNOVATION
Brazil
José Luis Gordon
Priscila Koeller
KOELLER, P.; GORDON, J. (2009).The Role of the State in National
Systems of Innovation - Brazil. RICS Project. IE/UFRJ.
International Seminar on
Innovation and Development under Globalization:
BRICS Experience
Trivandrum, 19-21 August 2009
Introduction
 The analysis on the role of the State in the Brazilian System of Innovation is
based on a broad definition of National System of Innovation
 A clear perspective of the implicit and explicit innovation policies
 Innovation policy: conjunction of scientific and technological policy with the
industrial policy
 The adoption of the broad concept leads to the discussion on the connection
between innovation policy and development policy
 This articulation is still more relevant in a context of underdevelopment, marked
by structural (productive and social) heterogeneity
 The main specificities of the Brazilian innovation system are its structural
(and innovative) heterogeneities, which are also reflected in the outstanding
regional disparities
Development
 Development process can be described by three characteristics:
First: changes in the social and economic structure
Second: a systemic process
Third: country specificity of the process
 Latin American Structuralist School:
- The development process is not seen as a movement of convergence of
underdeveloped economies towards developed ones
- The elaboration of specific policies, aimed at breaking the logic that
reproduces underdevelopment, comprises the role of the State. There is
the requirement of thinking innovation policy as integrated to development
policy, once innovation is recognized as the motor of economic growth.
Evolution of the form of the State
 After World War II:
1940: Vale
1950´s: Petrobrás, CNPq, CAPES, BNDES
1960´s: EMBRAER, FINEP
 In the decade of 1990, the market assumes the leadership of the accumulation
process and the State ‘withdraws’ from the economic environment  Neoliberal  privatization of Vale and EMBRAER
 The innovation policy returned to the consideration of the federal government
in 1999, being then restricted to the Ministry of Science and Technology
- 1999: Sectoral Funds:
- 1999 – 2006: Sectoral Funds, equalization of interest rates and economic
subvention to firms.
Ministry of Development, Industry and
Foreign Trade - MDIC
 Since the government of the period 2003-2006, MDIC gained
room as promoter of the national development.
 Industrial, Technological and Foreign Trade Policy (PITCE –
2003-2007) and the Policy for Production Development (PDP –
2007-2010)  main manager
 Some actions and programs among those implemented by MDIC
are directly addressed to innovation
The National Bank for Social and Economic
Development (BNDES)
 The National Bank for Social and Economic Development
(BNDES) is one of the major institutions in Latin America for
financing investment in production. After 2003, Innovation is
seen as a strategic priority for the concession of financing.
 Innovation and development policies have an important role
Ministry of Science and Technology
 The Ministry of Science and Technology was created in 1985, as an
acknowledgement of the relevance of this issue for the country. It is
currently the main agent of the Federal Government responsible for
implementation of the explicit innovation policy
 The Ministry has a significant participation in the innovation policies –
PITCE and PDP
 Lei do Bem (Law of the Goods) and Lei da Inovação (Law of Innovation)
have the purpose of establishing new mechanisms of financing, such as
economic subventions and interest equalization, as well as of restructuring
fiscal incentives for R&D and for innovation.
Ministry of Science and Technology
The Innovation Law (Law nº10.973) was sanctioned in 2004 and regulated in
October of 2005
- three pillars: the constitution of an environment appropriate to the
establishment of partnership relations between universities, technology
institutes and enterprises; the incentive to the participation of institutes of
science and technology in the innovation process; and the direct incentive to
innovation within the firms
 The Law of the “Goodwill” is a mechanism for boosting innovation, which
seeks to benefit, by means of fiscal incentives, those firms that fulfill
Research and Development activities.
- the debate about the actual capacity of such mechanism for changing the long
term strategies of the agents in the production sector
- the incentives are specifically addressed to firms that perform technological
research and development of technological innovation, thus restricting the
concept of innovation.
Studies and Projects Funding Agency FINEP
 The Sectoral Funds (16 funds), whose resources are allocated to
the financing of innovation and of S&T development  their
principles to promote cooperation and the establishment of
partnerships between companies and scientific and technological
institutions (STIs) (universities, institutes etc.).
 The economic subvention was launched by FINEP in 2006 and is
granted directly to the company. The resources available through
this mechanism are not reimbursable and are granted through
public bids.
Explicit Policies - PITCE
 The Federal Government launches in November of 2003 the Industrial,
Technological and Foreign Trade Policy (PITCE)
 The merit of the government in restoring the importance of the innovation
policy is undeniable
 Some of the criticisms made to the implementation of this policy:
1- Regard to the difficulties faced for defining its guidelines, besides the
coordination problems that hindered its implementation
2- Didn´t establish specific goals and measures
Explicit Policies - PITCE
 The actions of PITCE were structured according to three axes:
 1) Horizontal action lines
a. Innovation and technological development
b. International insertion
c. Industrial modernization
d. Production capacity and scale
e. Strategic options
 2) Strategic options
a. Semiconductors
b. Software
c. Capital goods
d. Pharmaceuticals and medicines
 3) Activities with future perspectives
a. Biotechnology
b. Nanotechnology
c. Biomass / renewable energies
Explicit Policies - PDP
 The government of the period 2007-2010 instituted, in May of 2008, the Policy
of Production Development (PDP – Política de Desenvolvimento Produtivo):
 The main goals are:
1-Expansion of fixed Investment
2- Rise of the private expenditures in R&D: PRIVATE R&D /GDP – Goal for
2010: 0,65% (R$ 18,2 billion). Situation in 2005: 0,51% or R$ 11,9 billion.
Average annual growth of 9,8% between 2007-2010.
3- Expansion of exports
4-Dynamization of MSEs: NUMBER OF EXPORTER MSEs – Goal for 2010:
increase in 10% the number of exporter MSEs. Situation in 2006: 11.792
enterprises
Explicit Policies - PDP
 25 strategic sectors
 Furthermore, indicators for measuring the policy progress by priority sector
or area, with definition of goals, were identified, what represents an advance
regarding PITCE that did not set any goal.
 A more meticulous analysis of goals and challenges raises some doubts
regarding the criteria that guided their definition: whether they were based
on international parameters; whether the background of priority sectors and
areas was considered (and, in this case, once for a long time there were no
specific policies, if adjustments were made accordingly to expected impacts by
means of a coordinated use of policy instruments); and whether analyzes were
carried out about the needs and the impacts of the advancement of these sectors
and areas on the National Innovation System; or on the integration of these
goals with the country’s development strategy
Implicit Policies - macroeconomic
 Implicit Policies have a significant relevance either as obstacles or as
opportunities for the development and the evolution of the NSI.
 The macroeconomic policy (2003-2006 and 2007-2010) became an
obstacle to the implementation of the innovation policy, once it assumed
the characteristics of what called a malign macroeconomic regime.
 The reason is that the high interest rates discourage investments,
imposing negative effects also on the investments in innovation activities.
 Furthermore, the regime of fluctuating exchange rates has occasionally
over appreciated exchange rates, stimulating imports to the detriment of
the domestic production sector.
 The restrictive fiscal policy has significantly reduced investments by the federal
government, thus hindering investments with infrastructure, became bottlenecks
to production. This policy reduced the budget available to ministries for
policies implementation, by allocating the resources as contingency reserves, thus
affecting even the budgets aimed at the innovation policy.
Implicit Policies - social
From 2004 and 2005, the domestic market begins to get stronger,
mainly because of the social development policy established by the
government, whose main program has been “Bolsa Familia” (Poor
Family Support Pension).
- Evolution of the social grants in Brazil: In 2000 (18,7 Million Grants/
Families) in 2007 (35,7 Million Grants/ Families  11 Million Grants/
Families in Bolsa Familia Program)
- Was specifically addressed to the Brazilian social context, characterized
by deep income inequalities
- These policies can be regarded as opportunities for producing the
required changes in the productive structure, if they are integrated to a
policy of social and economic development  very important role in the
formation of the Brazilian system of innovation
Conclusions
 The role of the State in the Brazilian Innovation System historically was
crucial for the formation of a scientific and technological infrastructure
as well as for the industrialization of the country.
 The main problem since 2000 was to design a Innovation Policy to
actually induce the innovation at the productive system. Some points
characterized the innovation policy during this period:
1- a bias towards technological innovation, prioritizing the mechanisms for
support to research and development, to the detriment of other important
innovative activities – thus ignoring (or neglecting) the heterogeneity of
the production structure, which entails distinct levels of capacity;
2- a focus on the relations of partnership between enterprises and scientific
and technological institutions, what makes difficult the integration of the
other agents participating in the innovation process.
3- implementing forms still based on a linear model of innovation.