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Enhancing Productivity through Innovation Policies in Brazil

Explore the impact of innovation policies on productivity growth in Brazil and key recommendations for policy reforms to boost competitiveness. Learn about funding, diversification, and infrastructure improvements vital for fostering innovation in the Brazilian economy.

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Enhancing Productivity through Innovation Policies in Brazil

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  1. Innovation for productivitygrowth Fernanda De Negri Director Division of Production and Innovations Studies – DISET Institute for Applied Economic Research – IPEA

  2. Productivity in Brazil

  3. Productivity estimates in Brazil: annual growth rates, several periods. Source: De Negri and Cavalcante (chapter1) in De Negri, F. e Cavalcante. L.R.M.T. (2014) Produtividade no Brasil: desempenho e determinantes

  4. Labor productivity: annualgrowth rates (2000 to 2009)

  5. Labor productivity: the distance between Brazil and other countries Miguez e Moraes (chapter 7) in De Negri, F. e Cavalcante. L.R.M.T. (2014) Produtividade no Brasil: desempenho e determinantes. Basedonthe World Input-Output Database (WIOD)

  6. The main causes oflowproductivity are relatedto: • Technology andInnovation, butalsoto: • Infrastructure • Education (alsoaffectinnovation) • Competition (alsoaffectinnovation) • Business environment (alsoaffectinnovation)

  7. Innovation Policies in brazil • The percentage of firms that have declared getting governmental support to innovate increased from 19% in 2003 to 34% in 2011 • Most of public support (75%) is related to machinery financing programs • The percentage of firms benefited from specific innovation instruments increased from 4,6% to 8,6% of innovative firms between 2003 and 2011

  8. Maininnovation policies in Brazil

  9. Tax breaks toinnovation: 2000 to 2013 (R$ bi)

  10. Credit for innovation: 2007-2014 (R$ bi)

  11. FNDCT’s budget: 2000-12 Demanddriven: Only30% oftheresources are used in projectswithcompanies No focus

  12. Some ideas for debate POLICY RECOMENDATIONS

  13. 1. Increasemissionoriented S&T spending Public S&T spending in Brazil is not mission-oriented Only 30% of S&T investments are attached to institutions with problem-solving missions More than 90% of S&T investments are mission-oriented

  14. 2. ReformulatetheProcurement Law includingthepossibilityof R&D acquisition Thereis no clearregulationabouttheacquisitionof R&D bypublic sector in Brazil. • The BrazilianProcurement Law (Lei 8.666) doesn’tmention R&D acquisition. • The law establishes, since 2010, a margin of preference for products produced in Brazil (up to 20%) and for products with Brazilian technology (up to 25%) • There is no a special part devoted to R&D acquisition as there is in the American Federal Acquisition Regulation. • The Innovation Law (20th Article) prescribes that Brazilian government can hire a company to do R&D to develop new products and process. • However, this possibility has never been used up to now(difficulties of implementation?) • The Knowledge Platform Program (launched last year but not implemented) is a good example of using public procurement to foster innovation.

  15. 3. DiversifyBrazilian S&T system • The Brazilian S&T institutions are mainly public. It’snecessarytoallowandfacilitatetheoperationofprivateresearchinstitutions. • Reinforcedifferentmodelsofinstitutions, suchthesocalled Social Organizations (OS), that are Government-ownedandprivately-operatedinstitutions. • Create different ways in which the public sector can foster innovation, besides the existing ones (grants, credit and direct investment in public research institutions): i) R&D acquisition; ii) Venture capital and seed money funds; iii) Cooperation agreements and so on. • Create different models of public agencies to foster innovation: the recent creation of Embrapii (inspired in the Fraunhofer model) is a good example of institutional diversification. Others examples are necessary.

  16. 4. Improve Business environmenttoinnovation • Besides improving general business environment, allowing more competition and entrepreneurship, specific actions are needed: • Reduce bureaucracy associated with research and development. Examples: biological research; patent application mechanisms… • One important improvement was the Biodiversity Law (recently approved). • Reformulate and update the Innovation Law. Created in 2004, some articles have never been used. • Facilitate the ways for researchers and professors in public institutions to work for companies. • The S&T Code (now in NationalCongress) adress some ofthe legal problems.

  17. 5. Build a more open andcompetitiveeconomy • Brazilis a veryclosedeconomy. It’snecessary (notsufficientbutnecessary) to open theeconomyandtoimport more technologyandknowledge. • IncreasetheinternationalizationofBrazilian Science (the “Science withoutborders” programis a goodiniciative) • Facilitateimportsofresearchequipmentsand inputs • Increasethepresenceofforeignreserachers in BrazilianInstitutions.

  18. 6. Invest in big scienceandresearchinfraestructure • Brazil needs scale up it’s research infrastructure • Create new, big and mission oriented research institutions • The size of Brazilian research laboratories is not enough to make a competitive science. 7. Improve monitoringandevaluationindicators

  19. fernanda.denegri@ipea.gov.br Thankyou!

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