Innovation Policies in Brazil: Macro-institutional aspects and International Strategies
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1 Innovation Policies in Brazil: Macro-institutional aspects and International Strategies Ricardo Camargo Mendes Washington DC June 2007
2 Introduction 1. Innovation Policies PITCE Other Measures and Institutions 2. Macro-institutional aspects 3. International strategies 4. Conclusions
3 1. Innovation Policies Competitive Advantages and Disadvantages: Challenges for Innovation in Brazil Advantages: Local scientific base Installed industrial capacity Market Dimension Purchasing power of the state Telecom Infra-structure MNCs Biodiversity Innovation Law Disadvantages: Low quality basic education Distance between scientists interests and market demands Scarce R&D investments Limited capacity for commercializing innovation Macro-institutional aspects International strategies Challenges: Building a local innovative capacity More private investments in R&D Strengthening networks between public and private institutions Macro-institutional aspects that eliminates barriers for innovation International strategies aligned with Innovation priorities
4 1. Innovation Policies Industrial, Technological and Foreign Trade Policy (PITCE) Implemented since 2004 Set of articulated measures and institutions to strengthen and improve Brazil s industrial base improvement of innovative capacity of companies Target international competitiveness levels (international insertion) Breaks the dichotomy between sectoral and horizontal policies Includes services Articulation between promotion institutions and private companies Priority given to sectors and potential sectors No distinction among state-owned, domestic and multinational companies
5 1. Innovation Policies Focus Innovation and technology development International insertion Industrial modernization Institutional climate/ increase of productive capacity Coordination: Brazilian Agency for Industrial Development (ABDI) Priority Sectors Pharmaceutical chain Software/ IT Capital goods Semiconductors Potential Areas Biotechnology Nanotechnology Biomass/ reneawable energies
6 1. Innovation Policies Other Measures and Institutions Measure/ Institution Innovation Law BNDES FINEP/ Sectoral Funds APEX SEBRAE Goverment Procurements Petrobrás/ Eletrobrás/ Bank of Brazil CNPQ/ FAPESP and similar Centers like Embrapa, ITA, etc. Objectives Applied innovation Development, export promotion and innovation Innovation Export Promotion Support to small and medium companies Promotion of domestic companies Promotion of productive chain Scientific research Applied research
7 2. Macro-institutional aspects Several Agencies in the Federal Government are Responsible for Innovation Policies Ministry of Development, Industry and Trade Apex, INPI, BNDES Ministry of Science and Technology FINEP, CNPQ, Sectoral Funds Ministry of Health Fiocruz Ministry of Agriculture Embrapa Ministry of Education CAPES State-owned companies Petrobrás ABDI s role still very limited Often lack of coordinated actions and definition of clear and factible goals
8 2. Macro-institutional aspects Innovation Policies Often Hindered by Domestic Business Climate and Institutions (examples) Contradictory policies Prior consent procedures for bio-research Backlog for patent applications Distance between academic research and industry Inefficient allocation of resources Tax burden Insufficient and uncoordinated funds for innovation Infant venture capital market Qualified labor programs not focused on innovation Labor costs for research intensive activities Regulatory framework not consolidated Lack of standards and transparency in agencies Unstable legislation
9 3. International Strategies Brazil s International Strategies are not Aligned with Innovation Priorities Trade policy agendas focused on market access for agriculture and tariff protection for industry technology transfer, harmonization of standards, trade in services, protection of property (investments and IP secondary No specific policies to increment investments by MNCs present in the market Strong opposition to international IP regimes Inexistence of an investment attraction agency Scientists and innovative companies do not participate in the policymaking of Brazil s international strategies
10 3. International Strategies Possible Legal, Political and Enforcement Divergences between US FTAs and the Brazil s Legislation Issue Impact for Investments Divergences Trademarks High Enforcement and procedures Geo. Indicators Low - Internet Domains Low - Copyrights and related High Enforcement and procedures Encrypted Program Carrying Satellite Signals Low - Patents High Ideological, legal (partial) and enforcement and procedure Industrial Secrecy High Enforcement and procedures Elaboration: Prospectiva Consulting
11 3. International Strategies Brazil and India Bound Commitments and Doha Round Offers: Distribution of Types of Positioning Brazil Mode 1 Market Access India Mode 1 Market Access 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% Brazil - Commitments Brazil - Doha Round Offer 0% India - Commitments India - Doha Round Offer None Restricted Unbound No position None Restricted Unbound No position Elaboration: Prospectiva Consulting
12 4. Conclusions Brazilian Innovation Policies are Often Overshadowed by Internal Coherence among Different Agencies and Programs More Asserted International Strategies are Necessary to Promote International Insertion of Brazil s Innovative Activities and Attract FDI in Innovation. A Much Broader and Coordinated Plan Must be Implemented for Brazil s Innovation Potential to be Transformed into Economic Resources. Innovative Companies Must Play a Key Role in this Process.
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