The Challenge of Innovation in Brazil: Innovation Strategies in Seven Countries

**To read the special report for this event, please click on the cover image to the left or scroll down to the report link at the bottom of the page.**

For countries seeking to build a dynamic, highly-competitive economy capable of sustainable, long-term growth, innovation—or the capacity to transform knowledge into new products and methods of production and service—has become the engine for national strategies of development. Seven of the world's most notably innovative countries—United States, Canada, Ireland, France, United Kingdom, Finland and Japan—have recognized knowledge as a key element for improving productivity and competitiveness, as well as advancing social and economic development. Understanding how these countries have succeeded in applying policies, adapting institutions, and using economic incentives and instruments to construct knowledge-based economies was the purpose of an in-depth, ten-month research project, Mobilização Brasileira para a Inovação (Mobit – Brazilian Innovation Mobilization). Intended to translate statistics into discernable trends, identify patterns in the national innovation strategies of these seven countries, and establish guidelines of action for the Brazilian government, the Mobit project was the focus of a recent seminar coordinated by the Brazil Institute and Prospectiva International in conjunction with the Brazilian Agency for Industrial Development (ABDI).

Hosted and co-sponsored by the Institute for Advanced Studies (IEA) of the University of São Paulo on April 25, 2008, the conference featured a keynote address by the General Coordinator of the Mobit study and the Observatory for Innovation and Competitiveness, Glauco Arbix. A group of leading Brazilian researchers, economists, and public officials joined the discussion to debate the findings of the Mobit final report and analyze its implications for Brazil's national innovation system. Paulo Sotero, director of the Brazil Institute, and César Ades, director of the IEA, provided introductory remarks. Participants, including Carlos Henrique de Brito Cruz, scientific director of the São Paulo State Research Foundation (FAPESP), noted that while Brazil's innovation performance is fast improving—leading in deep-water oil exploration technology and in the production and use of renewable fuels—it is far from entering the ranks of top international innovators. The full report synthesizes the findings of the Mobit study and the proceedings from the seminar.

The analysis of innovation systems in the Mobit study assessed how the Brazilian government can best proceed and promote innovation in the country. Of the instruments available to the Brazilian government, Arbix cited four that may be most effective in spurring innovation: first, building and promoting a National Fund, whose purpose would be to sponsor innovation and establish a system of support for private enterprises, especially in the "pre-project" phase; second, utilizing this system of pre-project support to help nascent firms perform self-assessments and identify weaknesses and opportunities; third, using the National Fund to stimulate investment in new products and enterprises through the creation of venture capital funds; fourth, designing a plan to apply the government's purchasing power to generate innovation. Ultimately, Arbix argued that the challenge of innovation in Brazil is not due to a lack of resources or entrepreneurial capacity, but rather in making all of the disparate government, university and business efforts combine to produce tangible products, services and processes.

Mirra noted that the present global scenario is such that Brazil is at once being pressured "from above" by highly competitive and innovative producers and also "from below" by various producers competing with lower costs (primarily of inputs, such as labor). Brito Cruz observed that Brazil, with average innovation spending equal to 1 percent of GDP compared to an OECD average of 2.2 percent, needs a more pronounced investment base (closer to the OECD average). Moreover, the country must focus on lowering the cost and risk of investment, especially by external financiers. Salerno emphasized the need for Brazil to expand its international efforts to publicize its advances along the lines of India's software industry. Kupfer offered a more pessimistic analysis of Brazil's innovation challenges, stating that the issue of innovation must still contend for space on the national agenda with other, "more pressing matters concerning our underdevelopment." He claimed that because Brazilian innovators suffer from isolation and disconnect within the domestic sphere, there is no critical mass to spur true innovation and, perhaps more importantly, no consumer market for innovative products in Brazil. According to Kupfer, this critical mass will only take shape at a future development stage, after Brazil has overcome its underdevelopment problems and has restructured its market to support innovative design and reach the levels of competence and capacity necessary to compete in the global market.