Demand-side Innovation
Policies in Brazil
Fernanda De Negri
Director
Division of Production and Innovations Studies – DISET
Institute for Applied Economic Research – IPEA
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
Public support for innovation
1 219 8 1 036
34
141
594
6
383
11
193
11 760
160
11 185
17
398
3 64272
3 07122
477
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Total Extractive
Industries
Manufacturing Electricity and
Gas
Services
Other support programs
Financing of Machinery and equipment to
innovate
Financing of R&D with colaboration with
universities
Financing of R&D without colaboration with
universities
Economic Subsidy
Informatics Tax Incentive
R&D Tax Incentive
Main innovation policies in BrazilInnovation and S&T policies and instruments (main sources of funding to S&T
in Brazil)
Value in 2012
(current Reais – mi)
Tax Breaks
Tax exemption created for companies who
invest in R&D, created by Law Nº
11,196/2005 (“Lei do Bem”) 1,476.8
Tax exemption for companies in the ICT
sector, created by Law Nº 8.248/1991 and
Nº 10.176/2001 (“Lei de Informática”) 4,482.2
Other tax breaks 464.0
TOTAL (tax breaks) 6,423.0
Subsidized credit for innovation
(disbursements)
Total volume operated by FINEP 1,800.0
Total volume operated by BNDES 2,200.0
TOTAL (credit) 4,000.0
S&T Public Investment
Subnational (State) investments 7,033.7
Central government (Federal) investments 18,387.9
TOTAL (excluding post grad expenditures) 25,421.6
TOTAL public S&T investment 40,045.0
Counterpart in R&D by companies in
regulated sectors (private compulsory
investment)
Electricity Regulatory Agency (ANEEL) R&D
program (approximate values) ~ 300.0
The National Petroleum Agency (ANP)
R&D program 1,226.7
TOTAL 1,526.7
Credit for innovation: 2007-2014
(R$ bi)
,5724 ,8272
1,6740 1,4582
1,9691
2,7328
6,1984
8,7031
,4064 ,7399
,8845 1,2181
1,7533 1,7651
2,5129
4,4638
0,6
1,4
1,7
2,2
3,3
-
1,00
2,00
3,00
4,00
5,00
6,00
7,00
8,00
9,00
10,00
2007 2008 2009 2010 2011 2012 2013 2014
FINEP contracts FINEP disbursements
BNDES disbursements
S&T Federal Investment MINISTRIES R$ MILLION %
TOTAL FEDERAL BUDGET TO S&T 18.387,9 100%
Ministry of Science, Technology and Innovation
(MCTI) 6.640,2 36%
Ministry of Education (MEC) – mainly CAPES 3.479,9 19%
Ministry of Agriculture (MAPA) – mainly Embrapa 2.448,3 13%
Ministry of Health (MS) – mainly Fiocruz 2.072,3 11%
Ministry of Development, Industry and Foreign Trade
(INMETRO and INPI) 1.041,5 6%
Ministry of Planning (IBGE) 1.013,6 6%
MINISTRY OF SCIENCE, TECHNOLOGY AND INNOVATION – DETAILED BREAKDOWN
MCTI -TOTAL 6.640,2 36%
FNDCT (Sectoral Funds) 2.981,4 16%
National Counsel of Technological and Scientific
Development (CNPq) 1.515,9 8%
Headquarters and MCTI research institutions 1.265,5 7%
Space program (Brazilian Space Agency - AEB) 278,1 2%
Nuclear program (National Nuclear Energy
Commission - CNEN) 515,5 3%
FNDCT’s budget: 2000-12
,17630
,37210 ,33360
,62840 ,62850
,78490
1,09510
1,51800
1,98610
2,35700
3,10560
2,77410
2,98140
0
0,5
1
1,5
2
2,5
3
3,5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
FNDCT’s breakdown
RS MI
Total FNDCT 3.056,1
Support to research and development in
Universities and Research Institutions 2.004,9
Scholarships (Science without Borders Program) 307,6
S&T infrastructure 367,0
Equalization 308,3
Grants to firms 345,0
Support to MCTI research institutions 320,1
Other actions 77,8
FNDCT’s evaluation
Only 30% of the resources are used in projects with companies: the program is notdemand driven
There is no focus on concrete results: thepublic notices (official announcement) are mostly generic
The objective of the program is to fosterS&T in general
There is no integration with public procurement
There is a positive impact on the firm’s R&D investment: additionality effect.
Public S&T spending in Brazil is not mission-oriented
Obstacles
MINISTRIES %
Ministry of Science, Technology and
Innovation (MCTI) 36%
Ministry of Education (MEC) 19%
Ministry of Agriculture (MAPA) 13%
Ministry of Health (MS) 11%
Ministry of Development, Industry
and Foreign Trade (INMETRO and
INPI) 6%
Ministry of Planning (IBGE) 6%
DEPARTAMENTS %
Department of Defense (DoD) 49%
Department of Health (DHHS) 23%
Departmente of Energy (DOE) 8%
NASA 9%
National Science Foundation (NSF) 4%
Departament of Agriculture (USDA) 2%
Others 5%
Only 30% of S&T investments are
attached to institutions with
problem-solving missions
More than 90% of S&T investments
are mission-oriented
The Brazilian Procurement Law (Lei 8.666) doesn’t mention 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?)
Obstacles
There is no clear regulation about the acquisition of R&D by
public sector in Brazil.
Recent advances
National Knowledge Platform Program
• Program created by Presidential Decree 8.269 / 2014,
using the article 20 of the Innovation Law.
• Public-private partnerships that articulate research
institutes and enterprises.
• Platforms are problem solving oriented and driven by
the country’s STI strategic demands
• Up to now, no platform was launched.
Recent advances
The development of the KC 390
by the EMBRAER was contracted
by Brazilian Air Force
The bidding was not necessary
(following public procurement
law)
This was possible only because
EMBRAER is the only aircraft
manufacturer in Brazil.
In other sectors, such contract
would not be possible.
The development of the KC 390
Recent advances
The production of a drug used by the Brazilian Public
Health Care system is contracted from a Public
Research Institution.
This institution will make a partnership with private
sector to develop and produce the drugs
It’s foreseen in Public Procurement Law that a
research institution has preference in a public bidding
Therefore, this is a mechanism that allows a limited
participation of the private sector.
The Productive Development Partnerships in Health