International Seminar onInnovation and Development under Globalization:BRICS Experience

Financial Innovation Discussion

Cristiane Garcez Trivandrum, 19 August 2009

NON-REIMBURSABLE ALLOCATION

VENTURE CAPITAL

FIXED INCOME / VENTURE CAPITAL

Closed-End Mutual Funds and Equity

Direct Equity

Criatec Program

TECHNOLOGICAL INNOVATION

FOCUS ON STRATEGY

FOCUS ON PROJECT

INNOVATIVE CAPITAL

FUNTEC Technology Fund

2009 Focus: Renewable energies, Environment, Health, Electronics, New Materials and Chemistry

PROSOFT, PROFARMA, PROTVD, PRO-Aeronautics and Pro-Engineering SECTORALS

BNDES CARD

For micro-, small and medium sized companies

Among the products are: Conformity certification and assessment, innovation, technological development and IP services

The BNDES Innovation Policy

Funding to Micro, Small and Medium-Sized Enterprises

51% growth in 2008 Number of operations grew 43% reaching 100,000 operations

The BNDES disbursements to Micro, Small and Medium-Sized enterprises in R$ billion

Source: BNDES

0

1

2

3

4

5

6

7

8

9

10

Micro/ small Average2007 2008

51% 40%

6.0

8.59.1

6.1

Local Production and innovation Systems

New way to look, think and formulate policies that include players as well as production and innovation activities

• with different dynamics and paths, from the most intensive in terms of knowledge to those that use internal or traditional knowledge

• with different sizes and functions, deriving from the primary, secondary and tertiary sectors, operating locally, nationally or internationally

Useful approach to boost the potential of policy efforts, redirecting them to the territory and to the interactions among stakeholders to encourage

• learning, innovation and competition processes

• solid fostering of local development

Local Production Systems and regional development as the BNDES’ priorities

1. Support to structuring projects and their surrounding areas, mainly in developing regions, in order to disseminate and foster development, by encouraging:

• Enhancement of Local Production Systems and adding value to goods and services locally produced; and

• Commitment of large and medium companies to locally-integrated socio-economic and institutional development

2. Support for state plans that emphasize integrated development of marginalized areas

3. Individual or collective support for Small and Medium-sized Enterprises

4. Support for federal programs, small production programs and collective low-income projects

The BNDES’ strategy towards Local Production Systems

Creation of the Office and Committee for Production and Innovation Systems and Regional Development in November 2007

Main Purposes

• Obtain sector insights and bring the BNDES’ operational areas together

• Contribute to incorporating a systemic vision and priority to regional development

• Propose new policies to support production systems, as well as regional and local development

7

The BNDES’ strategy towards Local Production Systems

Mapping and policies for Local Innovation and Production Systems (LIPSs)

Main Purposes• Consolidate knowledge on identification and mapping of Local

Production Systems in 22 Brazilian states (Redesist)

• Design and analyze balance of payments across the states

• Assess existing support policies and provide means to design and improve policies for LIPSs in Brazil

8

Main Remarks

Financing of industrial innovation in India - Sunil Mani

- Government targets on innovation are quite high

- “..the government targets the expenditure on S&T about 2% of GDP”

- Concentration

- “concentration in high and medium technology based industries”;

- “most of the research grants are addressed to public sector enterprises or individual researches”; and

- “Tax incentives are mainly significant for big firms and also has several limits government targets the expenditure on S&T about 2% of GDP”

9

Two Question Marks

Financing of industrial innovation in India - Sunil Mani

• How to use instruments available and new ones on a creative way to promote the innovation within a new, systemic and broader model?

• What is the relevance of local and territorial aspects in innovation and development financing?

10

Cristiane d´Avila GarcezOffice for Local Production and Innovation Sistems and Regional Development

cgarcez@bndes.gov.br

11

Annex

BNDES Performance

Areas of Activity

InnovationTo support investments promoting technological innovation and competitiveness.

InfrastructureAccess to electric energy, telecommunications, urban transport, water supply and sanitation, increasing the offer of services ahead of demand to avoid harm to economic growth.

Productive structureTo increase industry production capacity. To make industry and service sectors more effective. To prioritize small and medium-sized companies. To support international business of Brazilian companies.

Exports To promote external sales and reduce imports. Technological investments to increase content value of consumer goods. Preferential trade relations with Mercosur and other South-American neighbors.

Social inclusionConditions and stimuli to intensify social benefits are established for the concession of BNDES credit.

Clients

The BNDES’ clients are:

1) Private individuals, domiciled and residing in Brazil;

2) Legal entities under Brazilian law (national or foreign control), established with head office and administration in Brazil;

3) Direct and Indirect Public Administration in the Federal, State, Municipal and Federal District areas. 

The financial support lines and programs offered by the BNDES serve the investment needs of companies of any size and sector that have been set up in the country. Partnerships with financial institutions that have agencies established around the country facilitate the dissemination of credit, enabling micro, small, medium-sized enterprises access to the BNDES’ resources.

Financing of

• Complete business projects

• Machinery and equipment

• Export of goods and services

Equity Investment

• Stocks and debentures

• Venture Capital

• Seed Capital Funds

• Private Equity Funds

Main Credit Lines

BNDES approvals and disbursements

Source: BNDES

27,125,2

41,1 37,4 40,433,5

37,9 39,8

54,547,0

74,3

51,3

98,8

64,9

121,4

92,2

118,8

92,2

0

20

40

60

80

100

120

140

2001 2002 2003 2004 2005 2006 2007 2008 2009*

Approvals

Disbursements

R$ Bilhões

*accumulated in 12 months up to May

Disbursements to industry (R$ 37 bn) and infrastructure (R$ 35 bn) had a 17% and 10% growth, respectively, over the amount accrued in 12 months up to May 2009 – part of a anti-cyclical policy

1 R$ = US$ 1.85