the outcome of brazilian innovation sistem, and how has it change over time

7/23/2019 the outcome of brazilian innovation sistem, and how has it change over time

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Master programme in Economic Growth, Innovation and Spatial Dynamics

What is the outcome of Brazilian innovationsystem development over time and what are

the next steps?

Eduardo H. Ubiali Leiteei!"eub#student.lund.se

Abstract: This paper will provide diferent analysis over the Brazilian innovationsystem, on how it has developed over time, which are the key eatures in the systemand what are the next steps in development. In order to better explain the evolutionand to evaluate the system, the author will provide systematic, unctional, economic,historic and international analysis, based o rameworks proposed by academics inthe innovation systems eld to create a complete and direct evaluation.

Key words: Economic growth, innovation system, innovation policy.

E$H%&!

Master thesis (15 credits ECTS)

August 2014

Supervisor: Firstnae Fai!"nae

E#ainer: Firstnae Fai!"nae



'c(nowledements

$t is iportant to than% " &ai!" and pro&essors' ho adepossi!e the e#perience in such an iportant institution as*und +niversit"' hich prograe has provided iportantasis &or a success&u! career &ro this point' ithout theirsupport $ ou!d not achieved this Master,



ontents

1. Introduction................................................................................................................1

1.2. Research objectives...........................................................................................2

1.3. Hypothesis..........................................................................................................2

1.4. Research purpose..............................................................................................2

2. Conceptual Framewor.............................................................................................4

2.1. !conomic "rowth and Innovation......................................................................4

2.3. Innovation #ystems............................................................................................$2.3.1. Classi%ication o% innovation systems............................................................&

2.4. 'echnolo(ical Intensity........................................................................................)

2.$. *revious Research...........................................................................................1+

2.,. Contribution to Future #tudies..........................................................................11

3. Research -esi(n.....................................................................................................12

3.1. #tudy rea........................................................................................................12

3.2. #election o% method..........................................................................................12

3.3. *rimary data collection.....................................................................................12

3.4. #econdary data collection................................................................................12

3.$. -ata analysis....................................................................................................12

4. nalysis o% -evelopment o% Innovation *olicy........................................................13

4.1. *hase 1/ Institutions *eriod..............................................................................13

4.2. *hase 2/ (e o% Re(ulations and Incentives....................................................1,

4.2.1. Innovation 0aw 1+.)&3 +2.12.2++4.........................................................1,

4.2.2. "oodwill 0aw 0ei do em/ 0aw 11.1), 21.11.2++$...............................1)

4.2.3. Rouanet Research 0aw.............................................................................21

4.2.4. ction *lan on #cience 'echnolo(y and Innovation %or 5ational-evelopment *C'I 2++&2+1+........................................................................22

4.2.$. ra6ilian #cience technolo(y and innovation system 7#IR'!C8.........24

4.2.,. 5ational strate(y %or #cience technolo(y and innovation !5C'i...........2,

4.2.&. 5ational code o% #cience technolo(y and innovation law project............2&

4.2.9. :hy the chan(e o% the le(al %ramewor;..................................................29

4.2.). !ducational *olicies...................................................................................2)

4.2.1+. <aret Innovation *olicies.......................................................................31

$. Results.....................................................................................................................34



$.1. #ystematic nalysis..........................................................................................34

$.1.1. In%rastructural %ailures/...............................................................................34

$.1.2. Institutional Failures/..................................................................................3$

$.1.3. Hard institutional %ailures/...........................................................................3,

$.1.4. #o%t institutional %ailures/............................................................................3&

$.1.$. Innovation culture/......................................................................................39

$.1.,. Interaction %ailures/.....................................................................................39

$.1.&. Capabilities Failures/..................................................................................3)

$.1.9. 'ransition *roblems/..................................................................................4+$.1.). =verall systematic analysis/......................................................................4+

$.2. Functional nalysis...........................................................................................41

$.2.1. Firms and re(ional clusters/.......................................................................41

$.2.2. !ntrepreneurship private sector (rowth and competitiveness..................42

$.2.3. Innovation activities/...................................................................................43

$.2.4. >nowled(e (eneration and di%%usion/.........................................................43

$.2.$. >nowled(e trans%er?di%%usion......................................................................4$

$.2.,. 5etwors....................................................................................................4,

$.2.&. Creation o% 0e(itimacy and protection on innovation/...............................4,

$.2.9. nalysis/.....................................................................................................49

$.3. #ector !conomic nd <aret nalysis/............................................................49

$.4. Historical and #ocial nalysis/..........................................................................$1

$.$. International Comparison and nalysis/...........................................................$2

$.&.1. nalysis/.....................................................................................................$3



$



1. Introduction

'he development o% humanity is an illustration o% human innovation over time. In %act

the phases in human evolution are mainly based on the technolo(y in which it was

developed by manind that in time would have completely chan(ed the way people

interacted and (row as (roups. 'his shows the entire dependency o% humanind on

the constant development o% innovations in order to chan(e or improve the way they

live and achieve better @uality o% li%e as well as social technolo(ical and economicevolution.

:ith the invention o% the steam power and the combustion en(ine leadin( to the

industrial revolutions not only the technolo(y but also the economy have

eAperienced an eAponential evolution %rom that point on. Furthermore there were

incentives and (overnmental policies %or the development o% innovations in order to

stimulate the economy (rowth as well as jobs and maret diversi%ication. In addition

accordin( to #chumpeter 71)9)8 innovation would be a recurrent %uel o% economic

(rowth in an international scale despite di%%erences between countries.

'o stimulate the development o% innovations in a country an interaction between

staeholder %rom (overnment private and third sector is necessary to join e%%orts to

build a stron( innovation system. Innovations systems are interactions between

actors policies re(ulations and activities. 'he success o% an innovation system

depends on several points in which will be better eAplained by this paper on theevaluation o% the national innovation system installed in the 0atin merican country o%

ra6il.

'his paper will be divided in parts in order to better eAplain the research @uestion

proposed. Initially the conceptual %ramewor as well as the previous study will be

provided (ivin( support %or chapter eAplainin( research desi(n (oin( throu(h results

chapter and %inally conclusion.

Results will be separated in several parts be(innin( at analysis o% development over

time in innovation systems and policies then systematic analysis %ollowed by

1



%unctionality analysis economic and maret historical and social scenario and lastly

international comparison. ll parts o% the results will use its individual %ramewor

proposed by the author or usin( other academics wor as concepts %or the (iven

analysis.

Conclusion will provide overall results analysis presentin( ey %eatures and

prospective su((estions %or the national system o% innovation in the country.

1.1. Research question

:hat is the outcome o% ra6ilian innovation system development over time and what

are the neAt steps;

1.. Research o!"ectives

• nalyse milestones in ra6ilian innovation policy and systemB

• *rovide systematic and %unctional analysis on ra6ilian innovation systemB

• Identi%y %laws successes and prospective scenario %or R- policies and system.

1.#. $ypothesis

'his paper de%ends the hypothesis that ra6ilDs innovation policies and system

despite si(ni%icant development in recent years has not reached an acceptable level

and is still very %ar %rom the models used in the developed nations.

1.%. Research purpose

In this conteAt it is very relevant to understand the di%%erent (rowth trends in

developin( and developed countries.

'he research will %ocus on ra6il one o% the %astest (rowin( nations in the world

also the %i%th in si6e and in population. In this sense the ra6ilian economy is a clear

eAample o% a country that is in search o% a economic (rowth in comparison to already

developed nations that have much more e%%ective (overnment policies re(ardin( the

development o% innovations.

2



Concludin( it is possible to say that this research will try to illustrate the ey %eatures

o% ra6ilian innovation system %ramewor main( it clearer success%ul and %ailed

actions by (overnment and staeholders in the pursuit o% an e%%icient innovation

system in the country may allow this nation to achieve economic (rowth in shorter or

lon(er period as a conse@uence o% the search %or innovation in all aspects o% society

and to become a nowled(ebased economy and thus providin( a sense o% the

historic economic and international scenario.

3



2. Conceptual Framewor

.1. Economic Growth and Innovation

For 0in and #ie(el 72++38 the world economy has su%%ered a lar(e number o%

oscillations in economic (rowth and decline over the history o% humanity. s claimed

by "rossman 71))38 economic (rowth is demonstrated by the (rowth in

investments (rowth o% job opportunities openin( o% new marets and raise in

standards o% livin( %or the (eneral population. 'he #ollow old (rowth theory eAplains

that the (rowth is driven by the increase o% demand and o%%er in marets thus

creatin( opportunities in businesses. (reat eAample proposed by bramovits

71)$,8 is the recovery o% the Enited #tates in a post second world war period when

the world demand %or (oods and services (rew a%ter the destruction o% nations by the

war as well as the increase o% demand in the domestic maret with the be(innin( o%

the merican way o% li%eG culture o% hi(h consumerism eAponential production and

commerciali6ation o% (oods in a competitive maret.

ccordin( to Romeo 71))+8 economic (rowth has chan(ed to a more compleA

%ormat called the new (rowth theoryG. In this conteAt economic (rowth would be

very much dependent on the development o% technolo(y and nowled(e in di%%erent

sectors o% the economy which would mean competitive advanta(e over maret

players. #chumpeter 71)34 1)$+8 supports that innovation is a ey %actor in

economic (rowth de%endin( that new technolo(ies substitute old ones meanin( that

companies are driven out o% the maret i% they resist to chan(e.

wellnown discoura(ement to the innovative process are spillovers o% innovation.

It means that innovations nowled(e or technolo(y are adopted by other companies

without eApenditure as a result o% %laws in the protection and compensation %or

intellectual property or patents in the world maret. In this sense economic (rowth

and innovations are repressed by the uncertainty %rom or(ani6ations which %eel

unprotected in re%erence to their new technolo(ies. Romer 71)9,8 concludes thatspillovers may be a result o% actual pla(iarism mobility o% labour international trade

4



networin( and (eneral purpose technolo(ies 7innovations that have relation to the

improvement o% @uality o% li%e thus main( %ull monopoly over (oods impossible8.

.. Innovation &olicy

s stated by !d@uist 72++18 'Innovation policy is public action that influences

technical change and other kinds of innovations... Innovation policy includes

elements of R&D policy, technology policy, infrastructure policy and education policy.

At the same time innovation policy is a part of what is often called industrial policy.Industrial policy is, however, a term that is burdened with a lot of deadwood in many

countries because of vainly public support to old and dying industries. The term

innovation policy arouses associations to change, fleibility, dynamism and the

future! Innovation policy should serve as midwife" .

.#. Innovation Systems

ccordin( to onson et al 72++18 it can be pointed out that systems o% innovationD is

not a %ormal theory in the sense o% providin( propositions with respect to established

and stable relations between well de%ined @uantitative variables.

'he principal re@uirements %or a success%ul innovation system are/

a8 #taeholders/ private companies (overnmental institutions non(overnmental

or(ani6ations research centres technolo(ical in%rastructure investment a(encies

universities and human resourcesB

b8 *olicies/ *ublic *olicies %or Innovation 0e(al Framewor and #ystematic Financial

ResourcesB

c8 #ocialeconomic conteAt/ !ntrepreneurial culture %ocus on the vocations o%

the re(ion (overnance and interaction amon( actors %lows o% nowled(e and

in%ormationB cultural political and social streams.

!d@uist 71))&8 de%ined a system o% innovation as #all important economic, social,

political, organi$ational, and other factors that influence the development, diffusion,

and use of innovations" which is very similar to the de%inition provided by ohansson

and ohnson 72+++8.

$



In(elstam 72++28 in the other hand adds to this de%inition by statin( that systems are

a set o% components and the relations between them is a common e%%ort. #ystems

always have a purpose even i% spontaneous or arti%icially created. nd %inally

systems must have boundaries or should be easily separated %rom the outside world

as oneJs perspective.

'o better understand this %ramewor Chaminade !d@uist 72++,8 describe the 1+

main activities in the system o% innovation in 4 macro levels. 'hese ey %eatures arerelated to the processes demand provision and support services. 'hese are o% (reat

importance to the innovation system due to the necessity o% development in activities

as %ollows/

a8 %rovision of knowledge inputs to the innovation process!

• -evelopment o% continuous Research and -evelopment 7R-8B

•

Competencebuildin( %ocus on human capital.

b8 %rovision of markets demand'side factors/

• creation o% new maretsB

• Kuality and standardi6ation.

c8 %rovision of constituents for I(/

• -evelopment o% institutional %ocus on new %ields entrepreneurship anddiversity a(encies etc.B

• %rovision )creation, change, abolition* of institutions 7laws pro(rammes

re(ulation procedures etc.8B

• 5etworin( maret interaction and constant learnin(.

d8 (upport services for innovation firms/

• Incubatin( activitiesB

,



• Financin( to innovationB

• >nowled(e %low and maret in%ormation.

:hat these eAplanations show is that the innovation system is a ey %acilitator in the

development o% innovation and the (eneration o% economic (rowth in nations.

:ithout this %ramewor a(ents would be actin( individually in no or(ani6ed actions

in order to reach the same (oal which would constitute system %ailure.

2.3.1. Classification of innovation systems

'here are many types o% classi%ication o% innovation systems usually tain( into

account the way it is delineated such as/ (eo(raphic and sectoral.

<oreover sectorallyD delimited systems o% innovation only include part o% a re(ional

national or international system. 'he limits %or this classi%ication are speci%ic

technolo(ical %ields 7(eneric technolo(ies8 or product areas. 'hey can be but not

necessarily restricted to one sector o% production. oth technolo(ical systemsD

7Carlsson and #taniewic6 1))$8 and sectoral innovation systemsD 7reschi and

<alerba 1))&8 belon( to this cate(ory.

ccordin( to ohnson et al 72++48 (eo(raphically de%ined innovation systems may

be local re(ional national and supranational. 'his type o% delimitation presumes that

the area in @uestion has a reasonable de(ree o% coherenceD or inward orientationD

with re(ard to innovation processes.

In the opinion o% 0emos C. Int 72++38 Innovation #ystems can be national re(ional

or local and seen as a networ o% institutions in the public and private sectors whose

activities and interactions (enerate adopt import modi%y and di%%use new

technolo(ies and innovation as well as (enerate nowled(e these are crucial

aspects.

:hen the concept national system o% innovationD %irst appeared in the literature in

the 1)9+s 7Freeman 1)9& 0undvall 1)9$8 it re%lected new developments in

innovation research. 'he most %undamental new insi(ht o% innovation studies in the

&



ei(hties was that innovation is an interactive process where a(ents and

or(anisations communicate cooperate and establish lon(term relationships.

'he (eo(raphic concept is so important that 0undvall et al 72++2/ 2218 said/

'he concept is rather broad so althou(h it can be translated into manuals %or

studies o% concrete national systems o% innovation it is not in its present %orm

easily inte(rated into any theoretical discourse. 'he pra(matic and %leAible

character o% the concept may be seen as a (reat advanta(e since it maes ituse%ul %or practical purposes. t the same time we believe that e%%orts should

be made to (ive the concept a stron(er theoretical %oundation throu(h

additional wor in the neo#chumpeterian and evolutionary economic tradition

to mae the concept o% national innovation systems better suited as a tool %or

theoretical economic analysisG.

However it is not obvious how territorially de%ined systems o% innovation should be

de%ined in practice and it may be very di%%icult to (ive empirical meanin( to the

notions o% coherenceD and inward orientationD.

:hether a system o% innovation should be spatially or sectorally delimited or both

depends on the object o% study. ll the approaches may be help%ul %or di%%erent

purposes or objects o% study. "enerally the di%%erent classi%ications complement

rather than eAclude each other.

'his narrow approach is not so di%%erent %rom the triple heliAD concept were

universities (overnment and business are seen as the three important poles in a

dynamic interaction 7!t6owit6 and 0eydesdor%% 2+++8.

'he Freeman and the albor(versionD o% the national innovation systemapproach

7Freeman 1)9&B Freeman and 0undvall 1)998 aims at understandin( the innovation

system in the broad senseD. 'he de%inition o% innovationD is broader. Innovation is

seen as a continuous cumulative process involvin( not only radical and incremental

innovation but also the di%%usion absorption and use o% innovation.

9



'he #I approach employs historical and evolutionary perspectives. *rocesses o%

innovation develop over time and involve the in%luence o% many %actors and %eedbac

processes and they are o%ten path dependent. ecause o% this evolutionary

perspective illustrative and instrumentally use%ul comparisons between di%%erent

innovation systems can be made while it is obvious that an optimalD system o%

innovation cannot be speci%ied.

'he approach emphasi6es interdependence and nonlinearity. 'his is based on theunderstandin( that %irms normally do not innovate in isolation but interact more or

less closely with other or(ani6ations throu(h compleA relations that are o%ten

characteri6ed by reciprocity and %eedbac mechanisms in several loops. 'his

interaction occurs in the conteAt o% institutions e.(. laws rules re(ulations norms

and cultural habits. In %act the central role o% institutions is emphasi6ed in practically

all speci%ications o% the concept o% innovation systems.

.%. (echnological Intensity

'o analyse the data on the manu%acturin( order it is necessary to a((re(ate the 32

sectors that mae it up into %our (roups proportional to their technolo(ical intensity

7hi(h mediumhi(h mediumlow and low8.

For this purpose it is used the classi%ication o% =r(anisation %or !conomic Co

operation and -evelopment 72++$8 which includes the sectors o% manu%acturin(

industry in %our main (roups o% technolo(y intensity/

• Hi(h technolo(ical intensity/ aerospace pharmaceuticals computers electronics

telecommunications and instrumentsB

• <ediumhi(h technolo(ical intensity/ electrical e@uipment motor vehicles

chemicals 7eAcludin( the pharmaceutical industry8 and rail transportation

machinery and e@uipmentB

•

<ediumlow technolo(ical intensity/ shipbuildin( rubber and plastic productscoe re%ined petroleum products nuclear %uel other nonmetallic products basic

metals and metal productsB and

)



• 0ow technolo(ical intensity/ other sectors and recyclin( wood pulp and paper

publishin( and printin( %ood bevera(es tobacco teAtiles and clothin( leather

and %ootwear.

.). &revious Research

'he paper will be based on the concepts o% !d@uist !t6owit6 0eydesdor%%

Freeman 0undvall ndersen ohnson ohnson et al (*dtling and (rippl, 5elson

Fa(erber( and others re(ardin( theory on Innovation *olicies and #ystems.

'he research will use the innovation system %ailure %ramewor developed by

:oolthuis et al 72++$8 the authors describe what would conteAtuali6e Innovation

*olicy systematic %ailure would mean in each o% the %ollowin( phases in order to

analyse justi%y and evaluate innovation policies e%%ectiveness/

+. Infrastructural failures )(mith, +- d/uist et al.,+0* being the physical

infrastructure that actors need to function )such as IT, telecom, and roads*and the science and technology infrastructure.

1. Transition failures )(mith, +* being the inability of firms to adapt to new

technological developments.

2. 3ock'in4path dependency failures )(mith, +* being the inability of complete

)social* systems to adapt to new technological paradigms. 56! d/uist et al.

)+0* address the same failure but do not distinguish so strictly between

transition and lock'in failure.

7. 8ard institutional failure being failures in the framework of regulation and the

general legal system )(mith, +*. These institutions are specifically created

or designed )d/uist et al., +0* for which reason 9ohnson and :regersen

)+7* refer to them as formal institutions.

;. (oft institutional failure being failures in the social institutions such as political

culture and social values )(mith, +- <arlsson and 9acobsson, +=*.

These institutions evolve spontaneously )d/uist et al., +0* for which

reason 9ohnson and :regersen )+7* refer to them as informal institutions.

1+



>. (trong network failures )<arlsson and 9acobsson, +=* being the ?blindness@

that evolves if actors have close links and as a result miss out on new outside

developments.

=. eak network failures )<arlsson and 9acobsson, +=* being the lack of

linkages between actors as a result of which insufficient use is made of

complementarities, interactive learning, and creating new ideas. Balerba

)+=* refers to the same phenomenon as dynamic complementarities@ failure.

0. <apabilities@ failure! (mith )+* and Balerba )+=* both refer to the

phenomenon that firms, especially small firms, may lack the capabilities to

learn rapidly and effectively and hence may be locked into eisting

technologies, thus being unable to Cump to new technologies.

.+. ontri!ution to -uture Studies

'his research will contribute to %uture studies by providin( a realistic scenario about

national innovation policies and system in ra6il by usin( the %ramewors proposed

by di%%erent academics in the %ield. 'his study may be used by (overnments and

a(ents in the innovation system as a re%erence %or %uture decision and the

development o% actions to improve their role in the national system. 'his may be

used to analyse innovation systems and policies as well as provide a %ramewor %or

the development o% criteria %or evaluation.

11



3. Research -esi(n

#.1. Study rea

'he country to be studied will be ra6il. It is the worldJs %i%th lar(est in economy as

well as in population 72+1+32&14 inhabitants8. 'his *ortu(uese speain( country

has %ound a%ter the international %inancial crises a scenario in which its economic

model would not be so a%%ected as some !uropean nations. It has a "-* o% E#L

21&+ trillion. -espite its intense industrial activities the development o% innovations

is still considered wea compared to more nowled(ebased economies.

#.. Selection o/ method

'he study will be conducted on literature review on innovation policies. lso based

on interview with specialists %rom the ra6ilian scenario throu(h videocon%erence on

#ype.

#.#. &rimary data collection

*rimary data will be collected %rom or(ani6ations and (overnment o%%icial websites

7=!C- Enited 5ations :orld international -evelopment an <inistry o% #cience

and 'echnolo(y FI5!* etc.8 previous studies %rom academics and interviews.

#.%. Secondary data collection

Interviews o% academics specialists and policy maers on their opinion re(ardin( the

development o% policies %or innovations. 'he data resulted %rom the interviews will be

used to reach results in support o% primary data collection.

#.). Data analysis

-ata will be collected and analysed by usin( so%tware <# :=R- 7writin( and

development8 <# !MC!00 7analysis8 and <# *=:!R*=I5' 7presentation8.

12



4. nalysis o% -evelopment o% Innovation *olicy

%.1. &hase 10 Institutions &eriod

ra6il had the birth o% its ey actors in the Innovation system on the second hal% o%

the 2+th century pro(ressively/

1)1/ C5*@ 7Conselho 5acional de -esenvolvimento CientN%ico e 'ecnolO(ico

5ational Counsel o% 'echnolo(ical and #cienti%ic -evelopment8 and C*!#

7CoordenaPQo de per%eiPoamento de *essoal de 5Nvel #uperior8 or(ani6ations that

incentive R- mainly in educational institutions as well as coordinate distributions

o% salaries and scholarships %or researches and student. 'hey were created to

develop hi(her education in the country in the be(innin( o% the presidential era o%

"etulio ar(as. 'he president would be in power %or many years to %ollow as a ind

o% -ictator o% the people. s the milestones o% his rule are the worers law and social

bene%its.

1)/ 5-!# 7anco 5acional do -esenvolvimento 'he ra6ilian -evelopment

an8 a state ban %ocussed in the socialeconomic development o% the country. t

its creation the ban main %ocus was in (ivin( %inancial incentives to the industry and

a(riculture notwithstandin( presently it (ives lar(e support %or the eApansion and

adaptation to innovations in all sectors includin( social causes. 'his period would

see many developments in in%rastructure with the mentality o% developin( the

country in just %ive what it should be in $+ years.

1+%/ 'he year o% the be(innin( o% the military dictatorship in ra6il it would last until

1)9$ with the %irst open elections. For their intellectual nature the military party had a

(ood strate(ic plan %or the development in ra6il in the %ields o% research and

technolo(y as it will be seen in the %ollowin( dates and creation o% institutions. 'he

period nown as the S!conomic <iracleS is the the time when there were a

eAceptional economic (rowth between 1),9 and 1)&3 in this the ra6ilian

development raised %rom ).9T to 14T. However this period would have hi(h

in%lation rates (reat income concentration and also became the most violent and

13



strict periods in ra6ilian history which would %orever chan(e the culture and the way

people thin in this country.

1+2/ FI5!* 7Financiadora de !studos e *rojetos8 a public company that provides

%inancial incentives to researchers companies research centres and others which

search %or development in R-. FI5!* provides many di%%erent lines o% %inancial

support includin( re%undable and nonre%undable in areas such as sustainability

industrial (rowth health a(riculture and many more. 5owadays plays a major role

in providin( incentives related to the national innovation policies.

1+/ F5-C' 7Fundo 5acional de -esenvolvimento CientN%ico e 'ecnolO(ico

5ational #cience and 'echnolo(y -evelopment Fund8 -ecreto0ei nU &1) de

31.+&.1),) adapted by 0ei nU 11.$4+ de 12.11.2++& 8

'he #ectoral Funds were created to provide solid and permanent investments in

scienti%ic and technolo(ical research in ra6il. :ith this initiative ra6ilian innovation

has been inte(rated into a new scenario mobili6in( additional sources in di%%erentsectors that were committed to %inancin( new challen(es.

'he resources available in F5-C' are %rom public and private companies that

contribute to the (overnment representin( new sources o% investment in innovation.

'his Funds not only %acilitate the technolo(ical development to production activities

but also collaborate with the chain connected directly or indirectly to nowled(e with

industry.

F5-C' are administered by the <ana(in( Committees coordinated by <C'I

7<inistVrio da CiWncia 'ecnolo(ia e InovaPQo <inistry o% #cience 'echnolo(y and

Innovation8 with the participation o% re(ulatory a(encies the scienti%ic community

and the private sector. It is these committees that de%ine the annual investment plan

outline new (uidelines oversee the investment o% %unds monitor and evaluate the

per%ormance o% %unded research. 'he %inancial incentives in the other hand is

operationali6ed by FI5!*.

'he ey sectors to be %unded are/ eronautical (ribusiness ma6on -evelopment

Fund to the -epartment o% 'ransportation :aterways and #hippin( iotechnolo(y

14



!ner(y #pace Research :ater Resources In%ormation 'echnolo(y In%rastructure

<inerals =il and 5atural "as Health 0and 'ransport EniversityIndustry

Interaction 'elecommunications.

12#/ !mbrapa 7!mpresa rasileira de *es@uisa (ropecuXria8 a state company

that %ocuses on the a(ribusiness by developin( new techni@ues and products %or the

national and international marets. In the %ollowin( years this company would have

played a ey role in the development o% ra6ilian rural areas which be(an %rom this

period to use worldclass techni@ues products and services in their niche o%

production.

13)/ <C'I as a re@uest %or hi(her support in the development o% new technolo(ies

the creation o% the <C'I came mostly as a demand %rom research institutions such

as !<R* which despite the support o% (overnment %unds still hopped %or better

(overnment policies %or the increase o% innovation in the country and actually

eApandin( as companies entered the international maret.

-espite havin( a stron( industrial in%rastructure since the turn o% the 2+ th century the

national (overnment always %ocused a lot o% its e%%orts and policies towards the

e%%ective production o% (oods and the eApansion o% in%rastructure to support this hi(h

(rowth rate demanded by the domestic maret. In this sense the policies %or

Innovation have developed rather distant %rom the actual industrial policies

concentrated mostly on the spread o% academic publications with low support to

industries.

n eAample (iven by 0ee et al 72++$ p. 3,)8 is that in states which nations had

di%%erent (rowth models %rom ra6il there was a much sooner inte(ration o% industrial

policies and innovations policies. i.e. >orea reached this point by late 1)9+s and

since then has developed numerous policies and incentives due to this inte(ration.

ra6il on the other hand has only reached this point by the be(innin( o% the years

2+++s when %inally both sides would enjoy %ull inte(ration and so %ocus on innovation

as a competitive advanta(e driven by socialeconomic development.

1$



'he end o% the 1)9+s in ra6il was a period o% hard economic %ailure where in%lation

would (row daily in surprisin( dimensions purchasin( power was unstable and the

economy had low perspectives on development.

%ter the economic politics o% president Fernando Henri@ue Cardoso the Real was

implemented as a more stable and e%%icient currency thus (eneratin( hi(h

developments which the country lived a%ter the 1))+s. Finally ra6il could see itsel%

as a nation that had more to o%%er than just bein( a provider o% raw materials lowtechnolo(yintensity products and cheap labour %orce. 'he (overnment had taen an

important step towards achievin( a nowled(ebased economy and di%%erent policies

had to be inte(rated in order to meet this (oal. 'hat bein( said no lon(er would

policies re(ardin( R- and the industry be seen as separated %ollowin( in the years

2+++s the international trend which had already been installed in developed nations.

%.. &hase 0 ge o/ Regulations and Incentives

%ter the development and the stabili6ation o% the economy by Fernando Henri@ue

Cardoso in 2++3 0uNs InXcio 0ula da #ilva was the %irst labourer to become

president havin( a lar(e support %rom the population as a conse@uence o% the

(rowth o% the 0abour *arty in recent years. 0ula would brin( a period o% hi(h

economic (rowth and development on innovation policies and the strai(htenin( o%

the innovation system as it will be better eAplained in the %ollowin( points.

4.2.1. Innovation Law 10.973 – 02.12.2004

'he main policy %or innovation the Innovation 0aw o% 2++4 was the bi((est

milestone %or a(ents in the science technolo(y and innovation system conteAt.

5ever have the (overnment developed such a strate(ic and re(ulatory piece o%

o%%icial document to stimulate the (rowth o% innovation as a weapon to con@uer

economic stability and technolo(ical development in the country.

'his law was the turnin( point in national innovation history and opened a ran(e o%

possibilities obli(ations and hope to a sector that had been waitin( %or such

1,



development in the ra6ilian economy. :ithin the lar(est needs were/ %undin(

partnerships and trainin( to improve the labour %orce.

For this all to become true the <inistry o% #cience and 'echnolo(y would need

support %rom stron(er and better established ministries mainly %rom the <inistries o%

-evelopment Industry and International 'rade 7<-IC8. 'o(ether they would discuss

options to inte(rate policies to achieve the (oals not only %or the innovation sector

but also to solve socialeconomic problems throu(h innovation.

<C'I would have the (oal o% 7<C'I 2+148/

• Increase the national eApenditure on R- %rom 1.1)T o% "-* to 1.9+T in 2+14.

• Raise business eApenditure on R- %rom +.$,T to +.)+T o% "-* in 2+14.

• Focus on Research -evelopment and 'echnolo(ical InnovationB raise business

eApenditure in R- %rom +.$,T to +.)+T o% "-* in 2+14B as well as to brin(

intensi%ication on *roductive Innovation.

'he 0aw establishes measures and incentive to innovation science research and

technolo(y on the production conteAt with a view on trainin( domestic technolo(ical

autonomy and the industrial development o% the country. y means o% this rule the

state reco(ni6es that innovation (enerates wealth however it comes with ris in the

activity. Conse@uently the state must stimulate and promote it sharin( the riss with

the private sector. lso it aims at brin(in( constant culture chan(in( to companiesinvestin( in R- thus ensurin( the survival and the competitiveness o% enterprises.

s important as the (eneration o% nowled(e is to allow society and business to

bene%it %rom it and so improvin( the @uality o% li%e %rom innovative products and

processes.

s stated by the Innovation 0aw 72++48 the main strate(ies to be developed by the

di%%erent staeholders in the innovation conteAt would be/

1&



a8 'o promote partnerships and strate(ic alliances/ 'his is nown as the 'riple HeliA

<odel conceptuali6ed by !t6owit6 0eydesdor%% 71)),8 where the %ollowin(

staeholders would participate as such/

• "overnment 7<C'I <-IC FI5!* C5*@ 5-!#8/ creates policies mobili6es

staeholders promotes development as well as human and %inancial supportsB

• usinesses/ (enerate innovations jobs and wealthB

• Eniversities and research centres/ provide trainin( and (enerate nowled(e.

b8 'o develop R- Institutions to stimulate eApansion o% the sector in di%%erent re(ions

by/

• !ncoura(in( projects aimed at creatin( incubators and technolo(y parsB

• #harin( laboratories %acilities in%rastructure and human resources with #mall and

<edium !nterprises 7#<!s8 in incubation activities and lar(er companiesB

• Celebratin( technolo(y trans%er and contracts licensin( o% its proprietary patentB

•

*rovidin( speciali6ed consultin( servicesB• !ncoura(in( employees participation in projects in partnership with public and

private institutions.

c8 'o encoura(e SResearcher ? CreatorS they may/

• =btain %inancial (ain result o% services rendered re(ardless o% pay sourceB

• Receive as an incentive to innovation scholarship directly o% supportin( institution

or sponsorin( a(encyB

• *rovide cooperation on R- with other advanta(es additional to earnin(s.

d8 'o establish the role and responsibilities o% the Centre %or 'echnolo(ical Innovation

75I' 5Ycleos de InovaPQo 'ecnolO(ica8/

• <ana(e innovation policy o% R- rate analyse promote and ensure the

maintenance o% institutional policy o% protection o% creationsB

• Celebrate technolo(y trans%er and contracts patent licensin(B

• *rovide speciali6ed consultin( services activities within the productive sectorB

• !ncoura(e employee participation in projects %ocusin( on innovationB

19



• *romote trainin( o% employees re(ardin( culture o% innovation and nowled(e

protection etc.B

• #upport the Independent InventorB

• -evelop and monitor the bud(et o% these activities.

e8 'o provide incentives %or the development o% innovation in private sector by/

• -irectin( concession to companies throu(h public notices %inancial resources

7subvention8 human material or in%rastructureB

• #upportin( %or carryin( out R- activities involvin( technolo(ical ris.

%8 'o (ive di%%erential treatment to encoura(in( the technolo(ybased #<!s/

• Havin( the support o% incubatorsB

• Esin( o% laboratories e@uipment instruments and materials %acilities o% R-B

• Receivin( economic "rants 7nonrepayable %unds8 via FI5!* ? F5-C' by

simpli%ied procedureB

• *romotin( actions to stimulate innovation in #<!s by the development a(enciesincludin( technolo(ical eAtension by R-sB

• !nsurin( %avoured treatment in the application o% the 0aw.

4.2.2. Goodwill Law - Lei do Bem Law 11.19!" 21.11.200#

%ter the creation o% the Innovation 0aw in 2++4 the 0aw 11.1), o% 2++$ came as a

re(ulatory milestone to the incentives proposed by the previous law. oth came to

substitute the *-'I 7*lano -iretor de 'ecnolo(ia da In%ormaPQo8. 'he new incentivesproved are %ar more comprehensive and its application more direct than *-'I was

and so brin(in( a (reater recovery %or companies o% their investments in research

and development. ll these incentives would be re(ulated by prior approval %rom the

<C'I to bene%it speci%ic projects.

=ne o% the reasons why the new law was created was to encoura(e private

investment in R- development. In 2++, in its %irst year o% validity the law bene%ited

only 13+ companies between the top 1+++ companies in ra6il that have revenues

above E#L 1$,.4 million.

1)



s a vision the law was desi(ned to increase the level o% ra6ilian industrial

competitiveness. For this the taA incentives were re(ulated %or le(al entities that

developed research in technolo(ical development and innovation. 'his also includes

the new desi(n o% products improvement o% innovative industrial processes and

enhancin( in addin( %eatures to the product or new %unctionalities or processes.

'he 0aw supports all companies re(istered in ra6il both o% national and

multinational capital. It supports universities research centres consultancycompanies as well as small businesses and many more.

'he ey %eatures o% the "oodwill 0aw/

• =wn use o% human resources %or R-B

• Increase team o% SresearchersS %rom one year to anotherB

• =utsoarchin( to Eniversities Research Institutions <icro and #mall !nterprises

%or eAecution o% R-B

• Installation o% laboratory %acilities and ac@uisition o% e@uipment %or use in R-B

• *rotection o% Intellectual *roperty 7patents8 in the country and abroadB

• 0icensin( o% technolo(ies in the country.

ccordin( to the rticle 2 o% the "oodwill 0aw 72++$8 %or purposes o% the -ecree

technolo(ical research and development o% technolo(ical innovation activities are/

a8 basic directed research/ research per%ormed in order to ac@uire nowled(e

re(ardin( the understandin( o% new phenomena aimin( at the development o%

products processes or systemsB

b8 applied research/ the wor per%ormed in order to ac@uire new nowled(e with a

view to the development or improvement o% products processes and systemsB

c8 eAperimental development/ the delineated %rom preeAistin( nowled(e systematicwor aimed proo% or demonstration o% technical or %unctional viability o% new

2+



products processes systems and services or even an obvious improvement o%

already produced or establishedB

d8 basic industrial technolo(y/ those such as the measurement and calibration o%

machinery and e@uipment the desi(n and %abrication o% speci%ic measurement

instruments certi%ication o% compliance includin( the correspondin( tests

standardi6ation and technical documentation (enerated and patentin( developed

product or processB and

e8 technical support services/ those that are essential to the implementation and

maintenance o% premises and e@uipment intended solely %or the implementation o%

projects o% research development and technolo(ical innovation as well as the

trainin( o% human resources devoted to them.

ccordin( to the eAplanation provided by lla(i 72+148 about the law o% Income 'aA

o% Corporations re(ardin( the bene%its and eli(ibility in which companies would be

subjected while developin( activities %or the research and development o%

innovations would pro%it by the %ollowin( taA incentives/

a8 deduction %or purposes o% calculatin( net income correspondin( to the sum o%

eApenditures made durin( the period o% investi(ation on technolo(ical research and

development o% technolo(ical innovation classi%ied as operatin( eApensesB

b8 reduction o% $+T o% taA on e@uipment machinery and instruments as well as

accessories parts and tools accompanyin( the (oods %or R-B

c8 accelerated depreciation without prejudice to the normal depreciation o%

machinery e@uipment apparatus and instruments %or use in innovation

development %or purposes o% calculatin( the income taAB

d8 credit the income taA withheld at source on amounts paid remitted or credited to

bene%iciaries resident or domiciled abroad as royalties technical and scienti%ic

assistance and speciali6ed services provided in technolo(y trans%er contracts the

annotated or re(istered under 0aw )2&) o% <ay 14 1)), the %ollowin(percenta(es/

21



• 2+T 7twenty percent8 %or the period ended as o% anuary 1 2++, until -ecember

31 2++9B

• 1+T 7ten percent8 %or the period ended as o% anuary 1 2++) until -ecember 31

2+13.

e8 reduction to + 76ero8 the rate o% income withholdin( taA on remittances abroad

intended %or the re(istration and maintenance o% trademars and patents.

4.2.3. $o%anet $esea&c' Law

'he decree re(ulatin( the 0aw 11.49& o% une 1$ 2++& called SRouanet Research

0awS amended the 0aw 11.1),?2++$ 7"odwill 0aw8 to insert an article which allows

businesses to use taA incentives %or innovation also %or projects conducted by

universities and research institutes. 'he mechanism o% access to incentives aims to

invite universities to submit research projects they consider to be o% interest to

companies. In return %irms may eAclude spendin( on income taAation and the taA

basis o% the #ocial Contribution on 5et *ro%its 7C#08.

'he new rule states that companies are entitled to incentives i% they invest in projects

previously approved by a standin( committee composed o% representatives o% the

<C'I the <-IC and <!C 7<inistry o% !ducation8.

ccordin( to <C'I 72+148 R- institutes are de%ined as public entities whose

institutional mission amon( others per%orm basic or applied research activities o% a

scienti%ic or technolo(ical nature. In this conteAt the Federal Institutions o% Hi(her

!ducation 7IF!#8 actin( as R- institute assumes an important role accountin(

and eApandin( the role o% public administration in the %ield o% scienti%ic and

technolo(ical research.

=ne sees the encoura(in( partnership between the public and the private in order to

achieve (oals that would be di%%icult to be achieved i% these spheres were separated

as once was believed to be the best. 5evertheless there is eAplicit provision in the ct to enable R- institutions to share with partner companies their laboratories

22



e@uipment materials and other %acilities aimed at implementation o% activities related

to innovation and technolo(ical development.

4.2.4. (ction )lan on *cience" +ec'nolo,y and Innovation fo& ational

evelo/ment - )(C+I 2007-2010

'he ction *lan on #cience 'echnolo(y and Innovation 2++&2+1+ 7*C'I8

announced in 5ovember 2++& is an important tool %or (uidin( the actions o% state to

the eAtent that outlines pro(rams and directs the allocation o% resources in a

systemic and strate(ic approach. 'o enable these actions the *lan provides

investments o% E#L 41.2 billion by 2+1+ comin( %rom the %ederal bud(et which in

many pro(rams are accompanied by state and municipal investments and

compensation o%%ered by companies mainly bene%ited by the projects.

Conceived as part o% the overall "overnment *ro(ramme mobili6es and coordinates

sills and actions throu(hout the Federal "overnment in cooperation with state

county and municipal (overnments and other actors. 'heir (oals are ambitious. Ful%il

them demand stron( institutional commitment. 'he @uality o% interaction between the

actors o% the 5ational Innovation #ystem is there%ore the determinin( variable in the

success o% the *lan re@uirin( coordinated action and shared mana(ement.

'he introduction o% the *lan as an instrument o% state policy in the ra6ilian scenario

o% innovation brou(ht advances with re(ard to the evolution o% the levels o%

investment in R- as the improvement o% instruments to encoura(e and support the

activities o% area.

'he *C'I has %our strate(ic priorities (uided by 5ational Innovation *olicy/

I !Apansion and Consolidation o% the 5ational #ystem o% #cience 'echnolo(y and

Innovation 7#'I8/

1. Institutional Consolidation o% the 5ational #ystem o% # ' IB

2. Formation o% Human Resources %or # ' IB

3. In%rastructure and *romotion o% #cienti%ic and 'echnolo(ical Research.

23



II *romotion o% 'echnolo(ical Innovation in !nterprises/

1. #upportin( 'echnolo(ical Innovation in !nterprisesB

2. 'echnolo(ies %or Innovation in !nterprisesB

3. Incentive Creation and Consolidation in 'echnolo(y Intensive Companies.

III Research -evelopment and Innovation in #trate(ic reas/

1. Carrier reas o% Future/ iotechnolo(y and 5anotechnolo(yB

2. 'echnolo(ies o% In%ormation and CommunicationB

3. Inputs %or HealthB

4. io %uelsB

$. !lectricity Hydro(en and Renewable !ner(iesB

,. *etroleum "as and CoalB

&. (ribusinessB

9. iodiversity and 5atural ResourcesB

). 'he ma6on and #emiridB

1+.<eteorolo(y and Climate Chan(eB

11. #pace *ro(ramB

12.5uclear *ro(ramB

13.'he 5ational -e%ence and *ublic #a%etyB

I Innovation %or #ocial -evelopment/

1. *opulari6ation o% innovation and Improvements 'eachin(B

2. 'echnolo(ies %or #ocial -evelopment

4.2.#. B&ailian *cience" tec'nolo,y and innovation system *IB$(+C

#IR'!C -ecree ,.2$)?2++& is one o% the main instruments used by ra6ilian

"overnment to inte(rate the scienti%ic and technolo(ical community and innovative

24



enterprises. It inte(rates the ction *lan on #cience 'echnolo(y and Innovation %or

5ational -evelopment 7*C'I 2++&2+1+8 by settin( actions to create a %avourable

environment to technolo(ical innovation in enterprises.

a8 'he ey #trate(ic *riorities are/

• !Apand and Consolidate the 5ational Innovation #ystem/ !Apand inte(rate

moderni6e and consolidateB

• *romote 'echnolo(ical Innovation in !nterprises/ oost promotion actions to

create a %avourable environment %or innovation in enterprises and stren(then

ra6ilDs Industrial 'echnolo(ical and 'rade *oliciesB

• R-I in #trate(ic reas/ #tren(then research and innovation in areas o%

strate(ic importance to ra6ilDs soverei(ntyB

• Innovation %or #ocial -evelopment/ *romote and stren(then science in schools

includin( the dissemination o% technolo(ies aimed at social inclusion anddevelopment.

b8 =bjectives/ 'o provide conditions to enterprises to increase their current levels o%

innovation. It means hi(her a((re(ated value to enterprises results more

productivity more competitiveness and a (reater insertion o% ra6il in the (lobal

maret.

c8 =r(ani6ation/ three types o% networs named components/ Innovation CentresB

'echnolo(ical #ervices and 'echnolo(y !Atension.

d8 "overnance/

• Innovation Centres/

'his component aims at (eneratin( and trans%ormin( scienti%ic and technolo(ical

nowled(e into products processes and prototypes with commercial viability 7radical

or incremental innovation8.

2$



Innovation Centres are composed by development units or (roups that belon( to

technolo(ical research institutes research centres or universities with eAperience in

interactin( with companies.

It is desirable that the participants institutions should have an Intellectual *roperty

*olicy.

ellow in %i(ure LLLZ it is possible to see the di%%erent innovation centers accross

the country in which speci%ic especiali6ation is related to the economic sources in there(ion.

• 'echnolo(ical #ervices/

'his component intends to support the in%rastructure %or calibration tests analyses

and con%ormity assessment services as well as standardi6ation and technical

re(ulation activities to meet enterprises needs associated to complyin( to technical

re@uirements %or maret access.

• 'echnolo(y eAtension/

'his component provides access o% small and medium enterprises to the #tate

5etwors o% 'echnolo(y !Atension aimin( at solvin( (aps in technolo(y

mana(ement projects development production and commerciali6ation o% (oods

and services. 'his arran(ement is constituted by institutions speciali6ed in

technolo(y eAtension. 'he sectors serviced by the 5etwors are chosen by the

#tate aimin( at the rein%orcement o% local productive systems.

e8 #ource o% Financial Resources/

%ter the years 2+++s ra6il mana(ed to have si(ni%icant improvement in its

structure that supported innovation in the country. <uch more R- was bein( done

in comparison to previous decades. In spite o% that ra6il remains a country with low

innovation rates in comparison to other countries as well as has %ocused its e%%orts

in very speci%ic areas o% research as it can be eAempli%ied in the (raphs provided by

5icolsy.

2,



s a response the (overnment analysed areas that were in need o% hi(her

incentives thus pointed out the %ollowin( areas to be taen as priorities by the 0ar(er

ra6il *lan/ R-B *harmaceuticals and Health CompleAB =il and "asB -e%ence

Industrial CompleAB erospace compleAB 5uclear ener(yB iotechnolo(yB

5anotechnolo(yB "reen !conomy 7renewable and biodiversity8B Climate chan(eB

=ceans and coastal areasB ssistive 'echnolo(iesB

4.2.!. ational st&ate,y fo& *cience" tec'nolo,y and innovation - C+i

ccordin( to <C'I 72+148 the 5ational strate(y %or #cience technolo(y and

innovation !5C'i 2+122+1$ is a (uide %or/

a8 #ustainable development/ R- as a column to the structure o% sustainable

development in ra6il.

b8 Facin( challen(es/

•

Reduction o% the scienti%ic and technolo(ical (ap that still separates ra6il %rommore developed nationsB

• !Apansion and consolidation o% ra6ilJs leadership in natural nowled(e economyB

• roadenin( the bases %or environmental sustainability and developin( o% a low

carbon economyB

• Consolidation o% new international insertion o% ra6ilB

• =vercomin( poverty and reducin( social and re(ional ine@ualities.

c8 #tren(thenin( the structure that supports Innovations policies in ra6il/

• *romotion o% innovationB

• 'rainin( o% human resourcesB

• #tren(thenin( research in%rastructure and scienti%ic and technolo(ical.

d8 Improvement support mechanisms o% innovation policy/

• Improvement o% the re(ulatory %ramewor %or %osterin( innovation

2&



• Improvement and eApansion o% the %inancin( structure o% the scienti%ic and

technolo(ical development

• #tren(thenin( the Innovation 5ational #ystem.

4.2.7. ational code of *cience" tec'nolo,y and innovation law /&oect

s stated in the presentation (iven by pro%essor 0. . !lias !Aecutive #ecretary

<C'I 72+118/

a8 the main instruments and current pro(rams are/

• 0oans with low interest %or innovation 7FI5!* and 5-!#8B

• *articipation in ris capital %unds 7FI5!* and 5-!#8B

• #hareholdin( in innovative companies 75-!#8B

• 'aA incentives 7Computer 0aw and "ood 0aw8B

• !conomic support %or innovation 75ational 5oticesB ***!B *RI<!8B

• 5ational pro(ram o% incubators and technolo(y parsB

• "overnment procurement 70aw 1234)?2+1+8.

b8 *reliminary provisions/ roadens the scope o% the 0aw o% Innovation considerin(

all entities operatin( in #IR'!C.

c8 #timulatin( the construction o% speciali6ed and cooperative environmentsinnovation.

d8 #timulatin( participation in public institutes o% science and technolo(y processes

innovation.

e8 #timulatin( innovation in enterprises modi%ies the concept o% enterprises by

includin( nonpro%it entities 7socialenterprises8.

%8 !ncoura(in( independent inventor.

(8 -evelopment o% stron(er investment %unds.

29



h8 Human Resources trainin( eApands the treatment o% issues relatin( to education

and trainin(.

i8 *romotion o% development and incentive o% research in biodiversity.

j8 #timulatin( imports and eAports o% technolo(y.

4.2.5. 6'y t'e c'an,e of t'e le,al f&amewo&8

ra6il %aces a depletion o% conventional strate(ies to stimulate economic and social

development. In this conteAt priority is the recovery momentum o% the national

research and the creation o% appropriate technolo(ical solutions to our economic and

social challen(es.

'here is a (rowin( importance o% innovation to the productive sector which re@uires

an eApansion o% the scope o% the constitutional norm reachin( science technolo(y

and innovation in order to support the coordinated actions between academia and

industry. s an e%%ect o% demand %or innovation loses sense o% envisioned be%ore theseparation between basic science and technolo(ical research as several lines o%

SpureS research have the potential to un%old in new solutions to the productive sector.

ims to create a 5ational #ystem o% # ' I that can coordinates the actions o%

public and private entities and encoura(e their collaboration.

Inte(rated *olicies/

4.2.9. d%cational )olicies

In the opinion o% L[Z\LZL education is the basis %or an innovative society. 'hat

bein( said ra6il lie many other countries in the past decades have developed

policies to oppose the low levels in (eneral education and even more speci%ic in

hi(her education.

'he <inistry o% !ducation 7<!8 presents %i(ure on less than 1+T o% the ra6ilian

population have hi(her educational trainin(. s it was previously stated in this paper

to pave their way to a more developed society and brin( innovation as a permanent

culture the national (overnment had to adapt its policies applied to the <inistry o%

2)



!ducation in order to inte(rate with policies %rom other ministries and help the nation

achieve their common objectives o% socialeconomic development.

'he <inistry o% !ducation currently wors in di%%erent policies to rise education

e%%iciency in the country. However the pro(rammes is also related to the

development o% science technolo(y and innovation.

'he ra6ilian (overnment maintains projects that %acilitate student access to hi(her

education and teachers and help improve the @uality o% education o% %ederal

institutions.

-IES/ 'he objective o% the #tudent Fund o% Hi(her !ducation 7FI!#8 is to %und the

hi(her education o% under(raduate students who are unable to a%%ord the costs o%

their education. 'o apply %or the FI!# students must be enrolled in private

institutions re(istered in the pro(ram and positive assessment in the evaluation

processes o% the <inistry o% !ducation <!C.

&ro4ni/ 'he Eniversity %or ll *ro(ram 7*roEni8 was created in 2++4. Its purpose is

to provide %ull and partial scholarships %or studies to students o% under(raduate and

se@uential speci%ic trainin( courses always in private institutions o% hi(her education.

'hose institutions that join the pro(ram receives taA eAemption.

IES &rogram <!C and 5-!# 72+148 'he <inistry o% !ducation and the 5ational

an %or !conomic and #ocial -evelopment 75-!#8 si(ned a joint action protocol

that will enable the provision o% %undin( to public and private hi(her educational

institutions which have (ood academic per%ormance. mon( the items that can be

%unded are in%rastructure improvement worsB domestically manu%actured machinery

and e@uipment that are accredited by 5-!#B boos domestic and imported %or

%ormation o% the collection o% librariesB national educational so%tware aimed at

improvin( the administrative and %inancial mana(ement import o% e@uipment that do

not present similar projects in national and %inancial restructurin( industry.

&R56(E 0aw 5o. 12.$13?2+11 75ational *ro(ram %or ccess to 'echnical and

!mployment8/ 'he pro(ram aims to eApand and democrati6e internali6e the

3+



provision o% vocational and technolo(ical education %or ra6ilian students. lso it will

eApand pro%essional opportunities %or labour %orce.

Science without -rontiers/ 'he pro(ram sees to promote the consolidation

eApansion and internationali6ation o% science and technolo(y innovation and

competitiveness throu(h the ra6ilian eAchan(e and international mobility. 'he

project involves (ivin( up to 1+1 thousand scholarships over %our years to promote

eAchan(es so that under(raduate and post(raduate do internship abroad in order toeep in touch with competitive educational systems in relation to technolo(y and

innovation. <oreover sees to attract researchers %rom abroad who want to settle in

ra6il or establish partnerships with ra6ilian researchers in priority areas de%ined in

the pro(ram and create opportunity %or researchers %rom companies %or speciali6ed

trainin( abroad.

'he ey modes o% scholarships are/ -octors de(ree partially overseas doctors

de(ree in ra6il *h-s achelor partially overseas -evelopment o% innovations

overseas ttraction o% %orei(n talents and #pecial "uest researchers. 'he ey areas

covered are the technolo(ical %ields such as/ I' Renewable resources and etc.

4.2.10. a&et Innovation )olicies

a7 ompany Innovation &lan 8 &lano Inova Empresa 9:1#70

'he pro(ram has its aim on stimulatin( investments in innovation to raise productivity

and competitiveness in the ra6ilian economy throu(h eApansion o% the level o%

investment (reater support %or projects o% technolo(ical ris stren(thenin(

relationships between companies and the public R- sector and on de%inin(

strate(ic areas by tar(etin( %osterin( innovation business plans and decentrali6ation

o% credit and subsidy %or medium and small businesses.

'he 3 5ew model %or %osterin( innovation are/ rticulated pro(rams o% various public

institutionsB Coordinated use o% instruments/ loans (rants e@uity and nonre%undableB Inte(rated <ana(ement 7Innovation Room8 %or all inds o% participation in

the pro(ramB Reduction time and administrative simpli%ication.

31



'he project calls %or a total investment o% E#L 32.) billion with 29.$ billion invested

by the %ederal (overnment and 4.4 billion by partner institutions such as 5ational

*etroleum (ency 75*8 'he ra6ilian !lectricity Re(ulatory (ency 75!!08

ra6ilian <icro and #mall usiness #upport #ervice 7#!R!8 and ra6ilian (ency

o% 'elecommunications 75'!08.

'he ey sectors to be %omented by the pro(ramme are/ (ricultural ChainB !ner(yB

=il and "asB Health CompleAB erospace and -e%ence CompleAB IC'B #ocial and!nvironmental #ustainabilityB Incremental InnovationB *roduct and *rocess

!n(ineerin(B -ecentrali6ationB #mall and medium !nterprises and In%rastructure %or

Innovation.

!7 &rograma (I Maior

'he #trate(ic *ro(ram %or #o%tware and I' #ervices part o% the 5ational #trate(y %or

#cience 'echnolo(y and Innovation !5C'I 2+12?2+1$ and articulates with other

eAistin( policies in the %ields o% de%ence economic (rowth health a(riculture I'

industry and telecommunications.

1 #upport the In%ormatics 75o. 9.249?)18 and the "oodwill 75o. 11.1),?+,8 0aws %or

the (eneration o% startupsB

2 -evelop scenarios o% special taA re(imes %or eAport o% so%tware and services lie

most competitive countriesB

3 *ropose tools o% taA incentives %or venture capitalists includin( an(el investment in

I' which has distinct maret dynamics rapid and eAit strate(ies very particular

investment in relation to other economic sectorsB

4 !valuate the models o% procurement o% In%ormation 'echnolo(y seein( to balance

the minimi6ation o% costs %or (overnment and (enerate added value %or the sectorB

$ Improve le(islation on outsourcin( and subcontractin( o% wor in the sectorB

,. #tudyin( aspects o% ra6ilian and international laws re(ardin( intellectual property

7I*8 so%tware relyin( on comparative law analysis assessment o% the economic

32

http://en.wikipedia.org/wiki/Brazilian_Agency_of_Telecommunications







impact o% le(al architectures o% I* barriers to innovation %or small businesses impact

on value creation %rom the ra6ilian maret amon( other topicsB

& eAamine the possibility o% rapid implementation mechanisms 7%ast trac8 %or the

attraction and establishment in ra6il o% silled international human resourcesB

#upportin( the implementation o% a law protectin( personal data.

<acro(oals 2+112+22/

• "row ra6il %rom &th to $th in the :orld I' Ranin(B

• -ouble I' sector "-*B

• Raise 9 times the amount o% eAports by sector reachin( E#L2+ billion in 2+22B

• 5early double the participation o% I' sector %rom 4.4T to ,T o% 5ational "-*.

#trate(ic *ro(ram/

• #ocial economic developmentB

• *ositionin( ra6il in the international arenaB

• "enerate innovation and entrepreneurshipB

• -evelopin( competitivenessB

• Incentive %or research technolo(ical development and innovation.

33



$. Results

).1. Systematic nalysis

In this chapter will be usin( the %ramewors proposed by :oolthuis et al 72++$s8 on

innovation policy systematic %ailure %ramewor and Chaminade and !d@uist 72+1+8

!d@uistJs 1+ activities?%unctions?%actors in%luencin( innovation 72++$8.

:ith these %ramewors it will be simpler to use their ey concepts to analyse thee%%iciency o% ra6ilian innovation policies and the overall system. 'he chapter will be

separated in Innovation #ystem analysis %unctional analysis !conomic and maret

analysis Historical In%luence and international comparison.

#.1.1. Inf&ast&%ct%&al fail%&es

In%rastructure %or the development o% innovation in ra6il is still developin(. In most

aspects research in%rastructure is small and concentrated in some re(ions o% the

country. lthou(h there are policies to support development in%rastructure is still

provided on demand main( it di%%icult to plan and stimulate innovations in a

%ramewor o% compleAity and poor in%rastructure.

ra6il invests 1.1)T o% "-* in R-. <uch lower than a country in a similar

economic sta(e such as >orea which invests 3.44T o% its "-* in the technolo(ical

development 7<C'I 2+138.

=n one hand in developed countries such as the Enites #tates and "ermany

investments made by private companies are much hi(her than those made by the

(overnment. 'his could be related to the hi(her sta(e in development re(ardin( the

achievement o% a nowled(ebased economy. =n the other hand in ra6il the

private sector still sees investments in R- as risy and not vital to the %uture o%

companies in the ra6ilian maret conteAt. s an eAample it can be seen that while

ra6il invests only +.$$T o% its revenue in R- >orea invests 2.9T. 'his shows that

innovation is still not seen as priority to ra6ilian companies in comparison to sian

and !uropean nations.

34



lthou(h the investments in innovation in ra6il continue to (row and remains hi(her

than other RIC# nations such as India and #outh %rica it is still insi(ni%icant

compared to China which has a very stron( sense o% investment in R- related

activities while ra6il is characteri6ed by relations mostly lined to maret and

or(ani6ational innovations 7=!C- #C=R!=R-R]I0 2+138.

=n the authority o% the =!C- #C=R!=R-R]I0 72+138 the share o%

eApenditure in R- in the total "-* remains low compared to developed nationshowever in the other hand is lar(er than its 0atin merican nei(hbours and some

RIC# nations. 'his is clearly shown by the much smaller number o% researchers

composin( the total employed labour %orce.

'he innovation eApenditure in 2++9 in ra6il was 1.+9T o% "-* accordin( to =!C-.

'he country scored bellow =!C- medium but remained hi(her than the others 0atin

merican countries.

#.1.2. Instit%tional :ail%&es

ccordin( to 0undval 71))98 Institutions understood as norms, habits and rules are

deeply ingrained in society and they play a maCor role in determining how people

relate to each other and how they learn and use their knowledgeG. ohnson and

!d@uist 71))&8 completes this de%inition by statin( the main objectives o% institutions

in the innovation systems are to provide accurate in%ormations about maret and

a(ents en%orce property ri(hts and to re(ulate the maret.

I% we point out the theory o% cemo(lu 72++38 re(ardin( the institutions bein( the

root o% causes in economic development institutions de%initely play a ey role in

innovation systems.

'he %ramewor (iven by :oolthuis et al 72++$8 re(ardin( hard institutional %ailures

as bein( part o% the systematic re(ulatory policymain( and bureaucratic side o%

institutions. 'he other side are the so%t institutional %ailures re(ardin( culture andother social %actors.

3$



#.1.3. ;a&d instit%tional fail%&es

ased on interviews and research ra6il does not present a lar(e number o% hard

institutional %ailures. 'here is a ran(e o% (overnment institutions and policies

%ramewor which cover all aspects o% the innovation system.

'he burden o% bureaucracy and attachment to %ormalism which o%ten mae

pro(rams %or R- are not mana(ed objectively in terms o% results to be obtained but

with a %ocus on bureaucratic and operational re@uirements. n approach that hasshown inade@uate to the dynamics o% the sector which re@uires rapid responses

@uicly taes the results %rom the laboratory to the maret and incompatible with the

very nature o% the activity o% R- 7In%orme biptiInterview Claudio iolato 2+148.

(ents/ 'here are a ran(e o% (overnment institutions as well as private and third

sectors institutions lined to the national innovation system which all play important

roles in the development o% policies and the overall innovation system. 'hese

institutions have (ood %inancial situation supported by the %ederal (overnment and

(rants. In this sense ra6il show %ailures in institutional %ailures since has solid and

important a(ents inte(rated to the national system o% innovation.

Re(ulatory %ramewor inte(ration/ ccordin( to =!C- #cience 'echnolo(y

and Industry =utloo 72+128 not much has chan(ed in ra6ilian innovation policy

since the Innovation 0aw. However there has been many measures to promote

coordination between institutions %rom national state and municipal level. 'hesea(ents would also have to interact with bans private businesses industry and

labour unions.

'he current situation o% innovation policies in ra6il is actually raisin( awareness o%

the importance o% innovation %or the countryJs competitiveness development

pro(ress and wellbein( o% society creatin( a more %avourable environment %or the

establishment o% policies aimed at the intensi%ication o% activities %or innovation in the

country. =ver the past 3+ to 4+ years there was a very lar(e scienti%ic and

3,



technolo(ical maturity in ra6il with the structurin( o% lar(e pro(rams o% R- and

trainin( o% personnel who have built eApertise in various areas o% research.

In the last two decades ra6il has created a set o% important policies to support

innovations such as sector %unds 0aw o% Innovation and subsidy mechanisms

which mobili6e resources %or technolo(ical development and innovation instruments.

In a(reement with the view %rom Innovation *olicy *lat%orm/ ra6il =!C- 72+148 the

!5C'I would become the ey innovation strate(ic policy by providin( strate(ies to

brin( ra6il to a (lobal level in innovationB development and stren(then

internationali6ation and partnershipsB to brin( a sustainable conscience about the

development technolo(ies %or a (reener economyB and brou(ht more awareness

about innovation re(ional disparities in the country.

'he 5ational Code o% Innovation new le(al %ramewor %or the sector will lead to new

incentives %or innovative activity in the country increasin( the level o% public and

private investment in innovation which will result in increasin( the competitiveness

%or ra6il. 'he approval o% *!C 2)+ will enable the construction o% a new

environment %or innovation in the country stimulatin( research and the creation o%

appropriate technolo(ical solutions to the needs o% ra6ilian society and the

inte(ration o% technolo(y research institutions and innovative companies in a national

system combinin( e%%orts towards national development. -ue to its approval it will

beable to establish clear and simple rules %or the use o% (overnment resources %or

R- in particular sectoral %unds.

-espite havin( policies overlappin( one another in a %ew points ra6il has a very

(ood policy %ramewor which %oresees all aspects o% the national innovation system.

'hat bein( said ra6il does not have many hard institutional %ailures.

#.1.4. *oft instit%tional fail%&es

In comparison to the %ramewor proposed by 0undvall 71))98 the ra6ilian innovationsystem shows lac o% trust and rationality with hi(h relations between the a(ents. In

interviews the topic re(ardin( the eAistent and even common rivalry between

3&



leaders o% institutions since there is hi(h competitiveness and e(o con%licts in the

(overnment sector specially.

#.1.#. Innovation c%lt%&e

'here is hi(h importance in the study conducted on the perception o% the domestic

population in relation to the bene%its %rom scienti%ic research as illustrated by the

(raphic bellow. It can be seen that ra6il is the country that had most positive

%eedbacs bein( compared to the E# China and >orea. 'his shows that thepopulation will probably support the creation o% new (overnment policies %or

innovation in the country.

low point mentioned by the =!C- #coreboardra6il 72+138 is the %act that even

unwillin( the (overnment is %avourin( incentives to lar(er better established and

more success%ul companies thus (eneratin( an unstable competitive scenario %rom

which already have been a((ravated over the nationJs history. 'he support available

to smaller and youn(er enterprises remains inaccessible to these victims that do not

possess nowled(e and resources to reach these incentives and (overnment directsupport. lthou(h there are %ew institutions that have scienti%ic culture inside

companies in ra6il there is (rowin( number o% membership o% companies to the

39



"oodwill 0aw which went %rom 13+ re(istrations in 2++, to ,3$ in 2++) while the

number o% bene%iciaries went 13+$42. 'his shows a possible shi%t to a stron(er

innovation culture.

'here are (reat challen(es since ra6il has yet to really stren(then a culture

%ocused on innovation especially in the business sector where investments in this

direction are still very shy.

#.1.!. Inte&action fail%&es

ccordin( to the %ramewor it is analysed re(ardin( the concepts o% #tron(h 5etwor

%ailure by Carlson and acobson 71))&8 despite evolvin( the innovation system and

brin(in( results to the sector in ra6il as partners there is a lac o% inte(ration

between the ey players in the innovation system. Re(ardin( the hierarchy o%

institutions and staeholders it is evident that e%%orts are wron(ly directed. 'he

eAchan(e o% in%ormation is low and treated as a need to now basis preventin( the

%low o% nowled(e and results creatin( locin.

'he concept o% <yopia due to internal orientation developed by o(enrieder and

5ooteboom 72++28 is evident since most staeholders in ra6il %ocus their e%%orts in

internal activities inhabitin( institutions to interact with other institutions this is a very

stron( culture in ra6ilian (overnment over the years recently been receivin(

chan(es in previous (overnments in search o% e%%iciency.

s pointed by the %ramewor o% R. >. :oolthuis et al. 72++$8 it is observed a hi(h

level o% dependency between smaller and bi((er partners. -ue to the in%rastructure

o% (overnment %undin( system in ra6il lar(er staeholders outsource projects to

smaller institutions they bein( public or private in order to provide results thou(h

speci%ic inte(rative actions. lthou(h decentrali6ation is seen as a (ood thin( in this

sense smaller staeholders become very much dependent o% others to even eep

their eAistence. 'his is specially seen in the third sector where associations and

institutes are tied to (overnment project %undin(.

3)



In the conteAt o% interaction between universities and businesses 'he interaction

between university and company is %ully impaired i% the company has a team o% R-.

'he mechanism is not bad %rom the point o% view o% the university but their

e%%ectiveness is almost nil. company that already does R- will not want to partner

their activities puttin( own resources and could mana(e directly into the hands o%

third parties. Firms that do R- have no interest in these partnershipsB i% they use

the mechanism be the incentive and not to increase their ability to innovate.

#.1.7. Ca/a<ilities :ail%&es

ra6il does not present a lac o% nowled(e in its institutions all have (ood eApertise

in what they do best. #pecially the (overnment or(anisms are very ali(ned with the

policies o% innovation. 5evertheless some capabilities have still to be developed.

#ome institutions despite their si6e lac %leAibility in adaption to a new scenario as

well as resources to promote actions to (enerate results. Instead o% joinin( e%%orts

with other staeholders to supply the demand %or certain %ields many institutions aimthe %ocus in sel% (rowth and institutional independence. 0osin( %ocus o% common

(oals and minimi6e learnin( potentials.

ccordin( to Innovation *olicy *lat%orm/ ra6il =!C- 72+148 the %ederal and state

(overnments must adapt to better inte(rate their innovation policies in or to provide

better services %or society in relation to services and provide in%ormation to a(ents o%

innovation in all re(ions o% the country.

#.1.5. +&ansition )&o<lems

'he ra6ilian economy has seen over its history many di%%erent scenarios. ra6ilians

are nown to mae the best o% thin(s and hope %or better times which recently have

come in a very much developed economy. In the innovation system conteAt it is not

very di%%erent. 'he e%%orts o% many are now havin( results and the system is

developin( in reasonable steps. 5evertheless the innovation system still has issues

with transition %rom a peripheral re(ion to a more developed scenario.

4+



In a couple o% interviews it was pointed out that ra6il does not has bad policies and

strate(ic plans the problem lays with the ine%%iciency in pointin( these e%%orts to the

actual eAecution o% activities to reach (oal.

#.1.9. =ve&all systematic analysis

'he systematic analysis %or the ra6ilian innovation system %ramewor is rather

ne(ative.

s it was pointed out innovation policies and institutions are not the issue in the low

development o% the system. 'he poor investment in innovation and the ne(ative

culture towards institutional inte(ration are to be blamed by the systematic %ailures o%

the overall %ramewor.

'here is remainin( lac o% e%%orts in the development o% capabilities that will provide

better inte(ration between a(ents in the scenario. #taeholders are currently tryin(

to develop these mechanisms but there is a resistance over chan(e re(ardin(systematic inte(ration with a(ents and policies to achieve desirable objectives.

).. -unctional nalysis

ccordin( to ohnson 72++18 functional analysis focuses on the processes that are

important for innovation systems to perform well. The processes are categorised as

functions of innovation systems and they clarify the dynamics of the systems G. 'his

bein( said there is a hi(h importance in analysin( the conteAt in which the ra6ilian

innovation system is %ramewor.

'he concept developed by '^dtlin( and 'rippl 72++$8 re(ardin( the problem areas in

re(ional innovation systems 7RI#8 the author points out the 3 di%%erent re(ional

innovation systems/ peripheral re(ion 7developin(8 old industrial re(ions 7locin

sta(nated8 and %ra(mented metropolitan re(ion 7well developed8.

'he concept %rom ohnson 72++18 re(ardin( the , %unctionalities o% innovations

systems will be analysed. lso er(e 2++2B Heert 2++&B er(e et al. 2++9B

re(ardin( system %unctional analysis as a way to evaluate the innovation system as it

41



is in terms o% its speci%ic %unctionalities which would classi%y the %ramewor as

e%%icient.

#.2.1. :i&ms and &e,ional cl%ste&s

ra6il @uali%ies as a peripheral re(ion in the sense that there are not many clusters

developed. <ostly as a result o% spontaneous phenomena in each re(ion. 'hese

usually %ocus on one activity and their service related businesses. #ome sectors

such as petroleum and (as as well as ethanol production are very developedclusters and industries in some re(ions o% the country nevertheless the perspective

o% ra6il as a %ra(mented metropolitan re(ion remains only in the absence o%

nowled(ebased clusters in national level.

#.2.2. nt&e/&ene%&s'i/" /&ivate secto& ,&owt' and com/etitiveness

ccordin( to I*! 72+118 $1T o% the activities related to eAportation in ra6il are

related to primary commodities and only 2$T related to hi(h and medium

technolo(ical intensity. 'his is still a very low percenta(e o% total production. For a

country to develop into a nowled(ebased economy its production must have very

intense technolo(y purposes.

s an eAample o% this problem as stated by *I5'!C ResultsI"! 72+118 in ra6il

durin( the period 2++)2+11 there were 14.3&T o% enterprises introducin( new

products %or themselves and 3.,,T o% the total that have introduced new products %or

the domestic maret. In 2++9 nationally the rates were respectively 1).)3T and

4.1+T. In this case it can be seen that the rate o% innovation o% local %irms were also

hi(her than the national avera(e in the triennium 2++,2++9 and 2++)2+11.

*I5'!C ResultsI"! 72+118 also point out that in terms o% selected industrial

activities the manu%acturin( se(ment o% machinery and e@uipment obtained the

hi(hest rate o% product innovation and process with 92.2$T o% the surveyed

companies in this sector which was also a leader in product innovation 7,1.),T8 the

new product %or the company 749.$$T8 and new product %or the domestic maret

42



73&.32T8. 'his shows how certain sectors have a much hi(her technolo(y intensity

creatin( a type o% discrepancy with other sectors.

'his can be a (reat problem in promotin( competitiveness since the 0aw 1149& is

%ocused on companies that collect income taAes usin( the systemJs actual pro%it. 'his

system are only lar(e companies and these usually already develop R-. 'hese

companies have little interest in usin( the mechanism. I% the law is intended to

increase the @uality o% the interaction between university and company most lielynot %ul%il its purpose.

-espite many problems re(ardin( the none@uality between staeholder

entrepreneurship based on innovation is still to be stimulated in the country as a

measure to intensi%y hi(h technolo(ical intense %irms. ccordin( to Innovation *olicy

*lat%orm/ R]I0 =!C- 72+148/

#everal initiatives support startups. Financial support is provided throu(h

(rants 7*ro(rama *rimeira !mpresa Inovadora *RI<! under which a total

o% 1 391 enterprises have received about E#- )9 million8 venture capital

investments 7I5=R8 or reduced interest loan pro(rammes 7uro ]ero

*ro(ramme8. In addition the *roInova pro(ramme introduced in 2++9

encoura(es entrepreneurship by di%%usin( in%ormation about the le(al tools

%acilities and mechanisms available to support initiativesG.

#.2.3. Innovation activities

'he low levels o% R- in the country @uali%y ra6il as a peripheral re(ion %or not

stimulatin( as much development as it has on some %ields previously discussed. 'he

research that is developed is mainly lined to incremental and process innovation. s

previously stated much o% the innovations in the country never even see income as

a result o% e%%orts.

#.2.4. >nowled,e ,ene&ation and diff%sion

a8 universities?research or(anisations/

43



'he hi(her education sector is within the areas that have lar(er (rowth over the past

years. 5evertheless still attracts low investments specially in in%rastructure and

research. lthou(h there are more patents and publications bein( re(istered

international cooperations and movement o% researchers remain small despite o%

investments made thorou(h C5*K and FI5!* %or the %inancial incentive o%

researchers %rom ra6ilian institutions. In addition =!C- #coreboardR]I0 72+138

concludes that the international cooperation and movement o% research is not just

low but also brin(s insi(ni%icant scienti%ic results.

s %or the Innovation *olicy *lat%orm/ R]I0 =!C- 72+148 ra6il must develop

support %or innovation buildin( e%%icient institutions %or education and R- due to

importance o% education to the development o% innovation. 5e(ative data is provided

by =!C- #C=R!=R-R]I0 72+138 which in%orms that the total investment in

education in ra6il is still very low o% total "-* 71T8 while itJs nei(hbour Chile invest

almost 2.$T and Canada almost 3T.

lthou(h there are many ne(ative points re(ardin( research or(ani6ations and

universities there has been a (reat development both in number o% students in all

levels. 'he policies o% education such as *R=E5I FI!# *R=5'!C improvement

o% the educational systems and teachers in (eneralB as well as the %inancial

incentives bein( directed to hi(her education and (overnment (rants.

In this conteAt ra6il @uali%ies as a old industrial re(ion in the number and @uality o%

universities. 'he ones considered to be hi(h@uality have are mainly orientated to

traditional technolo(ies. 'here is not much partnership between companies and

universities to develop innovation. ccordin( to *olanyi 71),,8 it is important that

there is a certain partnership between universities and private sector in order to

provide practical learnin( %or students since the masterapprentice relationship

teaches as much as the academic side o% education.

b8 education?trainin(/

44



ccordin( to C*!# <C'I 72+118 despite a slow (rowth in academic (raduates

over the last 2+ years in 2+11 almost $$.+++ masters and doctors students

(raduated in ra6il. 324T increase in comparison to 1))9 which (raduated

1&.+++ academics in public and private educational %acilities. 'his number is still very

small in comparison to developed countries which have achieved the nowled(e

based economy conteAt. In this sense it can be ar(ued that the development o%

thiners is vital %or an economy to (row %rom a low technolo(ical intensity scenario to

a very hi(h intensity conteAt. 'his can mainly be related to the low incentives to

innovation in ra6il.

*ro%essionals in ra6il still pre%er to %ocus on more practical bachelorDs de(ree that

%or instance would (uarantee their participation in the labour maret rather @uicly in

comparison to the academic career choice which would tae a lon(er dedication

without (uarantee o% %inancial and career pro(ression in a short time as they would

have with bachelorDs de(ree in the private sector.

cademics that insist in pursuin( their vocation havin( to become %rustrated by low

opportunities o% jobs in di%%erent sectors mainly %ocussed on the public universities

career or pursue international careers that have hi(her demand %or hi(hly silled

labour thus (eneratin( a nowled(e %low and brain draina(e to these nations

leavin( ra6il with even less innovator and thiners.

s a peripheral re(ion bra6il %ocuses its educational e%%orts on the e%%iciency o% the

low and medium level @uali%ications and trainin(. lthou(h there are traditional and

well established vocational school and developed educational policies such as

*R=5'!C FI!# and *R=E5I the participation o% hi(her education (raduated in

the overall maret is still around 1+T.

#.2.#. >nowled,e t&ansfe&?diff%sion

s previously stated in ra6il there is a very di%%icult reality %or the developed o%

nowled(e and technolo(y into actual commerciali6ation. 'he innovations created

4$



despite havin( hi(h demand in the domestic maret still shows low in%luence on total

"-*.

'echnolo(ical di%%usion understand the process in which a technolo(ical innovation is

adopted by the maret a%ter bein( developed. 'he main objective o% dissemination is

to eAchan(e innovations that can contribute to increased e%%iciency and e%%ectiveness

o% the means o% production that are bein( used at that moment. ny dissemination

as an impact o% technolo(y occur di%%erently amon( di%%erent economic a(entsbene%it.

'o better eAplain technolo(ical trans%er we will use the words o% #5'=# it is S'he

process by which an invention or intellectual property resultin( %rom academic

research is licensed or trans%erred throu(h the use ri(hts %or a %orpro%it entity and

conse@uently mareted.S

-espite not in the same level as international upper levels nowled(e %lows in other

countries accordin( to Innovation *olicy *lat%orm/ R]I0 =!C- 72+148 ra6il has

developed many support mechanisms to encoura(e eAchan(e o% ideas such as

incubation provision o% %acilities %or independent researchers incentive on joint

projects establishment o% startups and %inancial support reachin( in 2++& E#L 2+4

million. <ost pro(rams incentive nowled(e %lows between universities and R-

related companies. #!R! the public company to incentive entrepreneurship in

the country plays a stron( role in developin( technolo(ical intense enterprises.

'he innovation 0aw 72++48 has opened many doors %or the development o%

nowled(e %lows by helpin( creatin( innovative companies with the support o%

incubators %acilities and partnerships to mae possible the shi%t to a more inte(rated

nowled(e system. Resources %rom #IR'!C and other (overnment policies have

directed %undin( to these activities. 'hese have already shown results. 'he ey aim

today is to brin( hi(her interactivity between universities and the business sector.

=nly throu(h this inte(ration will the innovation system be %ully e%%icient in nowled(edi%%usion.

4,



#.2.!. etwo&s

ra6il classi%ies an old industrial re(ion since the system still has not mana(ed to

brea %rom technolo(ical or political locin. lthou(h the networs are very well

developed throu(h policies and %ramewors %or the system o% innovation the

relations between the actors is still developin(. 'here is a need to improve

inte(ration between these which would so mae the innovation system more

%unctional and so main( possible the development o% many actions re(ardin( the

evolution o% the innovation system in the country.

#.2.7. C&eation of Le,itimacy and /&otection on innovation

'he *atent law 70aw ).2&)?),8 re(ulates the obli(ations and ri(hts relatin( to

industrial property to ensure the inventor o% a new product the production process o%

industrial or utility model application the ownership o% his invention %or a certain

period durin( which any interested in main( the invention %or commercial purposes

you must obtain permission %rom the copyri(ht and pay him royalties.

#pillovers have always been the main concern o% innovators when investin( in new

technolo(ies. -edicatin( months and even years in projects to (ive nowled(e to

competitors has been a major concern o% researchers all over the world.

In ra6il the lac o% incentives %or the development o% new technolo(ies re%lected in

2+1+ the very low number o% patents re(istered in the Enited #tates *atent =%%ice

with only $,9 patents re(istered not much more in relation to 1)9+ where there have

been re(istered $3 patents. 'his is a minuscule amount %or a country which sees

development throu(h R-. In #outh >orea on the same period have been

re(istered 2,.+4+ patents 7in 1)9+ re(istered only 33 patents8 and in the Enited

#tates 241.)&&. 'he company 'oyota alone in 2++) re(istered more than 1.+++

patents accordin( to E#*'= 72+148. ccordin( to =!C- #C=R!=R-R]I0

72+138 'he number o% patents per capita in ra6il is an even worst problem where it

is lower than the other RIC# nation showin( the low culture o% intellectual propertyin the country.

4&



=nce brou(ht up these numbers it is easier to understand why ra6il has di%%iculties

in emer(in( to a nowled(ebased economy in comparison to more advanced

nations in the world. 5ot only this is an intellectual property problem but also it

becomes clear that there are patents that are not bein( re(istered missin( out on

possible revenues or in some cases just archived in universities all over the country

never main( the production chain slowin( the technolo(y intense economy.

(ood eAample is the GCopaNbaG it is a seed ori(inated %rom ra6il used as a naturalantibiotics and antiin%lammatory to treat urinary and lun( in%ections psoriasis

ec6ema and wounds. ra6il is the nation that has made most publications related to

the seed 7&, publication8 almost & times more than the second country that made

any research on this the E# 7118. 5evertheless ra6il has not made any patents

re(istration in the last 1+ years however the E# has made 1& and even apan has

made 2. 'his demonstrates the lac o% intellectual property culture in the country

75I?C 2++)8.

#.2.5. (nalysis

In the %ramewor proposed by '^dtlin( and 'rippl 72++$8 it would be di%%icult to

@uali%y ra6il as a speci%ic type o% re(ional innovation system. 0ie most countries in

the RIC# which %ind themselves in a conteAt o% shi%tin( %rom underdeveloped

economies to well developed ra6il is a country that has many traces o% a peripheral

re(ional system as well as old industrial re(ion characteristics.

=verall ra6il is an peripheral re(ional system since it is still very premature in the

sense o% cooperation and actual use o% actions. 'he country searches %or possibilities

o% improvin( educational in%rastructure as well as nowled(e di%%usion between

a(ents. 5evertheless it is possible to analyse a resistance a(ainst chan(e by

institutions in order to wor better as one to achieve desirable (oals.

In the other hand ra6il shows many important characteristics that old industrial

re(ions have. lthou(h bein( a relatively youn( nation the country bene%ited %rom

the industrial revolution just lie other countries in the world. 'his shows that ra6il

49



has a relatively stron( industrial revolution. 'he problem lies on the locin which

taes place in the ra6ilian maret where innovations are rarely seen in the maret

and the search %or developments is still very shy compared to other nations.

'o achieve a e%%icient %unctionality in the national innovation system must adapt to

inte(rate policies and staeholders to pursue common (oals as partners. Innovation

can trans%orm the country in a %ew decades i% properly administrated.

).#. Sector Economic nd Mar;et nalysis0

'here is a sta(nation o% innovation indicators in ra6il in relation to a set o% %actors

that are related to the characteristics o% the ra6ilian productive sector the eAistin(

research in%rastructure in the country and with the tools to encoura(e the

technolo(ical e%%orts o% %irms and their interaction with the universities and research

centres between others. mon( these %actors it is hi(hli(hted a productive structure

speciali6ed in se(ments less technolo(yintensive small scale production o%

ra6ilian companies and the eAistence o% %ew ra6ilian companies o% national capital

in more technolo(yintensive sectors.

ccordin( to *I5'!CI"! 72++98 the *ro(ressive "rowth rate o% innovation (rew

%rom 31.$T in 2+++ to 39.1T in 2++9. 22.3T o% innovative companies used at least

one instrument o% (overnment support while in the previous survey was 19.9T. 'he

innovative e%%ort is still concentrated on the ac@uisition o% machinery e@uipment and

so%tware. Companies with medium?hi(h technolo(ical intensity recorded hi(her rateso% innovation. !.(./ automotive industries 793.2T8 and pharmaceutical industries

7,3.&T8. 'here was an increase in the technolo(ical intensity o% the hi(htechnolo(y

sectors 7whose R- ? R0 ratio increased %rom 1.9)T to 2.29T between 2++9 and

2+118 mediumhi(h 7%rom 1.13T to 1.2&T8 and mediumlow 7%rom +.,2T to +.&9T8.

=n the other hand the lowintensity se(ment technolo(y R- ? 5#R ratio %ell %rom

+.2,T to +.22T. =ne can also observe that the sectors are medium to hi(h tech

ones that contribute most to total spendin( on R- in the manu%acturin( industry in

ra6il 7+.3&T to +.&$T in 2++9 and +.42T to +.93T in 2+118. #ectors o% low

4)



technolo(ical intensity in turn althou(h they represent about a third o% the R0

to(ether contributed only +.+9 percenta(e points 7in 2++98 or +.+& percenta(e points

in 2+11 %or the R- ? relationship R0 industry avera(e processin( 7*I5'!C

Results I"! 72+118.

-espite the e%%ects le%t by the international crisis the economy in ra6il continues to

(row slower nevertheless the number o% companies bein( born remain lar(er than

the ones dyin(. :hich shows the improvement o% enterprise lon(evity in comparisonto the previous years and even to other countries. ccordin( to the =!C-

!ntrepreneurship at a "lance 72+138 all the =!C- nations had a hi(her rate o%

enterprise death than births apart %rom >orea 0uAembour( and mainly ra6il.

:hat can be seen in the recent period is a deepenin( o% this speciali6ation.

'here%ore international commodity prices still hi(h and a bacdrop o% slowdown in

industry 7sector accounts %or over &+T o% business R- in the country8 contributed

to %urther speciali6ation o% the ra6ilian economy in se(ments o% low technolo(ical

intensity. In this sense there seems to be a problem o% composition/ despite the

(rowth o% the nowled(e content in technolo(yintensive sectors these sectors are

losin( (round in the ra6ilian productive structure. In other words the technolo(ical

e%%ort increases in important se(ments o% the industry but the share o% these sectors

in the economy decreases. 'his eAplains why the increase in R- in the

manu%acturin( industry has not translated into an eApansion in the ratio R - ? "-*.

s per the data o% *I5'!C ResultsI"! 72+118 eApenditures on internal R-reached in 2+11 E#L 1).)$ billion currents whereas spendin( on %orei(n ac@uisition

o% R- reached E#L 4.2) billion to RL24.24 billion. :hen compared to "-* this

represents +.$)T versus +.$9T.

'here was an increase in R-?R0 industry relationship which increased %rom

+.&3T in 2++9 to +.91T in 2+11. I% the analysis is restricted to the minin( industry

this ratio (oes %rom +.1$T to +.42T while limited to the processin( industry analysis

indicates an evolution o% R-?R0 %rom +.&$T to +.93T. ll these percenta(es show

$+



that between 2++9 and 2+11 the ra6ilian industry increased its investment in R-

7*I5'!C ResultsI"! 2+118.

Financial Incentives/ ccordin( to the <C' in 2++, 13+ companies spent about

E#L 2 billion in their R- projects. 'his (enerated a real reduction o% E#L 19)

million in social contribution and E.#. L $2$ million in income taA. I% accounted %or all

taA incentives o% 0aw the real (ain %or these companies was around E#L 22) million

in 2++,. 'his is an eAample o% how the %inancial incentives to these %irms is e%%icientand can help develop more innovations over time. However the number o%

companies is still very small compared to what it could be.

ccordin( to economist Robert #olow by includin( taA incentives 7taA cuts8 and lines

o% credit %rom 5-!# subsidi6ed as a way o% promotin( innovation the 0ar(er ra6il

*lan contains real measures o% promotin( Innovation over lon( periods nevertheless

it does not brin( much development in shorter periods.

'he major criticism that maes the "oodwill 0aw une@ual is the disre(ard to small

companies that are %ramed in a simpler taA %rame which is re(ime based on deemed

income. 'he stated reductions in taA can only be redear in taA system based on

taAable income. In this sense lar(er %irms will always be more %avourable to taA

reductions and even reduce one third o% their eApenditures.

'he milestonere(ulation that enables the (rantin( o% a subsidy was established a%ter

the adoption o% the Innovation 0aw and the 0aw o% "ood It is observed %rom the chart

below that companies that had the hi(hest number proposals contracted economic

subsidies %rom 2++, to 2++) were the #<!s. *I5'!CI"! 72++98.

ccordin( to data provided by the =!C- 72+148 ra6il %ocus its support to the

development o% R- in taA incentives rather than direct (overnment %undin(. It is

illustrated in the (raph that ra6il provides small investments in comparison to

Countries such as the E# Russia >orea and France.

$1



).%. $istorical and Social nalysis0

History itsel% is a %actor that chan(es institutions and culture in (eneral. 'hat bein(

said it is important to point out how history has in%luenced the development o% the

national innovation system in the the country.

s it has been previously pointed out ra6il has shi%ted %rom many di%%erent

economic philosophies over a little more than a century. 'he country shi%ter %rom

monarchy to a more totalitarian republic later by dictatorship %ollowin( by ri(ht win(

(overnments and %inally most recently by the le%twin( politics. 5evertheless the

country has always had a status o% third world nation and considered to be a mare

spectator in the (lobal scenario.

ccordin( to =!C- 72+148 challen(in( %ramewor conditions and substantial social

challen(es such as poverty eAplain the (enerally wea #'I per%ormanceG. In

countries such as ra6il these %actors would a%%ect the development o% policies by

providin( slow and costly re(ulations in the country. ureaucracy and ine%%iciency is

an inheritance %rom the colonial period.

).). International omparison and nalysis0

ra6il is becomin( a more important actor on the world sta(e both %rom an economicstandpoint innovation which provides more opportunities %or international

$2



cooperation and increased presence o% ra6ilian technolo(y in %orei(n marets. 'heeconomic momentum that the country lives opens a ran(e o% opportunities in overalleconomic development. Innovation is an important tool to (enerate economic (rowth.'he country despite the international %inancial crises has %ound a scenario o% (rowthtrajectory which does not seen to be chan(in( in the past years. 'he country hasimportant research institutions that %ocus in hi(hly developed technolo(ies such asdeep water oil eAtraction done by institutions such as *!'R=R# the publicpetroleum company in the country.

It was published the "lobal Innovation IndeA 72+138 where it analysed throu(h the

eyes o% di%%erent variables how innovative countries were tain( into consideration

%actors such as eApenditure on R- development o% human resources patents

re(istration and etc. s a result it was observed that the top %ive most innovative

countries were %rom !urope and 5orth merica on the %ollowin( order/ #wit6erland

#weden Enited >in(dom Holland and the Enited #tates. -espite this result had not

caused much surprises another %amiliar conteAt is the %act that ra6il was held in the

,4th place behind countries economically weaer such as Eru(uay 7$2th8 Colombia

7,+th8 and Russia 7,2th8. 'his clearly demonstrates that ra6il still has a low culture

o% innovation in comparison to some smaller nations and very %ar behind in

comparison to the developed nations o% the northern hemisphere. =!C- 72+148 and

I'IF 72+128 both point out how ra6il is levelled in the lowermid or lower tier in the

"lobal Innovation *olicy IndeA.

$3



In re%erence to the data provided by *I5'!C R!#E0'E#I"! 72+118 etween

2++9 and 2+11 the world went throu(h a crisis that obviously had an impact on

investments in innovation. s a result countries lie the Enited #tates and #pain

showed a decrease o% their business investments in R - relative to "-*. In the

%irst case this ratio %ell %rom 1.)&T in 2++9 to 1.93T in 2+11 and the second %rom

+.&4T to +.&1T o% "-* in the same period. In both cases these reductions were

observed a%ter a threeyear period 72++$2++98 in which the corporate R - ? "-*

relations had risen. 'here are however eAceptions. Indeed the !uro6one showed a

sli(htly upward trend o% business eApenditure on R-?"-* in the three periods and

China mana(ed to increase this ratio by almost +.$ percenta(e points between 2++$

and 2++1 with emphasis on the period 2++92+11 in which this indicator increased

%rom 1.+9T to 1.3)T. 'hese data show that the relative sta(nation o% the ra6ilian

economic indicators althou(h consistent with what has been observed in more

advanced countries tend to penali6e it compared to an emer(in( country lie China.

lthou(h the i% the stron( e%%orts to develop a stron( innovation policy in the country

over the years these were unable to reverse the development trend. In the last

decade the country has built a relatively complete menu innovation policies/ taA

incentives subsidies subsidi6ed credit amon( others. -espite this set o% policies

aimin( in the ri(ht direction it lacs ey elements especially %ocus prioriti6ation and

ade@uate resources. Initiatives try to overcome these limitations but the results will

only be observed in the %uture.

$4



Re(ardin( the development o% articles and patents ra6il is still a country that

produced low number o% innovations =!C- 72+148 eAplains that ra6il still has a

lar(e dependency on international lina(es to develop more compleA researches. round 2&T scienti%ic articles are published in coauthorship with %orei(ners and

1&T o% patents. 'his is a clear eAample o% how ra6il still sees itsel% as a spectator in

the world scenario. It is important that one sees themselves as important

staeholders and (ive the proper (uidance to their capabilities.

#.7.1. (nalysis

It is possible to a%%irm that althou(h ra6il is in a very mportant period o% economic

(rowth which will probably shi%t itJs history in the neAt decades the country is still

behind developed nations in many ways. In re%erence to the conteAt o% innovation

$$



policies and system the country is to very %ar %rom policies and institutions

developed to impulse innovation development. 'he ey problem which ra6il %aces in

comparison to the (lobal scenario is the lac o% inte(ration and investment in R- in

the country. 'he national in%rastructure is still considered to be wea and education

to elevate innovative thinin( is not very stron( as it is in the other countries.

Concludin( ists possible to say that ra6il has much to develop to reach the level o%

international partners nevertheless as it is pointed by 'ripll 7\Z\ZZ8 not all

%ramewors are ideal %or all innovation systems thus ra6il needs to adapt e%%icient

%ramewors to the national reality.

$,



CH*'!R , -I#CE##I=5 5- C=5C0E#I=5#/

'he development o% an innovation system is somethin( rather compleA and

hard to evaluate and cate(ori6e all the aspects over a sin(le %ramewor. 'hats is

why the inte(ration o% di%%erent %ramewors proposed by authors such as LL\L[

L\LZ is very important to the evaluation o% an innovation policy and system. For ra6il it could be no di%%erent specially because ra6il does not @uali%y itsel% as a

sin(le %ramewor. RICs are in a di%%erent sta(e than developed and undeveloped

nations their innovation systems are compleA and despite havin( many %ailures it

presents characteristics o% very developed systems which maes the analysis very

hard to be made.

History and culture/

'he importance o% historical %actors to the innovation system in ra6il is very

clear. lthou(h there is a very stron( innovation culture in relation to the level o%

importance o% innovation to the overall economy ra6ilians still are very conservative

in relation to (eneral chan(es and so innovation is rather wea in the country. 'at

bein( said staeholders must raise throu(h innovation policies the sel%steam o%

ra6ilians re(ardin( their capabilities o% developin( innovation.

'his social structure in ra6il was developed as a result o% (overnment

instability underdevelopment and polari6ation o% the international order which ept

many nations outside the innovative nowled(e %low between nations. In interviews it

is pointed out how (overnment measures that aimed to mae the domestic maret

stron(er bac%ired bin(in( the notion to people that imported products would always

be better than nation products this line o% thinin( is only recently be(innin( to

chan(e.

$&



!ducation/

s it was pointed out in di%%erent parts o% this paper the importance o%

education to the development o% innovation in a country is perhaps the most

important %actor in in relation to the development o% a stron( innovation system.

'he development o% educational policies and the overall educational system inra6il has been %or(otten by previous (overnments which classi%ies ra6il as a very

wea educational system within the international education indeA 73)th8. 'hese %acts

are very serious and this is just a eAample o% how ra6il has developed over the the

decades.

In order to %iA these institutional and policy problems it is important that

staeholders %ocus the development o% more incentives to education throu(h

scholarships (rants and provide a support %or the population to educate themselves.

Havin( only 11T o% itJs population with a hi(her education is not an acceptable

percenta(e %or a country which aims to become a nowled(ebased economy. It is

necessary that there are more pro%essionals @uali%ied in the technical and

technolo(ical %ields.

lthou(h ra6il sees (rowth in the hi(her education sector the acesibility and

@uality o% education is still very distant %rom an international perspective. It is

important that (overnment and private invester create more institutions to promote

education in hi(hstandards. It is important that the creation o% these institutions tae

place in less economical areas such as the southeast part o% the country in order to

(enerate development in poorer re(ions.

It is important to discuss that ra6il has in the previous year developed many

important educational policies which are already brin(in( results such as *R=E5I

FI!# and #cience without %rontiers nevertheless it is necessary the continuance o%

policy development in order to stren(then education in the country.

$9



usinesses/

ccordin( to I*! 72++)8 ra6il must develop an innovative culture in order

to be more competitive with other nations and especially in the private sector.

Companies that innovate and di%%erentiate their products and services pro%it more

employ more remunerate well above avera(e have better @uali%y silled labour

eAport $ times more and with prices at least 3+T hi(her than those eAporters who do

not innovate. I*! 72+118 also con%irms this theory by statin( that the companies

with technolo(ical advanta(es mae only 3.$T o% the total national industry.

5evertheless they are responsible %or 43.4T o% the total income %rom the national

industry and %or 4).2T o% the whole industry trans%ormation employ 21T labour

are 2., times more productive have an annual avera(e salary 1.9 times bi((er than

the national avera(e and %urthermore are the ones that attract most investments.

In order to improve private sector participation in the national innovation

system staeholders must %ocus on stimulate innovation in %irms in order to (enerate

wealth. 'hrou(h the development o% an innovative culture in %irms actors will

understand the importance o% innovation to %irms.

nother important %actor to businesses is the %act ra6il needs to have a better

representation re(ardin( innovation that would be eAported ra6ilian technolo(ies

are not very %re@uently seen in the overall maret. 'his a problem since i% there is no

visibility to ra6ilian products revenue will be low and so innovations will no (enerate

as much bene%its to %irms as it should.

It is also very important to say that the solidi%ication o% the brid(e between

R- and the actual (eneration o% wealth in %irms is somethin( that still has to be

intensi%ied in ra6il. 'he educational sector should %ocus on researches that can lead

to patents and wealth in %irms. *atents and publications stored in academic o%%ices

will not mae ra6il more innovative.

$)



<aret development/

!-IKEI#' 71)))8 'hrou(h various public actions the %unctionin( o% marets

can be improved or the state may create marets. 'he improvement o% the

%unctionin( o% marets is the objective o% competition law and competition 7antitrust8

policies. It is o%ten a matter o% increasin( the de(ree o% competition in a maret. 'his

mi(ht sometimes be achieved throu(h dere(ulation i.e. "ettin( rid o% old or

obsolete re(ulations. =ne eAample o% maret creation is in the area o% inventions.'he creation o% intellectual property ri(hts throu(h the institution o% a patent law (ives

a temporary monopoly to the inventor. 'his maes sellin( and buyin( o% technical

nowled(e easier.

Investments and incentives0

lthou(h the present policies have developed much on the possibility o%

investments in R- and taA incentives to actors that are willin( to develop innovation

in the country the amount o% resources directed to these actions is still very low. It is

important to develop a stron(er in%rastructure in the country and develop research

centres that will help public and private sector to be more inte(rated to the overall

innovation system. <ore project (rants should be available %or actors to develop

independent project.

*olicies re(ardin( investments in R- to (overnments are seen as tools to

develop the economic scenario presently and in the %uture. For companies the

development o% innovations is much related to the actual %inancial bene%its that these

will provide. 'his bein( said it is important to point out that to bene%it both the

economy and %irms taA incentives (overnment (rants and invests must be directed

to companies. n important point to re%er to is the necessity %or e@uality between

lar(er and smaller %irms. #maller %irms in the innovation system are not always

considered %or these resources but they are the companies that (enerate most jobs

in the country.

&olicy and system interaction0

,+



s it was previously stated in this paper the innovatio policy %ramewor in

ra6il is very well developed. It has developed into laws strate(ic plans and most

recently is evolvin( into a national code o% innovation which will provide even more

le(al (rounds %or the development o% innovation in the country. lso the country does

no have a lac o% stron( institutions. 'hese are very well established and are e%%icient

in the purpose.

'he downturn in ra6ilian innovation system is the lac o% interaction between

actors in the system. lthou(h these are very e%%icient in their individual activities

institutions have di%%iculty in ali(nin( their strate(ic actions with other institutions. 'his

creates a problem %or the national innovation system since without interation

policies and actions proposed cannot be applied.

#ince ra6il needs this inte(ration to develop itsel% and so achieve the

desireble economic chan(e in the country the country needs to mae chan(es to

adapt to these chan(es. 5o lon(er must one staeholder or instution thin o% itsel%

as an island in the innovation system conteAt. lthou(h there have been e%%orts in recent (overnments to stablish this

inte(ration it has %ailed so %ar. 'his is a cultural trait instaled in ra6ilian (overnment

sector which needs to be chan(ed. 'he e(o war played by many institutional

directors and politicians will never bene%it the national innovation system. <ore

e%%orts must be directed to this (oal by either adaptation to a benchmared

%ramewor %rom other nations or %rom induced culture chan(e in public institutions.

'his is vital dor the development o% ra6il into a nowled(e based economy.

-I6< 56<4SI560

Concludin( it is possible to a%%irm that althou(h ra6il had a rather late

innovation system development it is still a country with lar(e potention %or he

development o% innovations as a ey %actor to stren(then the economy.

#taeholders are worin( to re(ain the lost time however more must be done

%or the system. 5ew actions must be developed in the inte(ration between a(ents

stimulation o% R- support to businesses solidi%ication o% educational system and

many other %actors previously inte(rated in the paper.

,1



'he %uture o% ra6il as a nowled(ebased economy is promisin(.

5evertheless it is important to point out that the %uture is not a mater o% %ate but so it

is a matter o% choice. *roblems are evidence in the system but how they will be dealt

with is the ey to the %uture o% the ra6ilian innovation system.

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Documents

the outcome of brazilian innovation sistem, and how has it change over time