Inovelab

The country accounted for 60% of research and development investment among Latin American and Caribbean countries. It is also the region's only nation to allocate over 1% of its GDP to innovation.

Agência Brasil

Brasília – Recent Inter-American Development Bank (IDB) data show that Brazil accounted for 60% of investment in research and development among Latin American and Caribbean countries in 2007. It is the only country in the region that sets aside more than 1% of its Gross Domestic Product (GDP) to innovation.

According to the IBD, one of Brazil's strong points are its mechanisms for fostering technological research. As in its neighbouring countries, however, red tape and lack of coordination between the government and businessmen hamper the growth of Brazilian innovation, preventing the country from climbing up the global ranking.

"Brazil probably has more tools for encouraging innovation than any other country in Latin America. When I went to different states and spoke with businessmen, I would always hear complaints that they [mechanisms] require too much red tape, are slow and there is not enough information about them," said Flora Painter, head of the IBD's Science and Technology Division.

The bank's representative attended a seminar on regional innovation systems held yesterday (14th) in Brasília, sponsored by the National Confederation of Industries (CNI), the Brazilian Industrial Development Agency (ABDI) and the Spanish Agency for International Development Cooperation.

One of the government mechanisms for encouraging business innovation is subvention – funds disbursed by the Studies and Projects Funding Body (Finep), of the Ministry of Science and Technology, by means of edicts. According to the ministry, over 1.7 billion Brazilian reals (US$ 995 million) have been disbursed since 2006. Companies, however, complain that the disbursing of funds via edicts are not compatible with the pace of industrial production.

Another issue detected by the bank is that businessmen do not point out how support mechanisms could meet their demands. "Businessmen do not possess the required knowledge to express what their needs are and to devise projects."

According to the bank's survey, the private sector's share of total funds for innovation in Latin America and the Caribbean is small. Whereas in Brazil and other Latin American and Caribbean countries, 60% of the funds are provided by the government, in the member countries of the Organisation for Economic Cooperation and Development (OECD), the rate is 36%.

To Flora Painter, the lower inflow of funds from Brazilian companies may have to do with legal and economic insecurities. "For any given company, investment must take place in a comfortable, stable environment. Brazil made progress with regard to economic and political stability. The country, however, has major problems with regard to providing financing to companies at reasonable interest rates," she explained.

The CNI's director of operations, Rafael Lucchesi, shares the same opinion. According to him, multinational companies, for instance, fear investing in Brazil and later having to pay a high volume of taxes as a result.

During the seminar, diagnoses on business innovation in four states were presented (Alagoas, Paraíba, Santa Catarina and Minas Gerais). The survey pointed out some of the problems that companies have when trying to innovate: accumulated demand for financing, lack of knowledge of technological services and no communication between universities and entrepreneurs.