Second International Workshop of the BRICS ProjectRio de Janeiro - 25-27 April 2007

FINEPThe Brazilian Innovation Agency

Ministry of Science and Technology

Science, technology and innovation policies in Brazil

Odilon Antônio Marcuzzo do CantoPresident

Framework of the presentation

• The Brazilian ST&I System

• Recent Brazilian ST&I System achievements

• The National ST&I Policy

• Ministry of Science & Technology

• FINEP: The Brazilian Innovation Agency

• FINEP Programs for firms’ innovation

S&T Policy

1950

Individual grants

Institutionalisation of research & post-graduation

Policy stagnation

Industrial Policy

Based on foreign technologyC

NP

q C

apes

Funt

ec/

BN

DE

SFI

NE

PFN

DC

T

MC

T

lack of policy

1960 1970 1980 1990 2000

Evolution of the Brazilian Industrial Policy

• Total of public HEI: 207 (83 federal, 65 state and 59 locals)

• Total of private or community IHE: 1,650

• Graduation courses: 16,000

• Master courses: 1,833

• Doctorate courses: 986

• Research institutions: 335

• Researchers: 77,600 (48,000 Ph.D.)

• Research teams: 19,500

• Qualified HR:

– 65% within universities

– 30,9% within industry

Brazilian ST&I System: global framework

Brazil

Source: OCDE, MSTI, 2004

Brazilian investment in S&T and percentage of GDP

1,22%1,25%

1,23%1,19%

1,17%1,12%

0

5

10

15

20

25

2000 2001 2002 2003 2004 2005

Private States governments Federal government

R$

bill

i ons

*

Source: MCT* Estimated

Ministry of Education

UFTO

Federal University System

•

UFCG •

Technological Institutes

Papers/Year

0

2000

4000

6000

8000

10000

1980 1984 1988 1992 1996 2000 2004

0

5 000

10 000

15 000

20 000

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

PhD Graduates/Year

• Brazilian Technological Innovation Survey*(PINTEC/IBGE, 2002 & 2005)

– Universe researched in 2003: 84.300 firms (10 or more employees)

– Increasing the firms innovation rate from 2000 (31.5%) to 2003 (33.3%)

– Decreasing of internal R&D activities as percentage of the revenue: 0,64% (2000) to 0,53% (2003)

– Low innovation rate compared to other countries

– Innovative pattern: high concentration in machine and equipment acquisition

* Methodology based on EUROSTAT – Community Innovation Survey (CIS III) 1998 - 2000

Brazilian industrial firms innovation

21,2

25,6

28,2

32,2

33,9

25,1

62,1

82,8

17,9

32,9

35,8

47,5

36,6

45,6

76,4

30,5

56,6

74,5

79,7

29,6

25,5

24,0

0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 90,0

Organisational rigidity

Consumers’ weak interactions

Lack of technical services

Lack of cooperation opportunities

Lack of market information

Technical standards adjustment difficulties

Lack of technology information

Lack of highly qualified HR

Lack of financial resources

High economic risks

High innovation costs

1998-2000 2001-2003

Brazilian firms innovation activities: main constraints

Source: IBGE (www.ibge.gov.br) 3ª CNCTI

• National ST&I Policy: innovation became a government policy

priority

• Industrial, Technological, Foreign Trade Policy (2004) – re-insertion of these issues within the Governmental Policy Agenda

• Sectoral Funds (since 1999): innovative economic engineering to complement, expand and secure the financial sources for ST&I

• Transversal Actions (2004): utilizing more than one Sectoral Fund

• New regulatory and legal environment (2005): Innovation, Informatics and Bio-security Laws; grants for R&D HR in companies; regulation of FNDCT; and MSEs Law

• Decentralisation of federal governmental ST&I policies and their integration to the state and local levels

• Emphasis on MSEs’ promotion, regional development and social inclusion

Recent Brazilian ST&I System achievements

15 Research Institutes

Ministry of Science and Technology

National S&T Council

The National ST&I PolicyDesigned and implemented by the Ministry of S&T

1. Strategic axes

So

cial

incl

usi

on

2. Strengthening of agencies programs (CNPq and FINEP)

3. Broadening of sources of financial resources

Expansion and consolidation of National System of Science Technology

and Innovation

Ind

ust

rial

, T

ech

no

log

ical

&

Fo

reig

n T

rad

e P

olic

y

Nat

ion

al s

trat

egic

o

bje

ctiv

es

Sectoral Funds for Supporting Scientific and Technological Development

• Creation: from 1999 onwards

• Financial sources: financially fed from selected productive sectors through the contributions of companies’ invoicing and/or from the earnings arising from the exploitation of natural resources belonging to the Federal Government

• Aeronautics; Agro-business; Amazon Region; Biotechnology; Energy; Informatics; Infra-structure; Mineral; Oil & Gas; Transportation; Health; Space Activities; Telecom; University-Industry Cooperation; Water Resources; and Water Transportation and Ship Building.

• Innovation Law (2005): strengthening the interaction between university and industry; promote the shared use of S&T infrastructure by firms and S&T institutions (emphasis on MSMEs); stimulate the creation of new technology based firms by researchers; create new financial mechanisms for grants to R&D and innovation in firms

• ‘Do Good’ Law (2005): create new financial mechanisms for grants to HR (M.Sc./Ph.D.) in innovation activities in firms

• MSEs Law (2006): invest minimum of 20% in MSEs

• Regulation of FNDCT (2007): resources flexibility and diversification of instruments

New regulatory and legal environment

The Industrial, Technological, Foreign Trade Policy (PITCE)

• Creation in 2004

• Re-insertion of industrial and technological issues within the Governmental Policy Agenda

• Innovation is crucial for competitiveness

• Pioneering convergence of industrial and technological policies

• PITCE is one of the strategic axes of the ST&I Policy

• FINEP: responsible for PITCE implementation

Investing more than US$ 500 million in PITCE actions

Investing more US$ 400 million in S&T infrastructure

Designing new instruments and programs for innovation

Inducing and financing firms’ R,D&I activities

Establishing synergies with other financial institutions and

relevant organisations

Working on the strategic sectors defined by the Federal

Government

FINEP 2003-2006: crucial importance within the

Brazilian industrial and technological policy

Publicly owned company subordinated to the Ministry of Science and Technology (MCT)

Mission

To encourage and finance innovation, and scientific and technological research in business, universities, institutes of technology, research centres, and other public or private institutions, mobilizing funds and combining the (financial) instruments for the country’s economic and social development.

FINEP

Financing Agency for S,T&I

• Research grants to non-profit R&D institutions

Bank

• Loans at low interest rates for R&D in firms

• Investments

FINEP’s main roles

Grants

Grants provided through FNDCT for public R&D institutions or non-profit organisations,and more recently, for private firms

Support includes every stage and dimension of the S&T development cycle: basic research, applied research, product, service, and process innovation.

Incubation of technology-based businesses, implementation of technology facilities, structuring and consolidation of research processes, development and innovation in established firms and market development.

FINEP: modalities of financial support

LoansCredit granted to firms for their innovative activities.Resources emerge from FINEP’s own funds or through on-lending from other financial sources.

Loans may assume different shapes: • standard loans; • low interest rates and • loans with profit sharing

InvestmentVenture capital funds related to innovation Seed capital

FINEP: modalities of financial support

I. Supporting firms’ innovation activities (credit, venture capital, economic subvention, RH, incubators, technological parks)

II. Supporting cooperation between firms and scientific and technological institutions (R&D and technical assistance)

III. Supporting scientific and technological institutions (modernisation of scientific and technological infrastructure, research in strategic areas)

IV. Supporting S&T for social development (health, sanitation, housing technologies, popular cooperatives, family agriculture, etc.)

FINEP ProgramsReimbursable & non-reimbursable resources

90

188

139

120 333

184

357

116

513

148

606

153

768

310

775

516

0

200

400

600

800

1000

1200

1400

1999 2000 2001 2002 2003 2004 2005 2006

FNDCT/non-reimbursable FINEP/reimbursable

FINEP total disbursements (reimbursable & non-reimbursable resources)

R$

mill

ion s

FNDCT - Disbursements in 1970 - 2006

0

100

200

300

400

500

600

700

800

900

FNDCT - Disbursements in 1970 - 2006

0

100

200

300

400

500

600

700

800

900

Sectoral Funds

FINEP investments in firms’ innovative activities (2003-2006)

0

100

200

300

400

500

600

700

800

2003 2004 2005 2006

Subvention Investiments Coop STI/f irms Reimbursable Total

• Ex-post evaluation survey (IPEA, 2005)

– The benefited firms of FINEP’s financial support present better performance, on average, related to R&D activities (50 to 100% more).

– Brazilian firms invest 80,8% more in R&D/GDP, than MNC subsidiaries in Brazil.

– Revenue, exporting value, salaries, job quality and productivity have been above average.

Evaluation surveys on the performance of firms

• Record budget: over US$ 750 million

• Broadening sources of financial resources capable of supporting an unforeseen portfolio of R&D project – 1,000 projects, totalling US$ 460 millions (demand of 5,300);

• Broadening credit portfolio for firms innovative activities - 67 projects, totalling US$ 290 millions;

• Broadening and improving FINEP’ programs and financing R&D cooperative projects established between scientific and technological institutes and firms, focusing on the priorities of the Industrial, Technological and Foreign Trade Policy.

FINEP results 2006

FINEPs’ Programs

Modality Programs Programs’ focuses

Line 1 - Firms’ innovative activities

Pro inovação R&D projects, innovation and technological capability

Juro Zero SMEs, production to commercialisation, under special conditions

PPGFOR Consultancy engineering activities for the energy sector

MDL Entrepreneurial pre -investment and financial support to cooperative projects related to the reduction of pollution emission

Loans to firms and investment (Reimbursable funds)

FINEPSUL Support to infrastructure projects of Brazilian firms of consultancy engineering within the context of South America countries

PAPPE R&D projects, business plans and market studies, focused on researchers and their activities within firms; creation of technologically intensive small and medium -sized firms by researchers

Economic Subvention PAPPE Subvention - Firms’ innovative activities in line with the Industrial, Technological and Foreign Trade National Policy and strategic sectors (partnership with other regional and state agents) Subvention for Innovation - Firms’ innovative activities in line with the Industrial, Technological and Foreign Trade National Policy and strategic sectors.

Grants (Non -reimbursable funds)

Incubator National Plan (PNI) Business incubators and Tech Parks

Inovar (Incubator-Funds) Venture capital

Inovar (Forum) Capitalization of tech nologically intensive small and medium -sized firms

Investments

Inovar (Seed Money) Structuring of local seed money funds

FINEPs’ Programs

Modality Programs Programs’ focuses

Line 2 - Cooperation between firms and scientific and technological institutions (STIs)

Coopera R&D projects and innovation activities

PPI-APLs R&D projects focusing on technological assistance and services to firms

RBT Suppliers and STIs (import substitution in selected productive sectors)

Grants to STIs

Assistec PROGEX E PRUMO - Assistance and tech consultancy to MSMEs

Line 3 - Scientific and technological institutions (STIs)

Proinfra Public scientific and technological institutions’ infrastructure modernization.

Modernit Qualification and modernization of public technological institutes

Grants

Promove Promotion and modernization of the Brazilian engineering

Line 4 - Scientific and technological support to social development

PROSAB Sanitation technology (low costs and easy applicability) HABITARE Housing technology (low costs and easy applicability)

PRONINC Tech incubators on popular cooperatives

Grants

PROSOCIAL Development and diffusion of technologies with social contents and interests, low costs, easy applicability and social impact

• To cope with the complexity and diversity embodied in the innovation issues (nature, policies, politics, etc.)

• To expand human, material and financial resources

• To stimulate firms to be engaged in innovative activities

• To improve partnerships, decentralising resources and operation

• To explore potentialities of new regulatory and legal environment

• To improve national and international strategic alliances

• To consolidate FINEP’s participation in the design and implementation of S,T&I policies

• To improve the internal organizational development.

Challenges

Thanks for your attention

Odilon Antonio Marcuzzo do Canto

odilon@finep.gov.br

Loans for projects focusing on product, process and service innovation, aiming at contributing to the improvement of entrepreneurial competitiveness.

- Standard financing: TJLP (9%year) + spread (2 - 6% year)- Reduced taxes financing: up to TJPL – 5% year (up to 4% year)

Reduced taxes application: Priorities and PITCE’s strategic options

Capital goods; pharmaceuticals & medicines; software & semiconductors; biotechnology; biomass; nanotechnology

Broadening the research team

Recruitment of masters and PhDs (at least 10% of the R&D team)

PROINOVAÇÃO

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PAPPE

• 20 out of 27 units of the federation

• 606 research projects developed by researchers

• 11% in biotechnology, 12% in health, 13% in energy, 18% in agro-business (related to Sectoral Funds)

• 46% in other sectors supported by the University-Industry Interaction Fund.

•  549 MSMEs all over the country, being:

– 62% micro, 21% small, 14% medium and 3% of large firms

– 37% incubatees and 63% not incubatees.

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Economic Subvention - R&D activities and HR

Innovative firms (any size)• Strategic sectors (pharmaceutical, ICTs)• Calls for proposals in 2006 (US$ 150 million): 1.100 firms’

proposals Micro and small firms• Decentralizing the operation and application of resources in

partnership with state foundations, regional development banks, Sebrae, etc.

• Calls for proposals in 2006 (US$ 75 million) for selection of states partners.

HR absorption• Subvention of part of the salaries of doctors and masters

employees in firms’ innovative activities

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Credit granted to MSEs for their innovative activities

no interests rates

no firms guarantees

no burocracy

Juro Zero

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Coopera: STIs and large/medium-sized firms

Non-reimbursable financing for projects focusing on PITCE priorities (pharmaceuticals & medicines, capital goods, semiconductors, software) and potential areas (biotechnology, nano-technology and biomass).

Total 2003-2006• 600 research cooperative projects• US$ 300 millions (FINEP) + US$ 100 millions (firms)

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Coopera: STIs and MSEs (partnership FINEP/Sebrae)

Non-reimbursable financing for projects focusing on innovation or technological diffusion of interest of MSEs (APLs, PITCE’s sectors and strategic options)

Calls for proposals (2005 - 2006)• Value of the call: US$ 38 millions (Finep + Sebrae) for

supporting projects between US$ 100 and 250 thousands, with firms’ counterpart of 5 to 30% (according to size and region)

• Approved: 167 projects, involving more than 700 MSEs

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PROGEX

• Partnership MCT and Ministry of Development, Industry and Trade (MDIC)

• Technological assistance, consultancy and services provided by technological institutes for supporting MSMEs exporting activities

• More than US$ 16.5 millions driven to more than 650 firms for the improvement of more than 1,000 products

• Evaluation: increasing of 153% exporting performance from a sample of 270 firms

• Increasing of 36.5% yearly compared to 18.5% from those not supported firms.

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INOVAR Program

• Incubator of Funds: Since 2001, 24 Funds implemented in Brazil, 12 invested by FINEP/IDB-MIF

• Seed money - Inovar Semente: 24 local seed-funds, R$ 300 millions, (40% FINEP, 40% other investors, 20% private), private management, incentives to private investor

• Portal Venture Capital Brazil – First website of venture capital in Brazil (2000) - 2.372 entrepreneurs registered and 635.941 consultations.

• Venture Capital – training of 100 professionals for the market

• INOVAR Network for business prospecting and development (FINEP, SEBRAE, CNPq, IEL, ANPROTEC e SOFTEX)

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FINEP – Investment in social development 2003-2006 (US$ 150 million)

AreasValue

(R$ million)Projects

1. Health and nutrition 108,70 812. Sanitation 24,26 933. Housing technologies 11,84 614. Education 7,56 205. Coop economies 11,35 556. Family agriculture 11,55 307. Local and regional development 5,22 98. Water resources 12,82 389. TICs for social development 74,42 4210. Culture 1,36 611. Sports 4,18 1412. Assistance technologies 11,38 2713. Social technologies 5,28 2614. Others 5,62 12Total 295,54 514

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