A Pol

1
A Política de Ciência, Tecnologia e Inovação no
Brasil perspectivas e necessidades de avaliação

• José Eduardo Cassiolato
• Seminário Internacional sobre Avaliação de
  Políticas de Ciência, Tecnologia e Inovação
• Diálogo entre as Experiências Internacionais e
  Brasileiras
• Rio de Janeiro, 03 Dezembro 2007

2

1. Some data
2. The Policy Evolution
3. Evaluating what?

3
1 - Some data
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Number of PhD Graduates 1980-2005
5
Brazil Number of MSc and PhD courses 1960-2005
6
Brazil Articles published in international
journals (indexed at ISI) Total and World
percentage 1981-2004
7
Brazil Number of graduates by region 1988-2002
8
Brazil Higher Education by Region - 2001
Region Higher education Institutions () Lecturers () Lecturers () Lecturers () Students ()
Region Higher education Institutions () Total MSc PhD Students ()
North 4.4 4.2 4.1 2.0 4.7
Northeast 15.2 15.5 16.1 11.7 15.2
Southeast 53.3 51.7 49.5 62.9 51.7
South 15.5 20.6 22.6 18.0 19.8
CentreWest 11.6 8.0 7.7 5.4 8.6
Total Brasil (number) 1,391 219,947 72,978 46,133 3,030,754
Enrolled students São Paulo and R de Janeiro
cities with 15.5 and 11.7 Of MScs and 27.0
and 12.3 of PhDs respectively
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Brazil Post-grad (MSc PhD) students by region
and scientific areas ( 1999 ()
Region Earth Sc Computing/IT Biological Sc Engineering Agricult. Total
North 2.2 - 3.8 0.5 1.7 1.6
Northeast 12.6 12.0 6.7 6.5 8.0 8.3
Southeast 68.5 52.4 71.2 70.4 69.8 69.0
South 12.6 33.8 13.7 20.5 18.1 18.1
CentreWest 4.0 1.8 4.5 2.1 2.4 3.0
Total Brasil (number) 7.232 2.358 7.300 14.188 7.774 38.852
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Brazilian Innovating Firms - RD/Sales Selected
Sectors 2000/2003/2005
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Innovation Rate (New Products to the Market)
12
Brazilian Innovating Firms Expenditures on
training over sales 2000/2003/2005
13
of Innovating Firms that Cooperate with
University and Res. Institutes/Total Innovating
Firms 2000-2003-2005
14
Government Support to Firms
Firms that Received Support/Total Innovators
Firms that received RD incentives/Total
Innovators
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Structure of GDP the increasing role of services
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And finally --- an indecent income distribution
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2 - Evolution of ST policies
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Evolution of Brazilian Industrial and ST
policies
Industrial Policies
Market Organizes
Based on Foreign Technology
Recent Changes
ST Policy
Funtec/ BNDES
CNPq Capes
FNDCT
FINEP
MST
1950
1960
1970
1980
1990
2000
Individual Support
Institutucionalization of Research pos-grad
Market Friendly policies
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From the 1950s to the mid 1960s

• ISI based on foreign investment ....and
  technology
• CNPq and Capes Support to individuals
• Failed attempt to create MST
• New institutions in some important areas (air
  space, for example) that led in the long run to
  important capabilities

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From the mid 1960s to the late 1970s

• Under ditactorship ISI based on foreign
  technology BUT strategic role of ST
• Transformation of CNPq into an agency to set up
  and implement a ST policy
• Setting up of FUNTEC at BNDES and Finep
  (financial arm of ST policy)
• Small tensions with foreign capital (the setting
  up of National Institute for Industrial Property
  to control remittances for technology)

21
Capital and tech flows of some MNCs in Brazil up
to 1975 (US million)
22
From the mid 1960s to the late 1970s

• Embrapa and technology in the agro-industrial
  sector

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Important achievements of the period

• A rapid increase in ST capabilities
• Setting up of Postgrad and Research
• Initial attempts to foster technology in industry
• Incentives (negative real interest rates)
• Using procurement as a policy tool
• Some programmes with long run effects (eg
  ethanol)
• First program on U/I linkages in 1974
• 1st and 2nd National Plans for ST (organizing
  ST activities)

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The 1980s Macroeconomic Crisis and Return to
Democracy

• The ealy 1980s - Budgetary Crisis rapid
  decrease of Federal Resources
• The mid 1980s - Democratization and the setting
  up of the Ministry of ST
• Recovery of level of expenditures
• Policies for HiTech and Human Resources
• The late 1980s Deepening of crisis high
  inflation and several institutional changes in
  ST policy

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Crisis in Funding Disbursements of FNDCT
(National ST Fund)1970 - 2006
Sectoral Funds
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The 1980s

• The World Bank loans and changes in management of
  resources introduction of public tenders

27
From the1990s Macroeconomic policies determine
ST policies

• The Collor Government and the abandonment of
  active policies
• Changes in Regulatory Framework (New Industrial
  Property Code, etc.)
• The Real Plan controlling the inflation

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Macroeconomic Context

• 1994 implementation of Real Plan
• 1995-1998 After the success of Real Plan,
  government maintained the macroeconomic austerity
  policy, based on restrictive fiscal and monetary
  policies, with an exchange rate anchor. Imports
  assumed an important function as one of the
  mechanisms to regulate national prices. The
  implementation of this exchange rate policy meant
  that imports increased more than exports, making
  current account deficits the balance was
  increasingly negative after 1995. This choice of
  economic policy resulted in a increasing
  vulnerability to the global economy and a very
  low real growth rate of Gross Domestic Product
  (GDP).
• 1999-2002 Successive international crisis
  (Mexican, Asian, Russian, etc.) and the
  increasing fragility of the trade balance and of
  the Balance of Payments resulted in the
  transformation of exchange rate regime in January
  of 1999, towards a floating exchange rate regime.
  The macroeconomic policy adopted the
  inflation-targeting regime having, again, as the
  main mechanisms the (high) interest rates and the
  rigorous fiscal adjustment.
• 2003-2006 continuation (or deepening) of the
  same macroeconomic policy, establishing even more
  rigorous fiscal adjustment, now under more
  favourable external conditions (The China effect
  and consequent surplus in Trade Balance).

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Macroeconomic Context
Sources IBGE - Sistema de Contas Nacionais
Ipeadata.
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Innovation Policy main guidelines

• 1995-1998 - Macroeconomic policy-makers were
  against ideas about industrial (and innovation)
  policy a radical neo-liberal agenda of
  development. ST policy continued to struggle
  (maintaining infrastructure alive) changes in
  IPR regime (new Patent Law, TRIPS, New Industrial
  Property Law)
• 1999-2002 - Recognition of the importance of
  innovation by Ministry of Science and Technology
  ignited the process of setting up a new legal
  framework to stimulate RD and innovation in
  firms.
• Market failures justified the intervention of the
  State
• Market failures led to underinvestment in
  innovation by firms enterprises and harmed
  possible partnerships between firms and
  scientific and technological organizations.
• So State was justified to intervene creating new
  tax (and other) incentives for firms to innovate
  and specific funding and supporting instruments
  to stimulate partnerships between firms and
  universities and other ST organizations.
• 2003-2006 - two policies related to innovation
  were launched the National Science, Technology
  and Innovation Policy, coordinated by the
  Ministry of Science and Technology, and the
  Industrial, Technological and Foreign Trade
  Policy. These policies preserved the main
  strategies developed during the last government
  creating new tax incentives to firms innovation,
  and grants to firms also Innovation Law was
  introduced.

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Innovation Policy Institutional Framework
ABDI
MAPA
MI
MF
FNO
CODEVASF
FCO
CAIXA
BB
EMBRAPA
FNE
ADENE
ADA
FGE
MCT
MDIC
FNDCT
CNPq
INPI
SUFRAMA
FINEP
FGPC / FND
Inmetro
BNDES
Enterprises and Organizations
Ministry of Agricultural MAPA Ministry of
Science and Technology MCT Ministry of Finance
- MF Ministry of Interior MI Ministry of
Development, Industry and Trade MDIC
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Most important recent policy changes

• Innovation becomes a priority
• PITCE Industrial, Technological and Foreign
  Trade Policy (2004)
• Sectoral Funds (since 1999)
• Univ-Industry Links but possibility of Across
  the Board Actions (2004)
• New regulatory and legal environment (2005)
• Innovation Law, Bio-security Law SME Law
• Decentralisation of policy and support to local
  systems
• In the last few months
• The role of BNDES (innovation and local systems)
• Sectoral policies (health for example)

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The 2 pillars of Recent policies

• Fostering RD expenditures in firms
• Fostering University/Industry Linkages

34
Innovation Policy Fostering RD expenditures in
firms

• Tax Incentives (PDTI and now automatic)
• Grants (a sectoral approach and a need to propose
  a project
• Equalization of interest rates
• Support to venture capital
• Incubators, etc
• The innovation Law

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Innovation Policy Tax Incentives to Few (most
Large) FirmsWould they invest in RD without the
Incentives???
Number of PDTIs and PDTAs approved and Enterprises
Source Ministry of Science and Technology
MCT. Note In 2006, the numbers are referred to
January to July period.
36
Innovation Policy Legal Framework
Acts Main objectives
1993, Law 8.661 Stimulate the innovation process and research and development - This law created some fiscal incentives to stimulate the technological capabilities in manufacturing and farming enterprises that made the Program of Manufacturing Technological Development (PDTI) or the Program of Farming Technological Development (PDTA).
1997 - Law 9.532 Related to tax legislation - reduced the tax incentives established by the law 8.661/93, in approximately 50.
2000 - Law 10.168 Determined a contribution to finance the Program of interaction between Universities and Enterprises to support innovation process.
2001 - Law 10.332 Reestablished the tax incentives established by the law 8.661/93 - this law created also the economic subvention to the enterprises which were participating of the PDTI or the PDTA, and the equalization mechanism for the interest rates.
2002 - Law 10.637 Created some new tax incentives.
During the 1999-2002 periods were launched 12 sector funds and two of them were not sector specific Support partnership in innovation projects between enterprises and scientific and technological organizations. The specific funds were the fund to finance the Universities and Enterprises Interaction Program, and the infrastructure fund, to finance the modernization of scientific and technological organizations. The other funds were related to energy space technology information technology biotechnology health agribusiness technology mineral technology hidrotechnology oil and natural gas automobilist technology and telecommunication technology.
2001 - Law 10.176 Related to information technology sector it replaced the law 8.243 of 1991 and its objective was to stimulate research and development using the tax incentives.
2004 - The Innovation Law the Law 10.973 Promote interactions between Scientific and Technological Organizations of Federal Government and enterprises considering the intellectual properties rights, and the role of researches of those organizations in a context of partnership with enterprises. This law also created new tax incentives to innovation process within enterprises, and created the economic subvention to enterprises that participated of some project of National Fund to Scientific and Technological Development.
2003 Law 10.664 2004 Law 11.077 Related to information technology Law 11.077 was known as the New informatics Act. This law replaced the laws no 8.248/01, no 8.387/91 and no 10.176/01. The main difference between the new act and the others was the tax incentives became automatic.
2004 were created more two sector funds Related to Navy Sector and aquatic technology, and to the Amazonian Area, aiming to develop new technologies and stimulate the innovation process.
2005 - Law 11.196 Also connected to tax incentives to the technological innovation. This law replaced the law nº 10.637(2002) and the main instruments were exemption of income tax, accelerated depreciation, accelerated amortization and the possibility of subvention to researchers, masters and PhDs. The difference between the new law and the old one was that the mechanisms for tax incentives became automatic before it was necessary to participate of the Program of Manufacturing Technological Development (PDTI) or the Program of Farming Technological Development (PDTA). .
37
Innovation Policy Fostering University/Industry
Linkages (in RD joint projects)

• Programs to support research in hi-tech areas
• The Sectoral Funds
• The innovation Law

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Sectoral Funds for Supporting Scientific and
Technological Development

• Set up in 1999
• Financial sources contributions of firms
  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.

39
Innovation Policy Main mechanisms and
Instruments
Evolution of Sector Funds
(As a of GDP)
Source Ministry of Science and Technology MCT
and IBGE.
40
New regulatory and legal environment

• Innovation Law (2005) strengthening the
  interaction between university and industry
  promote the common use of ST infrastructure by
  firms and ST institutions (emphasis on MSMEs)
  stimulate the setting up of new technology based
  firms by researchers create new financial
  mechanisms for grants to RD and innovation in
  firms
• Lei do Bem (2005) creates 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

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The Industrial, Technological, Foreign Trade
Policy (PITCE)

• Set up in 2004
• industrial and technological issues are
  re-introduced in Governmental Policy Agenda
• Innovation is crucial for competitiveness
• Pioneering convergence of industrial and
  technological policies
• PITCE is one of the strategic axes of the STI
  Policy
• FINEP responsible for PITCE implementation
• What about resources???

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FNDCT - Disbursements 1970 - 2006
Sectoral Funds
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FINEP investment in firms (innovation) (2003-2006)
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FINEPs Programs A wide range of mechanisms
Inovar (Incubator
-
Funds)

Venture capital

Investments

Inovar (Forum)

Capitalization of tech
nologically intensive small and
medium
-
sized firms

Inovar (Seed Money)

Structuring of local seed money funds


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FINEPs Programs A wide range of mechanisms
Sanitation technology (low costs and easy
applicability)

Grants

HABITARE

Housing technology (low costs and easy
applicability)

PRONINC

Tech incubator
s on popular cooperatives

PROSOCIAL

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


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3 - Evaluating what?

• The narrow and the broad vision of the NSI

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Conceptual Framework

• Often policy makers and scholars have applied a
  narrow understanding of the concept (of
  Innovation System) and this has given rise to
  so-called innovation paradoxes which leave
  significant elements of innovation-based economic
  performance unexplained. Such a bias is reflected
  in studies of innovation that focus on
  science-based innovation and on the formal
  technological infrastructure and in policies
  aiming almost exclusively at stimulating RD
  efforts in high-technology sectors.
• Without a broad definition of the national
  innovation system encompassing individual,
  organizational and inter-organizational learning,
  it is impossible to establish the link from
  innovation to economic growth. (Lundvall, 2007,
  p. 1-2)
• In Lundvall, B.-Å. (ed.) (2007), National
  Innovation Systems Towards a Theory of
  Innovation and Interactive Learning, London,
  Pinter Publishers (2nd edition of the 1992 book).

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NIS The Narrow Version Policy concentrates on
RD (in firms and U/I linkages)
Narrow
Very Narrow
Firms
Demand
ST infrastructure
STI Policy
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NIS the Broad Version Innovation is much more
than RD
Geo-Political, Social, Political, Economic,
Cultural Local Context
Wide
Narrow
Very Narrow
Subsystem Production/Innovation
Demand (segmented)
Subsystem Capacity-Building, Research
Technology Services
Subsystem Policy, Promotion, Representation
Financing
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Fiscal Incentives to RD the Australian
experience

• RD tax concession do not screen out RD that
  would have happened anyway the bulk of business
  RD. This increases the costs to revenue from
  stimulating any additional RD and reduces the
  magnitude of net benefits from the program. At
  present program settings, the net benefits of the
  program are not large and could be negative (p.
  XXVI)
• firms should be barely receptive to subsidies
  directed at RD alone, any more than people
  buying cars would respond to a reasonable subsidy
  on the tyres ( p. 35).
• The finding that other factors are also important
  for business innovation does not render RD
  irrelevant. It simply means that innovation
  policy has to look at more than one explanatory
  factor and that these additional factors are of
  great importance. For example, governments have
  significant impact on the innovation system
  through policies relating to the creation of
  infrastructure and human capital (p. 36)

The Productivity Commission (2007) Public Support
to Science and Innovation, Melbourne Australia
51

• The science and innovation policy discourse over
  the last decade has concentrated on
• collaboration in RD
• commercialisation of research results
• reducing the costs of RD to firms

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Some problems with Brazilian

• Support to innovation in industry (concentrated
  on RD)
• Support to university/Industry linkages
  (concentrated on RD joint projects)

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Problems with Brazilian support to industry
(concentrated on RD)

• Brazils current suite of business programs do
  not target the rationales for public support
  (additionality and spillovers) effectively.
• It concentrates on RD (narrow vision of NIS) and
  disregards problems associated with broad NIS
  (for example training, technical education)
• It disregards technical change in so-called
  traditional sectors (for eg. diffusion of ICT and
  relation to innovation in these sectors)
• RD tax concession
• is available to all eligible firms whether or not
  the RD would have been performed anyway and
• it assists RD that has low levels of spillover.
• Low risk innovators are the prime beneficiaries
  of Brazils support mechanisms for RD????

54
The need to focus on learning and
capacity-building and not RD

• Within most OECD economies, policymakers remain
  heavily focused on ICT, biotech and
  nanotechnology issues (both in innovation and
  diffusion policy) to the exclusion of most of the
  areas of knowledge that are, in fact, producing
  change across major industries. Policy remains
  focused on a science-based model of innovation to
  the exclusion of a genuinely learning-based
  approach (Smith, 2004).

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Problems with Problems with Brazilian support to
U/I linkages

• More than 30 years of support and dysmal results
• Concentration in one aspect of U/I linkages (RD
  projects)

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Conclusions

• Historically low interest in evaluating program
  and policies
• Difficulty in not envolving main stake-holders
• The two main problems to be tackled
• Adressing the imbalances (regional and social
  dimensions of the policies)
• Adressing learning and capacity building (really
  abandoning the linear view of innovation and
  incorporating the notion that innovation is MUCH
  MORE than RD)

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Conclusions Some general criteria for evaluation

• Evaluating the Program in its reasoning and
  evaluating the reasoning of the Program
• Outputs and intended outcomes should be defined
  in relation to the rationales for public support
  and to the benefits expected from that support.
• The importance of case studies of impacts.
• Evaluation and assessment should be independent
  from major stake holders (the role of some
  communities !!!)
• Evaluation should take into account the needs and
  interests of majority of population