Shaping the Americas
Ecosystem for Innovation
and Competitiveness
João Alberto De Negri
Ipea
Why Brazil is different from other
developing countries?

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Firms´ competitive strategies affect their performance and
contribute to shape the ecosystem for innovation.
Therefore macro-economic indicators do not tell the whole story
about similarities and differences among developing countries.
Share of industrial turnover, according firm’s competitive
strategies
Brazil
Mexico
Argentina
Firms that innovate and
differentiate products
25,19%
5,30%
12,71%
Firms specialized in standard
products
64,19%
82,70%
80,11%
9,80%
11,99%
7,61%
Competitive strategies
Firms that have lower
productivity

There are very competitive firms in Brazilian industry. How
to promote cooperation between these firms and US firms to
improve product innovation and differentiation?
Are technological efforts in Brazilian firms bigger
than in other developing countries?
Personnel engaged in R&D
Brazil
Mexico
Argentina
Firms that innovate and
differentiate products
20,110
1,859
2,373
Firms specialized in
standard products
39,997
4,712
5,349
Firms that have lower
productivity
16,951
1,447
1,509
Total
77,058
8,018
9,230
Competitive strategies

How can US and Brazilian firms cooperation transform
these differences into business opportunities?
Private Sector Technological Efforts
R&D spending as a share of turnover in industrial firms with
positive R&D spending
3,5%
3,0%
2,5%
2,0%
1,5%
1,0%
0,5%
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Business opportunity: new Brazilian
entrepreneurial mentality

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Firms that innovate and differentiate their
products represent 25.9% of Brazilian industry
sales
39% of the firms that innovate and differentiate
their products adopt executive strategy changes
23% of the firms that innovate and differentiate
their products and 13% of the firms that are
specialized in standard products innovated to
adjust themselves to international norms and
standards (some 4000 firms).
Innovative Brazilian firms have sought
information abroad to carry out technological
innovation.
Technological innovation is one of the
determining factors of Brazilian exports.
How to finance innovation?

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90% R&D investments of Brazilian industrial firms are financed
with own resources.
Only 18% of Brazilian innovative firms have received some
kind of public support to innovate. In developed countries the
share of firms that receive public support to innovate is
approximately 30%.
However, in 2006 Finep released R$ 510 million in innovation
grants directed to firms, and BNDES have started a special
credit line that amounts R$ 1 billion to finance innovation.
What does it take to promote strategic alliances between
American seed or venture capital and Brazilian innovative
entrepreneurs?
Could US venture capital and seed money funds explore
business opportunities in Brazil?
Would the availability of credit in Brazil foster investments
in innovation from American firms?
R&D investments of US firms in Brazil
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44% of R&D investments in the Brazilian industry are
performed by multinational corporations
American firms account for 17% of total R&D spending in the
Brazilian industry.
However, national firms invest 80.8% more in R&D related to
turnover than transnational corporation subsidiaries in Brazil.
Some locational factors like interaction between private
enterprises and universities or research institutes and the size
of domestic market seems to be important in the decision of
foreign firms to invest in R&D in Brazil.
What are the main obstacles to increase R&D spending of
US firms in Brazil?
Is the lack of qualified personnel a relevant issue? Is it
possible to attract qualified personnel?
Could Brazilian firms invest in R&D in United States?
Are universities and research institutes
important to foster innovation?

Firms that declare that universities and research
institutes are an important source of information
to innovation in Brazil:
– 28% of Brazilian innovative industrial firms
– 70% of US innovative industrial firms

Firms that have valid patents in Brazil:
– 4% of Brazilian innovative firms
– 12% of US innovative subsidiaries

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Is the relationship with universities an important factor to
develop innovations? What are the main constrains to foster
this relationship?
What is the role of the intellectual property rights?
How relevant is cooperation?
New products to the market – share of total sales (%): firms
with no cooperation agreements, firms with cooperation and
international cooperation agreements, Brazil - 2003
12.0
10.0
8.0
6.0
4.0
2.0
0.0
no cooperation
cooperation
international
cooperation
Issues that need to be addressed.
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How to design appropriated arrangements
(collaterals, sharing of innovation benefits) to
finance innovation (an intangible good)?
How to foster the University-private sector
cooperation in innovation (going beyond the
innovation law)?
IP: What are the main problems and possible
solutions in the Brazilian case?
What are the sectors most suitable for
cooperation on innovation among American and
Brazilian firms? Bioenergy? Biotechnology?