Shaping the Americas Ecosystem for Innovation and Competitiveness João Alberto De Negri Ipea

Why Brazil is different from other developing countries?  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.  There are very competitive firms in Brazilian industry. How to promote cooperation between these firms and US firms to improve product innovation and differentiation? Competitive strategies BrazilMexicoArgentina Firms that innovate and differentiate products 25,19%5,30%12,71% Firms specialized in standard products 64,19%82,70%80,11% Firms that have lower productivity 9,80%11,99%7,61% Share of industrial turnover, according firm’s competitive strategies

Are technological efforts in Brazilian firms bigger than in other developing countries? Competitive strategies BrazilMexicoArgentina Firms that innovate and differentiate products 20,1101,8592,373 Firms specialized in standard products 39,9974,7125,349 Firms that have lower productivity 16,9511,4471,509 Total77,0588,0189,230 Personnel engaged in R&D  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

Business opportunity: new Brazilian entrepreneurial mentality  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?   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   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  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

Issues that need to be addressed.   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?