Portulans Joint Report with CNI Shares Evaluation, Recommendations on Brazil’s Readiness to Address Future Challenges

On 11 December 2020, Portulans Institute and the National Confederation of Industry- Brazil (CNI) proudly announced the launch of the Green Paper: ‘Supporting Brazil’s Future Readiness‘. Portulans and CNI presented the report for the first time during the Entrepreneurial Mobilization for Innovation – Brazil (MEI) 31st Dialogue meeting (Agenda).

Using an original and innovative way to combine existing data, a vast literature review, data-based projection scenarios and various country benchmarks (including OECD, BRICS, Latin America and the Caribbean), the Report highlights Brazil’s main shortcomings, areas of opportunity and policy recommendations for improving its future competitiveness.

The report covers 47 of the world’s top-performing economies, and locates Brazil’s performance within this sample. Some of the Report’s key-findings include:

  • While Brazilian policymakers possess a unique constitutional mandate to build innovation into the core of Brazil’s institutions and infrastructure and through strong public investment, the country lacks an overarching policy framework to tackle the three key components of competitiveness: innovation, technology and human capital. The report points out that the meaningful inclusion of key innovation stakeholders – from entrepreneurs and researchers to private sector leaders – is decisive.
  • Financing innovation in Brazil faces several serious hurdles, like funding gaps and infrastructural, institutional and security deficiencies. Brazil – located in the last five rankings of the report – displays a GERD as a percentage of GDP that is only near 1.3%. While this figure is high regionally (0.4% average for Latin America and the Caribbean sampled economies), it is far from the levels displayed by its fellow BRICS economy China (2.2%). Governments play an active role in funding ITT in some developing economies: but Brazil still has a long way to go in terms of GERD financing.
  • Technology, institutions and infrastructure require the most immediate attention for improving Brazil’s competitiveness, as demonstrated by the impact scenarios. Offline barriers, insufficiencies and inefficiencies, such as bureaucratic hurdles, hinder Brazil’s digital development frontiers. However, these deficiencies present investment opportunities to local and international investors.
  • Investment in innovation, technology, and human capital go hand-in-hand with competitive levels of innovation. Improvement in key areas can drastically enhance Brazil’s future preparedness. The report suggests improving GERD (e.g. with an increase of at least 16%), improving human capital development (e.g. with a 35% increase in the number of researchers), providing for better 4G coverage (e.g. no less than 11%) to spur innovation, in addition to a number of other recommendations included in the report. These improvements could boost Brazil’s performance in the FRI from 44th to 41st: a remarkable improvement, given the high-performing characteristics of the sample group.

CNI’s Innovation Director, Gianna Sagazio, notes that the Report recognizes the urgency of adopting measures to accelerate funding for science, technology and innovation (ST&I) in Brazil, especially at the time of the crisis caused by the Covid-19 pandemic. “We are moving away from the most advanced countries in terms of structure, financing and innovation policy. More than ever, global disparities between countries in terms of digital innovation and excellence in ST&I have become apparent. It is clear that innovation, technology and human capital are crucial not only to increase global competitiveness, but also to improve social well-being,” said Gianna.

The Report’s roadmap arrives at a pivotal time for Brazilian innovation. When the COVID-19 outbreak occurred nine months ago, Brazil was still in recovery from recession. As a result of the crisis, Brazil will likely suffer another deep recession, with a 9.1% fall in GDP in 2021 given the second-wave scenario. However, if Brazil can preserve investor confidence, limit uncertainty and adapt fiscal policy, tackle corruption, monetary and structural policy support based on underlying conditions, the country may face a strong trajectory for post-pandemic recovery. In any case, bolstering Brazil’s future readiness is a strategic imperative, with a potentially transformative impact on economic development and the wellbeing of Brazil’s citizens.

The objective of the report’s recommendations is to assist decision makers in the design and promotion of policies and best practices to improve Brazil’s innovation-based competitiveness at the local, regional, and global stages. Recommendations include, with many directed to the public sector:

  • Establish solid bridges between public and productive sectors. 
  • Focus and outline mission oriented policies
  • Devise intersectional rather than single domain policies.
  • Identify and periodically collect data to better support the design of mission-oriented policies. 
  • Increase gross domestic expenditure on R&D.
  • Foster an innovation investment culture via venture and risk capital markets. 
  • Promote the private sector’s engagement in innovation and entrepreneurship. 
  • Foster an IP Culture based on international guidelines for intangible creations.
  • Tailor a people-first innovation strategy. 
  • Adapt to the rapidly changing global human capital landscape. 
  • Lead innovation and technological change by example.
  • Expand local digital development frontiers as a core enabler of public and private competitiveness.
  • Ramp up the design of technological regulatory framework.
  • Reduce red-tape and corruption at all levels. 
  • Promote regional linkage and cluster development.

According to Dr. Rafael Escalona Reynoso, Senior Research Associate and Data Scientist at Portulans, “Brazil is within reach of a transformation that ensures firmer international footing through improved innovation-led competitiveness. A technical review of its future readiness fundamentals suggest that the design, timely implementation and management of intersectional and holistic policy efforts weighing aspects of innovation, human capital, technology and institutional redesign are key towards achieving this objective.”

Access the full report here. View the presentation slides in English or Portuguese.