Abstract
This article focuses on the Brazilian Company for Industrial Research and Innovation, (EMBRAPII), a social organisation created as an intermediary agent to encourage partnerships between research centres and companies. The main objective was to overcome the shortcomings of Brazil’s conventional STI public policies, the technological and innovation results of which were considered unsatisfactory. EMBRAPII innovates in governance and funding, regarded as an instrument capable of boosting companies’ engagement in collaborative technology and innovation projects. This article concludes by acknowledging EMBRAPII’s evident qualities with respect to the conventional STI policies, even though its achievements seems lower than expected in terms of the number of companies involved. The research findings endorse Ergas’ assumption that policies cannot be assessed in isolation. ‘The first and most fundamental is the dependence of technology policy outcomes on their economic and institutional environment.…’.
Introduction
The Brazilian productive sector, especially manufacturing, is impaired by a technological delay despite nearly twenty-five years of implementing public policies to raise technical and innovation standards. Facing unsatisfactory outcomes, leaders in business, government, and academia decided to implement a new policy model to stimulate knowledge transfer from universities and research centres to companies aiming at transforming innovation projects into marketable products or services. This article examines EMBRAPII’s efforts to boost companies’ engagement in collaborative technology and innovation projects to enhance their competitive performance. The article is divided into five sections (excluding this Introduction): (a) the section ‘Theoretical Considerations’ provides a brief theoretical reference, summing up some ideas that have been proposed in the debate on the innovation process and which are based on our assumptions and hypotheses. More recent conceptions on the innovation process also are referred; (b) the section ‘Brazilian Innovation Environment’ provides a brief depiction of the Brazilian innovation context and comments on the country’s challenges facing the new scenario; (c) the section ‘A New Generation of Innovation Policy’ describes EMBRAPII’s main characteristics and goals; (d) the section ‘The Research Methodology’ reports the methodology used for the collection of the data and presents the research findings; and (e) the last section ‘Findings’ focuses on the analysis of the findings. Lastly, final considerations are presented.
Theoretical Considerations
The innovation process is a field in development, considering the swift technological transformations. The speed and complexity of today's technological changes challenge theoretical explanations and force them to undergo continual rethinking.
Briefly, the debate on the innovation process highlights the contribution in the last decades of the twentieth century and in the 2000s of scholars such as Ergas (1987), Lundvall (1992), Nelson (1993), Mazzucato (2018), Kattel (2018) and Diercks (2019), among many others. 1
Studies at the end of the twentieth century underline the systemic and interactive nature of the innovation process and the national system of innovation (NSI). 2 The NSI approach (Freeman, 1995; Lundvall, 1992; Nelson, 1993) regards the innovation process as a complex system of interactions among different agents, especially government, researchers, scholars and entrepreneurs. It also assumes that public policies cannot be assessed in isolation: ‘The first and most fundamental is the dependence of technology policy outcomes on their economic and institutional environment.…’ (Ergas, 1987, p. 232). Therefore, different NSI arrangements lead to different innovation performance and differences in economic development.
A favourable environment for innovation should mainly include investments in human capital focusing on the workers’ education and training, competition between firms, and dismantling of protectionist mechanisms ‘to encourage the best use of resources and capabilities … (instead of) to subsidise long-term inefficiency.’ (Ergas, 1987, pp. 232 and 235).
Nelson and Rosenberg (1993) formulated similar propositions: ‘our studies do indicate strongly that aspects of the national background in which firms operate matter greatly … innovation involves much more than R&D, and the institutions that influence technological capabilities’ (Nelson & Rosenberg, 1993, p. 13). The infant industry protection programmes and subsidies are recognised as necessary. The problem is due to ‘protected and subsidised industries that have never got to the stage at which the firms can compete on their own … (as) … the import-substituting industries of Argentina and Brazil’. (Nelson, 1993, pp. 514–515). To avoid this from happening, ‘strong incentives for the firms to quickly start trying to compete on world markets, as contrasted with hunkering down in their protected enclave’ would be necessary (Nelson, 1993, p. 515).
New conceptions of innovation policy have emerged focusing on societal problems such as climate change, resource scarcity, food security, ageing societies, growing inequality, youth unemployment and demographic change (Cohen et al., 2002; Diercks et al., 2019; Mazzucato, 2018). The novel conception of technological development and economic growth emphasises that the latter should be smart (innovation-led), inclusive, and sustainable and have ‘not only a rate but also a direction’ (Kattel & Mazzucato, 2018, p. 1).
Mazzucato, one of the most prestigious advocates of the new mission-oriented policies, proposes that the government lead the country’s innovation process by focusing on the grand societal challenges from climate change to social justice (Kattel & Mazzucato, 2018). The new mission-oriented policies would provide the basis for economic opportunities and growth by ‘creating and shaping markets that increase business expectations around future growth opportunities, thus driving private investment’ (Kattel & Mazzucato, 2018, p. 2). Diercks et al. (2019) called the new perspective ‘transformative innovation policy’.
Brazil’s innovation policies are still far from the new mission-oriented policy/‘transformative innovation policy’. It still needs to overcome the inefficiencies diagnosed by Mazzucato and Penna (2016, pp. 11 and 45): ‘ad hoc and non-systemic projects (many of which had a science-push bias).… The policies remained based on a linear view of the innovation process and therefore focused on R&D more than on innovation.’ 3 EMBRAPII was created to take a step forward towards a practical systemic approach.
Brazilian Innovation Environment
The digital technologies introduced a new economic and social development paradigm based on knowledge-intensive production (Berger & Frey, 2016; Brynjolfsson & McAfee, 2014; National Science Board, NSB, 2018), which requires education, science, technology, and innovation to be investment priorities. (NSB, 2018).
A country’s NSI is supposed to back up the interaction among different agents such as universities, research institutes, scientific laboratories, and society. As asserted, ‘institutional differences between, say, universities and industry, seem to be less and less relevant’ (Gibbons et al., 1994, p. 30). This statement became a reality during the 2020 pandemic.
Brazil faces significant global challenges while knowledge-intensive production tends to dominate (NBS, 2020). Since the late 1990s, different public policies have been implemented to increase the competitiveness of the Brazilian product sector. 4 Despite continuous efforts, the results have been mediocre, as evidenced by the National Survey on Innovation (PINTEC), 5 which has attended the innovation process in the country since the year 2000 (Arbix, 2019; De Negri et al., 2018; Frischtak, 2019; Instituto Brasileiro de Geografia e Estatística, IBGE, 2020a; Mazzucato & Penna, 2016).
PINTEC’s latest results (published in April 2020) for 2015–2017 present data on innovation activities implemented by the Brazilian companies. (IBGE, 2020a). The companies surveyed (116,962 with ten or more employees) were selected by their potential innovation capacity in the manufacturing, services, electricity and gas sectors. The overall innovation rate for 2015–2017 was 33.6%, down by 2.4% compared with 2012–2014 (36.0%). When asked by PINTEC to indicate ‘the main obstacle for not innovating’, 82.0% of the surveyed companies have chosen the option ‘Excessive economic risks’ (IBGE, 2020a; PINTEC 2015–2017). This downturn resulted in great part from the severe economic recession in 2015–2016 (GDP declined by 3.5% and 3.3%, respectively) (Chaimovich & Pedrosa, 2021; De Negri et al., 2020; Marques, 2020). However, the downward trajectory of the innovation rate (especially in the Services and Power and Gas sectors) 6 was already present even when the economy had higher growth rates from 2010 to 2013 when the average GDP growth was 4.0% (Gomes & Cruz, 2014, p. 52) (see Figure 1). The total innovation rate for 2012–2014 was 36.0%, practically the same as in the period 2009–2011, which was down by 2.8%, compared to 38.6% in 2006–2008. (IBGE, 2020a).

R&D investments are essential for raising the capacity of firms to attain the knowledge necessary for the new technology-based production. R&D expenditures are critical for assessing the company's commitment to implementing innovations and pursuing economic competitiveness 7 (NBS, 2020). Brazil’s business sector has a low share of R&D performance; the average is lower than half of the total R&D expenditure, considering that most of the business spending is funded by the State through incentives, subsidies and State participation in the ownership, as it happens with Petrobras (the oil company controlled by the State) (see Figure 2). The opposite occurs with countries such as South Korea, Japan, China, the United States, and Germany, where the private sector average R&D spending is over 70% (De Negri, 2018; NSB, 2018).

PINTEC 2015–2017 showed a drop in R&D expenditures about GDP in the companies surveyed (0.50%), as compared to previous trienniums: 2012–2014 (0.58%) and 2009–2011 (0.55%) (De Negri et al. 2020). The drop in internal R&D activities in the companies surveyed came with a decline in the number of researchers and technicians: from 52,905 researchers and 20,560 technicians in the 2012–2014 period to 41,036 researchers and 17,396 technicians in the 2015–2017 period (Marques, 2020). 8
Brazilian companies are technologically lagging compared to the global trend, given that from the year 2000 to the 2015–2017 triennium, around two-thirds of the companies remained technologically stagnant (PINTEC, several triennia), despite the numerous policies, subsidies and incentives focused on the technological and innovative development of the Brazilian companies for more than two decades (Guimarães & Barcelos, 2019).
In the Global Innovation Index 2020, Brazil is 62nd out of 131 economies—four places higher than in 2019 (Dutta et al., 2020). Similarly, PINTEC 2015–2017 showed an improvement in the percentage of technological innovations introduced into the market by the companies surveyed: 7.6% compared to 5.2% (2012–2014) and 4.8% (2009–2011). (Marques, 2020). However, Brazil still ranks behind Chile (54th), Mexico (55th) and Costa Rica (56th). (Dutta et al., 2020). Furthermore, a large part of what is defined as innovation is the acquisition of machinery and equipment, which does not necessarily imply R&D activities: ‘75% of companies … (that) had access to the National Bank of Economic Development (BNDES) funding was for (acquiring) machinery and equipment.’ (De Negri et al., 2018, p. 537). Although the Brazilian companies do, they use information and communication technologies in basic, low added-value applications, without integrating them into the routines of the production process in more complex forms of utilisation in terms of the digital economy (Barbosa, 2020).
Brazil’s technological fragility is well known and has been widely analysed and discussed by scholars (Arbix 2017; De Negri, 2018; Frischtak, 2019; Guimarães, 2016; Mazzucato & Penna, 2016; Rocha, 2015). The poor technological performance of the majority of the Brazilian companies led to the creation of EMBRAPII, which brought in a new governance methodology that was considered an excellent tool to stimulate the companies to engage in innovation programmes. The following section indicates some necessary steps introduced by EMBRAPII that make it an innovative agent in the country’s innovation context.
A New Generation of Innovation Policy
As the systemic perspective highlights, the successful innovation system depends on a network formed by key agents (scientists, entrepreneurs, investors, qualified workers, policymakers), whose collaboration would produce exchange and diffusion of knowledge throughout the economy. The Brazilian NSI has had ‘little success in creating the desired networks’ (Mazzucato & Penna, 2016, pp. 60–61). The mismatch between basic and applied/innovation-oriented research has been a significant bottleneck. (Oliveira & Guimarães, 2019). Indeed, the conventional policies of the Brazilian NSI tend to be (not to say based on) ‘a linear view of the innovation process and therefore focused on R&D more than on innovation’ (Mazzucato & Penna, 2016, p. 45).
Given the existing shortcomings, some academics, business leaders and public managers decided to implement a more up-to-date and functional model of innovation policy. In 2014, EMBRAPII was created as a social organisation, supported by the National Manufacturing Confederation, the Ministry of Science, Technology and Innovation, and the Ministry of Education. The first contract was provided for six years (2014–2019), which was extended in 2019 to a new ten-year period. Several other organisations became EMBRAPII partners, such as the Service for the Micro and Small Businesses (SEBRAE), the Ministry of Health, and several other national and regional research funding agencies and national and regional business associations.
The EMBRAPII model was based on the Fraunhofer Institute. 9 The programme started with the accreditation of scientific and technological research groups existing in the NSI (universities and private and public centres).
The selection of research groups—EMBRAPII units (EUs)—is carried out through a competitive public call process: research groups must submit a six-year plan showing the capacity to meet criteria such as excellence in research, experience in partnerships with companies and fundraising; they are also required to dispose of state-of-the-art infrastructure.
EMBRAPII started its activities at the end of 2014, counting on thirteen units and nine contracting companies. In the following years, the number of units and contracting companies grew to forty-two units by 2019 and sixty-one units by 2020. The main areas of operation are Information and Communication Technology; Materials and Chemistry; Biotechnology; Mechanics and Manufacture, and Applied Technology. From 2014 to 2020, 1093 RDI research projects were funded (467 concluded) based on advanced manufacturing, the internet of things, digitalisation, new materials, and others, contracted by 739 companies (see Table 1). Companies’ satisfaction with the EMBRAPII operational model varied from 89.7% to 97.9% (EMBRAPII, 2020b; EMBRAPII, 2021).
Main Indicators of EMBRAPII Performance (2014–2020).
EMBRAPII introduced several practices that were earlier not typical of the innovation policies in Brazil, such as (a) focus on industry-driven applied research oriented towards concrete business results; (b) R&D project sharing funding system, in which the companies contribute with the more significant part—an average of 48.6% in the period 2014–2020 (EMBRAPII, 2020a, p. 29; EMBRAPII, 2021, p. 15); (c) EMBRAPII funds are available in a simple and unbureaucratic way at the starting of the collaboration; (d) the units should submit a six-year plan; (e) units have autonomy in decision-making for signing contracts, budget spending and for modifying the projects; (f) a continuous follow-up of the projects in progress (web-based project management system); (g) R&D project submission has a constant flow; and (h) the companies may choose among different units technologically qualified to meet their particular needs for carrying out RDI projects. Thus, EMBRAPII’s model offers great flexibility compared to the usual constraints of the Brazilian state bureaucracy and rigorous feedback mechanisms lacking in the conventional agencies.
The EMBRAPII model is not yet in agreement with the conceptions of innovation policy as the so-called ‘transformative innovation model’ or the mission-oriented policy (Mazzucato, 2018). However, in the case of Brazil, it represents a step forward in innovation policy conception.
In the sharing system funding, the three agents—EMBRAPII, the company, and the researchers’ institution—are associated with one-third of the total project cost. The companies provide more than one-third, whereas research groups cannot meet their full quota. During the 2014–2020 period, contracting companies funded an average of 48.6% of the total research expenses; 32.0% were provided by EMBRAPII and 18.0% by the EUs. The participation of companies in research costs is essential for their commitment to carrying out an innovation project through its end. Without the companies’ investment—as is the case with the majority of government funding agencies which tend to be the only financing agent—the Brazilian experience shows that that companies tend to feel disengaged from completing the technology transfer process by producing goods or services to the market.
An important innovation implemented by EMBRAPII is the focus on targets and mechanisms for evaluation and accountability. The EMBRAPII evaluation system operates as a continuous process during the development of the different stages of the research. The evaluation process relies on independent consultants that also guide the research groups towards achieving the targets within the period foreseen for each step. That evaluation system contrasts with the approach by conventional research funding agencies in Brazil, which tend to focus mainly on the academic quality of the research proposal at the time of submission. Systematic follow-up during the research development is practically non-existent.
Another advancement was the collaborative partnerships in different forms: (a) collaboration among competing companies in an RDI project with sharing costs, risks and ownership of technology that can be used according to the interest of each company; (b) cooperation in RDI among companies in a production chain whose generated product or process contributes to the technological development of the chain as a whole; and (c) collaboration in RDI among companies of small and medium and large sizes.
A highlight in the collaborative modality was the partnership that involved fourteen companies, national and multinational, large and medium-sized companies and one startup (five competing companies associated with the Brazilian Aluminium Association; five companies in the automotive and transport sector and four suppliers to the automotive industry). Another exciting partnership involved eleven small-sized competing companies, in which technological individuality (intellectual property) was ensured using technical adaptations to the needs of each company (Guimarães, 2020).
EMBRAPII and SEBRAE partnership has reinforced collaborative modalities aimed mainly at startups such as (a) technological chain partnerships among an EU, a startup and a large or medium-sized company, and (b) technological cluster companies in partnership with an EU and more than one startup, whether or not in partnership with medium-sized or large companies. Among the partnerships coordinated by EMBRAPII and SEBRAE, 54.3% are shared projects. EU can also subcontract startups to participate in RDI projects with another company.
Collaborative projects advance partnerships between research groups and companies in Brazil. Joint RDI projects and sharing costs and risks contribute to exchanging knowledge between companies.
The following section is divided into two subsections: (a) methodology, which informs the research strategy concerning methods and techniques applied to collect the data, and (b) the presentation of main findings.
The Research Methodology
The research took place between 2019 and 2020, and its main objective was to investigate EMBRAPII at work by researching the perceptions of the units’ directors. The research employed a qualitative instrument based on semi-structured interviews conducted with open-ended questions that allowed the interviewees to express their perceptions on the subject. Three topics oriented the questions proposed in the interviews: (a) the unit research group’s previous history of partnerships with companies; (b) the assessment of EMBRAPII’s partnership model (benefits and problems); and (c) impacts on the research group as an EU in terms of the number of contracted projects, research funding and level of innovation.
Reports and studies depicting EMBRAPII’s building process were examined.
Semi-structured interviews were conducted with the president and executive director of EMBRAPII. Next, a purposive sample of EUs was selected from forty-two units. The model sought to achieve diversity regarding the units’ legal status (public/governmental or private bodies), affiliations (universities, research centres and one technical research institute) and regional location.
Fourteen units were selected in the Southern, Southeast and Northeast regions. Among the fourteen units investigated, five units were linked to state/public universities, eight were set up as private non-profit organisations and one was linked to a state technical college. As for units associated with universities, we investigated units at the Federal University of Rio Grande do Sul and the Federal University of Santa Catarina, both in the South; at the University of São Paulo, in the Southeast; and at the Federal University of Campina Grande, in the Northeast. The selected private non-profit organisation units were linked to other research and technological development centres in the South, Southeast and Northeast regions. Ten of the interviews conducted in the EUs were face-to-face. Four were operated remotely, through video calls over the Internet (Skype), because of the social distancing imposed by the government due to pandemic.
Findings
The EUs investigated differ in several ways: legal status (public or private), operating environment (universities and research centres), the field of specialisation, experience of collaboration with companies, level of R&D activities as well as sources of financing and length of time as the EU. The units also differ in the current status of research (basic or applied). EMBRAPII-backed projects should use levels three to six of the Technology Readiness Level (TRL), corresponding to the stages of applied research: experimental proof of concepts; in-laboratory validation of technology; confirmation within an appropriate environment and demonstration within a suitable environment. Stages three to six are also known within the innovative environment as the ‘Death Valley’, meaning the complicated steps to bridge the ‘chasm’ between laboratory-produced knowledge and its technological application.
Despite the differences, the respondents agreed that the new research funding model stimulates firms that want to develop innovation, but are unprepared yet to assume the risks themselves. They said EMBRAPII’s financial and managerial support encourages the company’s engagement by winning their trust while reducing the risks of innovation projects (‘risk mitigation process’). They said that increasing the sum of resources available results in more ambitious, bold and complex projects.
From 2015 to 2020, there was an increase in research projects, and the companies funded the more significant part (an average of 48.6%) compared to EMBRAPII (32.2%) and EUs (18.3%) (retrieved from
Respondents also pointed out that EMBRAPII’s system is free from the bureaucratic obstacles of traditional funding agencies. They pointed out that the EMBRAPII system has advantages such as the autonomy of the units for signing contracts with the companies and budget spending including hiring new researchers and staff as needed and modifying the project. Traditional agencies’ central part of funding disbursement tends to cover 100% of the project value (Oliveira & Guimarães, 2019). In this case, it is likely to result in lower limits for funds granted to meet the demand. Bureaucratic norms often cause considerable delays in resource disbursement, which makes meeting deadlines and developing projects along the proposed lines challenging.
Interviewees pointed out that EMBRAPII’s partnerships with different government Ministries and other organisations created opportunities for units to expand operations in the country’s economic segments and geographic areas. Research groups that used to maintain partnerships with local companies could apply their knowledge to different economic fields and expand their performance at the national level. 10
The partnership between EMBRAPII and the Service for Micro and Small Businesses (SEBRAE), as referred above, favoured medium-sized and small/micro-companies and startups, which traditional funding agencies do not consider fairly. Before EMBRAPII, firms collaborating with research groups were mainly large companies that enjoyed tax benefits and subsidies for operating in economically strategic fields. EMBRAPII does not distinguish sectors, and funding one-third of the resources enables partnerships with companies that did not feel able to engage in innovation projects. Figure 3 shows the percentage of contracting companies by size (total of 739 companies in 2020): the rate of medium-sized, small, micro and startup companies stand out.

EMBRAPII also requires the participation of students in collaborative research projects, offering grants to those taking part in RDI activities, aiming at stimulating the development of a technological culture among the young. The number of students financed by EU’s projects has exceeded initial goals: in 2018, there were 317 students; in 2019, 315 students; and in 2020, 313 students (EMBRAPII, 2020a, 2020b, 2021).
EMBRAPII demands that the EUs carry out customer prospecting activities to expand the number of companies incorporating new technologies and innovation in their production process. The findings indicate that non-governmental units tend to carry out regular customer prospecting activities, which is not valid for units linked to the public sector with a more passive and critical approach towards prospecting activities. Despite some criticisms, the EU prospecting activities have exceeded initial targets: in 2018, 1804 such activities were carried out; in 2019, 1,779 prospecting activities were done.
Respondents agree that the strict demands for high performance cause some stress to the team. Still, they asserted that the rigorous demands contribute to the success of the partnerships: ‘(with EMBRAPII) we have changed the profile of our work because we are more targeted, more pragmatic’ (Interview 2, SP, university).
As to intellectual property, the issue varies according to the institutional status of the units. Units linked to public organisations (universities and research centres) follow the regulations of the Innovation Law, which provides for co-ownership. Units related to private organisations tend to favour the companies referring mainly to technology co-authorship.
Some interviewees demand a change to the EMBRAPII rule, which does not allow the use of funds after the projects’ official endpoint. They say it is necessary to ensure the payment of researchers during the period between the end of a project and the starting of a new one. This demand is especially felt by private centres, particularly those in the medical field where innovations are often subjected to a long waiting period for institutional approval.
Table 2 summarises part of the findings related to the interviewees’ perceptions on the collaboration with EMBRAPII and its impact on the group with respect to affiliation, location and situation prior to and after the collaboration.
Directors’ Perception of EMBRAPII’s Influence on the Research Unit’s Performance.
Table 2 shows that despite the diversity of the units investigated, there is a very positive perception of the EMBRAPII performance, highlighting that most of the units indicated the growth in the number of projects and the value involved in the research projects.
The companies’ assessments of the EMBRAPII model are also very positive. Contracts signed by companies specify that they have to evaluate the partnership with the EU. After 467 projects concluded (2015–2020), the evaluations were entirely satisfactory: 95.8% of the companies asserted that they were ‘Satisfied or very satisfied with the quality of projects’, while 96.8% stated that the ‘Project contributed to a technical increase of the company’; and 89.7% highlighted ‘EMBRAPII’s importance to increase the RDI investments in the company’ (EMBRAPII, 2021, p. 35–36). See several companies’ statements on the EMBRAPII website
The positive evaluations on EMBRAPII were not without concerns on the general technological change and consequent transformation in the world competitiveness. One respondent commented:
[M]anufacturing is still in its infancy in R&D in Brazil … it is complicated to talk about R&D for companies which needs are day-to-day demands to solve … they are still a long way from Industry 4.0. When an order comes, you realise that the project will generate a difference for the company, but it is not a technological innovation project. (Interview 5, PB, university)
Another statement expresses similar feelings about the profile of the Brazilian business community:
EMBRAPII has made many international partnerships …no matter how much EMBRAPII makes all these ties with global centres and resources, companies do not understand this; they cannot connect … the industry has not woken up yet; they have to realise that China is not so far away, it is a plane or a ship out. (Interview 12, PE, private organisation)
These two comments are from interviewees from the Northeast, a region less industrialised. However, a similar statement was made by EMBRAPII’s director. ‘Although Brazil has adopted several STI strategies over the years, there has been the scant valuation of innovation within the Brazilian manufacturing sector’ (Guimarães, 2020).
Analysing the Findings
The evaluations of researchers and companies regarding their cooperative work under EMBRAPII coordination were highly positive. Indeed, the EMBRAPII model represents an advance vis-à-vis the traditional funding agencies and innovation policies, particularly for EMBRAPII’s agility, flexibility, unbureaucratic administration, focus on applied research aiming at the market (value-added), and continuous assessment and assistance to the units during the project development and, last but not least, for contributing to create an effective network among key STI agents at the national and the international levels. The continuous increasing accreditation of units also shows EMBRAPII’s good performance—from thirteen in 2014 to sixty-one in 2020. The EUs also show good performance, as demonstrated by the continuous increase of (a) contracting companies—from 9 in 2014 to 739 in 2020; (b) contracted projects—from 62 in 2015 to 1093 in 2020; (c) investment value—from US$ 426.189.189 in 2014–2019 to US$ 453.055.555 in 2014–2020 and to US$ 526.315.789 in 2014–2021. The participation of business in the total cumulative investment was significant. The amount financed by business is unexpected in the Brazilian public funding agencies (EMBRAPII, 2020a).
Surprisingly, the positive results achieved by EMBRAPII and its efforts to expand the scope of its action at the national and international levels, with the units’ and companies’ positive assessment, were insufficient to attract a high number of companies engaging in the programme. In six years of activities (2014–2020), the number of companies and projects had not exceed 739 and 1093, respectively (some companies have more than one project). Many companies participated in meetings held in different regions of the country, promoted by the productive sector organisations to raise awareness of the efficient work and funding capacity of EMBRAPII. With the prospecting efforts carried out by EUs, 70,929 companies were reached between 2014 and 2019 (EMBRAPII, 2020a, 2021).
The number of companies that engaged in the programme following the significant efforts of stakeholders to attract business involvement in RDI projects seems lower than would be expected. As mentioned above, PINTEC surveys have shown that two-thirds of the potentially innovative companies (116,962, with ten or more employees, in 2015) remained technologically stagnant (IBGE, 2020a).
The companies’ modest adherence, over six years, to the stimuli from credible agents as their representative entities and the EUs confirms the diagnostic made by many analysts (Brito Cruz, 2016; De Negri, 2018; Frischtak, 2019; Mazzucato & Penna, 2016) that the Brazilian subsystem of production and innovation have a low disposition to innovate. What factors contribute to that?
An adequate public policy such as EMBRAPII did not seem a particularly relevant variable for stimulating business participation in innovation projects. ‘Scarcity of appropriate sources of financing’ was not considered a pertinent obstacle to innovation since that option was ranked by businesses in the fourth place, according to the PINTEC 2015−2017 survey. The lack of qualified personnel was also not a big factor, since there was a reduction in the personnel employed in R&D activities over the 2015–2017 period. As mentioned before, ‘Economic risks’ was ranked by respondents as the main obstacle for not innovating (IBGE, PINTEC, 2015−2017). As already mentioned, in 2014–2016, the country experienced its most significant economic recession and the political instability caused by the president’s impeachment. However, there was a slight recovery later (accumulated growth of 3.8% over the 2017–2019 period) (Chaimovich & Pedrosa, 2021, p. 235).
As emphasised by the theoretical systemic framework, innovation outcomes depend on the broader ensemble of social, economic and political factors.
Brazil has been struggling with severe structural and institutional problems such as low quality of the educational system, chaotic tax system, precarious infrastructure, excessive bureaucracy and lack of judicial security, which are obstacles to increasing productivity, competitiveness, and innovation. In addition, it highlights the economic variables such as extreme protectionism, the closing of markets, the absence of commercial agreements and high labour costs (Brito Cruz, 2016; Frischtak, 2019).
The historical trajectory of the Brazilian modern economic structure is based on the import substitution industrialisation model, whose logic is still prevalent. The Brazilian economy is considered one of the least integrated to international trade (as a percentage of GDP) compared to other emergent economies or all economies. (OECD, 2020; The World Bank, retrieved from Trade (% of GDP) Data
The opening of the economy would trigger changes in the other bottlenecks that hinder economic development. Simulations carried out by OECD studies suggest that the opening of markets in Brazil could raise labour productivity by 4% (OECD, 2020). Brazilian productivity remains stagnated for more than thirty years–from from 1981 to 2018, when the productivity was 0.4% (Jornal da USP, 02/21/2020).
The Brazilian agribusiness sector has high productivity and is competitive and technologically front-line, mainly due to the sector’s internationalisation, a factor that imposes a permanent search to increase competitiveness.
Final Considerations
The article tried to show the difficulties faced by emerging countries like Brazil, as they lack the conditions to reduce the gap between them and those at the leading edge of the new economy. The case of Brazil is of interest since it shows that the support of public policies for more than two decades, aiming at a technological improvement, was not enough to stimulate the envisioned process; on the contrary, instead of progress, one observes regression.
Faced with the continuous technological delay of the Brazilian productive sector, social agents such as politicians, academics and business leaders turned to a successful model abroad to reproduce in Brazil. The assumption was that similar results would follow at home by transplanting a successful model from elsewhere.
The reproduction of the German model by EMBAPII in its functioning was entirely satisfactory. The best practices were employed in management, financing, scientific and technological research. The results, although considered positive, cannot be evaluated as a trend capable of changing the country’s situation of the technical and innovative gap, given the modest number of companies engaged in the collaboration programme during the six years of EMBRAPII operation.
In a visit to Brazil in 1961, Douglass North warned about the error of implementing economic projects seeking to reproduce successful models abroad (North criticised the industrialisation plan to be implemented in the country’s Northeast region, a rural area at the time) (North, 1961 as cited in Boianovsky & Monasterio, 2018).
North’s warning half a century ago was ignored, and Brazil continued to solve its problems by reproducing the successful experience of developed countries. North et al. (2007) have continued to argue that developing countries should examine the political, economic and social factors that contributed to a successful event before attempting to replicate the experiences of developed countries.
The systemic theoretical framework shows that the innovation process requires an institutional matrix and complementarities compatible with the new development pattern, namely, incentives that rewards efficiency, productivity, competitiveness, internationalisation and innovation. In contrast, a majority of the Brazil’s potentially innovative companies prefer to disregard technological advances. They maintain inefficient practices, using political pressure to secure privileges such as market protection, granting of incentives, subsidised credits and tax exemption, which benefit traditional economic sectors and guarantee them high profitability even with low-quality production, thanks to their protectionism.
The country’s economic development sustained by a high degree of protectionism encourages economic isolation and alienates the business segments from competition challenges. The system works in a vicious circle: Low productivity, low competitiveness and low technological level may achieve short periods of economic growth followed by long periods of economic downturns, protectionism and new economic distortions.
To accelerate the trajectory of low technological performance in the Brazilian productive sector, besides organisations such as EMBRAPII, it seems essential to count on a more open, more competitive economy, and chiefly less dependent on state protectionism. The need to attain higher competitiveness would incentivise entrepreneurs to incorporate innovation as a value.
Footnotes
Declaration of conflicting interests
The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.
Funding
The authors would like to thank the Brazilian Agency National Council for Scientific and Technological Development (CNPq) for the financial support that made this research possible. They also thank the peer reviewers for their valuable suggestions.
