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Investments

A new plan for growth

Federal government will earmark R$42.1 billion for science, technology and innovation

eduardo cesarThe National Science, Technology and Innovation Plan for National Development for 2007-2010, announced by president  Luiz Inácio Lula da Silva on November 20, has a bold target: to increase national spending on research, development and innovation (R,D&I), over three years,  from the current level of 1.2% of GDP to 1.5%. This increase equals investments of some R$5.7 billion a year, or roughly R$23 billion over the entire period. As a result, Brazil would climb from a position similar to that of Eastern European countries and South Africa in the ranking of R&D spending to a level similar to China’s and close to that of the UK and  the Netherlands. With this plan, named the Science and Technology PAC (Growth Acceleration Program), the federal government promises to sponsor this acceleration and to earmark R$41.2 billion for science, technology and innovation (C,T&I) during the course of the next four years.  The plan also relies on the contribution of private firms, whose share of R&D expenditure is expected to rise from the current level of 0.51% to 0.65% by 2010.

The forecasted investments will finance not only the S,T&I system but several other lines of action, such as corporate innovation; the training of human resources; research and development in strategic fields; and the establishment of vocational centers, telecenters, and social technology incubators, among others. The funding is to come from the Ministry of Science and Technology (MST) budget, from development agencies, from the National Fund for Scientific and Technological Development (NFSTC), from Brazil’s National Economic and Social Development Bank (BNDES) and from other ministries.

The resources earmarked for corporate innovation will rise from slightly more than R$4.5 billion in 2007 to R$6 billion in 2010. This funding increase will result from the speedy release of  funds over the next two years, and from the creation of new funds, announced by the government. The money will reach the market in the form of both refundable and non-refundable resources, risk capital funds, tax incentives and financial subsidies. The aim is to raise the amount of revenue coming from innovative companies  from 0.8% in 2005 to 1.2% in 2010.

To encourage firms’ investments, the government plans to provide subsidies to firms that invest in R&D, while Finep (the Financing Agency for Studies and Projects) will offer a credit line with no real guarantees required and at zero interest for those firms that establish themselves in technological complexes. It is estimated that by 2010 R$2 billion will be allocated to subsidies, with matching funds required. The measure will strengthen the Innovation Law, passed in 2003, and will expand tax incentive mechanisms forecast in the Law of Benefits (Lei do Bem).

The Science and Technology PAC also foresees creating a Brazilian Technology System (Sibratic), a network that will consist of research institutions and of federal, state and private universities. These, according to the ministry, should earmark R$677 million for organizing innovation centers, technological services institutes and technological extension. This network, to be put in place by the end of 2008, will consist of at least ten institutions that will train human resources, offer technological education programs and specialized technical services (such as calibration and assays), and upgrade laboratories, among other activities, in  partnership  with private initiative and using funds provided by BNDES, Finep, and CNPq (the National Scientific and Technological Development Council).  The target is to aid the creation of at least ten innovative firms a year.

The plan reinforces the federal government’s intention to mobilize the purchasing power of the public sector, as provided for in the Innovation Law,  and to foster firms’ technological development. One of the first areas expected to benefit from this policy will be the pharmaceutical industry.

eduardo cesarTraining researchers
The plan provides for an increase of almost 50% for investments in generating master’s degrees and Ph.D.s from 2007 to 2010, to a total of some R$6 billion during the period. The number of CNPq grants will grow by 46%, with a view to increasing the number of people who get a Ph.D.s by 60% a year. The new grants will be earmarked mainly for engineering courses, this being one of the areas of greatest market demand, as well as  fields considered a priority according to Pitce (the Industrial, Technological and Foreign Trade Policy).

“The larger number of grants is very positive, especially if they focus on engineering, a field in which the shortage of qualified professionals is widely acknowledged”, stated Carlos Henrique de Brito Cruz, FAPESP’s scientific director. However, he stresses that care must be taken not to overemphasize interest in applicability, where academic research is concerned. “In industrial research and in the studies conducted by institutes with a targeted mission, the issue of application is essential. However, research at universities should explore the frontiers of human knowledge in all areas and not only in those for which applications can be foreseen.”

Furthermore, the value of the grants offered by Capes (the Coordinating Office for Training of Personnel with Higher Education) and by CNPq will rise by 20% as from March 1, 2008.

Investments in training human resources will also comply with the science and technology decentralization strategy, pursuing a regional and social balance, especially in the Midwest, Northeast and North. The idea is to strengthen regional and local systems through added support for state institutions, where fostering R,D&I is concerned. However, the measure that elicited most of the applause at the ceremony at which the S&T PAC was presented to the scientific community was announced by president Luiz Inácio Lula da Silva himself: the government is going to simplify the process of importing material required for research. According to minister Sérgio Rezende, the Federal Revenue Service will create a fast track for them and speed up their entry into the country. ” ‘Customs’ officers will treat research products differently”, promised the minister.

Strategic R&D
The plan’s chief novelty is strengthening R&D in strategic areas involving not only the MST but several other ministries, thus generating a larger budget for the S&T PAC. The president himself explained that this decision was similar to a procedural revolution: “We put all the government sectors that dealt with science and technology issues, directly or otherwise, and decided to do away with their individual programs, creating instead a program for the Brazilian State”, explained Lula at the plan announcement ceremony. The intention, he stressed, “is to get rid of that business of each government center having a little piece of the science and technology action”.

This “procedural revolution” transforms the MST into a sort of manager of R&D in 13 technology-intensive sectors that, according to the federal government, enjoy “sectorial transversality as well as a multidisciplinary technical and scientific character”, besides having a major innovative and dynamizing potential for the economy plus a significant weight in the balance of payments, and being compatible with Pitce.  The  selected sectors were: biotechnology and nanotechnology; information and communication technology; inputs for health; biofuel; electric energy, hydrogen and renewable sources of energy; oil, gas and coal; agribusiness; biodiversity and natural resources; the Amazon Region and the Semidesert; meteorology and climate changes; the space program; the nuclear program; and national defense and public safety.

“These are strategic themes that require articulation in government’s sectors”, informed minister Sérgio Rezende during the 7th Strategic Studies Seminar held in Brasilia from November 6 to 8, two weeks before the announcement of the S&T PAC.

According to Brito Cruz, the government’s initiative of proposing an “encompassing” plan with defined targets is positive, although he recognizes that it might elicit criticism regarding the areas chosen. “The very existence of the plan is per se a major progress from the institutional point of view”, he stresses. Nevertheless, he points out the weak elements that he believes should be corrected. “The plan is not a national plan, but a federal one, because it did not discuss the states” strategic priorities with them. This is a significant limitation, because 65% of public funds for R&D in Brazil come from federal sources but 35% come from the states. In São Paulo, 60% of the funding is provided by the state”, he noted. The second weak element is that the plan, which is meant to cover the 2007-2010 period, was only announced in November 2007. “It would be more correct if it were a plan for 2008-2010.”
Additionally, Brito praised the target of raising spending to 1.5% of GDP. “It’s a good objective, though it’s less than the 2% GDP rise that president Lula announced at the Science and Technology Council in 2003”.

eletronuclearImproving basic education
The S&T PAC has points in common with the Education PAC. The government intends to build “bridges” between public universities and the basic education system. “Though ranking 15th in global scientific production, Brazilian universities fail to transfer this know-how to the world of work or to basic education. It is encapsulated knowledge”, states Fernando Haddad, the Education Minister, at a conference held during the Strategic Studies Seminar.

From 2007 to 2010, the government plans to invest R$2 billion a year in the restructuring of public universities, in order to create a national system for training teachers. “To date, 36 out of the 54 public universities have submitted their restructuring plan, which includes developing links with basic education”, calculated the minister.

The “bridge” linking universities and the world of work, as he said, started to be laid when Law 11487, known as the Rouanet Law for research, was passed (see the August 2007 Pesquisa Fapesp issue). “Professional education also needs to be reassessed, to incorporate science as a production factor”, added the minister.

Emerging leadership
The Science and Technology PAC and the Education PAC throw some light on the country’s long-term prospects. The growth strategy, however, acquired a light of its own through the words of Mangabeira Unger, the Special Minister for Strategic Planning. “We need to devise a new development model with more educational opportunities and more popular participation”, he stated at a conference during the Strategic Studies Seminar.

Unger listed the strategic project’s priorities, which, at the time, he had “started to discuss with the president.” The first point is National Defense, one of the action areas foreseen in the S&T PAC. “There is no national development strategy without a defense strategy”, he stated. He advocated the reorganization and professionalization of the Armed Forces, the recovery of their technological leadership role, and the establishment of a National Defense industry. “The transfer of defense technology among countries is accessory. We have to have our own capabilities and to elevate national industry to be technologically independent.”

The minister also seemed to be fairly concerned about the future of the Amazon region, considered a priority in the S&T PAC as well. He proposed the development of a national  economic and environmental development project capable of enabling, for instance, the productive use of certain areas. “But to achieve advanced economic activity, such as making use of biodiversity, it one must have qualified personnel throughout the country.” “The solution to this problem is unknown.”

Unger also reflected on how urgent it is for the country to embrace what he calls an “inclusive industrial policy.” He explained that “traditional policy is geared toward large firms and its tool is subsidized credit and fiscal favors.” He devised a strategy that would take into account emerging enterprises, foster the dissemination of “successful” local experiences, include management advice on personnel training and establish a support network for technological extension.

According to the minister, the social basis of the country’s new development project should be the “emerging and hardworking small bourgeoisie”, consisting of people who go to night school, who open their own business and who  are introducing to the country a self-help culture. “That is the lead that most want to follow”, he assumed. “One must use State funds to encourage the bulk of the population to follow the example of the emerging vanguard”, he states, advocating social policies geared toward training, quality public schools and the democratization of the market economy.