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Agency for innovation

Finep completes 35 years and consolidates its role in support of R&D&E

NegreirosIn the course of its 35 years, commemorated in July, the Financier of Studies and Projects (Finep) has consolidated itself as the supporting arm for innovation in Brazil: it finances investments in Research and Development (R&D) in companies, promotes their interaction with universities and research institutes, and implements measures for attracting venture capital to spur the growth of technologically based emerging companies. The agency has been capitalized and is responsible for running the National Fund for Scientific and Technological Development (FNDCT), where the resources for the Sectorial Funds are lodged; this year, these will add up to R$ 500 million, but they should exceed the R$ 1 billion mark in 2003.

“Finep has been rejuvenated and restructured, with new instruments to encourage innovation”, explains Mauro Marcondes Rodrigues, the agency’s president, giving as an example the reduction in the costs of the operations for financing technological innovation. This mechanism, which is to be regulated, will make possible operations with the lower Long Term Interest Rate (TJLP in the Portuguese acronym), which should substantially increase its portfolio of projects. Finep has also been authorized by law to subsidize R&D programs in companies directly, a prerogative that until then had been limited to universities. “We are able to support technologically based companies that are not yet ripe for venture capital”, Marcondes explains.

Created at the beginning of the 70s, Finep consolidated its work when it started to operate the funds of the FNDCT, a strong instrument for encouraging innovation, is Marcondes Rodrigues’s comment. The agency also has an important role for the scientific community, through the transfer of funds from the Infrastructure Fund (CT-Infra), which finance infrastructure and support services for investigation in universities and research institutes.

These institutions also benefit from the projects supported by the Green-Yellow Fund. In its last call for tenders, for example, Finep offered R$ 25 million for financing projects with a like contribution from the interested companies, which are to be carried out in partnership with universities and research institutes. The number of proposals submitted to Finep was a surprise. Companies like Caraíba Metais, Cecrisa, Embrapa, Natura and Companhia Vale do Rio Doce, amongst others, presented projects in a total amount of over R$ 130 million.

There is still a long way to go, he recognizes. “But the country’s agenda has changed”, he says. “Companies are now more alert to R&D and innovation”, adds Finep’s president.

X-ray of technological advancement

The main action taken by 71% of Brazilian companies in the direction of technological development is still the purchase of machines and equipment. Product innovation is prominent in sectors like office machinery and information technology; chemicals; electronic and communications materials; medical-hospital and optical equipment. The qualification of human resources is carried out by only 30% of the companies, in their majority the big ones.

In spite of this picture, the majority of companies consider themselves technologically advanced and reckon that they have enjoyed a significant technological advance in recent years, as well as increased capacity for innovation with regard to the period 1995 to 2000. These were some of the conclusions of the survey of Industry and the Technological Question, sponsored by the National Confederation of Industry (CNI) and Finep, made public at the beginning of August. The survey heard 531 executives, from small (367), medium (105) and large (59) companies, between October and December last year.

Regardless of their size, the majority of companies pointed out the opening up of new markets as the key variable for success over the next five years, and the manufacturing of products with the maximum of efficiency as the most important factor for expanding business. Efficiency, by the way, (with 89 points), was far ahead of other indicators like Research, Development and Engineering (R&D&E) (60 points) or exports (53 points). Strategies like marketing and design were awarded 50 and 32 points, respectively.

The survey also registered that R&D&E has acquired strategic importance for companies, when one compares investments now with those carried out in the second half of last decade, above all in the sectors that produce Capital Goods and Food and Beverages. The small companies carry out proportionally less research activities that the medium and large ones. Amongst the activities mentioned by them, besides the gathering of data and information, they indicate the building of prototypes and experimental production. In the case of the medium and large companies, the main activities are process engineering, the gathering of data and information, market prospecting, and product engineering.

Difficulties in financing
Technological innovation is regarded as necessary by 93% of the interviewees. Half the companies, however, stated that they did not have the technical or financial capacity nor the human resources to invest in innovation. This percentage is 60% among the small companies. In spite of the result, 83% of the companies consulted claimed to have some strategy for innovation, but half allege having difficulties in accessing finance. On this aspect, incidentally, the CNI/Finep survey found that the companies depend in a critical way on the availability of resources of their own and are short of governmental support for investments. When the issue is investments in new technologies, and, above all, in R&D&E, the situation is even more serious, because of the high risk and the long maturity period. The lack of qualified staff was pointed out as a hurdle to innovation by 35% of those interviewed, and the difficulty in establishing partnerships by 17%.

Concern with the qualification of human resources to operate or to develop new technologies grows in direct proportion to the size of the companies. This is regarded as a “very important” point by 54% of the big ones. But, generally speaking, it is irrelevant for a major part of the companies, which, according to the survey, “seems to denote a lesser concern with setting up formal R&D&E structures”.

The strategies for innovation are carried out predominantly in the company itself, with the customers and suppliers as the main partners. On the other hand, in large companies, the emphasis is on the acquisition of technology already developed by third parties. In the case of cooperative projects, 25% of the companies indicated that they counted on the support of the National Service for Industrial Apprenticeship (Senai) and the Brazilian Support Service to Small Business (SEBRAE), companies from the group and consultancies. It is interesting to note that the number of companies that have joint projects with universities and research institutes is now in the region of 24%.

This X-ray of innovation has shown that technological innovation in companies is directly related to the purchase of equipment. This too is the main channel for the transfer of technology, with 60 points as an indicator, followed by the hiring of specialized personnel, with 53 points. “This indicates the need for the policy on technology to include instruments to support these ventures, which represent the main way for innovation to be introduced into companies”, the survey concludes.