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Crises, virtues and opportunities

Equipment and input importation has raised the cost of research in Brazil

The quality and the dynamism of Brazilian scientific production are incontestable. In many areas – such as biotechnology, genomics and immunology, if only to mention a few examples – they are already performing at the frontier of knowledge. In others, such as engineering, physics and agrarian sciences, the research has gained competitiveness and international projection. This position of highlight that has been conquered over the last few years must be considered a grand accomplishment, because to carry out research in Brazil is costly. The country is as yet consolidating its infrastructure of science and technology, which demands expensive investments in the purchase of state of the art equipment, inputs and services, which, in almost their totality, are imported and their prices are quoted in US dollars.

Equipment such as microscopes, chromatographs, centrifuges, low temperature freezers, lasers, spectrophotometers, among others, are all imported. This is without mentioning the material used in research such as perishable reagents, explosives, corrosives, pipettes, and even live animals. In spite of the Ministry of Science and Technology (MCT) coming closer to business and of the know-how in the manufacturing of products and prototypes accumulated in the universities and research institutes themselves, national industry, probably through the lack of an incentive policy, has not as yet shown an interest in producing similar equipment or inputs.

Brazil invests around 1% of its Gross National Product (PIB) in research and development, something in terms of US$ 5 billion. At least 60% of this expenditure, US$ 3 billion, is however the responsibility of the public sector. It is difficult to precisely calculate how much is spent on the importing of equipment and inputs for academic research. Something to the order of three hundred and twelve institutions are accredited through the National Council for Scientific and Technological Development (CNPq) to carry out direct purchases abroad with tax breaks, through a system of quotas established annually.

Furthermore, there isn’t consolidated and available data about Brazilian imports for scientific and technological research. It is only possible to make estimates based on the operations of external purchases of some development agencies. For example, the first tender of CT-Infra I, one of the sectorial Funds administered by the Financier of Studies and Projects (Finep), destined R$ 149.3 million towards supporting sixty eight projects for the installation and modernization of the research infrastructure at universities and public institutions.

Of this total, R$ 80.5 million was reserved for the purchase of equipment for laboratories, computer networks, among other items, of which 28%, or that is to say, R$ 23 million, pay for imported products, according to Fernando Ribeiro, one of Finep’s directors. Construction spendingin the total number of projects reached R$ 63 million, and the expenses and general services a further R$ 5.7 million, and of this amount R$ 4.1 million is also related to importing, since it includes customs expenses and freight etc.

Back in São Paulo, FAPESP’s expenditure on imports annually reaches something around 30% of its budget. Last year, imports to the total of US$ 61.7 million were authorized, out of a budget of US$ 171. 8 million. In 2002 – the projection is for a budget of US$ 165 million – expenses to the value of US$ 34.4 million for imported goods and services for research projects have been authorized. At the Research Support Foundation of the State of Minas Gerais (Fapemig), with a budget of R$ 35 million this year, imports represent between 30% and 40% of the total investments in research projects, by the calculations of Naftale Katz, the institution’s scientific director.

The Research Support Foundation of the State of Rio Grande do Sul (Fapergs) also used around 30% of its budget on the external purchase of research equipment and inputs, until an unprecedented crisis reduced the budget from R$ 19 million to R$ 12 million this year, halting investments, both in reals and in the dollars. The proportion of spending in dollars is 20% of the budget of the recently inaugurated Research Support Foundation of the State of Bahia (Fapesb), with a budget of R$ 21.5 million for 2002. There are exceptions. In Rio de Janeiro, expenses in dollars represent something around 10% of the budget of R$ 50 million, of the Research Support Foundation of the State (Faperj), according to its scientific director Luís Manoel Fernandes.

Adding things up, one can confirm that the six FAPs, with a total budget of US$ 199 million, this year have invested US$ 64.4 million or 32% of their accumulated budget on the purchase of imported equipment, inputs and services. This sample can be considered significant: these six amongst the fifteen Brazilian State Foundations account for 69.4% of research groups, according to the National Directory of Research Groups produced by the CNPq. Even though it is impossible to project these spending percentages in dollars of the FAP or of the CI-Infra I towards all of the activity of research in the country, but this data could be a good indicator of the degree of external dependence of Brazilian science.

Federative pact
One might argue that this is the price paid for he recovery a historic neglect in investments in science and technology. Or even consider that these expenses are the counterpoint of the current dynamism of national scientific production and of the recent efforts by the MCT to decentralize the activity of research, heeding to the regional vocations and demands. “Research throughout Brazil is at different stages. And its realization is most expensive at start up, when the machinery is not well known and dialogue is not very widespread”, points out Evandro Mirra, the president of the Administration and Strategic Studies Center (CGEE) of the MCT.

To the investments in the implanting of an infrastructure, one must add the expenditure associated with the ever increasing need for upgrading and even the substitution of equipment, without speaking of service support hired out of the country demanded by the leaps in scientific instrumentation at the international level. This equation could even justify the high cost of Brazilian research. But one had better remember that the challenge of modernization is not exclusively Brazilian. It’s on the international agenda and has to be faced by any country that wants to keep competitive in science and technology.

Nevertheless, in the Brazilian case there are other weak points. The first is directly related to the instability of the currency. And the second, to the absence of an agenda that gives priority to science and technology as a development strategy. “Science and technology is a question of economic policy”, says José Carlos Silva Cavalcanti, from the Support Foundation in Science and Technology of the State of Pernambuco (Facepe). “The implementation of a policy towards the substitution of imports, combined with a national plan, is fundamental”, highlights Fernandes from Faperj.

“We have to start thinking about a federative pact for science and technology that re-defines the priorities and the place of state and federal development agencies, of the Union and of the states themselves”, suggests José Fernando Perez, FAPESP’s scientific director.

This year the increase of 52.4% in the value of the US dollar has brought immense havoc to budgets and to the programs of external purchases by development agencies with serious repercussions for research in almost all areas of knowledge. For example, FAPESP had to suspend, in August, though in an emergency and temporary character, the release of resources for the importing of goods and services for ongoing projects, as well as for newly approved projects. Only the purchasing of inputs, and repair parts at the minimum indispensable quantity and of exceptional character, are being authorized.

Fapemig, the state of Minas Gerais’s development agency, a state that comprises 1,257 research groups, or 8.3% of the country’s total, has also felt the effects of the currency variation on its budget, says Naftale Katz. But it decided not to interrupt its imports. “We decided to go on funding the permanent importing of inputs and we’re authorizing purchases at the limit forecast for these expenses”, he explains. For example, in the biotechnology area, one of the research strong points of Minas Gerais, there are no national products. Katz forecasts that it will be inevitable to reduce the rhythm of the approval of projects. “This year the investments destined to projects of spontaneous demand were R$ 10 million. When we reach this level, we’ll have to stop”, he says. “I hope these increases are just an accident along the way because it’ll not be possible to survive with these hikes in the exchange rate.”

The examples of the difficulties at the universities and research institutes are multiplied throughout all of the country. The increase in the price of the dollar has obliged the recently inaugurated Fapesb to revise its grants for supporting overseas travel. “We’re putting out fires”, explains Cleilza Andrade, the director general of the entity that supports 473 research groups in the State of Bahia, or that is, 3.1% of the Brazilian total. The currency instability has also jeopardized projects such as that of the Network for reduction of Atmospheric Pollutants (Reapa), developed in the environment of the Cooperative Research Networks (Recope) of the State, implemented in partnership with Finep.

The team responsible is mounting pollution control equipment that would be used by companies at the Petrochemical Complex of Camaçari, among others, whose components are bought in Germany. “The difficulties had already begun when they had to identify and negotiate with a German company the supply of all the parts, bringing together material from other sources, in order to import once, making the process of purchase easier”, relates Tânia Mascarenhas, the project’s coordinator. “While this was happening, the dollar went up and the allocated resources were no longer sufficient”, she adds. The way out was to slow down the project and wait for a possible fall in the dollar in order to resume the importation.

The exchange crisis did not have such serious repercussions in the academic world of Rio Grande do Sul. There the organ Fapergs already had its project portfolio practically frozen due to a fall in income: the R$ 21 million initially forecast for the year, should, with luck, reach R$ 12 million. The state government, which according its constitution should destine 1.5% of the tax named Tax on Goods and Services in Circulation (ICMS in the Portuguese acronym and similar to a VAT) to the foundation, reduced the transfer of income that supports 1,769 research groups, which represent 11.7% of the total Brazilian groups. “The State simply didn’t pass on the resources”, explains Rogério Isotton, the foundation’s administrative director. In 2001, Fapergs’s budget was R$ 19 million. Historically, the expenditure in dollars of the foundation is equivalent to 30% of its income.

In Rio de Janeiro, in spite of imports eating up only about 10% of Faperj’s resources, the movement in the exchange rate was felt in the form of a “shower” of requests for additional funds to cover contracts already signed, according to the president of the entity. “We reviewed some projects, sent them for an analysis by an assessing committee and, when possible, re-managed the expenses within the approved budgets”, he says. “In some cases, we approved additional funds for the contracts.” In Rio de Janeiro, there are currently 2,111 research groups, or 13.9% of the Brazilian total.

The re-managing of income and the approval of additional funds for some contracts have been the alternatives adopted by the majority of the development agencies in order to not greatly jeopardize the development of research. The good news is that the Brazilian scientific community is leaning towards equipment sharing. “This will increase its rate of use, bringing to the apparatus complementary competence. And this is not a Brazilian trend”, observes Mirra from the CGEE. However, in the case of Facepe, a more radical and definite solution was adopted: the redirecting of its investment policy. “We are slowing down projects that depend on imports and moving towards more productive strategies, by looking for international partners that will not endanger the payment of equipment and will allow for the substitution of imports”, says José Carlos Silva Cavalcanti, the entity’s president.

The ideal example of this new model of doing business is the Porto Digital, a center for the generation and attraction of business in information technology that was implemented some two years ago in a partnership between the State government of Permanbuco, the Interamerican Development Bank (BID) and Finep. “We already have partners such as Siemens, Motorola, Oracle, among others”, explains Cavalcanti. At the beginning of November they closed yet another agreement, this time in Germany, involving the state government “for a large initiative in this area”, he saids without revealing the identity of the future partner. “It’s just not on to purchase foreign technology”, he reiterates. The exchange rate could even return to a more favorable position, but Facepe’s decision has already been taken. Engineering and computer science are strong points in Pernambuco State research, where some 579 research groups are active, or that is 3.8% of the country’s total.

S&T and economic policy
The current scenario of research in the country, evaluates Facepe’s president , shows, “in a shocking manner”, an undeniable fact: investments in research in the country need to be dealt with in the context of an economic policy. “If we wish to strengthen Brazil within a global perspective, we need to invest in modern R&D and this requires commitments and a sense of daring.” Cavalcanti cites the example of China, which recently presented to the world a standard for digital TV to compete with the American, Japanese and European standards. “Brazil also needs to be daring, since competency for this to occur exists as well as to carry out technology.”

The prospects, nonetheless, are not very optimistic. “Not a single candidate for the Presidency of the Republic placed science and technology in the plans of their economic policy”, FAPESP’s scientific director, José Fernando Perez observes. “And the challenge is to make this into an absolute priority to guarantee more competitiveness, less importation and more exportation.” Employment, he continues, is in fact an essential policy, but this issue will not be resolved without science and technology. Perez suggests that we should think about a federative pact for science and technology in which the way the federal and state agencies work together, as well as the role of the Union and the states, is re-defined. “A more pro-active policy in the evaluation of priorities and in the commitment of funding is needed”, he argues.

In the states that have intensive research activity, such as in the cases of São Paulo, Rio de Janeiro, Minas Gerais, Pernambuco and Rio Grande do Sul, he underlines, the size of the scientific community has already overtaken, and by a long way, the funding capacity of their development agencies. The redefinition of an agenda for science and technology in Brazil must also contemplate a policy for the substitution of imports. “Scientific and technological research is thepatrimony of a developing country. And the national industry resists investing in the production of scientific equipment and even to innovate”, says Fernandes, Faperj’s scientific director.

“And this depends on a wider and more strategic agenda that involves actions that include imports substitution and the creation of special lines of funding”, he suggests. He reminds us that all the candidates for the Presidency defended a policy of substitution in strategic areas. “And this is very much the case in science and technology.”

Substitution of imports
Despite the difficulties in this sector over the last few years, the universities and the research institutes have developed various competencies, including in instrumentation of high precision. “Companies have already perceived this situation”, underlines Perez. For example, the chromatography laboratory of the Chemical Institute of the University of São Paulo, in São Carlos, masters the technique of developing chromatograms, equipment that has application for the qualitative evaluation of any chemical compound and with wide use, from the analysis of residues of insecticides on food to the control of fuel quality, passing through the measuring of the absorption time for new medicines.

The research team has already implanted this technology at the Research Center of Petrobras and Usiminas (Cenpes), in this case for the control of the quality of raw material. “We’ve never had contact with national companies interested in their production”, observes Fernando Lanças, the vice director of Chemical Institute. A chromatogram, generally imported, costs between US$ 30,000 and US$ 100,000. “Brazil needs to invest in the production of this equipment, without protectionism, and to bring industryclose to the universities “, he suggests. “A program specific towards instrumentation would be of great worth.”

Another example of the capacity of the researchers in the area of scientific instrumentation is at the Particles Instrumentation Laboratory (LIP in the Portuguese acronym), of the Physics Institute of USP in São Paulo. The group, financed through FAPESP, built a Matrix-Assisted Laser Desorption/Ionization (MALDI) spectrometer- which is a kind of a scale to weigh proteins – at a cost of US$ 50,000.

A similar imported model costs around US$ 500,000. “It’s not our function to sell these instruments. We’re contributing towards the development of basic research, such as that of national technology and the training of personnel.”, emphasizes Suzana Salem Vasconcelos from the LIP.

This was not the first piece of equipment developed by the group. For example, they have already made two sensitive detectors for working with crystallography. These detectors make up part of a catalogue put out by the MCT, with a series of pieces of equipment developed by Brazilian researchers with the clear idea of presenting them to private companies at the end of the 90’s. No interest was shown. It was argued that research here does not have the scale to justify investments in production. There are doubts: for example does there exist a demand for genetic sequencers for DNA examinations? “One cannot think about substituting everything, but we must place our chips on what is in intensive and extensive use”, argues Perez.