Research by the Getúlio Vargas Foundation (FGV), of Rio de Janeiro, makes it clear that the country pays dearly, literally, for the companies low investment in technology. The study assesses the import and export of technological services (supply of technology, trademarks and patents, implantation of services, franchises, etc.) carried out between 1990 and 2000, during which period exchanges between Brazilian companies and those in other countries substantially increased. The purpose was to identify the amount of money involved, the type of technology entailed, the most dynamic sectors and the size of the partner companies.
The results were alarming. In the period studied, Brazil’s technological trade with other countries, turned over US$ 14.5 billion, or around 0.005% of the country’s Gross Domestic Product (GDP), a relatively small trading volume for a country that needs to innovate in order to compete in the international market. In the same period, the United States turned over 4% of its GDP, with technology imports and exports which represents US$ 320 billion.
Brazil exported US$ 2.8 billion in technology and imported US$ 11.7 billion. And, the trade deficit was thus US$ 8.9 billion. “In no sector did we find a surplus”, says Virene Roxo Matesco, of the FGV-RJ, coordinator of the research and director of the Brazilian Society for the Study of Transnational Companies and Economic Globalization (Sobeet-SP in the Portuguese acronym). These results, she believes, suggest that incorporating imported technology, although it adds value to the product domestically, has not yet had any great effect on Brazilian exports of technological service, as is to be hoped.
Trade balance
Based on figures provided by the Central Bank (CB), the survey observed that, within the scope of trade in technology, Brazilian exports by manufactures headed overseas sales by sector and accounted for 57.23% of Brazilian business with other countries. The services sector accounted for 35.75% of all exports, followed by retailing, with 6.18% and by other sectors with just 0.84%. The highest spending was on purchasing specialized technical services, which accounted for 87.13% of imports. The others, specialized technical services for assembling equipment, projects, engineering drawings and models and the implantation or setting up of projects, came to no more than 5%.
Technology transfers headed imports, accounting for 38.15% of Brazilian overseas spending. Then came specialized technical services, with 24.47% and the supply of technological support services, with 17.57%. In fourth place came spending on patents – usage licenses and ceding licenses – registration, deposit, or maintenance. The figures are expressive; they reached US$ 1.3 billion, or almost 11.5% of all imports. And, in fifth place are specialized technical services for assembling equipment, accounting for 3.8% of all imports.
Technology imports, Virene recognizes, benefit the country, since they show investment by companies in modernizing production facilities, and in innovating their businesses. “They show belief in the future, she observes. The problem, in the case of Brazil, is the pace of the growth in technology exports over the period studied. “Business performance makes it clear that imports of capital goods and technology have not managed to add value to goods and services produced here so as to enable a surplus in some business sectors” she warns.
Technological deficit
All the sectors examined recorded a trade deficit in technological services. In the farming sector, exports were concentrated in agriculture and livestock and turned over US$ 46.9 million, but the accrued deficit in the period came to US$ 8.1 million. The same imbalance was observed in all industrial sectors. Mining had a significant deficit of US$ 156.6 million. Even in the oil business, which, historically, has spent a great deal on Research and Development (ReD), we observed a cumulative technology deficit of around US$ 58.5 million. This performance was repeated too in manufacturing, which turned over US$ 7.5 billion in buying and selling technology, resulting in a technological deficit of US$ 1.6 billion.
The sectors with the highest technology exports, without, however, getting out of the red, were the car industry and capital goods. In the retail sector, the deficit came to US$ 458.9 million, and in services it was US$ 3.9 billion. Large companies accounted for 40% of exports. The share of small companies in exports was 13.4%. Imports were better distributed over companies of various sizes. Virene points out that very big companies had a share of only 3% of total spending, which in her opinion, shows that they have little interest in innovation.
Competitive advantage
Virene, again, recognizes that the size of the Brazilian domestic market – which absorbs 90% of local technology production – could, in some cases, justify this imbalance in technological trade in Brazil over the period. “Multinationals, for example, focus on the Brazilian domestic market”. She underlines, however, that this performance has what she calls a complicated structural bias. “We missed the boat at the turn of the 60’s to the 70’s, when the country’s competitive advantage lay not in domestic production but in extensive use of technology” she notes. In the last decade, the country neglected several factors that, today, help new incorporated technology into production to be dissipated and, as a result, they do not add value to the product, which would have had a favorable effect on exports.
One of the dissipation factors, she points out, is the “lack of education for technology”. “We bet heavily on eradicating illiteracy, in training abundant and cheap workers, without investing in the specific preparation of the labor force” she assessed. Also contributing to the this dissipation of investment is the fact that companies operate “strangled” by high taxation, raising what has become conventionally called the Brazil Cost. She also points out the lack of an industrial policy, taking account of the needs of different needs. “The State cannot see what each sector needs”.
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