Brazil as natural future economy

January 20, 2012

I visited Brazil in December 2011 for the first time in three years. In 2007 I lived more than a year in Brazil, learned speak fluent portuguese (after living two years in Argentina learning spanish and making Latin American Business studies) and worked in Finpro Brazil. I visited University of Sao Paulo (USP) Instituto de estudos Avançados (IEA) to understand better the historical development of Brazilian innovation system and future prospects.  During the flight back to Finland I decided to write on recent developments in Brazil.

Brazil is the only emerging BRICS (Brazil, Russia, India, China, South Africa) country that have not been discussed widely in Finland from innovation perspective. This is understandable as Brazil is seen distant geographically, culturally and linguistically to Finns and Finland poses weak historical political and economic relationship with Brazil. Other reason is that Brazil has been performing relatively weak in innovation performance caused by lack of coherent innovation policies, and protective legislation have been creating challenges for foreign investment (Brazil ranked 129th out of 183 countries in the World Bank’s latest Doing Business report) and innovation cooperation. However, there are signals on emerging innovation culture in Brazil and context related systemic approach need to be taken to increase strategic cooperation between Finns and Brazilians. This blog focuses on Brazilian innovation system and policy from social, economic and environmental perspectives to understand educational, scientific, technological, business model and service innovations emerging from Brazil and its fellow Latin American countries, mainly Chile.

Brazil has many times in its history praised to be the land of the future. Let’s look first on some recent developments in Brazil why it might finally fullfil the promises. First, Brazil with population of 190 million, the past eight years “Bolsa Familia” social program have lifted over 40 million Brazilians out of poverty and into middle class. This creates interesting platform for creating context related innovations and scaling bottom-of-the-pyramid innovations (disruptive and reverse) globally. Second, Brazil was almost non-effected by financial crisis 2008, a signal for strong and stable macro-economic policies. This means that Brazil, first time in its history, is becoming an interesting country for long term investment and strategic cooperation. Third, Brazil is hosting Football World Cup in 2014 and Summer Olympics in 2016. This will increased investments on infrastructure development and pressure for Brazil to show its true nature internationally. Growth Acceleration Program (PAC) 2011 – 2014 invests US$526 Billion to sanitation, crime prevention, basic health clinics, savings and loan systems, electricity and water for all, logistics, and energy. Fourth, deep sea oil field discovered 2007 will double or in most optimistic estimates tenfold Brazil’s current 16 billon barrel oil resources. Combined with bioenergy and wind energy production and hydroelectric resources Brazil is becoming a global energy power and profits from these resources create funds for future investments and development. End of 2011 U.S. finally opened its markets to Brazilian ethanol which will boost the sales in the future. Fifth Brazilian climate change law requires reduction of greenhouse emissions by year 2020: 36 – 39% below 2005 levels and 80% reduction in deforestation puts Brazil in forefront on fighting against climate change. And last strong primary economy from iron ore to soy beans will continue to boost national financial resources driven by explosive demand growth in China and India. In 2005 there were only 3 companies (Petrobrás, Banco Bradesco and Banco Do Brasil) in Fortune Global 500 list as in 2011 there were total 7 companies (4 new companies Vale, JBS, Itaúsa-Investimentos Itaú and Ultrapar Holdings). Other primary economy companies are Aracruz, Votorantim and Gerdau. Emerging higher technology Brazilian companies are aeronautic company Embraer, automobile part producer Marcopolo, cosmetics company Natura and Information technology provider Totvs.

To change course from primary economy to knowledge based economy Brazil have implemented several science, technology and innovation (STI) policies. Brazilian innovation, technology and international trade policy including Innovation Law was launched in 2004 and it followed Good Law 2005, PAC da Ciência 2007 and Productive Development Policy 2008. Innovation Law is designed to university-industry research relationship, promote shared use of R&D infrastructure, allow direct government grants for innovation in firms and increase mobility of researchers within the system. Good Law provides fiscal incentives for private R&D investment and funding for firms hiring Masters degrees and PhDs. The subsidy can reach 60% of the salary in remote underdeveloped are such as North East and Amazonia and 40% in rest of the country up to 3 years. PAC da Ciência growth action plan for science and technology funding has increased R&D funding from 1.0% of GDP in 2006 to 1.13% of GDP in 2009. This percentage and growth can be considered remarkable as 30 years ago there was almost no infrastructure for scientific research.

Corruption referred as “mensalão” is the only single threat slowing down the Brazilian development and cause of high inequality! In end of 2011 Brazil passed UK becoming 6th largest economy globally. Continuing these developments, Brazil is expected to become the world’s fourth largest economy by 2030, behind China, US, and India. All this have not been and not will be possible without improvements in innovation performance. Future blog posts weekly will focus on different aspects of innovation in Latin America. Even “innovation” is considered many times confused term refering to political, economic, social and environmental development, I will carefully follow state-of-the-art academic and intellectual stream on using this term and provide insight on using this term in development rethorics.

I hope the Finnish approach to Brazil will change and take strategic stance when Finnish education-research-business delegation lead by Minister for European Affairs and Foreign Trade of Finland Alexander Stubb and Prime Minister of Finland Jyrki Katainen will visit Brazil in second week of February!

Please comment and add your insight on recent develpments in Brazil!


18 Responses to “Brazil as natural future economy”

  1. Congratulations Tatu!

  2. Radu Ticiu Says:

    Thanks, Tatinho! 🙂

    Great insights on current evolutions in Brazil. They are adding to my personal glimpses during my participation to the 3rd Global Forum on Innovation and Technology Entrepreneurship 2009.

    • tatinho Says:

      Nice! The 2009 was the year for Brazil for global entrepreneurship! However we are still waiting for full potential to realize. It takes time like I argue in my new post. Hope your activities are also taking global there in Romania! Have you been talking with Aalto Startup Sauna for possible cooperation?

  3. Fernando Teixeira Says:

    Young Tatinho:
    Innovation policies? Finns & Brazilians, economist & humanist?
    Think and try to help your old neighbors barbarians, that will be more useful!
    So far, so good, thank goodness …

    Fernando Teixeira, senior economist, portuguese and brasilian citizen.

    • tatinho Says:

      What do you mean by old neighbours? My goal is to understand to act like humanist and think like economist. To think globally, Brazil is major player on future to challenge global development, My 5 cents goes for Brazil and will always go 🙂

  4. Tatu,

    congratulations for your economic description of Brazil.

    I am Brazilian and I work in a company located in the Innovation Center of USP (University of São Paulo).

    as you said, we have seen a huge change on our economy and specially on technology and environmental issues.

    As an example, today we have one Swiss and one Spanish person working with our environmental programs (Carbon Footprint for companies and Events – show, and

    please, do not hesitate to contact us if you need any information.

    good luck,


    • tatinho Says:

      Thanks for you support Fernando! We are forming a group in Finland to understand better Brazil. Eu ja entendo bastante 🙂 Finnish company Kemira which is focusing on water research establised resently their lab in Barueri. I visited USP in December and got very interested on ecosystem of your Campus. I am working in building innovation ecosystem here in Finland in Otaniemi Campus and would be interested in exchanging experiences in innovation ecosystem and innovation hub concepts with USP. Something will come out but long distance projects always take time. Please let me know if you interested on entrepreneurship cooperation with Finland. Startup Sauna have already gotten global recognition 😉

  5. Good job, Tatu! I also hope the visit of the minister and business delegation will bring some actual results this time. Nevertheless, the business btw Finnish and Brazilian companies is increasing all the time. Kind regards, Tommi Reinikainen

    • tatinho Says:

      Thanks Tommi! We need to investigate what are the actual results 🙂 High level many times stays high level! Today I talked with one Master’s student in Aalto School of Economics on her Master’s thesis concerning Brazil and I promised her to arrange meeting with you. Next week I will take contact with you to share experiences on Brazil 🙂

  6. […] last post -Brazil as natural future economy –  I promised to observe Brazil from different perspectives. To respect the tradition of […]

  7. […] As stated earlier the policy rationale to intervene in market economy is when market failures emerge. It was only 2003 when Brazilian government and business sector realized the underlying factors inhibiting innovation performance nationally. I already listed the major objectives of Innovation Law in Brazil in my earlier blog – Brazil as natural future economy: […]

  8. José Luis Says:

    Parabéns Tatu,
    Uma muito boa descrição do potencial econômico do Brasil e do futuro a curto prazo. Gostei especialmente da mensão da Copa do Mundo 2014 e as Olimpíadas de 2016. Espero como você diz grande parte das inversões vão parar onde devam, e não sejam fruto de enriquecimento de poucos como infelizmente acontece muitas vezes no Brasil. E inevitável comentar a respeito da corrupção quando analisamos o desenvolvimento econômico dos países Latino americanos porem quando vemos o caso do Chile podemos concluir que não é algo intrínseco dos povos latinos mais pode-se superar e é primordial para o completo desenvolvimento e madurez do pais. Temos muito que aprender nesse sentido da Finlândia e dos países do norte da Europa.
    A proposito agora estou no Chile por um més e estive no Brasil por 2 semanas, na próxima vez que visite a América do Sul me avise e nos encontramos. Volto pra Finlândia em abril.

    • Muito obrigado Jose! Vamos a ver que Brasil pode aprender da Finlândia e Finlândia do Brasil! Eu vou para Chile no Maio e Brasil talvez no fim do ano. Resto do ano vou estar na Finlândia. Gostaria saber mais da sua relação a Chile, Brasil e Finlândia porque são países que me interessa e com quem trabalho diariamente. 🙂

  9. Jose Teixeira Says:

    Dá para ver que muitas coisas foram bem feitas to tempo do Lula. Você captura bem a política brasileira de R&D no geral. Parece que o Brasil só andou para a frente quando os “especialistas” to IMF saíram do pais.

    É verdade: Muito se escreve na Finlândia sobre a China, Rússia e Índia. Temos muitos Professores convidados destes países, mas nunca vi um professor brasileiro a visitar a Finlândia. De quem é a culpa ?

    • Concordo que o Brasil, como outros países, estão em melhor situação quando IMF não está envolvido. Talvez isso esteja mudando, mas agora é problema dos países africanos.

      Na Finlândia setor privado tem sido precursor da globalização e da nossa política está seguindo, muito atrás, mas ainda seguindo. Estamos ainda esperando de estratégia finlandesa para o Brasil. Se ele não vem, vou fazer isso sozinho 🙂 Pelo menos nos próximos anos vamos a ter muitos brasileiros que vem para a Finlândia. A minha pergunta é, quem está disposto a ir para o Brasil? 😉

  10. Hey Tatu! Congratulations for the analysis of our country! For sure Brazil is a natural future economy! We can not deny it! It is something that is taking a lot of time to happen, a lot of years! First we have a political harmony at the end of 80s when we started to vote for our politicians. Then we had the Plano Real in the 90s when we could stabilize our economy. Finaly the social initiatives like “Bolsa Família” are reducing dramatically the poverty.
    I am very enthusiastic with that! I hope that we can be smart with this avalanche of investments and we can eliminate some serios problems that we have as country. We can not ignore and forget about our weak education and health system. Also our infrastructure is almost collapsing.

    Well, keep writing these interesting ideas! I recommend this video that summarize some aspects of Brazil!

    See you!


    • Thanks Bruno for your comments and contributions! Next post I will try to tackle the issue of education with my Finnish lenses. I just found couple of anaysis made by Brazilians living in Finland 🙂

      What a great video with very good and funny facts! I especially liked these two: 1) First Americans should know that Buenos Aires is not the capital of Brazil. 2) Q: Is Brazil ready in 2014 for World Cup? A: Of course not, but we are going to have the best Copa Do Mundo ever! Saludos ao Brasil e vamos a conversar um dia sobre sua pesquisa na USP!

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