History of Brazilian innovation system – from 14-bis to Innovation Law

February 3, 2012

In the last post –Brazil as natural future economy –  I promised to observe Brazil from different perspectives. To respect the tradition of evolutionary economics, in this post I investigate Brazilian innovation from first aeroplane flight in 1906 to Innovation Law established in 2004. This period highlights the Brazilian potential for innovation and how it missed almost a century on global development caused by the lack of strategic approach to innovation. The Story of Science clearly states that innovations does not happen over the night and requires balance between passion for science and research, political power, and open global collaboration and rivalry as Michael J. Mosley shows in my favourite documentary!

Brazil gained the independence from Portugal in 1822.  Portugal legacy left Brazil underdeveloped as country had been mainly used as a source for raw materials to feed the parent country. There was no investment on education system, universities or scientific organizations. Many international and internal conflicts kept Brazil underdevelopment for many decades. Only innovation policy highlight comes from establishment of Instituto Butantan biomedical research center to Sao Paulo in 1901 and innovation highlight from year 1906: If you went to European or North American school you most probably have learned that the Wright Brothers invented and flew the first aeroplane in 1903. However if you look on Brazilian school books you can find that first actual flight with “real” airplane was made by Alberto Santos Dumont with 14-bis aeroplane in 1906. This is a many times praised as one of the global achievements of innovation in Brazil. Brazilian basic education, university and science and research system remained relatively underdeveloped until 1930s.

Brazilian recent political history can be divided to three phases based on Rosanis (2011) dissertation on Brazilian innovation system. 1930 – 1980 is named as “state-led protective industrialization” or “milagre econômico brasileiro”. Protectionist policies contributed to high GDB growth and high levels of local industrial expansion. The policies culminate on Singer-Prebisch thesis in 1950, dependency theory and import substitution industrialization which aimed to decrease dependency from Western developed economies and increase local production. However, these policies missed the fact that only selected industries should be protected. In addition, these policies produced disincentives to innovation, decreased rates of productivity and lead technological inefficiency. Innovation policy highlighst for this period were establishment of Aeronautic Technological Institute (ITA) in 1950, the National Research Council (CNPq) in 1951, the Brazilian Development Bank (BNDE) in 1953, the Agency for Financing studies and Projects (FINEP) in 1965, and the Brazilian Agricultural Research Corporation (Embrapa) in 1973. Apparently, these instruments did not get much attention among policy makers from strategic innovation perspective, and science and research remained marginal and isolated. One of the reasons for this was the misleading assumption made in Latin American World model in 1970s. It assumed that most important modern world challenges were not scientific but social and political. This lead to state that

“it was necessary to reduce the rate of technological development since advances in technology had already outstripped existing consumer needs.”

During this period, Brazil emerged as supplier of raw materials and crops and increased its capacity in manufacturing industry. Still in short, Brazil and other Latin American countries missed the one of the highest technological development phases in human history. Efforts to decrease the dependency to Western economies actually laid a ground for technological dependency for coming decades when global scale economic liberalization took place.

This lead to the Brazilian lost decades in 1980 – 2000. During this period Brazil as other Latin American countries’ economic development stagnated, poverty increased and income distribution gap increased. Recovery policies failed and increased the foreign dept. All this lead to super inflation and drew Brazil to economic and social turmoil.

In 1985 the Brazilian Ministry of Science and Technology (MCT) was formed to implement national innovation policies. However, investments to science and research does not realize overnight and didn’t help much Brazilian innovation performance during the economic and social difficulties. While Finland and South Korea as well as many other historically underdeveloped countries entered to global liberalization in 1990s with high technological capacity, Brazil and other Latin American countries were forced to rely even more heavily on foreign technologies to catch-up modern development. The Real Plan, Foreign Trade Policy (PICE) and the National Privatization Program (PND) meant Brazilian companies needed to enter global competition in 1990s. One only need look situation in sales of 50 biggest companies in Brazil in 2000 to figure out what happened. 19 out of 50 biggest companies in 2000 in Brazil were foreign owned and especially if we look high-tech industries as automobiles (9/10), telecommunications (5/10), petro chemistry (4/10), Information and communication technologies (8/10), pharmaceutics (8/10), and electronics (9/10) were foreign owned.

Stefan Zweig wrote already in 1941 “Brazil: Land of the Future”. In following decades this already became a joke arguing that “Brazil is the country of tomorrow – and always will be!” However, when coming to new millennium Brazil is finally starting to fulfil its promises.

Macroeconomic stability gained in late 1990s, President Lula’s social and international policies etc. as stated in earlier post – Brazil as natural future economy – have increased the arguments that Brazil is finally becoming a serious country not only famous of football, carnival and bikinis.

In 2005 almost century later of Santos Dumont first flight, Brazilian company Empresa Brasileira de Aeronáutica (EMBRAER) made again historical mark for aviation history. They unveiled the Ipanema, the first commercially produced aircraft to run solely on biofuels. This was not cause of blind change! One policy act still not mentioned in this post is the PróAlcool bioethanol policy implemented in 1975 to response the 1973 oil crises. Historical and long term evolutionary understanding of global development matters!

The Story of Brazilian Science is much more fascinating that one might think. This blog post shows that Brazilian innovation culture has deeper historical roots than many can image and lack of policy understanding for innovation have kept this part of the Brazil hidden for decades. Now it is time for Brazil to show its real face on race to tackle global societal challenges such as climate change and poverty reduction. All this culminates to Innovation Law established in 2004 which my next blog post will tackle.

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12 Responses to “History of Brazilian innovation system – from 14-bis to Innovation Law”

  1. ramialhames Says:

    It’s very important to know the real history behind the growth that brazil is doing now. One, one of my teachers says: Brazil was establishing the economic climbing through the last decade, the phase of rapid growth is now. Parabéns Brasil. Parabéns pelo autor.

  2. Well done Tatinho!
    Keep on inspiring us!




  3. Antonio Grillo Neto Says:

    I’d like to congratulate the author for this interesting article. Innovation, technologies, overcomings, are some of the finest and welcoming words but the most valuable asset of Brazil still it’s citizens solidarity. Best,

  4. R. Lankenau Says:

    Innovation cannot be regulated; it’s simply done. There have been quite a number innovative ideas that originating in Brazil in the historical past but with few exceptions it took “outside” development to make them feasible. (the joke we used to have as children growing up in Brazil is that Santos Dumont was like the country; looking backwards while trying to fly forwards. He never knew where he was going even see it when ge arrived). The potential has always been there but it has been stagnated by a political system that suffocates aspiring innovation with incentive crushing relulation and “burrocracia”. Great innovations were not developed by governments but rather inspite of them. Steve Jobs didn’t achieve what he did because of some “Innovation Law”. His predecessors like Edison, Graham Bell, Madame Curie, and so on ad infinitum didn’t need a government sponsored innovation rulin g to invent or innovate; they just did it! Brazil has the last opportunity to finally wake up and actually drink the coffee instead of just keep smelling it. Otherwise it will always merely be the country of the future, a future that never becomes the present. As we always say “cada povo tem o governo que merece”. It’s up to the people – today’s more “innovative” young people – to shake things up constructively, working together as individuals each contributing his or her strengths to drag ALL Brazil kicking and screaming into the 21st century. Use the opportunities offered by the World Cup and the Olympics to show what real innovation is all about.

    • tatinho Says:

      Thanks for you informative post. I totally agree that innovation cannot be controlled and innovation is all about people and especially young people’s passion for change. However, I want to remind the importance of innovation policies and regulations. For example Porter hypothesis clearly shows that regulations can drive innovations and companies that are aware and actively lobby for regulations are better off in general. Edison also needed institutional support for his invention to replace the gas based public lightning system 🙂 Apple was build in garage while Amazon was developed with public support and public financing. In next post I will tackle more on innovation law and inspired by your comments try to take critical stance for it 🙂

  5. […] rather obstacles than enabler for their market success. However, as I showed in my last post on – history of Brazilian innovation system – government policies can really be the major obstacle for technological development. Does this […]

  6. Ivan Danilin Says:

    Thank you for your informative post. Still, I hope, the most interesting things are ahead. For example, what is restraining Brazilian innovations (not mentioning some obvious things, such as some social and education gaps and challenges, infrastructure issues, etc.)? How success stories – like Embraer – are changing the innovation landscape (I know that some innovative companies emerged from Embraer core business). What about foreign investments – are they helping (or not) Brazilian innovations, how government is stimulating innovation-driven investments, attraction of VC money and what is real success of it? Sorry for all these questions, Brazil is a very interesting country and real info about it`s innovation development is precious 🙂

    • Thanks Ivan for your professional comment! All your questions are very relevant and I will focus on them one by one in the future. Current posts are in very general level. In the future I will go on more micro and case level analysis. Especially I am interested in how foreign companies and organizations are contributing to innovation in Brazil. Mainly Scandinavian countries that are global forerunners in innovation. Especially interesting issue is how Brazilian government is stimulating innovation-driven investment. I am more familiar currently with situation in Chile. Chile has government supported programs to attract foreign public research organization to Chile (International Centers of Excellence – ICE program) as well as foreign start-ups (start-up Chile program). Private sector is private sector so would not count that much on them on real win-win knowledge exchange 😉

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