While coming back from Globelics Academy 2012 conference, I read article on Finnish science magazine (Tiede) on how school mates improve the learning performance in primary and secondary schools. The message is simple:

“It is better to buy a worst house in best neighbourhood than best house in poor neighbourhood”

There are two reasons why private elite schools are bad for developing knowledge economy and increasing national intellectual capacity; (1) weak performers will not become more intelligent if they spend their schooling time with other weak performers; (2) many initially well performers become weaker performers among other well performers. The reasons for these observations are multiple.

First, weak performers normally come from families with lower levels of education meaning that their initial educational levels are weaker than the average. Families with weaker education levels come normally from lower income classes. When student with weaker learning capacity spends time with other students with weaker learning capacity the results indicate that aggregate level of learning decreases among the whole group of students. However, when weak performer is located with better performers, the learning capacity shows clear increase already in one year of time according to empirical research. In addition, if there are only few well performers among weak performers, the social pressure might decrease initially well performers’ opportunities and capacity to learn. Well performers coming from low income families is normally associated to motivated parents who are willing to invest in learning environment at home. This investment is many times wasted because of unequal social system. This means that for example Brazil should not only increase the level of public education, but also find ways to provide interactions between students coming from low income and high income families.

Second, high performers normally come from higher classes where the education levels of parents are higher. These students in developing and emerging countries normally go to private elite schools based on their family income levels. However, the elite schools are not always the best places for well-educated students. The self-esteem of good performers might go down when they need to compete with other high performers. In mixed schools where there is right kind of mix of good and bad performers, many good performers’ self-esteem increases as they can shine compared to bad performers.

To conclude, private elite schools are not supporting the development of knowledge economy. For example in Brazil in general only students that have graduated from private elite primary and secondary schools manage to get in to best universities in Brazil.

“There are 99 federal institutions in Brazil, enrolling about 940,000 students, and also 108 state institutions, enrolling 600,000 students. The private sector is much larger, with 2,100 institutions and 4.8 million students enrolled.”

In Brazil best universities are public such as USP (which is raked among top 200 universities in the world). On the other hand, the ones who are not the top performers in private elite school normally choose private universities which are not conducting academic research to connect their learning to global knowledge production. The people coming from poorer families are left out of professional education or are forced to pay from low quality higher education.

Source: Kuiru et. al. (2012) Best friends in adolescence show similar educational careers in early adulthood. Journal of Applied Developmental Psychology.

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Last week I followed the Finnish policy, education, research and business delegation visit to Brazil. I already concluded the first two days in my earlier blog post where higher minister level discussions and early state agreements were made. It was not that easy to acquire information from last days of the visit as it included some face-to-face discussions with business delegation, which might include some trade secrets. However, I will discuss later this week with my ex-colleague from Finpro, my colleague from Finnish Technical Research Centre (VTT), and one professor from Aalto University to get more detailed insight of the visit. As I have promised to supervise one Master’s degree focusing on Brazil in Aalto University School of Economics, where I am doing my PhD, I hope I will also gain some insight from Finnish companies that took part for visit, such as Kemira, Vaisala, Deltamarin, GS-Hydro, Almaco, Vacon and Wärtsilä. Some other Finnish participants were Chempolic, Cleantech Oy, Finnvera, and Tekes, Hubconcepts. I will uppdate this during next weeks.

There was also interesting discussion in Twitter concerning the delegation visit. One of my favourite comments was this:

By @CelinaRio:

“@Tatinho @AlexStubb @jensstoltenberg @Exportradet @DenmarkinUSA NORDIC countries as one unit, not 4, might better develop BR relationship.”

and by @alexstubb:

“On my way home after five fantastic days in Brazil. Long trip, but worth every minute of it. This country simply rocks! #Brazil.”

Here come some conclusions from last two days of the Finnish delegation visit to Brazil:

  • President of Petrobras, Maria das Graças Silva Foster received Finnish Prime Minister Jyrki Katainen (Petrobras)
  • 12 Finnish companies visited Telecom operators ViVo in Sao Paulo and Oi in Rio de Janeiro (alexstubb)
  • Finnish companies met with top management of Vale and EBX
  • Innovation seminar on bioeconomy in Sao Paulo organized by UNICA and BRACELPA (Bioen Fapesp and IPT)
  • Visit to Sao Paulo public research organization Instituto de Pesquisas Tecnológicas (IPT) to discuss research cooperation in biomass, bioenergy and naval engineering (IPT)
  • Academy of Finland (AKA) and The State of São Paulo Research Foundation (FAPESP) assigned an agreement on scientific research cooperation (FAPESP and AKA)

It seems that three major cooperation activities will take place in massive scale between Finland and Brazil in the future. Or is already taking place.

First, is the cooperation in bioeconomy including biomass, bioenergy, water and biodiversity. VTT and Kemira are cooperating in Sao Paulo related to business and research in bioeconomy.

Second, is the cooperation in maritime industry including offshore technologies, naval engineering and oil and gas industries. Finnish companies have been cooperating intensively with Brazilian stakeholders since 2010 and 2011 when Brazilian delegation lead by Petrobras visited Finland. In addition, Finnish Offshore Technology Center (OTC) has strategic focus on Brazil. And Aalto University is cooperating with COPPE/UFRJ in research and education. The future potential of maritime industry in Brazil is well argumented by Finpro:

One half of the major oil discoveries made around the world in the last decade have been in Brazil. By 2015, investments totalling USD 270 billion will be injected into oil production in Brazil, mainly offshore. The nation will become one of the world’s leading oil exporters as the national oil company Petrobras doubles its oil production.

Third, is the mobility of students, researchers and professors between Finland and Brazil. Accordingly, 10 Finnish Universities have bi-lateral agreements to Brazil and “Ciência sem Fronteiras” is the main instrument to accelerate this mobility. Who wants to come to Finland? Who wants to go to Brazil? Vamos!

Those who are interested, can watch the Declaration of Cooperation by Brazilian President Dilma Rousseff and Finnish Prime Minister Jyrki Katainen from Youtube. Viva Brasil, Viva Finlândia!

As I have written in my earlier blog posts, Brazil is becoming every day more interesting country for innovation cooperation. All Nordic countries have realized that! First, biggest ever Norwegian delegation visited Brazil in February 2011.  Second, at the same month Danish delegation visited Brazil to sign Memorandum of Understanding (MoU) on bilateral cooperation in Science, Technology, Innovation and Higher Education. Third, on May 2011 Swedish Prime Minister Fredrik Reinfeldt visited “”Sweden’s second largest industrial city” to strengthen relations with Brazil in commerce, research and innovation. And now fourth, Finnish education-research-business delegation of 123 Finns lead by Prime Minister of Finland Jyrki Katainen and Minister for European Affairs and Foreign Trade of Finland Alexander Stubb are currently visiting Brazil. I have followed the visit from Twitter @EmbFinlandia and Facebook @embaixadafinlandia. Really big thanks already for people in Embaixada da Finlândia no Brasil for democratization of knowledge!

Here comes some conclusions from first two days of the visit:

  • High minister and president level meetings (See picture above of President Dilma Rousseff and Prime Minister Jyrki Katainen)
  • Cooperation between Finland and Brazil is integrated with cooperation between Mercosur and European Union (planoalto)
  • Second biggest Finnish foreign trade delegation all time with 60 companies and 123 people in total (source: EBC and alexstubb)
  • According to Paulo Tigre from Confederação Nacional da Indústria (CNI) Brazil offers opportunities for investments in infrastructure related to projects focusing on World Cup 2014 and Summer Olympics 2016 in oil industry and renewable energy supply chains like ethanol, biofuels, wind power and hydroelectricity. (source panoramabrasil)
  • Focus sectors for Finnish business delegation are forestry, mining, metal, ICT, naval and offshore (source: VNK)
  • Focus sectors for research and development need in Brazil are in renewable energies, telecommunications, natural disaster alarm systems, naval defence and offshore (source: planoalto)
  • Science and research exchange and mobility between Universities and public research organizations (source: Ciência sem Fronteiras)
  • Finnish Technical Research Centre (VTT) and VTT Graduate School offers opportunities for 100 Brazilian researcher and PhD students in near future (source: MCT)
  • Call for Brazil-Finland cooperation in 12 Finnish Universitities (UNIFI) (source MCT)
  • Finland promissed to contribute on capacity building of Brazilian teachers and professors (source Globo)
  • Cooperation in basic education (source MCT)

Please do not hesitate to comment if you have some insight from the visit to make information and knowledge visible for all interested on education, research, business and policy cooperation between Finland and Brazil. Leave you comment below and I will add it to the list.

Traditionally, understanding of major technological inventions culminated to ultimate triumph of rational minds taking linear process from scientific research to development and market diffusion to create huge economic and social impact. These master minds are many times called as entrepreneurs and many of them see the governments with their policies rather obstacles than enabler for their market success. 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 mean that they can also be the major enabler? Entrepreneurs in more developed countries, such as Finland, many times do not see the underlying factors enabling their innovative activities. Short deep dive to Brazilian innovation system gives a good change to understand the system as whole and how it enables innovation.

I ended my last post to Innovation Law which was established 2004 in Brazil. One might ask why innovation law? To understand why, it is good to mention the rationale for policy making. In the economics literature government intervention is supported by the theory of market failures. One of them is that market system does not invest optimally to research to meet needs of the society in long term. Others include for example environmental protection, occupational health and safety, meteorological services and defence as well as transportation, energy and communication infrastructures. Next I will discuss why Innovation Law is crucial for Brazilian economic, social, and environmental development and operates as major indicator for new approach to innovation in Brazil.

First we need to understand what are the major market failures in Brazil that innovation law is targeted to tackle. In September 2011 seminar on “Research Policies for Grand Challenges – Strategies and Tools” was organized in Helsinki. Professor Glauco Arbix from The Brazilian Innovation Agency (FINEP) in his presentation concluded the major misconception of Brazil for innovation in the last century:

“Innovation and technology have been conceived as by-products of economic development rather than requirements for it!”

This indicates the misunderstanding of science and technology in national development in Brazil. As seen from the earlier post, until 1980s it was assumed in Brazil that scientific and technological development will automatically emerge with economic growth and industrial development. Three major gaps in Brazilian innovation system were identified by Professor Arbix in his presentation in Finland:

  1. Lack of understanding the innovation networks causing isolated scientific research in universities
  2. Underinvestment to human resources, especially engineering education
  3. Poor innovation culture, mind-set and management causing underinvestment to R&D in private sector

Brazilian investment in R&D has increased from 1.0% in 2006 to 1.3% 2010 of GDP. In 2010 Brazil produced 2.12% total scientific publications globally, a huge increase from below 1% in 1980s. This is more than many OECD countries, but we need to understand the micro level implications of this investment, to say, policies and strategies in practice. And it is good to remember that these measurements are many times biased but give some macro level indications where to focus on micro level developments.

First, we need to understand where science and research is made in national system. In Brazil almost 60% of researchers are working in universities while for example in Germany 65% and in US 75% of researchers work in private sector. In addition, most of the scientific production is basic research in nature, and university departments are many times isolated from the society with few interactions with private sector. It is still a mystery for me from where this isolation originates?

Second, we need to understand what kind of science and research is conducted. Accordingly, Engenharia Data reveals that only 6% of researchers in Brazilian educational system are dedicating to engineering. Even there has been substantial growth in last 10 year, Brazil still lack behind in engineering education. For example in Finland around 20% graduates comes from engineering related fields. The same applies to higher education. Needless to say that this has major implications in transforming the scientific results to products, processes and services which businesses, industries and society at large benefits.

Third, as already argued, private sector in Brazil is not investing to research and development activities. Even Brazil has many global companies there are only a few innovative companies in Brazil focusing on high-tech. There is not much microeconomic level research done in Brazil on this issue. It seems that lack of science, research and innovation oriented engineers in the labour market and poor dialogue between universities and enterprises give some hints for some reasons why private sector is not investing to R&D.

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:

“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”

With this post I do not mean that there is no innovative companies, public-private partnership in science and research or talented and motivate engineers in Brazil. The fact is that there has not been systematic approach or incentives in society to innovate in broad basis. That is why policies are needed to change the course. And Brazilian government is taking this issue seriously! In 2011 The Brazilian Innovation Agency FINEP invested approx. US$4 billion for innovation related projects.

In next posts I will focus on micro level analysis of local innovation systems in Brazil, specific innovation hot-spots and innovation and entrepreneurship activities in these specific locations. For example two recently constructed hotspots are nano- and biotechnology cluster (CNPEM) in Campinas and National Center for Advanced Electronic Technology (CEITEC) in South of Brazil in Porto Alegre focusing on microelectronics. Some international companies have already noticed new trend in Brazil. IBM is opened new research labs to Brazil in 2010 in cooperation with Government of Brazil. It the first IBM research lab in Latin America and first new one in 12 years. Chinese are also investing heavily to R&D activities in Brazil. In 2011 ZTE announced the investment for technology park after agreements between Chinese and Brazilian governments which will employ around 2000 people and same year Brazilian government signed a deal with the Chinese Academy of Sciences to build a nanotechnology center in Campinas. In addition, same year German public research institute Fraunhofer is established in Brazil, Norwegian public research institute Sintef Brazil and Centro de Pesquisa e Inovação Sueco-Brasileiro (CISB). And of course the Finnish counter part Technical Research Centre of Finland established VTTBrazil Ltd. March 2011.

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.

If you liked it please share this below on Facebook, Twitter, Linkedin or mail this to people interested on Brazil and if you want to contribute on our knowledge on Brazil please comment on this 😉

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!

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