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.

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