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Brazil Vows to Spend 1.5% of Its GDP, About US$ 22 Billion, in Science

Brazilian technology Brazil has just announced that it will invest approximately 1.5% of its Gross Domestic Product (GDP) in advancing science, technology and innovation in 2010. Based on Brazil's 2008 GDP figures, that would correspond to 43.3 billion Brazilian reais (US$ 21.8 billion).  As part of this investment, private enterprises are expected to represent 0.65 percent of the GDP.

"We are committed to encouraging and expanding academic and business partnerships to stimulate regional technological development, increase business competitiveness and contribute to job creation," said Guilherme Henrique Pereira, secretary for Technological Development and Innovation, Ministry of Science and Technology (MCT).

"Brazil has both leading academic institutions, as well as competitive entrepreneurs. We are working to combine the strengths of both forces to boost research and innovation activities in strategic areas throughout the country."

One example of the growing importance of innovation in Brazil is that the state of Santa Catarina established processes for the implementation of its Innovation Law on June 10, 2009. This new law allows for a series of incentives for scientific and technological research intended for innovation, including incentives that are part of the Program for Support to In-Company Research (Pappe-Subvention).

The Innovation Law was created as a result of meetings with entrepreneurs, universities, research centers as well as the state government, and was coordinated by the Foundation for Support of Scientific and Technological Research in the State of Santa Catarina (FAPESC).

A major achievement of this initiative is the designation of one percent of the state net revenue to FAPESC and the same percentage to the Santa Catarina State Enterprise for Agricultural Research and Rural Extension (EPAGRI).

Eight other federative states have similar legal instruments in place to promote investments, including Minas Gerais, Mato Grosso, Sao Paulo, Amazonas, Ceará, Bahia, Rio de Janeiro and Pernambuco.

According to Brazil's Secretariat for Social Communication (SECOM), the country has a proven track record of innovation in specific sectors, such as technology outsourcing, as well as in passing laws that serve as primary drivers for technology investment.

The federal Innovation Law (Law 10.973/2004) implemented in 2004, for example, supports alliances between universities and the business community, and provides incentives to boost innovation and investments for public and private enterprises to share resources, raise capital and support intellectual property rights. 

Secondly, the Positive Law (Law 11.196/2005) implemented in 2005 established a set of fiscal incentives, such as significant reductions in taxes and contributions for companies that invest in research, development and innovation (RDI).

"Promoting innovation and expanding investments in the information technology sector are essential to the development of Brazil," said Luciano Coutinho, President of the Brazilian Development Bank (BNDES). "Our institution has a series of programs to contribute to the development of the IT industry, which are designed to expand the participation of the private sector in the market, promote exports growth, foster the growth and internationalization of national companies of the sector, and strengthen the Brazilian operations of multinational companies that develop technology in Brazil or use the country as an export platform."

Support to innovation seems also to be a strategic priority for the BNDES. From 2008 to 2010, the bank plans to invest 6 billion reais (US$ 3 billion) in technological innovation, providing support to all economic sectors by combining several financial instruments.

The BNDES has two financing lines designed for this aim: Innovative Capital, focused on supporting companies to develop capabilities to undertake innovative activities; and Technological Innovation, which supports technology projects aimed at developing new products or processes.

The BNDES also has two funds to finance innovation: a technology fund, FUNTEC, which has the purpose of investing in technology institutes, carrying out RDI activities in areas that are strategic for the country; and CRIATEC, a R$ 100 million fund focused on the capitalization of seed capital for innovative micro and small-sized companies.

In addition, the BNDES has innovation support programs aimed at developing specific sectors, namely software and information technology, digital TV, aeronautics and the pharmaceutical industry (Prosoft, Protvd, Pro-Aeronautica & Profarma).

BNDES also finances innovation through its BNDES Card, created to facilitate credit extensions to micro, small and medium-sized companies. These companies can use the BNDES Card to finance contracts for research and development services.

Among the eligible items for financing are the acquisition of technology transfer, specialized technical services in energy efficiency and environmental impact, design, prototyping, technical responses of high complexity, and the assessment of product quality and software processes. Over 200,000 cards have been issued so far, adding up to R$ 7 billion in pre-approved credit for investments.

Other key resources offered by the Brazilian government to promote technological innovation in business include:

* The First Innovating Company Program (Programa Primeira Empresa Inovadora – Prime). This program is open to technology-based companies, not older than two years, to receive funding of up to 120,000 reais (US$ 60,000), in order to develop innovative products or services. 

In 2009, 230 million reais (US$ 115 million) are available for about 1,900 companies. Currently, the Financing Body for Research and Projects (FINEP) has contracted 17 anchor-companies to choose the best projects and monitor their implementation.

* The Technological Research and Innovation Incentive. This incentive enables cooperation between technological institutions and businesses. Currently, 123 National Institutes for Science and Technology (INCTs) will receive 605 million reais (US$ 302.5 million) over the next five years. The focus is on basic scientific research in projects associated with innovation in business.

* The Innovate Project (Programa Inovar/FINEP). This program aims at promoting the development of micro, small and medium-sized companies based on technology by designing instruments for their financing and by helping them to complete the cycle of technological innovation from research to the market.

From 2008 to 2010, FINEP will invest 300 million reais (US$ 150 million) in over 25 funds of three types of investment: capital venture, private equity and seed capital funds. The last of which will capitalize investments in innovative small and micro-sized start-up businesses.

The Secretariat for Social Communication (SECOM) of the Presidency of Brazil is responsible for coordinating the Public Relations activities for the government of Brazil.

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