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The application of the triple helix of innovation to developing countries:

the case of Brazil

Longo, W.P. e Seidl, P.R.

Anais do Third Helix Conference, p. 406 a 407, Rio de Janeiro (2000).

INTRODUCTION

The Triple Helix of Innovation (Science and Public Policy 25(6), December 1998) in which "Sabato's Triangle" of government, industry and university interactions is substituted by overlapping, yet relatively independent institutional spheres required to capture contemporary innovation processes, is a powerful methodological tool. Yet, its implications for countries which are in a transition from protected to market economies is almost completely overlooked (Seidl and Longo, 1999, Longo and Seidl, 1999). This is most unfortunate since interactions among universities, industry and government vary from country to country and strongly depend on a particular country's stage of development. A triple helix in Western Europe, Japan, and specially in the United States, will be quite distinct from one in developing countries.

The changing patterns of university, industry, government relations in Latin America, for example, can be investigated as an expression of National Systems of Innovation (Sutz and Casas, 1998). In this context, it is illustrative to compare innovation systems in newly industrializing countries with those in large and small market–oriented industrialized ones (Nelson, 1993). What distinguishes Brazil and Argentina from the other countries chosen for case studies of industrializing countries (Korea, Taiwan and Israel) is the “system,” or set of institutions whose interactions determine the innovative performance of national firms. It was found that they were either lacking in a coherent network of agents, institutions, and policies – the case of Argentina (Nelson, 470) – or that government support for these policies was critical – the case of Brazil (Nelson, 445). Thus, when government support was withdrawn in the early eighties, the carefully constructed system (Seidl, 1978) started falling apart. The market–oriented measures that have characterized government policy since the early nineties, have severely eroded the basic elements of a national innovation system and an attempt at putting together an updated version of the National System for Scientific and Technological Development must be analysed in this new context

DEVELOPMENT OF S&T SYSTEMS. THE BRAZILIAN CASE

In view of the strategic importance of science and technology government involvement in its development has been growing in many countries in spite of the existence of neo-liberal policies that advocate minimum government intervention in society. Other reasons for government involvement are the rising costs of research and the complex physical infrastructure and social ambience that are required for it to flourish. Government is the main coordinator of S&T activities, directing them to answer present and anticipated demands which are considered relevant. To fulfil this role, besides formulating policies and strategies, government must count on specialized agencies dealing with: regulation (intellectual property, standards, certification, environment, etc.); promotion (development banks, finance agencies, etc.); services (libraries, museums, etc.) and R&D (defence, health, energy, etc.).

In in developing countries, a more ample view of the “university” segment is required, since it responsible for education and training of the whole human resource base, from specialized workers to researchers and, along with universities, technical schools play an important role. Together, they can be considered as the Educational Sector. Traditionally universities carry out the largest share of basic research so they produce most of the scientific knowledge.

Firms provide the main impetus for technological development. In search of innovations based on results of scientific research or on inventions, and on bettering what already exists, firms have increased their role in producing scientific knowledge. Besides firms and their R&D centers, consulting and engineering firms as well as those which provide specialized technical services or scientific and technical information are also important.

Observation of how national systems evolve allow the characterization of the following stages:

  1. Random nucleation - human resources are prepared by the government to respond to emerging needs (health, sanitation, defense, etc.). There are no policies or strategies.
  2. Programed nucleation – the necessary components for the formation of the system are created one by one as an answer to government policy for S&T. The strategy employed at this stage is simply to populate the system through the preparation of human resources, infra-structure building (public and private), creation of promotion agencies and public unds to finance research, organization of researchers in scientific societies, establishment of journals, etc. In other words, the three sectors (government, edication and firms) are provided with organisms and means for functioning.
  3. Growth and interaction – the system is delineated and functions incipiently. Policies are betteres. The components of the system are strengthened, filled our and expanded. Credit, fiscal and market incentives are created. In the nucleation stages interactions among actors of diverse sectors are rare since they behave as isolated “islands”, worried about their internal problems and their recognition. In this stage, with growth, strong interactions among national actors (government, firms, educational system) and between them and the exterior start taking place. So, besides the strategy for growth, other strategies are developed with the aim of ordering the internal interactions and these with the national and international society and to multiply them, resolve conflicts and avoid superposition, increase the flow of information and stimulate the transfer endogenous and exogenous to the productive sector.
  4. Maturity - in this stage, the system onsolidates itself: generation, absorption and transfer occur naturally. The formulation of S&T policies and strategies becomes routines and coherent with industries, agricultural, foreign relations, and other policies. The national demand for technology and related services is increasingly met by national solutions and organizations, their export also occurring. International relationships in the area are intensified. Strategies to continuously better the system are formulated.

In the case of Brazil the first stage lasted until the end of World War II. Institutions that were created before the conflict, resulted from concrete challenges faced by governments, principally in the areas of education, health and agriculture. Table 1 contains the events that led to the creation of a S&T system in Brazil.

The process of institutionalisation of policies and the development of an articulated S&T system began to occur after the war, principally after the fifties, whem the programmed nucleation started with the creation of the Conselho Nacional de Pesquisas (National Research Council – better known as CNPq). This nucleation was clearly accelerated from 1964 on, whem the first financial instrument for the development of science and technology – the Fund for Technological Development (FUNTEC) was established at the National Development Bank (BNDE). This Fund played an important rote during the sixties, gradually losing its relevance until it became extinct in 1975.

From 1967 until 1990, a federal agency, FINEP, had a fundamental importance in supporting a wide range of activities, from consolidating basic research to technological innovation in national firms.

The Fund for Financing Studies, Projects and Programs had been created in 1965. Its aim was to provide the resources to finance investment programs and proposals. FINEP, a public sector company which succeeded the Fund, was created in 1967 taking over its rights and obligations, also assuming feasibility studies of investment projects for the Planning Ministry (29). Its financial activities were limited to the line of Support for User of Consulting Services – AUSC. In 1971, by government decision, FINEP became the Executive Secretariat of the National Fund for Scientific and Technological Development – FNDCT which had been created in 1969. This Fund was to provide the support for financing the Basic Plan for Scientific and Technological Development, a detaled version of the National Development Plan – PND in the area of science and technological. Taking on this responsibility, the agency became the most important source of funds for R&D activities in the country.

In 1972, the Support Program for National Consultancy – CAN was created to complement AUSC, both of them representing, at the time, the principal support mechanisms for pre-investment activities.

In 1973, FINEP began the Support Program for Technological Development of National Firms – ADTEN.

In 1975,in order to incentivate the substitution of imports, the Federal Government created Nuclei for Articulation with Industry – NAI in each state-owned company that bought capital goods, and a Coordinating Committee – CCNAI for these Nuclei. The objective was to establish a preference for equipment developed and manufactured in the country and to direct new investments destined for the production of capital goods and the acquisition abroad o technology financed by internal monies. The next year, 1976, FINEP was appointed the Executive Secretariat for the CCNAI.

From this, it is apparent that FINEP, initially created to support consulting firms, became a unique agency, since it covered the whole spectrum of scientific and technological development. It took on the financing of the group of “consulting firms/industrial and service firmsuniversities and institutes”, in an ample spectrum of activities which preceed investments of a productive nature (30). This circunstance allows it an integrated view of the process of scientific and technological development, being equipped to support an innovation from the speculative and creative phase to its insertion in the market.

The principle organism of the system being nucleated up to 1974, the growth and beginning of more intense interactions among the different actors of the scientific and technological scenario followed.

In 1985, with the creation of the Ministry of Science and Technology – MCT, it was expected that the system would begin to reacg maturity. But, as a consequence of the grave economic crisis that Brazil had sunk into at the beginning of the eighties, there was a reversal in the evolution of the area due to the loss of its relative strategic importance and the acute lack os resources that began to occur. Industrial policies were formulated but were not carried out. In 1989 the Ministry was extinguished, weakening the system even-further.

Recovery of the system began with the change in government that took place in 1992 and continues in the present government that took office in 1995 and was reelected in 1998. The Ministry was re-established 1992. In January of 1996 the National Council for Science and Technology – CCT presided by the President and composed of Ministers and representative persons from the scientific and technolocal community, and having, Minister of Science and Technology as its executive secretary, was created. This Council, should formulate the national policy for S&T, integrating and coordinating the actions of all the ministries.

Some relatively recent facts should be pointed out:

First: the new Constitution of the Federative Republic of Brazil was approved in 1988. This Constitution contains two articles which are directed to science and technology and are shown in Table IV.

Incentivated by Article 218, Section 5, several states and municipalities established agencies to promote scientific and technological development, some states creating their own systems, coordinated by a Science and Technology Secretariat (at the state lovel, a secretary corresponds to a minister). In 1990, it is estimated that states invested around $672 million in scientific and technological development.

Second: as for global investments in S&T, it is estimated that between 1981 and 1989 Brazil invested 2-3 billion dollars a year, representing 0.6 to 0.8% of the GNP. These figures, although significant for a developing country, are rather small, considering Brazil’s present potentialities and the levels of investment of industrialized countries. An additional cause for concern is the fact that the private sector contributes with only 10% of the total and state-owned companies with another 10%, revealing that the productive sector invests very little in R&D, depending largely on technology transferred from abroad. The present investment plan allocates 14-15 billion dollars for science and technology for the next three years, 37% of the total coming from the productive sector and 6% from the states and municipalities.

So much for Brazil’s attempts to establish a “system.” How did the individual Triple Helix components fare? A closer look at each acter is required for this purpose.

Universities (and Technical Schools)

The role of institutional actors in Triple Helix schemes is well exemplified by the "university" segment. MIT or Caltech can hardly be considered a paradigm for universities dedicated to teaching, not research, almost totally supported by federal or state governments, in which salaries are regulated by law, not competence. A taxonomy of the Latin American University, with its high degree of autonomy and resistance to external stimuli has been well characterised (Arocena, 1998); it suffices to point out that its particularities require very unique Triple Helix arrangements (and, usually, migration of proponents of these arrangements out of university structure).

Compared to other Latin American countries Universities were established rather late in Brazil. While in Spanich America Universitites startet’ being opened in the sixteenth century, the first university in Brazil was founded in 1920. Nevertheless according to modern concepts, only in 1934 was a real university – the university of São Paulo, created by the State Government – to come into existence. Today with its 38 000 undergraduates and 23 000 graduate students, it is the largest and most important Brazilian University.

Although late in establishing universities, Brazil could count on several isolated institutions of higher learning. The Catholic Church, through Jesuit Companies, practically held a monopoly on learning in the Portuguese colony until their expulsion, 1759. Until them, the Jesuits had created six courses in the arts (or philosophy) and theology, the first opened in 1572. With the dissolution of the Jesuitic system, higher education went through a period of disorganization which lasted until the seat of the Portuguese Crown was transferred to Rio de Janeiro in face of the invasion of the Iberic Peninsula by Napoleon’s troups. This is whem, in fact, higher learning began in Brazil with “classes in Anatomy and Surgery” in the State of Bahia, in 1808. The expansion of schools continued through the whole imperial period. Being strangthend after the Republic system was established in 1889 and provided an impetus for the appearance and growth of the private system of higher education.

After World War II the number of universities began to grow through the agglomeration of formerly isolated schools under a central administration. At the time, in order to be considered a university, an institution had to include at least three of the following four major schools: Education, Sciences and Letters, Medicine, Law and Engineering. The expansions of higher education took place not only through federal initiatives but also through those of state and municipal governments, and principally of the private sector.

Late Industrialization: Brazilian Policy

The country’s first experiment with industrial planning accured curing the mobilization of the sector at the time of World War II (12). Basides mobilizing for the manufacture of arms and war – related equipment and materials, which was done in cooperation with the USA, Brazil had to come to terms with shortages in oil, coal, machines and other products.

In the beginning of the forties, by government initiative, two large state – owned enterprises were established the National Steel Company (CSN) and the National Motor Factory (FNM), to manufacture, respectively, steel and combustion engines for trucks. The planning efforts that followed priviledged investments in infra-structure (highways, electricity, communications, etc.) which made industrilization possible. In the fifty years that followed World War II, Brazil went through profound transformations. Its population grew from 41 million inhabitants in 1940 to 147 million in 1991. The Country experimented an intense move to the cities, initially along the coast. São Paulo, its largest city, has 11 million inhabitants. As the capital was transferred from Rio de Janeiro to Brasilia, which lies more to the center of the country, an intense movement to occupy the great voids to the West and North, principally the basins of rivers tha flow into the Amazon from the South. In spite of the expansion of agriculture in these regions, rural populations decreased proportionally, due to modern labor-saving technologies and the attraction for cities. Urban population continued growing, reaching 76% in 1991.

Parallel to the growth and bettering of infrastructure, and without losing its characteristic of a large agricultural country, Brazil conducted a successful industrialization policy. To counteract unbalanced foreign accounts, the government introduced a rigid control of imports. Control of foreign exchange ended up as very relevant for industrial growt, for it became a development policy in which the substitution of imports was the central strategy. At the same time that the exchange rate was over valued, measures that made the importation of non-essential goods or those that were similar to those produced in the country progressively more difficult were introduced.

The results of this policy were very positive. Between 1945 and 1975 industry grow 8.8% and agriculture grew 5.6%. It was conducted competently and without concessions, principally in the sixties and seventies, resulting in a complete and complex industrial sector, capable of manufacturing and exporting mails and airplanes. In the absence of sufficient national private capital, construction of the infrastructure and industrialization demanded, besides the investments that came from the limited availability of domestic savings, large foreign loans, attractio of foreign firms and the presence of the State in the sector producing goods and services. Gigantic state-owned firms, most of them holding monopolies, were created: Petrobrás (oil), Eletrobras (electricity), Telebrás and Embratel (communications), Siderbrás (steal), Embraer (airplanes), Portobrás (ports and harbors), Infraero (airports), Vale do Rio Doce (mining), Rede Ferroviária Federal (railways), ECT (mail), Nuclebrás (nuclear power), Imbel (arms) and Petroquisa (petrochemicals).