Guest Contributor Michael Darden: The State of Brazilian Innovation
February 3, 2011 2 Comments
Brazil, once a sleepy colony, has now grown into what is today the eighth largest economy in the world; and is projected to become the fourth largest by 2040. Driven in part by the enormous appetite for commodity goods by China and India, Brazil owes much of its current economic and social success to political will and growing domestic demand.
As it stands now, Brazil is home to some of the world’s largest companies; Vale, which produces iron ore, beverage giant AB InBev, which recently purchased Anheuser-Busch, and oil giant Petrobras, which is leading the way in deep-sea drilling and exploration. These titans of industry have become the face of a Brazil that is expanding its political and economical footprint across the globe. While these corporations are the face of corporate Brazil, they do not tell the whole story of Brazilian innovation.
Brazil’s improving state of innovation can best be illustrated through a number of case studies. After the oil crisis last century Brazilian manufacturers adapted. As a result Brazilian car manufacturers now rely on “flex” engines, in which a single, or combination, of ethanol or standard fuel can be used. In the month of October 2010, 89 percent of new cars sold in the country featured flex engines. These flex cars take advantage of the fact that Brazilian sugarcane-based ethanol is six times more efficient than corn-based ethanol produced in the United States, due to the use of genetically modified sugarcane and its widespread access.
Brazil is also home to Embraer, the third largest aircraft manufacturer in the world. Embraer has thrived because of their ability not to out-compete or out-sell their respective rivals, but because they were able to find a niche within the industry of small/medium-sized planes. Embraer’s innovative business model of “reverse outsourcing” has now become standard within the aviation industry.
Brazil is now the lead exporter of poultry, sugarcane, and ethanol, with agriculture making Brazil a breadbasket for the world, with agricultural expanding 365 percent between 1996 and 2006, quite the turn around for a country that was a net-importer of food thirty years ago. The explosion of farming is largely due Embrapa, the Brazilian Agricultural Research Corporation, who have transformed unfit cerrado (savannah) into thriving farmlands, due mostly to innovative technology and long-term development initiatives.
While these companies have taken the lead in innovative business plans and technologies, statistics paint a different picture for Brazil as a whole. The Global Innovation Index placed Brazil 68th in 2010, an eighteen point drop from the previous year. In 2009, China filed for over 8,000 international patents, Brazil had a meager 480. In Brazil only 1.1 percent of GDP is spent on Research and Development, compared to 3.4 percent by Japan.
As for education, both the Fernando Henrique Cardoso and Lula administrations have implemented successful conditional cash transfer programs to boost school enrollment which has helped lift many poverty-stricken people into a new lower-middle class. With further investment in education, progression in innovation will follow, as the Minister of Education Fernando Haddad alluded to with the release of the OECD’s Program for International Student Assessment (PISA) results, noting the recent gains across the country as evidence of “the Brazilian educational system reacting to stimulus.”
Regardless of statistics and rankings, Brazil has become an example of green-technology and development. Successfully securing the 2014 World Cup and 2016 Summer Olympics is not only an enormous opportunity to bolster foreign investment and attract new business, but a nod to Brazil’s growing stature.
Sources: Christian Science Monitor, The Economist, Engineering and Technology Magazine, O Estado de S. Paulo, PRLog,