Economy & Energy
Year IX -No 57:
August - September
2006 
ISSN 1518-2932

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Text for Discussion:

A National Development Model

 

José Fantine ( * ) 
fantine@correio.com
Carlos Feu Alvim (**)
feu@ecen.com

                  The Brazilian society has intensified debates, albeit in an incipient way, about the means to generate economic and social wealth and how to do it in a sustainable manner. China, India, Russia and South Korea have been successfully organizing or reorganizing (Russia) their growth process. Brazil is the only country that has the basic conditions to be in the team of important emerging countries and to yearn for a foremost position in the next twenty years. To be out of this challenge is unthinkable.

 

INTRODUCTION

The scope of the present article is to clarify some aspects regarding the Brazilian development and to ponder on some commonly accepted paradigms [1]. According to our opinion, the issues to be treated here have not had due attention in the national debate.

Many of the opinions expressed here have already been examined by eminent researchers and scientists. But the aim of this report is also to reach a larger public composed of opinion-makers such as teachers, students, politicians, armed forces personal, managers, technicians, entrepreneurs, journalists, among others, and invite them to meditate on these issues, search for more information and data regarding economic growth strategies of the countries that became rich (or are becoming) in the last 50 years and debate with a new perspective the way to a higher pace for the national economy.

In the national debate financial issues are predominant relative to those concerning innovation and technology. The debate is centered on what is considered as the “basis of the economy”: interest rates, external and internal debt, country risk, primary surplus, payment balance, commercial surplus. Opinion makers seem to believe that once the financial situation is equated, growth will come as a consequence. Issues such as investments on infrastructure and education in the more current approach remind us that there are fundamental problems that for three decades have been hindering the Brazilian development and interrupted growth (measured by the GDP per capita). But other issues such as the importance of innovation and technology are not included in these debates. This is our central concern in the present report.

All financial issues that are nationally debated are pertinent and opportune but it is also fundamental to consider other variables.

The development issue was replaced in the nineties by modernity. There was the belief that once inflation is controlled, the so-called economic liberalization[2], the market mechanisms would automatically reestablish conditions to growth and globalization would render technology available to all. It was implicitly considered that to plan national development was useless and even hindering to growth.

 

THE PRESENT DEBATE

The low general efficiency of the previous model for promoting development and some setbacks in countries where it was more extensively applied resulted in the return of the development issue to the Brazilian agenda and to that of other countries. Within this ambit where there is no consensus, one can identify at least four trends regarding the debate on paths to development.

In the first place are those who still insist that the solution would be to deepen the application of the previous model. They believe that the solution regarding development could come from external capital that comes to Brazil[3], with the establishment of imported factories and industrialization[4] and those, less numerous, that consider the complete opening of the market and the internationalization of the economy as the exclusive promoters of growth[5].

Opposed to this conception one can identify a second one composed of those who want to resume the development and economical paradigms of the thirties and fifties when Brazil started its national project. In this conception it is also included a return to the state administration model. However the world has changed a great deal and continues to move on and if we follow the traditional path Brazil will only hold a secondary place and will have to eternally struggle to overcome delays due new and significant progress achieved by developed nations and remain in the so-called group of developing countries.

In the world economy the wealth notion is not static both in the quantitative and qualitative aspects; the standards and source of power of the richers alternate continuously[6]. The Brazilian society makes considerable effort to conquer positions in the market[7], but the leading countries reach new and more complex frontiers and Brazil remains relatively more distant from their economies. The country runs after what was an industrial novelty decades ago and when it reaches its objectives the novelty is another one, put in the market by the dominant countries.

There is a third concept in the society that demands immediate, total and exclusive attention to education, the only way to reach development. Evidently, a modern education system demands high investments and a long waiting time to form future generations that would be able to reach development[8]. In advanced countries or in those with accelerated growth now, the development and improvement of education were parallel processes[9].

Without contesting the great importance of education in what concerns development, it is necessary to consider that Brazil has a fraction of the population that can achieve important progress in some areas. If the thesis that it is necessary to improve education before technological progress can be made were an absolute truth it would not be possible to explain the success enjoyed by some Brazilian enterprises and groups such as Petrobrás, Embraer, Embrapa, Globo Network, Dr. Ivo Pitangui and Dr. Hilton Rocha Clinics, INCOR, Sarah Network, the group of enterprises in Caxias do Sul, footware industries in Nova Serrana and Nova Hamburgo, EMBRACO, Metal Leve[10] among others.

There is a forth view, still a minority, who thinks that the project of a wealthy nation (if it is understood as social, economical scientific and technological wealthy) depends entirely on planning and incentives to technology and innovation even considering in their true dimensions the traditional concepts listed before.

This view is concerned with the capacity of the state and of the enterprises to develop/apply ample policies/incentives for creating environments and processes that can create additional wealth using the national knowledge and what already exists in the country in parallel and progressively with the traditional activities. We think that this strategy can aggregate value to the Brazilian products, processes and services or create them based on innovation and new national or acquired technologies but transformed, gathered, adapted in national entities, giving rise to the true spiral of sustainable economic growth[11]. South Korea, Japan, China and India are recent examples of the success of this model. 

One assumes that, always ahead, all nations that have economical, technological and social power will have other conditionings and supports and that those competitors countries, as if it were a technological and knowledge relay race, will capture part of the future development[12] or, at least, one part of the present. In the last 60 years, no country became rich following the traditional path of exporting manufactured commodities, dedication to primary agriculture or cattle raising, ore exports or their transformation into conventional products. But about twenty became wealthy[13] or recovered their previous privileged status[14] because they toiled at creating products, processes and services with high aggregated value and innovation in general.

 

THE PATH TO WEALTH

            The theory that correlates wealth accumulation with the capacity of aggregating national intelligence to Brazilian processes, services and products or to assemble knowledge and imported input and reorder them in more valuable models is being disseminated in the country, even though in a restricted form. This would be the essence of a development process: intelligence, technology and the ensuing innovation, transforming itself into currency or capacity to act competitively in the national and world market. This is the thesis of the Knowledge Era, valid worldwide. [15].

   In the conventional industrialization, most of the time, there are positive entrepreneurial results – and this confuses everybody – but there is not necessarily a favorable balance for the country or, if it occurs, it is not substantive. The highest price attained in this model is just the sum of manpower, raw material and inputs (some of high value and imported) and the cost of capital, besides licenses and technology (normally imported). There is no aggregated value corresponding to innovation and knowledge. In general they are conventional products already fabricated or offered by various nations. Therefore, it is not possible to introduce special profit (this would bring national wealth) only to recover for the enterprise around from 10% to 20% of the capital used (in the industrial processes). But for the country, that had to invest resources in energy, roads, ports, education infrastructure preparation, this is not enough. Considering exemptions, investment in the installed infrastructure, interests paid to financing and remittance of dividends in the case of external investments, the social results can even be negative. Therefore, the first change regarding reasoning is to understand that there can be progress for hundred of companies but there would be no national progress.

            For example, it is necessary to invest much more then hundred billion dollars in the next ten years to supply energy, transportation, sewage and education to follow/foment the present development process. If the option of the entrepreneurs that will use this infrastructure and resources is in their majority for investing in productive processes and conventional agriculture, as has been the rule, Brazil will become more and more far from the developed countries. It would have invested all it could to create a base for wealth and the result will not be grandiose at all. Therefore, one can realize the importance of investments of the productive sector (that will use these infrastructures and resources) directed to the segments of more profit per real applied in infrastructures and education.

            It is clear that nations with natural resources available such as large extension of farmland, abundance of mineral reserves, much water and good climate and furthermore population density present some extra advantages for pursuing wealth since they can count on cheap primary inputs and also extra foreign exchange from agribusiness, cattle raising, fishing, tourism, etc. Even with these factors, the country cannot dispense with the magical formula – transforming intelligence into money – because this is the only safe and sustainable way to development[16].

Japan and South Korea became industrially powerful without having natural resources like Brazil. A country having iron, aluminum and other minerals, with large extension of land can be tempted to opt for a development path based on the transformation of these natural possessions. This country would make a huge effort and at each decade ahead it would realize through a comparative accounting that it is poorer than the countries that have opted for the path of transforming intelligence and knowledge into products, processes and services. It would be in a critical situation because these segments would be effectively using its infrastructure and resources and moving its economy but without the necessary dynamism to advance. For example, Brazil has now less good investments available to generate energy but it is engaged in electro-intensive industries that demand much petroleum and is tied to a type of agriculture of low aggregated value demanding much energy and fertilizers. So, when it is considering growth, the entrepreneurial elite, linked to these processes, demands more and more investments in infrastructure and production of basic input without discussing in-depth questions regarding national profit per applied Real, among different hypothesis.

A wealthy Brazil would have a GDP around US$ 3 trillion (five times the present value). In fact this value is so high that it would be impossible to reach it in twenty or thirty years from trades involving the primary sector (agriculture, fishing, cattle raising, etc.) and the conventional secondary one (production of common manufactured goods for the internal and external market); even if this would be possible, it would be a high GDP value without quality, that is, it would not produce real national wealth because it would not remunerate the national capital and manpower used due to the intense external competition. Almost nothing of the pure intelligence would be transformed into exchange currency in the international trades.

The combination of investments, national costs and profit from the invested savings produces dreadful truths. In the present model, in order to increase a net dollar in the GDP it is necessary to increase 2.7dollars in the capital stock[17], which means that in order to gain one point in this GDP it is necessary to invest (i) 2.7 points of it (above the replacement corresponding to scraping). The national savings (everything produced less what is consumed) is around 22% (ii) of the GDP. From this value it should be subtracted 4% (iii) corresponding to interest and dividends sent abroad and 11% (iv) that are simple investments to recover the obsolescence or losses and the worn out equipment of the productive sector, infrastructure, etc. To increase the net production is left only 7% of the GDP saved in the country. Dividing by 2.7 one gets the average growth of 2.6% for the GDP which is above the national average in the last 25 years (2.2%), since we have invested less than presently.

In order to grow in a sustainable way, at high rates, it is necessary to get higher savings (ii) and have investments with better quality and characteristics (i), improving the capital productivity. The forced reduction of remittances abroad (as Argentina and Russia have done in the recent past) seems today impossible and undesirable if we think about the social disturbances in those countries[18]. Even if these remittances could be suppressed and converted into productive investments it would result in an improvement of little more than 1% of the annual GDP. This not unimportant (since the accumulated difference would produce a GDP 25% higher in twenty years) but still not sufficient to reach the desirable growth.

Regarding investments for “GDP replacement” there is a vast field to be explored and there are three ways to produce gain:

  • Decreasing costs associated with productive investments and so increase in real terms national savings, for example applying the scarce resources now available in few segments with larger return such as roads maintenance;
  • Improving the quality of investments. For example, roads could be used for twenty years but they don’t even last five years due to the process now in use[19];
  • Investing in segments far-off obsolescence;

In order to generate more savings (ii), the most promising path is to generate growing profits associated with innovation not forgetting the eternal search for production decreasing costs by improving management.

  • It will always be possible to decrease costs inherent to the productive sector (operational costs) but naturally the potential of gain is limited since each entrepreneur is already engaged in this exercise constantly;
  • It is possible to think in ways to implement the quality and value of products and processes where the innovation and knowledge factors are essential. Developing the imported technologies, introducing innovations will not demand new infrastructures so there is a general compensation;
  •  And, above all, in the forefront of a larger national saving generation would be the creation of new processes, products and services that are intensive in knowledge and technology, therefore with lower infrastructure costs. In this case, innovation and knowledge are the basic factors for advancement. To illustrate this item, the reader can consider how wealth generation in Japan by the innovation of digital machines occurs and the demand of infrastructure and energy as  compared with the exports of ores, rocks and similar goods of low value in Brazil.

So, even though it is advantageous and opportune to profit from the Brazilian natural resources, a country with prodigious nature and geography, it will be necessary to pay attention to the valuable source of wealth that would be in the quaternary sector (knowledge, information, etc.) in the upper level of the tertiary sector (services) and in the high technology of the secondary one. This is the translation of the New Industrial, Technological and Foreign Trade (PITCE) and the conclusions of the intense discussions made by the scientific community in the 3ª National Conference on Science and Technology. Let us examine a part of the PITCE:

...“The world panorama is distinguished by a new economic dynamism based on the amplification of demand of differentiated products and processes, made viable by the intense and accelerated development of new technologies and new organization forms. This new dynamics enhances the importance of innovation as a key element for growth and for aggressive competition”.

And it is also translated in the Industry Strategic Map - 2007-2015 (2005) of CNI[20] that states:

...” Innovation is fundamental for a strategy of the Brazilian industry. Create an environment that is favorable to innovation, have an adequate infrastructure and knowledge centers with the capacity of transforming research results are essential for industrial success in the next ten years...”

Recently, South Korea made a report about the important Chinese segments that will compete in the future with their segments in the external market[21]. This means, the fact that they are in the forefront in the international panorama, growing selectively in high technology and knowledge sectors, together with Japan, the United States and the European Community (other reports also delineate these competitors) would not be sufficient vis-à-vis the Chinese development growth surge. In the 1960s South Korea did the same thing with Japan. This South Korean move is similar to that of its competitors that are always conducting studies to identify the “future providers” sectors, responsible for sustainable economic growth and national and social wealth. It is also similar to the Brazilian study that resulted in the 2003 Guidelines for Industrial Policy, Technological and Foreign Trade, Innovation Law besides the establishment in 2004 of the Brazilian Industrial Development Agency and the 3ª National Conference on Science and Technology in 2005[22]. The big difference is that in Brazil few people believe and discuss development strategies based on innovation and technology and because of that the issue is not disseminated by the media with due emphasis and of course it delays the national development effort.

 

AREAS FOR CREATING SUSTAINABLE DEVELOPMENT

Innovation, that astonished the market, aggregates an elevated extra value to the products, processes or services. This does not depend nor on the raw material neither on the manpower and intensive capital. Japan, South Korea, Taiwan, Hong Kong, Ireland, Switzerland, the Netherlands, Finland, Singapore, Italy became rich by converting national intelligence into products, processes and services with high aggregated values. The sum of thousand of innovations will guarantee the extra income of a country for its sustainable development. And it is in this way that the nations manage to multiply the values of input bought from underdeveloped or developing countries, establishing a system of trade in which the ton they buy probably costs on the average less than US$ 500 while their exported goods is worth thousand and sometimes million of dollars.

The following examples show this reality. Brazil will have to produce a large quantity of foreign exchange in order to renew all its stock of filming and photographing cameras (acquiring the unbeatable digital cameras and afterwards new products, two or three times on the average), of computer and peripherals each three years, of cell phones and other digital instruments totally imported (or assembled here but with the most expensive, imported inputs [23]). Maybe it will reach more than 100 million units in a few years. At an average cost of about US$ 300 per unit we will spend the fantastic sum of US$ 30 billion! If this amount is to be generated by the export of primary products, minerals, among others, this will imply exports of more than 150 million tons (probably unviable) of goods with average price of US$ 200 per ton. This exporting model would demand fantastic sums of national savings invested in energy, transport, fertilizers plants, etc., that could be used in something that in fact would bring something in return. That is, Brazil due to the digital revolution in which it did not participate, will have to generate foreign exchange without anything to offer to the market. It will rather be compelled to buy the worldwide offered innovations. And the population, without a proportional income raise, will have to spend an equal sum of money only to be kept updated. That is, it spends its savings and it also subtracts social resources only to replace something it already had, so decreasing the general savings in the next years.

Another example, each iPod that weights less than 100g that did not exist years ago, bought by youngsters and adults, forces the country to export five more tons of iron or one ton of soybean in order to maintain the same previous commercial surplus. Imagine some million Brazilians buying this iPod and similar gadgets, further on those with larger capacity and then those more useful. In the last ten years, for the same purpose they bought and updated walkman of different models, then discman, also imported that are now in the waste basket or transferred to those who cannot afford these novelties. And imagine that years ahead other gadgets will be marketed with new technologies that will have similar or substitutive performances and that will interest the same class of consumers. When you examine all electric and electronic chain and their components of high and medium technology products and processes from this point of view, it is possible to understand why Brazil had a US$ 56 billion deficit in the 1998-2005  period (imports – exports), the forecast of US$ 100 billion in the next ten years and furthermore, the wealth of countries that were engaged in this segment from 1980s on.

In the conventional development model and considering these elevated deficits, the next step would be to attract factories of these components and products imagining the nationalization of production. When Brazil manages to learn the technology these products would have become manufactured commodities and the country would still import the more elaborated components. Still more critical, as it has occurred in all technological cycles in the last thirty years, very quickly these products would have become obsolete, repeating the dynamics of the process when inequality is reestablished. That is, the underdeveloped countries dream of factories they don’t have and whenever they acquire them others are next in the list of wishes and so this perverse cycle is eternally repeated.

Therefore novelties from research laboratories of developed countries that invest about US$ 600 billion annually in R&D, of which 70% comes from enterprises, will be sent to countries that can produce some income from exports of primary goods or goods with low technological content. And these countries, on the other hand, will be frenetically engaged in these exports in order to pay the growing imports until they deplete their natural potentials. Further on they will become totally decadent as it has happened to hundreds of them, unable to follow the current pace of changes in the economy, technology, environment and society’s yearnings. And Brazil, what is its position in this panorama? What are the available paths besides the consensual ones in the economy and good public management? How to engage more and more people in discussing these issues?

 

PATHS FOR DEVELOPMENT

Formulation of a development model for Brazil is a complex but necessary task. The objective of this article is to present our opinion about the model centered in the technological aspect so that through debate we can arrive at a consensus necessary for its achievement.

It is also comforting to observe – as illustrated by some quotations – that statements from different national institutions are unanimous in pointing out the appointed path as those that would lead to development. We have tried to consider the existing reality assuming that some successful cases would made viable path to development that can be summarized as follows:

1.    Be active in the national and international markets of high technology and innovation;

2.    Work with conventional products (low technology conventional or manufactured), but innovating in all the productive chain gaining in scale and therefore multiplying;

3.    Prepare the country and its goods and services enterprises to operate abroad in the advanced technology area with high aggregated value by exporting both goods and services and the technology itself.; and

4.    Operate in the services area such as information, entertainment and knowledge, tourism and similar areas where wealth is accumulated through creativity, better service, valuation of knowledge, aggregation of technology to everything that is produced.

 

Path one - Be active in the national and international markets of high technology and innovation

In this panorama, path number one points out to organizing efforts in order to operate in the national and world high technology and innovation market, otherwise the country will not generate resources to follow the world innovation. It should be remembered that it is no more possible to close the economy regarding novelties since the modernization will become obsolete and therefore anti-economic[24]. This is true for the large business and micro and medium enterprises and for all the national systems and processes.

Unfortunately, in this case there are few examples in the country. The only one would be EMBRAER that transforms resources, technology and high value knowledge into products of higher value – products that are not commodities. This is one of the good examples of how a poor and emerging country can penetrate in the world market before it has solved all the internal problems relative to the economy, education, etc. For this purpose it was necessary the clairvoyance of those who established the Aerospace Technological Center (CTA) and the Aeronautic Technological Institute (ITA) and later on the state-owned EMBRAER followed by the competence of those who took over its physical and knowledge assets in the privatization process. One can say that EMBRAER is a net exporter of the national knowledge and intelligence[25].

There is the case of the nuclear energy and the equipment for its use which has been brilliantly developed by the Brazilian Navy together with several institutions. In 1986 it was established the Special Projects Coordination that was transformed into the Navy Technological Center in São Paulo – CTMSP in the São Paulo University Campus that receives the help of the Aramar Experimental Center in Iperó, inland of São Paulo state. This is an example of how to develop advanced research in the country and not be satisfied to buy turnkey packages. In the seventies the Brazilian government had practically given up indigenous development of nuclear energy by acquiring in 1975 within the Brazil Germany Agreement a technological package which included uranium enrichment and reprocessing. It has spent hundreds million of dollars to assimilate processes whose technology was not yet developed[26].

The Navy has restarted the national effort and has already achieved encouraging success that can put Brazil in the nuclear technology map in this century. In order to evaluate the consequences of the results it is enough to observe the world disputes with Iran regarding uranium enrichment. This same technology was mastered by the Navy and been applied in Brazil and the country can enter in the enriched uranium market to be used in nuclear reactors. A country that wants to have an important worldwide position must dominate these fields[27].

It should be mentioned that there are also a reduced number of micro, small and medium enterprises that are transforming the intelligence of its founders into internally and externally competitive goods. It should be emphasized that in the now rich countries a large part of their exports are from such entities what indicates that it is easier than assumed to enter in the internal and external market competition. It is as if we would imagine that the future competition will also be among small enterprises with few employees and not only with small new-formed Brazilian enterprises and the large foreign conglomerates.

It should be emphasized the market opening has obliged and obliges the national enterprises of any size to be concerned about innovation so that they will not be pushed out of the market (as it happened to hundred of them). Furthermore, they have the advantage of knowing the market, the access to less expensive raw material and mainly much less expensive manpower than their competitors in developed countries. But on the other hand the foreign companies have technological support and incentives to go worldwide [28]. For this purpose it is of fundamental importance the role of SENAI’s SEINATECs, of SEBRAE’s Local Productive Arrangements and of Excelence Centers started by Petrobrás and in the future the Technological Networks established by Petrobrás.

The imperative goal is the establishment of dozens of “EMBRAERs” and “Projetos Aramar” in the next ten/twenty years so that Brazil will come close to the world vital innovation cycle. For this purpose the current activities which must be annually improved already indicate the “future bearers” sectors, even up the competition since “the game will still be played”. It is essential to think about other segments in order to try this change otherwise there will be no resources to maintain the sustainable development. And, quite important, to think about favoring the creation of thousands of micro, small and medium enterprises[29] to try the national and world markets with product having high knowledge content.

Without the contribution of the national intelligence inserted in the productive processes, innovating or transforming knowledge into products with high added values no national wealth will be created.

This does not mean that all technologies should be developed in Brazil. This is impossible. South Korea and Japan have always been great technology buyers and of all that they could transform into products for the market, therefore adding some value to the imported scientific knowledge. Brazil is and will be a big buyer in this field but it will need to grow a lot regarding its own knowledge and technology in order to have exchange currency in this world market.

 

Path two– Innovate by working with conventional products

 

Path two is the one that takes advantages of the national resources generating knowledge and technology in the country. It is the path that makes the national product competitive or creates them in the country, that is, generates wealth with costs lower than the similar foreign ones and multiplies the production or the final value with less capital units invested by unit produced. In this path conventional products are used (conventional commodities or low-technology manufactures), but there is innovation in all the productive chain, there is scale gain and so the opportunities are multiplied[30].

The best examples, in this case, are Vale do Rio Doce and EMBRAPA and all the ensuing innovations from the latter (alcohol, sugar, soybean, meats, poultry, fruits etc). In these units one can clearly see the transformation of the national intelligence into concrete results (lower operational costs, better quality, higher operational yield) doubtless reaching a good entrepreneurial and national result. The country cannot determine the world price of its mineral and agricultural goods except for a few products that have an important participation but in the market only those with cost below the world average will increase. [31].

However, it should be considered that there is a large competition in the world market and that the large exported volumes (more common minerals or agriculture products with large markets) require a huge infrastructure to follow the progress of the sector, thus absorbing a large part of the national savings. For this reason, the importance of selecting the segments of larger return, smaller area demand, larger diversification, less environmental damage, better technological content.

Nevertheless, if path two is the only option, Brazil will not generate sufficient income to follow the world progress. In this context one should be aware of historical facts. No monoculture and no mineral exporter model[32] is presently responsible for the wealth of any nation. Occupy all available areas and our remaining forests to establish some type of intensive cultivation that potentially will have an ephemeral market would be backwardness. It is necessary to diversify, elevating the national and social results per area used and installed infrastructure.

The natural advantages of the country makes you think of hundreds of Vales and EMBRAPAs and their derivatives that would demand strategic national efforts through mobilizing programs and high governmental commitment.

Due to the size of the entities in this path two and their diversity, new opportunities of type one arise as in the case of biotechnology and the use of biodiversity to enhance agribusiness or the finer uses of metallurgy. Or still an evolution based on accumulated knowledge for treating business of paths three and four.

It should be remembered that the feature of this country, is that of exporting goods in primary form without technological aggregation in substantive form in the production system of the first good in the value chain. There is a large field concerning transformation of some minerals and precious stones, natural products, food industry and other similar ones. Japan and India have large profits in the jewelry industry based on gold, diamonds and precious stones bought or smuggled from Brazil and Africa. There is a high value market for special fruits, flowers and special meats that depends on high technology in all the productive chain. For example, Belgium and Switzerland earn a lot of money by exporting industrialized chocolate using cocoa seeds that they do not produce. Chile and Israel gain much money with fruits, Chile with salmon and the Netherlands with flowers.

 

Path three- Develop the capability of the country and its enterprises that are suppliers of goods and services in areas of strategic importance and of high aggregated value

The third path combines features of the first one, ordering efforts to operate in the world market, and of the second one, using the natural advantages. However, it considers the strategic products, both considering its present or potential scarcity and the importance of having the raw material in order to master all the productive cycle and also to prevent progress blockage due to shortage or high price of certain raw materials. Or still to guarantee national supply in any situation and at the lowest cost.

In these cases the investment in technology and innovation guarantees special results for the country since it feeds the productive chain of high interest.

In this case, the best example is that of the petroleum chain exploitation by Petrobras that, since it has opted for developing technology in the country, has generated three special results: it has established the foundation for its entrepreneurial growth and competitiveness; it has guaranteed national supply at international prices; and it helped in levering technological and entrepreneurial development like no other segment. Petrobrás has already invested in Brazilian territory more than US$ 120 billion using its own resources (generated by its activities) and has assets of more than US$100 billion. If another model had been chosen (using external investments and re-application of profits) Brazil would be sending abroad maybe more than US$ 10 billion annually relative to profits, dividends and payment of technologies and licenses of this segment alone[33]. Furthermore, if Petrobrás did not exist, probably the price of products in the internal market (without taxes) would follow the world logic[34], above the international ones, further draining the national economy.

Furthermore, in this path, due to the complexity of the involved technologies, processes and products, the country and its supplier enterprises have got the capability to operate worldwide in advanced areas and with high aggregated value both by exporting goods and services and exporting the technology itself. In this case, Petrobrás and its partners - enterprises and universities - regarding technology development will also become technology exporters such as Shell, Exxon, ENI, Chevron, IFP. Anyway this already happens with national enterprises that are expanding their frontiers abroad due to their experience learned from dealing with the large state-owned enterprises.

The case of the nuclear industry could fit in this item. It was inserted in path two because it is in fact an advanced technology scarcely disseminated and in some points a Future Provider like Nuclear Fusion[35].

It is not excessive to imagine that there are at least a dozen of opportunities in this path when we think about high-valued strategic minerals.

 

Path four –Operate in service areas where creativity, quality, knowledge and aggregated technology are important

Path four concerns services, information, entertainment and knowledge as product, tourism and the like. In this case wealth comes also from creativity, a better service, valuation of knowledge, aggregating high technology to everything done.

The best national examples, in this case are the Globo Network, known worldwide, and our evolving tourism system. Even countries with large difficulties can be successful in developing services areas, notably those less capital-intensive like India[36], for example, in software and movies. Other services that could progress in Brazil would be sports, software, movies, design, arts and selling of rising services and technologies.

 

CONCLUSION
 TECHNOLÓGICAL EXCELLENCE: A NATIONAL PROJECT

Increase national wealth and lay the foundations for development is, as we have pointed out, a battle in many fronts. We are dealing here with the technological part. that however, has implications in other “fronts”.

In order to reach technological excellence it is necessary to change once and for all a cultural characteristic, namely the inferiority complex that make us think that Brazil has no vocation for high technology. Looking for national wealth in technology would help to improve the excessive income concentration in Brazil since valuation of the national intelligence inevitably amplifies the social base.

In the educational aspect, it is necessary to capitalize on the great effort already made in the area and give opportunities to national brains that continue to go away or are underutilized. On the other hand, the technological effort itself will contribute to improve the graduation and post-graduation level and even that of the teachers.

In the economic aspect, by aggregating to the product value from the national intelligence we would be increasing the capital productivity that was identified as the main obstacle to economic growth. It would also be necessary to increase the manpower productivity.

Finally, in the financial aspect, there will be alternatives that even though can not offer remuneration equivalent to the quite high interest rates in Brazil (that reflect in part the risk of investment) will be safe alternatives for investing the national savings.

Regarding the need of consensus, we can say that it already exists around the suggested points as indicated by the conclusions of the present Industrial, Technological and Foreign Trade Policy Guidelines of which we quote the following:

... “For the medium and long term external equilibrium, it is fundamental for a country like Brazil not to be away from the more dynamic areas of knowledge. Furthermore, it is decisive to undertake Research and Development – R&D, in enterprises and public and private institutions, produce patents and transfer the innovations to the products and services”…

 

...”Brazil should structure a National Innovation System that would permit the articulation of agents involved in the innovation process of the productive sector, specially enterprises, public and private research centers, institutions that promote and finance technological development, institutions that support metrology, intellectual property, technology and knowledge management, institutions that disseminate technology”…

In the Industry Strategic Map - 2007-2015 (2005) of the CNI[37], one can find the definition of directions to be followed. It says:

...”Innovation is fundamental for the Brazilian industry strategy[38]......... stimulating the technological centers network requires consolidation of external centers – public and private -, that allows for economy of scale and scope, sharing costs and risks and increasing networks and partnerships establishment….The objective is to amplify the interaction among enterprises and research institutions so that there would be a larger cooperation regarding analysis and development of products and processes”.

In what follows we will try to explain the main lines of the National Plan of Technological Excellence and some specific actions that might be implemented in the short and medium period and some that are already in operation.

Objective: Raise Brazil from the present plateau of primary goods producer or goods of low technology intensity to that of goods with high and medium content of national intelligence aiming at the following goals:

Goal 1: Increase R&D investments from 1% to 2% of the GDP and, afterwards, to 3%.

This (3%) is the present investment objective of South Korea, USA, Japan, European Union without which the country will be farther away from the world business leading countries [39]. 

It should be taken in consideration that increasing the resources by 1% of GDP (presently it is approximately US$ 600 billion) means to invest more US$ 6 billion annually in the country; if 2%, US$ 6 billion additionally. This is so if we don’t consider the GDP growth which would increase the amount to be invested in R&D. Therefore, after 20 years (time necessary to reach a reasonable development plateau), the country must have a GDP between US$ 1,5 trillion and US$ 3 trillion and invest between US$ 15 billion and US$ 30 billion annually. That is, Brazil must produce and invest well between US$ 200 billion and US$ 400 billion in R&D to see its dream come true, namely to be a wealthy country, in 20 years. This would be a National Program, large and complex, that deserves the attention of all. However, one should not expect that this money would exclusively come from the governmental budget. Investments in technology and innovation should be profitable and permit its multiplication in the medium term both for the governmental and entrepreneurial part from where most of the new resources would come. [40].

Goal 2: Create and Consolidate Technological Networks with participation of enterprises in subjects deemed priorities[41].

It should be considered that presently the laboratories and the human resources are mainly concentrated in universities and public research institutions[42], and so it is impossible to imagine any increase of investment without the marked presence of these institution in a network together with the enterprises from where it is hoped will come the above mentioned resources (own resources from tax exemption, incentives and compulsory investments).

Assuming that in order to invest hundred of billion of dollars in R&D in the next 20 years, Brazil will need to improve its management mechanisms, and the creation and operation of these networks without which it will merely multiply research without getting the optimized results or the resources to increase investments that would conduct Brazil to the first ranks in the world competition.

Goal 3: Support activities or organisms that focus on the productive sector, whose sizable and comprehensive results and action favor the formation of networks

Even though Brazil has organized its research system in the 1950s – and therefore it is quite advanced in the academic and scientific fields – studies have pointed out that in 2003 the productive sector is not satisfactorily served.

In the 1990s, concerned with the technological question, the federal government has created several Funds for Research Incentive, has formulated laws to direct elevated sums for the same purpose, has defined rules for investing its resources in the productive sector. Therefore, it has tried to act as the rich countries that long ago were concerned with encouraging research in the productive sector.

South Korea, an example of paradigmatic rising economy[43], has hundreds of innovation centers in the productive sector while Brazil has less the ten. It was only from the 1980s on that Korea has experienced the growth of high technology nuclei in the private sector. So it is possible to imagine that, if Brazil from now on encourages the creation of these nuclei, it can reach an interesting technological plateau in the next twenty years.

In this context, there are presently a few pragmatic activities or organisms that are sizeable and comprehensive focused on the productive sector. Their results favor the creation of networks that concentrate the existing resources and introduce novelties that might enrich the debate about national sustainable and accelerated development. They are differentials that should be studied.

  • National Mobilization Program of the National Petroleum and Gas Industry– PROMINP;
  • Program for the Creation of Excellence Centers and Networks of Petrobras/COPPE/UFRJ;
  • Program for the Creation of Technological Networks and Nuclei of Petrobras;
  • North – Northeast Technological Networks with initial Funds from CTPetro;
  • EMBRAPA and its 46 nuclei of research and development;
  • Other CTPetro Networks;
  • SENAI- SENAITECs Technological Centers;
  • National Software Program for Exports - SOFTEX;
  • Brasil Technology Network – RBT.

Goal4: Establish Excellence Networks worldwide

It is necessary to have networks (that can be called centers provided that they congregate several institutions) in some specific sectors that are as good as the best in the world in their area and that can be a reference to other activities.

Presently there are organisms that are characterized as excellence centers or networks in the governmental area and in class associations. In the entrepreneurial area the Excellence Centers and Networks and the Technological Networks of Petrobrás are presently the only ones that are the product of the initiative of an enterprise. The Program of Excellence Centers and Networks is the only one organized according to global, national and world model and in a compulsory network with governmental, academic and market institutions, in a institutionalized form, operating in all the productive or support chain in the considered area; it has a booklet that presents the methodology for networks creation.

There are several undertakings underway that can be visited, analyzed and serve as parameters for new projects. This Program is connected to PROMINP, to the Technological Networks and Competence Nuclei of Petrobrás, to the CTPetro Networks and to the National Learning Service (SENAI – SENAITEC CTGAs). Presently the Program is being expanded and therefore many theses of this document will be amply valid and exemplified for general use.

Actions for Consolidating the Plan in the Medium Term:

If the plan is to become an important National Plan it is mandatory to ordinate the consolidation actions and to take at least the following initial options:

  • Forming a National Petroleum and Gas Excellence Network starting from the North-Northeast Excellence and Technological Centers and Networks using initially funds from CTPetro. This will induce the formation of other similar thematic excellence networks in the country;
  • Enlarging SENAI’s activities by transforming its SENAITECs into National Excellence Centers in their respective themes as it was already done with the Gas Excellence Center - CTG;
  • Connecting more effectively PROMINP and the movement concerning the creation of excellence centers and networks in order to continue the program and its comprehensiveness;
  • Connecting more effectively the Incentive Funds, and fiscal incentive for the above mentioned projects.

___________________

(*) Eng, José Fantine

Consultant of COPPE, former Director of Petrobras and former Planning Superintendent of Petrobras. Member of the National Engineering Academy, e_mail: fantine@correio.com  

(**) Carlos Feu Alvim, PhD and Editor of the Economy and Energy - e&e. periodical;

e_mail: feu@ecen.com


 

[1] We invite the readers to Express their critical, corrective, exclusion, inclusion or supportive opinions, so that we can establish a final document that will be easy  to read and that will help every one to understand the roots of underdevelopment and the path to sustainable development. e-mail: fantine@correio.com e feu@ecen.com.

[2] It is interesting to notice that the new doctrine that calls itself has supported radical interventions of the state such as fixing the exchange rate anchor or the decisive intervention of central banks on the interest rates. 

[3] The importance of the external savings  should be examined in the qualitative aspect because from the quantitative point of view in the last 30 years it never exceeded in Brazil 12% of the annual productive investment. In the period, instead of receiving net resources, we have exported 5% of our internal savings. That is, on the average Brazil was and continues to be a capital exporter. This fact is a consequence of remittance of profits and dividends due to external investments just as loans result in payment of interests. This amount has been growing in the last years and reached more than US$ 10 billion in 2005, nullifying the commercial surplus. The real and productive inputs in foreign currency compared with remittances do not reach US$ 100 billion (in this context we do not consider reinvestments of profits which are not foreign input) in the last 100 years.

Foreign investments are often presented as having no disadvantages at all and they are not compared, in the pertinent cases, with the own national effort of the segment. The Brazilian Central Bank made a census of foreign investments in Brazil (including the re-investments) and obtained the amount of 103 billion dollars of stock in the year 2000. This stock is about 6.3% of the total productive capital in Brazil (not important quantitatively). Incidentally, in no country foreign investments are a majority in the economy, they are rather, when well ordained and administered, complementary in a sustainable development process.

[4] An interesting particularity from the qualitative point of view is that of the capital stock calculated by BACEN for the year 2000 (US$ 103 billion) only US$ 35 billion are in the industrial sector, US$ 66 billion in the services sector and US$ 2 billion in the agro-industry. Of the “services” total, almost half (US$ 30 billion) is concentrated in only two activities: communication (US$ 19 billion) and financial operations  (US$ 11 billion). This fact limits the power of this capital to lever exports, it rather induces imports since there is no incentives for these industries to enter into partnership with essentially Brazilian enterprises.

 

[5] Brazil tries to obtain from the USA, Japan and the European Community an effective opening of their markets by ending their quotas or fitosanitary barriers or discriminatory taxes for alcohol, sugarcane, soybean, orange juice, shrimps, meat, steel and foot-ware but this initiative has been frustrating. However, it has practically opened its markets to all products and services of these countries from 1990 on, without any direct counterpart but to wait for the reciprocity or good will regarding dispute or sanction threats resulting from restrictions made to what they called the Brazilian protectionism.

 

 [6] In the first months of 2006 the media has highlighted the forecasts regarding the smaller growth of the GDP in the year, values lower than that of the world average. But it has not been emphasized at all that the dominating countries are making progress in segments that are not even considered in Brazil and that will dominate the future world economy and trade, defining the standards of comfort and quality of life. That is, even if Brazil would be growing at rates equal or larger than the average value of other countries it would still loose the world parade because it did not consider the segments of the future wealth which are advanced products, processes and services intensive in technology and knowledge. Furthermore, by the late setting up of some sectors one runs the risk of making obsolete the productive park and of making the country subject to substituting investments in new routes dictated from abroad. The productive capacity is rapidly dismantled as it also happens (due to quality issues) with roads that do not last, goods that deteriorate and undertakings that fail to achieve their objectives.  

 

[7] Since it Independence, Brazil struggles to have factories and processes similar to that of the leading countries. It has acquired the steel, aluminum and metals industries and the primary manufacturing industries. Now the rich countries do not care to have them in emerging countries and they are dedicated to enterprises that are intense in knowledge and that do not demand much energy. So the country is always trying to “conquer” what has become “commodity fabrication process” and it must repeat the cycle with other novelty. It establishes factories that come searching for subsidies, for complementary investments offers, for manpower and energy or some inexpensive input, besides other facilities such as a position to dominate market niches. These factories will not develop technologies in Brazil and will import the most expensive and complex components.

China has clearly understood the qualitative importance of external investment and the only large country were the way of attracting external investments is really helping. This is so because there is a conditioning to investments namely they must promote the absorption of technology, occupy the external market and in several cases enter into partnership with local enterprises. There is also concern regarding the absorption of the abundant local manpower and its transformation into foreign exchange (they need to incorporate 300 million people to the productive sector) or in order to satisfy the growing internal demand. In this aspect they admit the presence of “maquiadoras” (enterprises that import most of their input from other parts of the world, use cheap manpower, assemble cars, TV sets, clothes and computers and export the final product) but they are making intensive technological effort so that their enterprises will take over this market. In the other countries this process would be interesting but never sufficient , as many believe, to reach development. Incidentally, external investment in China is only important from the qualitative point of view; from the quantitative point of view it is assigning about 40% of the GDP to investments (nominal values, average value for the 2000/2003 period) using only internal resources; the net external investments flow is -0.6% of the GDP, that is external investment is negative and close to zero.

.

[8] Efficiency of investments in education has been only briefly discussed. For example, what’s the use of filling the market with professionals when the economy does not create enough jobs for those having a diploma? In the case of engineers (profession directly related with technology) the total number of graduates that do not practice the profession is 65% according to a survey of University Observatory published in the media. Between 1987 and 2004, according to data from the Ministry of Science and Technology the number of those who graduated from universities has practically trebles, from 225 thousand to 627 thousand graduates per year. That is, the number of graduates has increased 190%, the economy 40%, the population 31% and the GDP per inhabitant has grown only 6.5% in 14 years. In the post-graduation segment the number of graduates was multiplied by 7.5 between 1987 and 2003. The number of MSc degrees per year has grown 624% and that of PhD, 768%. Regarding the schooling of the active population, it has grown between 1992 and 2003 from 4.9 to 6.4 years. Since this is a cumulative value, the 1.5 growth in 11 years is very significant. That is, Brazil has made a huge effort in the education area with very scarce results in growth. The positive side of this matter is that the country would be well prepared to increase its participation in the technological market.

[9] Japan and South Korea did not adopt first the education path and then started to grow. They grew because of good decisions made in the technological area and investments made in important sectors of the economy and in the process they sensed and defined that an advanced and global education would be a sustaining and validation column for growth, which is quite different.

[10] In 1986, there was no technology available in the world to produce petroleum at 200 meters below sea level. Petrobrás made a five-year program to reach 1,000 meter that cost US$ 86 million in 1992, another similar one for 2,000 meters and at the start of 2000 decade another one for 3,000 meters. Result: Brazil is the world leader in this technology since its first program, it has guaranteed its self sufficiency in petroleum, its competitiveness and low costs, recovering its investments a hundred times. National education continued in the same standard but the personnel training for the programs and the ensuing installations was quite of first rate. The same occurred at EMBRAER and EMBRAPA, Sarah Network and Incor, advanced technology and education islands, generating wealth and multiplying its effects on society.

That is, its is possible to create a lot while the country does not reach as a whole the desired advanced level regarding education and so create wealth in parallel with educational advance.

 

[11]In the debate it is not clear the origin of the resources to be invested in R&D&I: the supporters of increasing investments think that come naturally, others believe in the practical impossibility of increasing them substantially. So, many segments and administrations, unable of reverting the process remain

outside the competition or give up. But it is investment in technology itself that generates resources to be further applied.. For example, Petrobrás investments in R&D did not start in the present plateau but rather modestly in improvised laboratories in Praia Vermelha in the University of Brazil. At the time they were large and daring investments and difficult to be equated until the nineties. But the growing results reached, most of it -due to the continuous technological forefront conquest - permitted the company to increase little by little these investments until it reached more than US$ 150 million annually and furthermore to form a research network involving almost all academic institutions of the country. By supporting the national technological effort, Petrobrás generates profits around US$ 10 billion annually and has assets totaling US$ 100 billion. Therefore it is not concerned anymore with financing investments in R&D&I in order to maintain the conquered forefront. It is the development spiral.

[12] The inevitable changes in the technological, knowledge or innovation fields permit, in normal conditions,, people or countries or enterprises to be effectively emergent, taking the leading places or approaching it. The English succeeded the Portuguese and Spaniards due to the steam engine, the steel industry  and the use of coal and the mineral and manufacturing industry. The USA substituted the English with mass and mechanized agriculture, the oil and car industries and those supporting them as well as the war industry in the equipment paradigms. The Japanese and later on the Koreans started their process through the traditional side of economy (ore transformation, cars, ships) but quickly migrated to more emerging niches of the electronic and digital industries. China and India try now to substitute them in the forefront position benefiting from the path known to everyone. For this purpose they have characteristics that allow for this distinctive adventure Nations with small population or territory can reach wealth by exploring specific niches of the economy, industry or services but never the world leadership and power (Taiwan, Singapore, Hong Kong, Ireland, Chile and several European countries).

[13] Ireland, South Korea Taiwan, Hong Kong, Singapore, Canada, Australia, New Zealand, Spain, Belgium, Finland, Norway, Denmark.

[14]Germany, France, England, Italy, Sweden, Switzerland, Austria, the Netherlands and Japan.

[15] In fact it has always been like that. Even in the distant past, technology and innovation created the conditions for a people to defend itself or dominate others and get the raw material and goods they needed, aw weel as the market of their products , more complex than those of the colonies. A paradigmatic example was the mastering of navigation and transportation, starting with almost nothing, that permitted tiny Portugal to attempt and maintain supremacy  in the seas and world trade for centuries from 1500 on. But now the velocity of changes and technological obsolescence has been modified, forcing the “science and technology athletes” to double their efforts and agility because the complexity and size of enterprise systems increase every year.  

 

[16] The country explores successfully iron minerals but on the other hand it is less successful regarding diamonds, gold and other precious stones (except for  H. Stern and Amsterdam Sauer), its granites and other rare ores. See the potential regarding the jewels sector and what is being done at http://www.ibgm.com.br.  It is also a leader in basic agriculture but it does not exploit adequately the segments that permit larger profit per produced unity, infrastructure used and occupied area.

[17] This value is the capital/ product ratio (K/Y) obtained by dividing the capital goods stock (constructions, machines, equipment and others)by the GDP. This ration is the inverse of the capital productivity (Y/K). In the seventies and eighties our capital productivity decreased to half of its value in the sixties .

[18] It is not possible to pay immediately the public and private debt. Default on payment of this debt on one hand eliminates remittances, on the other hand it makes more expensive new demands of external capital and the financing costs of imports and exports therefore nullifying the previous gains. For this reason

the best is to work on the positive side, improving the profit from the capital used. Anyway there has been a substantial reduction of the external debt in the last years and reduction of remittances is expected. Of the 26 US$ billion sent abroad in 2005 (net values) only 4 US$ billion refer to interest rates on external loans, 10 billion refer to direct investments and the balance (12 US$ billion) refer to portfolio investments of which US$ 8 billion are remuneration of fixed income loans that follow the interest rates fixed by the Brazilian Central Bank. The balance of the internal debt is now more important than that of the external one.

 

[19] It is par of the vicious circle of poorer countries and people to choose goods whose maintenance cost is higher in the short term than that associated with the investment. With growing maintenance costs the good no longer adds value and even if it continues to be used it does not practically contributes to generate wealth (contribute to the GDP). Solution to this problem is not elementary since investment resources are scarce but certainly it should be thoroughly analyzed considering investment and maintenance. It is of now help as well the governmental practice (imposed by the international credit bodies for a long time) of considering as expenditures the government investments, inducing low quality investments.

[20] CNI (Confederação Nacional da Indústria) Document – pag. 52        http://www.cni.org.br/f-ps.htm .

 

[21] It is very important to read the document edited by CNI in order to understand why Brazil did not came close to a central position in the international system and what are the future formulas to guarantee competitiveness. Observing South Korea worries one can understand the conventional political misconception regarding development in agriculture, cattle raising, etc. South Koreans are very fine, they have their place in the high technology and innovation trade and, eve though competing with the current great powers they try to find out the Chinese development strategies that might affect its growth. Brazil has had the rubber and coffee cycles of, enrichment during the war, development periods during the Vargas and Juscelino eras, the economical miracle. However, in 2000 it has not emerged as a candidate to the winners’ podium. During all its history, Brazil did not foster development similar to that of South Korea  . http://www.rand.org/pubs/monographs/2005/RAND_MG320.pdf .

[22]  For better exploring these issues, navigate in the MCT, MDIC, FINEP and CNPq sites.

 

[23]  The deficit in the imports x exports accounts of the electric and electronic segment was around US$ 56 billion, in the 1998-2005 period, and the forecast is US$ 10.4 billion in 2006. The Brazilian imports will be US$ 18.2 billion, of which, between 60% and 70% refer to components of products fabricated in the country or for substitution. See http://www.abinee.org.br/abinee/decon/decon15.htm. This is the segment that creates wealth in several countries such as the USA, Japan, South Korea, China and Taiwan. But Brazil has growing deficits due to it technological underdevelopment.

[24] For example, a journalist without a digital machine and its peripherals to communicate in real time with the head offices does no find a place in the market and his enterprise is poorly rated. A refining unit that is not automated   and operated through the use of advanced control systems is not competitive and the it is pushed out of the market. An assembling industry without robots will not be competitive worldwide. To be in the forefront each enterprise, entity or public organ will then need to assimilate the novelties of the world market, forcing imports or national production. In cases where the manpower is less expensive, the more intensive use of this input can indicate during some time as compared to other less expensive equipment but in order to make this decision it is necessary to dominate the technology.

[25] In the 1999-2003 period EMBRAER exported US$ 11,6 billion and imported US$ 6,8 billion, a net balance of US$ 4,7 billion. More than 25% of its manpower is composed of engineers (3,500), clearly indicating what was said about exports of knowledge (good salaries and high concentration of engineers are indications of national intelligence remuneration). http://www.defesanet.com.br/fx/embraerfx.pdf.

 

[26] Uranium enrichment development using ultracentrifugation in Brazil was less costly than the jet-nozzle developed with the Germans and it did not have concrete results (grams of enriched uranium). Nothing has been done in the reprocessing area. If 10% of what was spent in the Nuclear Agreement with Germany, maintaining and increasing the infrastructure and the human resources it had until 1975, added to what was spent by the Navy, Brazil would dominate the nuclear technology in all its aspects and would have economic profit from this segment

[27] The Brazilian nuclear programs (with Germany and the Parallel one) call attention to an aspect that is frequently neglected when development is considered. There is a series of Technologies, mainly those connected with the nuclear and aerospace areas that are not available to countries that cannot development them themselves. There are in the world a series of formal and informal groups, including the Brazilian participation, .that control the trade of goods connected with these areas. The list of controlled equipment and technologies is increasingly growing including more and more “dual” ones that can be used both for peaceful uses and fabrication of mass destruction weapons. The idea, existent in economic growth models, that globalization made available to all nations technological progress is limited and even naïve. There are many situations where the indigenous technological development is a condition to buy equipment and technologies since only those that demonstrate the indigenous development capacity have access to this market. That is, technological restriction has economical consequences that prevent the access to markets where aggregated value connected with knowledge is important. In this regard, in spite of the various mistakes committed, the nuclear agreement with Germany made possible the acquisition of equipment and knowledge that are now under larger restrictions. On the other hand, if Brazil would have not developed the uranium enrichment process and the fabrication of fuel elements it would probably be compelled to supply the raw material for this activity.

 

[28] In the national debate much is talked about capital costs, interest rates, taxes, exchange rate, national taxes and manpower issues. You just pay attention to how often is emphasized the technological support. Therefore, if nothing substantive is made, whenever all fiscal, financial and human questions are solved the country will be aware of the technological support issue. In the same way, only after the almost unconditional opening and the privatization of the 90s it was clear that these were not necessarily the hindrances, or the only ones, to progress. A good organization of these supports is a task for at least ten years so not engaging in this debate means that the country will not be prepared for the next round.

In 2004, when PITCE was established, IPEA tried to approach this issue suggesting the “Industrial Embrapa” idea, imagining an organism that would have the same role relative to enterprises as that of Embrapa regarding the agriculture sector. That opportunity could have been used to equate the issue of supporting the national enterprises, perhaps not using this path but other ones that respected the thesis , namely there was not technological support to the national enterprises.

[29] It is essential that society understands and values the SENAI work in more that 40 Technological Centers and that are now true Excellence Centers in what regards assistance to micro, small and medium enterprises, helping them to find the technological and knowledge forefront. This activity should be supported by the government because it is the only one of this kind and it is essential for creating the national wealth. Likewise, SEBRAE with its Local Productive Arrangements activities must be amply supported since they transform small dispersed businesses with low knowledge intensity into highly competitive consortiums.

 

[30] The commercial balance surplus in agro-business was US$ 38.4 billion in 2005   (http://www.iea.sp.gov.br/out/verTexto.php?codTexto=4385) , surely due to the high level of advanced technology and knowledge, guaranteeing the world competitiveness. However this surplus is biased upwards since it does not consider imports of inputs (such as energy, fertilizers, equipment and remittances of interests and dividends related to the investments in the sectors or for them).

 

[31] In the past Argentina was a rich country due to agriculture and husbandry but it declined economically soon after the Second World War because it did not invest in technology and innovation and consequently it did not have products with high aggregated value, dominant in the world market after the petroleum crises.

 

[32] In the XIX century and in the first half of the XX century, exporting iron ores or other segments of the steel industry did not generate wealth. But mastering the productive cycle with its own ore or from their colonies meant economic and military power. After the petroleum crisis, to have steelworks was no more a synonym of power and wealth but only to have an important segment to support the desired growth since imports shipment was expensive. Exporting steel products is no more interesting from the point of view of the country even though it continues to be from the entrepreneurial standpoint.

 But if the national market demands a good in large quantities and if there is available ore, its production by national enterprises is favorable. This is so because the market is there for national or imported product. In the case of Petrobrás its assets exist mainly because the profits are re-invested in its activity. If not the national enterprise, whose decision making process occurs in the country, another one would be in its place, would have the same profits but its productive pattern would be a foreign one. Probably this enterprise would send abroad large quantities of foreign exchange since capital re-investment permit remittances. In other words, it is necessary to have large national enterprises supplemented by foreign ones committed to local development of products and technology.

[33] The sum of Petrobrás investments in the country is comparable to the sum of investments of foreign enterprises (direct investments and re-investments of profits). In 2005, remittances of profits and dividends of these enterprises was US$ 12 billion, about 25% of the Brazilian trade balance surplus. 

 

[34]Before the new Petroleum Law that correlates the internal market prices to those in the exporting ports, the average value of Petrobrás products was about US$ 2/barrel lower relative to prices in the exporting ports during a period of ten years. Presently they are correlated. Actually there is no market that is effectively competitive regarding petroleum because few actors dominate the market fixing prices always above of those of the exporting ports (they demarcate the commercial exchanges but not the internal prices that depend on the oligopoly or cartel grade of the market). Assuming that Brazil would adopt the practice of charging US$ 1 above the exporter market plus shipment, this would drain US$ 700 million from the national economy annually.

 

[35] Regarding nuclear energy, see:  France gets nuclear fusion plant ; BBC News;

http://news.bbc.co.uk/2/hi/science/nature/4629239.stm

[36]  “India that works”: Deepak Bhojwani (General Consul of India in Brazil).

There exists an India that many people, unfortunately, are not acquainted with.. Overpopulation and high rates of misery are just one face of the country, the most obvious. But the other one has an advanced world center of software, movies, medicaments production, space research, supercomputers and biosciences. The technological business is so good that the country has revised it goals of software exports. They hope to go from US$ 10 billion to US$ 80 billion in the next five years”.   

 

[37] Industry Strategic Map2007-2015 CNI –National Industry Confederation document , pag. 52                           http://www.cni.org.br/f-ps.htm

[38] See quotation pag. 20

[39] Japan, USA and the European Union will continue to invest each  values above US$ 100 billion annually in R&D so that they can compete with each other and with China and South Korea. The latter will probably invest more than the present 3%of its GDP, that has a sustainable growth, in order to continue competition with the first three countries and prevent China from taking its markets. China grows its R&D investments (more than US$ 30 billion/year) and takes shortcuts by transferring factories to the country but puts its own enterprises together with them or isolated in the internal markets and yearning for the external one (see news in http://www.nytimes.com/2006/02/17/business/17auto.html). If Brazil will invest more 2% of the GDP in R&D, around US$ 10 billion annually, it would be investing much less than each of the leading countries are investing since all of them invest more than 2% of a GDP much higher than that of Brazil. So it should be considered that it is not possible to compensate for the underdevelopment. This is difficult to solve but re-organizing the State to reach the level in the future in some new segments or in the evolution of the present technologies is still possible since technologies are transformed and the cycle starts from zero. But for this purpose, since the resources are scarce, it is necessary to innovate in the creation of networks using the already existing structure and researchers because there is much to be done and much money to invest.

[40] Regarding this matter, the South Korea Ministry of Science and Technology , Chae Youngbok said on June/10/2002 “…Today, we are living in a knowledge-based society where science and technology is the key to economic prosperity, social welfare and national security…. Korea’s capability in science and technology has been growing steadily since the 1980s together with the rapid economic development. The volume of investment on R&D as well as the number of researchers has increased in a remarkable way. Investment in science and technology has increased 25 times from US$ 480 million in 1980 to US$ 12.2 billion in 2000. The proportion of science and technology investment in GDP has also risen from 0.84% in 1980 to 2.68% in 2000”. .See also NR 11

.

[41] To choose priorities is one of the great difficulties of the technological policy because when everything has priority nothing has priority. Linking the networks and entrepreneurial resources will automatically prevent dispersion.

 

[42] Brazil has 29,000 research scientists in industries, representing 23% of the total in the country. while the USA has 790,000, representing 80% and South Korea 94,000, representing 54%. Hence the importance to have in the next years the maximum number of researchers from the universities and public research centers where are the remaining 77% of  research scientists, otherwise Brazil will not have the brains to support its technological evolution.

[43]  South Korea had no industrial tradition until the 1960s, was dominated by foreign powers until the end of the Second World War and took part in a devastating war in the fifties.

Graphic Edition/Edição Gráfica:
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Revised/Revisado:
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