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Instituto Inovação Page. 2

ANALYTIC INDEX

EXECUTIVE SUMMARY ................................................................................................. 4

THE CONTEXT OF INNOVATION IN BRAZIL ......................................................................... 5

1. Initial Considerations........................................................................................... 5

2. The Great Gap ................................................................................................... 6

3. Knowledge as means to Innovation .......................................................................... 8

4. Environment for Innovation in Brazil ........................................................................ 9

Talent for Science ................................................................................................. 9

Investment in Science and Technology ....................................................................... 10

Law for Innovation, Property Law and Fiscal Incentives .................................................. 10

Initiatives for propagation of the culture of innovation .................................................. 11

Development of Risk Capital Industries ...................................................................... 11

Lager Investment in Innovation by companies .............................................................. 12

5. Companies: driving force behind Innovation ............................................................. 13

WHERE IS THE INNOVATION IN BRAZIL? ......................................................................... 17

6. Potential for Knowledge Generation ...................................................................... 17

7. Potential for Application of Technological Knowledge................................................. 18

8. Potential for Interaction in Generation of Technological Innovations .............................. 21

CONCLUSIONS ........................................................................................................ 24

BIBLIOGRAPHICAL REFERENCES ................................................................................... 25


INDEX OF FIGURES AND TABLES

Figure 1. Brazilian international scientific articles, indexed in Institute for Scientific Information

(ISI), in relation to those of Latin America and the world 1981 – 2004 ...................................... 6

Figure 2. Factors preventing approximation of Science and the Market .................................... 7

Figure 3. Socio-Economic and Science, Technology and Innovation (ST&I) Indicators .................... 8

Figure 4. Growth of Investment in S&T .......................................................................... 10

Figure 5. Evolution of expenditure of the Secondary Sector in Innovation and R&D .................... 12

Figure 6. Investments in R&D and Index of Innovation in relation to company size..................... 13

Figure 7. Dynamics of the formation of an innovative company ............................................ 14

Figure 8. Possibilities of Open Innovation Model .............................................................. 15

Figure 9. Matrix showing Potential for Generation of Knowledge .......................................... 17

Figure 10. Matrix showing Potential for Application of Technological Knowledge ...................... 19

Figure 11. More industrialized cities ............................................................................. 20

Figure 12. Matrix showing Application of Technological Knowledge vs. Potential for Generation of

Knowledge ............................................................................................................ 22

Figure 13. HDI-M and Index of GDP/Capita ..................................................................... 23


EXECUTIVE SUMMARY

Three years after the publication of the first version, Instituto Inovação has revised its study, which had great repercussion. In addition to the number of research workers, this new edition also considers the number of patents registered per city. This made it possible to generate the map showing Brazilian cities with the greatest potential for the generation of knowledge and the application of technological knowledge.

The introductory part of this study highlights the “Context of Innovation in Brazil” which is characterized by the existence of a “Great Gap” separating the scientific production from the business sector. Among the reasons for the existence of this Great Gap are the culture and incentives for publications of research studies rather than the protection of knowledge, as well as the limited presence of research workers in companies.

In the present context, in which knowledge is the basis for economic development, it is essential that the interaction between science and the market be stimulated so that this active can be exploited in the generation of benefits for the Brazilian society.

Despite the “Great Gap”, the environment in Brazil is favorable for the development of technological innovations. Among the indicators of transformation are (1) growth in the number of research workers and the international recognition of Brazil in certain areas of expertise; (2) growth in investment in S&T in the past few years; (3) creation of regulatory goals to innovation, including fiscal incentives; (4) initiatives in the propagation of culture of innovation; (5) development of an industry for providing risk capital; and (6) increase in investments in innovation by companies.

However, the “Brazil of Innovation” will only exist when all these transformations reach the companies, since they must be the driving force behind innovation.

Giving the methodological adaptations adopted, this new version of the study attempts to identify the Brazilian cities most inclined to foster interaction between the academic community and the market.

For the generation of knowledge, the following cities are very important: Campinas, Florianópolis, Porto Alegre, Rio de Janeiro, São Carlos, São Paulo and Viçosa.

For the application of knowledge, other cities stand out: Belo Horizonte, Caxias do Sul, Curitiba, Franca, Guarulhos, Joinville, São Bernardo and São Paulo.

Finally, the cities with the greatest potential for “Interaction for the Generation of Technological Innovations” are Belo Horizonte, Curitiba, Rio de Janeiro, São Carlos, São Paulo, Campinas, Porto Alegre and Florianópolis, the last three having been identified in the previous version of the study.

Among the conclusions of the study is what can be done in the case of cities at the limits of these analyses: how research centers in cities emphasizing the application of knowledge (e.g. Caxias do Sul – RS) can be strengthen and how the economic development of the knowledge-generating cities can be encouraged (e.g. Viçosa – MG)


THE CONTEXT OF THE INNOVATION IN BRAZIL

1. Initial Considerations

The first version of the study “Where is the innovation in Brazil”?, published in 2004, had the main object of contributing to the discussion about Brazil’s potential for innovation and identify the cities, which given their involvement in science, provided the highest potential for the generation of innovations.

The first version of the study did not include indicators that make it possible to identify the role of the companies involved in the process of innovation...

The analyses of the first version of the study were limited because they did not include indicators of the productive sector in the evaluation of innovative potential of cities and regions. Although it may sound strange, it is not the task of the university to generate innovations. Along with research centers, however, they do play a very important role since they are storehouses of technology with market potential. However, it must emphasized that if there is no application of this knowledge in a way which will generate benefits for the society, there will be no innovation1. Technology with no application, in spite of the contribution to the expansion of the limits of knowledge, is only an invention, because it does not bring economic and social development.

... in this new version, not only the number of research workers in each city but also the number of patents registered was considered.

It is in this context that we are well motivated to up date the first version of the study and add a variable that makes it possible to understand the role of the private enterprise in this context of innovation – the number of patents registered by companies and institutions in Brazil in the last 10 years. The methodology of the study was reevaluated from this point of view which considers the development of patents, profile and number of companies in each city as measures. The methodology of the study was reevaluated from this point of view which considers the development of patents, profile and number of companies in each city as measures. In this new version, Instituto Inovação has also made a slight modification in the methodology to analyze the impact of a mesoregion2 on the potential of a city to generate knowledge. In the previous study, only exact numbers of individuals with masters and doctoral degrees per city were taken into consideration. In the present study, however, the numbers were weighted relatively to the mesoregion where the city is located. The advantage of this modification is to capture more accurately the potential for the generation of new knowledge, since it is, in general, completely integrated into the research system of the cities around it.

1 Innovation: it is the successful exploitation of new ideas. (DTI, 2003) 2 Mesoregions are subdivisions of Brazilian states, grouping together various municipalities in close proximity

and with common characteristics. They were created by the Brazilian Institute of Geography and Statistics for statistical purposes and do not, therefore, constitute an administrative area.


2. The “Great Gap”

In last years, Brazil has demonstrated great potential for knowledge generation.

The indicators of S&T indicate that since 1981, Brazil has developed considerably when we consider the relevance of its scientific research. During this period, data from the Ministry of Science and Technology show that Brazil´s relative participation on the number of scientific Brazilian articles indexed in Institute for Scientific Information (ISI) grows, as we can see at Figure 1. When we analyze the quality and quantity of articles and scientific publications, Brazil is well ranked in relation to developed countries. Some Brazilian institutions are among the 500 top universities in the world, which means a lot, considering that the oldest Brazilian university has not reached 100 years old.

Source: National Science Indicators (NSI) of the Institute for Scientific Information (ISI) Elaboration: General Coordination of Indicators Brazilian Ministry of Science and Technology

But what does that mean to increase the number of articles and scientific publications, for the companies? Many businesspeople are tired of hearing that the science produced in Brazil is high quality, which generates many scientific articles and knowledge to be applied. The numbers of published articles little represents to Brazilian companies, especially to those that cannot see the opportunities that this knowledge can create.

However, we notice difficulties in the transformation of this knowledge in resources for society..

Analyzing the experience of those who are devoted to explore the environment of technological innovation, we conclude that there is a Great Gap between science and market in Brazil. The process of generation of knowledge and the transformation of this knowledge in resources, despite some advances in the last few years, is still in the very beginning. There are several facts that indicate that science and market in Brazil do not communicate in an efficient way and also that we have many factors that resist to the successful exploration of innovation opportunities generated at universities and research centers in Brazil. These factors are not only related to the academic community or to the companies, but to both and other agents that are part of the so called “innovation system”, like the government (see figure 2).

Figure1:: Brazilian international scientific articles, indexed in Institute for Scientific Information (ISI), in relation to those of

Latin America and the world 1981 2004.


Source: Instituto Inovação

Figure 2:: Factors that prevent approximation

of Science and the Market


3. Knowledge as means to Innovation

In the present context, when knowledge is the basis for economic development, it is imperative that we stimulate the exploration of this active to generate benefits to Brazilian society..

In the world we live today, capitalist and globalized, knowledge is able to generate great value when assimilated (quickly) into products, processes or services. If Brazil has been slowly increasing its knowledge basis, showing that through the increase of relevance of its publications, it is important that we explore this active to bring benefits to society. A patent represents a concession, given by the State, which guarantees to its titular, the right to commercially explore its creation. Thus, it is understood that who registers it has the intention to use this knowledge to some practical application. So, the number of patents is an estimation largely used to indicate the level of innovation of a company or country. In this context, when the number of scientific articles published in international magazines increases faster than the number of Brazilian patents registered in the American office for patents (USPTO), it may be inferred that the relevance of Brazilian scientific research has been more well-known internationally than the innovations of the companies.

Source: Brazilian Ministry of Science and Technology; Goldman Sachs (2003);

“Dreaming with BRICs: The Path to 2050”;CIA (2005); World Factbook, Analysis of Instituto Inovação.

Figure 3:: Socio-Economic and ST&I (Science, Technology and Innovation) Indicators (Brazil participation as

percentage of world production)


4. Environment for Innovation in Brazil

Despite the “Great Gap”, the Brazilian environment is favorable to the development of technological innovations.”

Brazil has many great characteristics related to development of innovations: it has a great potential to generation of knowledge, it is living a moment of enormous structural transformations on the innovation environment and also has developed the technological and commercial basis for the development of innovations.

When we speak of an environment to innovation, we consider three wide dimensions: human, financial and structural. Considering the human dimension we have: the generation of scientific knowledge and the education of the work force. The second dimension refers to the capacity for public and private investment, making innovative strategies profitable at long terms. To conclude, the structural dimension is about contact network and information distribution, cooperation and legislation structures. The following paragraphs discuss about some characteristics and initiatives that prove the recent development of the dimensions that are part of the environment for innovation in our country.

Talent for science

The growth in the research workers’ basis and the international recognition of Brazil for its vocation in some areas of knowledge placed our country in an innovation position.

In relative and absolute terms, the country is amongst world references in various areas of technological knowledge. Agriculture is just one example, but also in the health area (specially referring to tropical diseases and SIDA treatment), aeronautic and mining. This position of Brazilian science among the leaders gives us credibility to approximate our projects to companies or research centers, including international ones. The number of vacancies for under-graduation courses increased significantly in the last few years. It results in better qualification of the Brazilian worker. Despite the modest amount, the government has been investing in science and engineering courses. Between 1996 and 2003, the number of undergraduate students who concluded their courses increased from 43% and 85%, respectively, totaling 71 thousand new potential scientists and engineers every year for the labor market3. Moreover, the number of masters and doctors that graduate increased considerably in the same period in those two technological areas. In engineering there are 10 thousand new masters and 5.7 thousand new doctors per year, while in science there are 10.3 thousand new masters and 9.5 new doctors every year4.

3Data extracted from MEC (Ministry of Education). 4Data extracted from CAPES (Coordination for Improvement of University Students).


Investments in Science and Technology

Investments in Science and Technology have grown consistently.

Each year, more resources have been assigned to base research in the universities. The growth in investments is intensive not only from public but also from private sources. Growth rates, in the past five years, are higher then the growth of Brazilian GNP, which shows the importance of this sector both to the Government and to the companies.

Source: General Coordination of Indicators Brazilian Ministry of Science and Technology

Law for Innovation, Property Law and Fiscal Incentives

Recent changes in the regulations have been stimulating innovation.

The creation and regulation of the Innovation Law has also contributed to promote the environment to innovate and overcome the valley. The law is going to stimulate innovation in the production sector and promote increase in investments in S&T by companies. The Union aims at motivating companies to support and invest in research activities and technological development by conceding financial, human, material and infra-structure resources. The Innovation Law, amongst many other benefits, brought the possibility for entrepreneur research workers to develop their projects without losing their connection with schools or the research they are working on. Furthermore, if companies carry out technological research and technological innovation development they may automatically benefit from Federal Fiscal Incentives, created since the so called “Good Law”, recovering their expenses with S%T from 54.4% to 68% because of tax reduction. Another benefit brought by the same law is the subsidies that may be conceded when they hire research workers, masters or doctors to perform research activities at companies.

Figure 4:: Growth in Investment in S&T (in R$ millions) 10 % per year


Examples of initiatives for propagation of Culture of Innovation

Several initiatives have been contributing for propagation of culture of innovation.

Knowing about the several actions that contribute to the formation of culture of the Innovation in Brazil, we would like to out line some that appear to be more significant to the relation between the three dimensions mentioned above.

-Prize for Innovation: More than the financial compensation, the prizes for innovation are great tools to propagate culture and the benefits of innovating. The most immediate reward to participants is the visibility corporations gain to society. As a consequence, companies end up getting internally structured to participate in a more effective way, making the environment for innovation more united. Besides the well-known FINEP (Studies and projects Supporter) Prize of Innovation, many corporations in Brazil institutionalized their own prizes to stimulate innovations. As example, we can mention: ANPROTEC (National Association of Supportive Corporations to Innovative Enterprises), Santander Bank, state agencies to support development and several others connected to private enterprises. -Launch of INOVAR Program (innovate): INOVAR program, by the Federal Government, represented an important step to the construction of a proper environment for innovations in Brazil. Through this program, three main initiatives were taken: i. development of Portal Capital de Risco Brasil (Portal Risk Capital Brazil), which not only displays information about activities of risk capital industries, but also motivates the generation of a community interested in the development of this activity; ii. creation of Fórum Brasil de Capital de Risco (Brazil Forum of Risk Capital), approximating physically the entrepreneur (including technological and academic ones and businesspeople who adventures at new business) and the resources to transform knowledge in value; iii. foundation of the Founds Incubator. Finally, INOVAR program is important for its own development of risk capital industries in our country, through the Founds Incubator. - Portals on Internet: Several portals containing information about innovation context are available online. An example is Mobilizar para Inovar (Mobilizing to innovate) (www.inovar.org.br), which brings information about financing for innovations, successful cases, articles, testimonials, interviews and much more information. We also have Biblioteca Virtual de Inovação Tecnológica (Virtual Library for Technological Innovation), which brings diverse studies, articles and other texts focused on technological innovation and science and technology issues. These portals aim at propagating knowledge associated with the culture of innovation. - Structuring of NITs (Technological Innovation Centers): Innovation Law also states the development of Technological Innovation Centers – NIT – at universities and research institutes. These centers´ mission is to, according to the law itself, look out for the maintenance of the institutional police of stimulating the protection of inventions, registering, innovation and other forms of technology transferring; evaluate and classify results from research activities and projects for the purpose of obeying the law.” Besides that, the NITs are responsible for the process of requiring and maintaining intellectual property titles of IEs. It is also important to mention the foundation of FORTEC (National Forum of Innovation and Technology Transferring Managers), which today has the its second own FORTEC, 86 associated organizations of education and research, of which 50 has NITs in structuring process or operation.

Development of Industry for Risk Capital

The macroeconomic environment is more adequate to the structuring of risk capital industries.

As confirmed by Dr. Evan Koslow, risk investor and Koslow Technologies Corporation CEO, an American company of technological development, the risk capital market is not totally developed not even in the most advanced countries. Brazil has stood out among developing countries in obtaining and investing in innovative projects. Between 200 and 2004, more than US$1.9 billion was invested by companies that manage risk capital funds in our country.


Another indication that our country is increasing its tendency to the risk is the growth in founds obtained in the stock market. Last year, alone, the value invested exceeded R$110 billion, which is more than the double of expenses of the BNDES National Bank for Economic and Social Development in the same year. Despite the founds obtained in the stock market being invested in productive capital, from investors´ point of view, the maturing of the capital market is the first step to the maturing of risk capital market as well.

Lager Investment in Innovation by Companies

Brazilian entrepreneurs have noticed the importance and invested more in innovation.

Most recent data from PINTEC (Industrial Research of Technological Innovation)5 show that, as a rule, Brazilian companies are investing more and more in innovation activities. PINTEC 2003 showed that the Secondary Sector in Brazil invested R$23 billion in innovation activities, while PINTEC 2005 showed that this number raised to R$33,7 billion.

The (new) model of innovation, also known as Open Innovation6, as we will see next, presents a broad range of opportunities to the development of innovations by large or small companies. In spite of the fact that in Brazil most investments in innovation are made by the government, the large companies also play an important role in the development of innovation projects. Industries with less than 50 employees have an innovation rate of 28.9%, while industries with more than 500 employees have an innovation rate of 79.2%. The group of smaller companies invested R$2.9 billion in innovations, while the group of the large companies, R$25.9 billion. Besides Petrobras and Cia. Vale do Rio Doce, Natura, Braskem, Embraco, Embraer among others have been investing resources to approximate to companies at the base of knowledge. These investments of large companies may also result in opportunities to the small and medium ones, either through cooperative projects, acquisition of research and development or through project contracting for future supply.

5 PINTEC 2005 – IBGE (Brazilian Institute of Geography and Statistics) 6 Term promoted by Henry Chesbrough (2005)

Figure 5 :: Evolution of expenditure of the Secondary

Sector in Innovation and R&D (in R$ billions)


Source: PINTEC 2005 – IBGE

5. Companies: driving force behind Innovation

It is in the companies that innovation materializes...

As we saw in the last chapter, the environment is favorable for companies to structure to development of innovations. Innovation, as discussed by several theorists since Schumpeter7, is able to increase competitiveness at companies and guarantee its sustainable growth. In this way, despite the fact that inventions not always happen in companies, innovations are exclusively developed with companies´ participation. Therefore, companies are innovation centers, even

involving non-private partners (which is advisable) during the process.

…the first step for it to happen is having support from senior management.

Becoming an innovative company is not a matter of luck: it is necessary that the company adopts innovation as part of its strategy, and like any other strategic policy, it has to count on support from senior management, so that it becomes reality. It is very common to meet companies that consider themselves as innovative, use the word innovation for its mission and advertising campaigns, but do nothing beyond that. There are many companies that are not engaged in making innovation true and also many others that not even know how to, or have difficulties in doing so.

The truth is that some decisions that are necessary to the innovative process are also difficult to be made, especially by large companies. Short term incentives, lack of willingness to take risks, ignorance and difficulty in evaluating new technologies potential are some problems that are part of well-known “The Innovator´s Dilemma”, articulated by Christensen (2003).

The results from investments in R&D are pontentized by well-structured management processes…

For some time it was believed that only investments in R&D would result in generation of innovations, bringing positive return for the company. What was later discovered is that there is no direct relation between these factors8. The most innovative companies are not necessarily those that invest more in R&D, but the ones which excel at management of innovation process.

7 SCHUMPETER, J. A. (1949;1984) 8 There are several studies in this area. As reference, see Drake, Sakkab, Jonash: Maximizing Return on

Innovation Investment (2006).

Figure 6:: Investments in R&D and Index of Innovation in relation to company size


The most innovative companies are not necessarily those that invest more in R&D, but the ones which excel at management of innovation process. The dynamics of the formation of an innovative company only starts with the support from senior management. To actually become an innovative company, the concepts of innovation have to be propagated amongst directors and collaborators, resources (human and financial) have to be allocated to innovation activities and a management process have to be implemented to measure its results.

Source: Instituto Inovação

An innovative company is the one that systematically invest in innovation, excels at management processes and takes advantage of supportive resources available. All these factors that lead a company down the innovation path are potentized by interaction with universities, research centers, supportive agencies, investors and business partners.

…and by interaction for sharing resources, knowledge, risks and results.

From this whole concept of formation of an innovative company ruled by interaction, we start to see a great opportunity preconized by the concept of Oppen Innovation: the generation and utilization of knowledge should not limit itself to the companie´s limits. The decreasing (or dilution) of risk and the increase in development speed are the main reasons for this statement:

Long term investments are, generally, riskier than short term investments. In this way, the use of knowledge or thirty party resources to development of innovations may decrease the demand for investments and, consequently, the risk of innovation projects;

Access to knowledge or thirty party resources may pontentize knowledge or internal resources, as well as decrease time of innovation projects. Sometimes, what seems to be extremely complex for a company, may be trivial for another or a technological center.

Figure 7 :: The dynamics of the formation of an innovative company


Source: Henry Chesbrough, 2006.

Analisys: Instituto Inovação

The Open Innovation may be observed in various ways: from the simple interaction and discussion of ideas and projects; from the licensing of patents; from the development of mutual researches or in partnership with another institution; from the creation of Spin-offs (new companies) in order to accelerate technological development; or from any other way which uses exchange of knowledge with the extern environment to reduce risks, increasing the speed of innovation projects development. In conclusion, this new innovation model brings the following, as the main benefits:

Possibility of leverage with R&D developed with thirds’ investments; Expansion of reach and capacity for generating new ideas and

technologies;

Opportunity of redirecting intern resources for prospecting, triage and implementation management;

Potentiation of the response over R&D investments, by the sub-utilized

patents registering.

Wider urgency sense on the ideas or technologies dealing – use them or throw them away;

Possibility of business’ extension and/or diversification, creating new

levers for growth.

The companies which are better prepared for interacting with the science will be the pioneers in obtaining this relationship’s good results

Therefore the current context points the necessity of companies and universities structuring to take the opportunity to explore Brazil’s notorious vocation on generating knowledge. It is important that both are organized to establish a longer and productive relationship, but we have to highlight that – even for a resource and autonomy issue – they are the most well positioned companies for passing the existent obstacles.

Figure 8:: Possibilities of Open Innovation Model


WHERES IS THE INNOVATION IN BRAZIL?

The study intended to point the Brazilian cities most disposed to the interaction between the academy and the market

This study’s intent is: show that exist a valley and that, although its existence, the environment is disposed to build a bridge over this valley, approximating the science and the market. Thus, from where should the Brazilian companies start to approximate themselves to the knowledge? Where are the opportunities of partnerships with companies and research centers? Which are the most disposed cities to develop an innovation project involving companies and research centers? 6. The potential for knowledge generation

The first published study by Instituto Inovação in 2004 has shown the localities with a great potential for knowledge generation (given by the research workers presence) and, consequently, great potential for the appearance of new inventions, technologies and innovation projects. On this study, there was a small methodological change, including on the city’s results, the results of the mesoregion in which it is inserted. These new results are contemplated on figure 9, detaching the existence of 3 different segments

Economical Centers: Cities with a large number of masters and doctors, resulting from, mainly, these localities population size;

University Centers: Cities with a relative large number of masters and

doctors;

Differentiated Economical Centers: Cities that can conjugate quantity and quality in their population formation.

Source : IBGE (Brazilian Institute of Geography and Statistics), 2004. Analysis: Instituto Inovação

Figure 9:: Matrix showing Potential for Knowledge

Generation Economic Centers


The cities where the education and research public institution are present keep being detach regarding the potential for knowledge generation.

In spite of the change on the matrix analysis methodology, a few things has changed on the last 3 years. Florianopolis, Campinas e Porto Alegre, besides Niteroi, keep being the cities with absolute high number of research workers and, at the same time, a high number of research workers relating to their economic active population. The positive surprise in this version of the study is the fact that Brasília approximates to specialized economic centers, being placed in the limit that divides this group and the economic centers one. It happens because, contrarily to the other cities, data available about Brasília and its mesoregion Distrito Federal are alike. In this way, when we weight data from Belo Horizonte and Curitiba, for example, with its respective metropolitan areas, we notice higher dilution of the number of masters and doctors than the observed in the national capital. However, it is important to emphasize that for the past 3 years, there have been a great progress of scientific infra-structure in Distrito Federal. Embrapa9, for example, created new research lines and built new laboratories, and it is one of the main attractive for research workers to this area. Moreover, official examinations for governmental posts attracted great number of masters and doctors to conduct researches and development of social, economic and structural policies.

7. Potential for Application of Technological Knowledge

Analyzing the number of patents registered, we tried to measure the intention of companies to use technological knowledge.

One of the new concepts of this edition of the study is the inclusion of indicator of patents registered in Brazil. The company, as mentioned before, is the real responsible for generation of innovations and, so, this indicator becomes specially important to understand the location of the companies that are generating technologies that are possible to be patented, which means, that have exclusive differences, making them potential innovations. Therefore, we draw the matrix showing the potential for technological application of knowledge, where we can also identify the following diverse segments:

Business Centers: cities that have large quantity of patents and low ratio of patents per company;

Industrial Centers: cities that have large quantity of patents per company

and low absolute number of patents;

Specialized Industrial Centers: cities that have large quantity of patents

and high ratio of patents per company.

9 Brazilian Enterprise for Farm and Cattle Raising Research)


The level of industrialization of cities contributes to more generation of patents.

Source: INPI (National Institute of Industrial Property) , IBGE (Brazilian Institute of Geography and Statistics) , 2004.

Analysis: Instituto Inovação

The 140 biggest “patenting” cities in Brazil are responsible for gathering more than 60 thousand registers of patents in the past 10 years, according to dada from INPI (National Institute of Industrial Property). Not surprisingly, the largest cities of the country, like São Paulo and Rio de Janeiro, have the highest absolute number of patents. However, some surprises are brought up to the discussion about the most innovative cities in Brazil. Caxias do Sul (RS), Joinville (SC) and Franca (SP) have not only high number of patents but also high number of patent per company. One of the factors that help explain this high relative index is the profile of the companies located in these cities. They belong to the group in which industries represent the largest part in number of enterprise registers. 20% of the total of companies in Caxias do Sul (approximately 27 thousand, according to IBGE) are industries. In Joinville (22.5 thousand) the number of industries represents around 13%, finally, Franca (approximately 17 companies) has 28% of industries, of all registered companies. Industries, as we expected, are the biggest “patenting” enterprises in relation to commerce or services.

Figure 10:: Matrix showing Potential for Application of Technological Knowledge Business Centers


Caxias do Sul (RS) has a very diversified industry. It is one of the most important metal-mechanic centers in Brazil, has strong influence in the arm sector, petrol-chemist sector, automotive industry, agricultural components industry, among others. Another important factor that contributes to the technological development of the area is the technological colleges that, despite not making basic research, are quite influent in the development of workers´ qualification. Joinville has one of the most modern industrial parks in Brazil and infra-structure of services compatible to industry needs. The city has several Brazilian and foreign multinationals, companies that are generally directed to innovation culture. Embarco and Tigre, companies located in Joinville, for example, are great national “patenting” companies. Other companies in the region that need to be mentioned are Multibrás, Busscar, Docol and Termotécnica, which also contribute to the high number of patents in the region. To supply the industrial park, Joinville also has many specialized technical schools that have high technological level. Finally, industrial communities contribute for sharing of ideas amongst companies and, consequently, development of innovations. Franca (SP) is one of the largest producer centers of shoe and leather products. This city also has both qualified university and important technological center. The Institute of Technological Research of São Paulo (IPT) has a Leather and Shoe Laboratory in the city, responsible for technological propagation among the companies in the region.

The cities of the state of São Paulo and Rio de Janeiro are very important regarding potential to application of technological knowledge.

Analyzing figure 8 we can also notice some important groups of cities distributed among the cities considered industrial centers, with great quantity of patents per company (relative index of patents). It is notorious the concentration of cities of the state of São Paulo and Rio Grande do Sul. Blumenau (SC), Contagem (MG) and Londrina (PR) are exceptions, because they are important industrial centers to theirs respective states and to the country. For example, Blumenau and Contagem are on the list of the cities which higher relative number of industry registers in relation to the total of companies, with 16% and 13%, respectively. In the state of São Paulo we notice the presence of two groups: on one hand, there is strong industrial activity due to the proximity to the capital, where Santo André and Osasco are located; on the other hand, there are cities that unite industrial development with strong academic presence, like São Carlos, Sorocaba, Marília and Bauru.

Figure 11:: More Industrialized cities (% of industries)


The group of business centers is formed by Rio de Janeiro city, Porto Alegre and Brasília. These cities are characterized by the small concentration of industries in relation to the total number of companies. Logically, they are very diversified business centers, with great emphasis on services and commerce. In Brasília, for example, only 4% of the enterprise registers are industries. Porto Alegre has 6% and Rio de Janeiro city has 5%. The national capital, however, is an interesting case. In spite of having high relative number of research workers in relation to economic active population, these research workers settle, generally, in non-technological research centers, like, for example, public policies centers. Unlike most places in Brazil, where it is expected that most research workers take over positions in educational centers, data from CAPES and IBGE show that only 30% of them work in university centers of this region. Considering patents, Rio de Janeiro city is a peculiar case. The city has low relative number of patents, despite having a high absolute number. The fact that Petrobras, one of the biggest “patenting” national companies, is located there helps explain it. This Brazilian multinational is responsible for a large part of patents of Rio de Janeiro city. 8. Potential for Interaction in Generation of Technological Innovations

For the final analysis of this study, we gathered in one matrix the indicators of potential for knowledge generation and of potential for application of technological knowledge. Axis x shows a weighted mean of indicators of research workers, while axis y shows a weighted mean of indicators of patents.

Campinas is a great example of a city that gathers every characteristic for academic knowledge to be applied, resulting in benefits to society.

We were driven to evaluate this gathering by the hypothesis that in the regions with high number of patents and high number of research workers, the probability to happen innovations is bigger than in the regions with lower number of research workers and patents. It also tends to be bigger the probability of strong interactions between research centers and companies. Campinas is a typical example of this scene. State University of Campinas (Unicamp), Center of Research and Development in Telecommunications (CPqD) and other research institutions located in the city have great interaction with local, national and multinational companies. The example of Unicamp has special value to other educational institutions, because it is the university that has been showing most significant results in transferring technology so that companies explore its market potential. In addition to being the only city to be present in quadrant 1 of all graphics in this study, Campinas is also considered reference in innovation for most studies that mention the interaction between research centers and companies in this region.


Elaboration: Instituto Inovação

In figure 12 we can notice that, except for Brasília, no other city outside South and Southeast regions are in areas of great potential for interaction in generation of technological innovations. An analysis aiming at relating distribution of companies in these quadrants with GNP per capita of the city in relation to Brazil, and with HDI of these cities in relation the HDI of Brazil, we can conclude:

There is a strong positive correlation between the companies distributed in the quadrants and the average HDI for the companies in these quadrants. The cities located in the quadrant of greater potential for interaction in generation of technological innovations show, generally, a higher HDI than cities in other quadrants.

The same observation was made to GNP/capita.

Figure 12:: Matrix showing Technological Application of Knowledge x Potential for Generation of Knowledge


Elaboration: Instituto Inovação

Cities that are potentially more innovative show better socio-economic conditions.

Finally, it is important to point out that the additional analysis showed that GNP per capita is more correlated with city indicators of patents, while HDI shows a better correlation with the number of research workers. These data accords with several research workers in innovation and suggest that economic centers are the most likely ones to generate patents and profit, while educational centers have bigger possibility to generate social well-being around it. It is also important to reaffirm neither industries nor universities isolated are able to raise a city´s GNP or HDI. Other institutions, like public agencies, consultancy services, institutions of basic education and health, service and infra-structure companies, among others, are fundamental for the development and consolidation of a innovative environment.

Figure 13:: HDI-M and Index of GDP/Capita


CONCLUSIONS

The analysis included in this study does not exhaust, or intent to exhaust, the discussion about what the most innovative cities in Brazil are. This mapping represents just a small part of the several indicators used to measure innovation. Studies based on secondary data are not capable of showing the specifications of each city and, consequently, identify the real capacities to generation of innovations. It would be recommended a deeper analysis of institutions, companies, economic and infra-structure conditions, etc. in each of the more than 5 thousand Brazilian cities. That would be a mistake if we forgot to affirm that technological innovations also happen in the absence of research workers and patents. Some industries, for example, aeronautic industry, do not make registration of patent of all their technologies. Some of them are kept as industrial secrets. Beyond patents and research workers, for innovation to happen, we need capable entrepreneurs committed to their projects. However, it is a fact that a place with higher number of patents and research workers is more likely to develop projects of great economic and social impact, more than regions which do not have research workers and new technology companies. Studies like “Where is the Innovation in Brazil?” generalizes a problem and put it forward to public discussion in a simplified way. It is interesting to emphasize that the collecting of data to base this study was more difficult than usually, once there is not constant updating of several indicators, which would allow us to investigate correlations deeper. Having said that, some reflections are brought up:

How is the structure of science and technology in certain regions effecting local and national development?

How is the supportive structure organized to potentize innovations generated or how to use it as a way to stimulate innovation?

How to establish public policies suitable to each “group of cities” following this study’s perspective? (For example: is it possible to strengthen research centers in Caxias do Sul (RS), while stimulating economic gain of Viçosa (MG)?

When recognizing that an area, city or company is not innovative, which references do we have to take into consideration?

Having Brazilian entrepreneurs willing to innovate, structuring of the environment and of the innovative process will significantly contribute to a great technological leverage in Brazil.

To provide means for discussion of this and other issues relatad to innovation management in Brazil, Instituto Inovação open its blog for articles, comments and contributions of readers of this article. Join us, go to blog.institutoinovacao.com.br

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http://blog.institutoinovacao.com.br/


AUTHORS

Bruno Moreira got a degree in Megatronics from the Pontific Catholic University of the state of Minas Gerais (PUC Minas). He

did work in Marketing at the Higher Scholl of Advertising and Marketing (ESPM) and is the director of Instituto Inovação in Campinas. At Instituto Inovação, he was responsible for the elaboration of a study on nanotechnology and for the

coordination of the present study. He is also involved in the management of projects of mapping, investigation and

development of new business of technological base with private enterprise, institutions of R&D and universities from the state of São Paulo.

Gustavo Mamão got a degree in business administration from the Federal University of the state of Minas Gerais (UFMG). He

is the director of Instituto Inovação in Belo Horizonte – MG. At Instituto Inovação, he was the author of some studies, such as the first version of “Where is the innovation in Brazil?”. He also managed projects of mapping technologies and defining

strategies of R&D to large companies. He was responsible for the evaluation of more than 60 technologies developed in

Brazilian research centers. Moreover, he lead the development of methodologies utilized by Instituto Inovação, such as the Diligence of InnovationTM.

Euler Santos got a degree in Economics from the Federal University of the state of Minas Gerais (UFMG). He is also a graduate student of Management of Innovation at Erasmus University Rotterdam (Netherlands) and a consultant for innovation process

and management of start-up of technological base. At Instituto Inovação he was the author of various studies, such as the

first version of “Where is the innovation in Brazil?”. Moreover, he took part in projects to the stimulation of innovations

including more than 50 companies in Minas Gerais. Furthermore, he managed Verti Ecotecnologias, a partner of Instituto Inovação.

Guilherme Pereira is the analist of Instituto Inovação and an undergraduate student of Economics at Pontific Catholic University of Campinas (PUC-Campinas) and also an undergraduate student of Medical Physics at UNICAMP. He was the

founder-president of the Center of Junior Companies of Unicamp. At Instituto Inovação, he worked with mapping and

investigation of technologies, elaboration of business plans for technological base. He also involved with working out

partnerships between universities and companies and the methodology of Diligence of InnovationTM.

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