Preamble

The crisis that has hit the world economy since 2008 has lent support to suggestions put forward previously that a significant share of the growth potential of the world economy resides in a few large less developed countries. Brazil, Russia, India, China and South Africa (BRICS) have such potential. More than just that, the BRICS countries are thought to have the capacity to ‘change the world’ on account of both the threats and the opportunities they represent from the economic, social and political points of view.

International agencies and analysts suggest that investors should pay careful attention to the opportunities offered by these countries. In such analyses, the focus has been restricted to identifying investment possibilities in the BRICS production structures and examining the prospects offered by their consumer markets. This book is part of a study—the BRICS project—where the interest in analysing the BRICS goes much further. These countries present significant development opportunities, as well as several common characteristics and challenges. Identifying and analysing them may help to uncover possible paths for fulfilling their socio-political and economic development potential. More importantly, it can also reveal development alternatives that might help both developed and underdeveloped countries to overcome the problems brought by an exhausted production and consumption system and a malignant regulatory and financial regime.

Introduction

Debates on innovation policy—its importance, scope, impacts, etc.—have taken place in the ambit of both developed and developing countries. The BRICS group of countries (Brazil, Russia, India, China and South Africa) stand out within this debate for their social and economic potential and also for the impact such development may have on other countries.

With a view to furthering this debate, this article presents the innovation policy adopted by the Brazilian Federal Government. The focus is on the period ranging from 1990 to 2006 even though some general remarks will be made about state intervention before this period that has influenced the Brazilian national system of innovation. The analysis will be tackled by means of an approach that is explicitly based on a combination of the neo-Schumpeterian and Latin American structuralist frameworks, conceiving innovation as the key element of the capitalist dynamics (Cassiolato & Lastres 2008).

Within this framework, the idea of a National System of Innovation1 understands the innovative process as an integrated and systemic (and not linear) process. Although it focuses on the enterprise, institutions and organisations—and how they interact—are also important elements. Furthermore, context and history are crucial components and all policy elements affect the dynamics of the system. Thus, the analysis that follows covers not only innovation policy but science and technology and industrial policy and, more importantly, the overall economic policy of Brazil during the period.

Introduction

One of the central preoccupations of the international research and policy agenda after the end of the Second World War was to come to terms with underdevelopment. Arguably, one of the most influential schools of thought on development during this period was the Latin American Structuralist Approach (LASA). Development theory and policy was shaped mostly by the analysis of the economic and social processes of production and knowledge creation. It followed a long-standing tradition that advocated that wealth originates from immaterial forces (creativity and knowledge) and that the accumulation of assets occurs through the incorporation of new technologies and innovation (Reinert and Daastøl 2004). Structural change and the connection between technical change and structural change were central to such developmental lines of argument.

There were two central arguments of LASA. First, the ideas that technical change plays a significant role in explaining development and underdevelopment and that specific knowledge and policies towards structural change were necessary to overcome backwardness. Technical change is a crucial component of an explanation of capitalism's evolution and in the determination of historical processes through which hierarchies of regions and countries are formed.

Second, the proposition that underdeveloped countries were significantly different from industrial advanced ones. Hence, they could not follow the same paths towards development and that the catching-up idea had to be reconsidered. In the words of one of the leading Latin American structuralist economists, ‘underdevelopment is … an autonomous historical process, and not stages that economies that already achieved a superior degree of development had necessarily to go through’ (Furtado 1961, 180).