Innovation and Technology

Brazil BNDES Sees BRL43.3 Billion Investment In Innovation In 2010

July 20, 2009

Brazil's investment in innovation is likely to reach 1.5% or 1.6% of gross domestic product next year, Luciano Coutinho, president of the National Development Bank, or BNDES, said Monday. According to BNDES, 1.5% of GDP is the equivalent of 43.3 billion Brazilian reals ($22.7 billion).

In recent years, Brazil had been spending between 1.1% and 1.3% of GDP in supporting scientific research and development, Coutinho said. "We plan to push this amount up to 2% in the next few years and get closer to other emerging markets such as China, Korea and Taiwan, who spend over 2.5%," Coutinho said. Coutinho said developed economies like the U.S. spend 2.7% of GDP on innovation.

The global financial crisis interrupted Brazil's innovation investment plans last year, he said. However, Coutinho said investment in innovation would increase on the back of a return to growth in Brazil's GDP this year. "We expect (GDP) growth of between 3.5% and 4% in the second half of this year, and 4.5% in 2010," he said.

Coutinho said the information-technology sector was a main driver for innovation, but Brazil was still rather weak in the area. BNDES, therefore, would offer incentives for software, hardware and telecoms development and hoped to attract foreign investors in these areas, Coutinho added.

He identified other areas of special interest such as biotechnology and pharmaceuticals, as well as the health sector in general. Other major areas of innovation investment already underway, Coutinho said, include ethanol production, deepwater oil-drilling materials and technology, and aeronautics. Brazil already has leading-edge technology in ethanol and deepwater drilling.
Coutinho said foreign companies also could access BNDES innovation funds as Brazil's constitution doesn't discriminate against foreign capital. He cited the example of the Brazilian arm of General Motors Co., which is planning a $1 billion investment in developing a global small-car platform at its modern plant in southern Brazil. "We're examining how we can support that investment," Coutinho said. He added that aluminum producer Alcoa (AA) had also received BNDES support.BNDES released half-year performance results in early July, which showed loan approvals up a record 50% to BRL77.2 billion.By John Kolodziejski

Source: Dow Jones Newswires (www.dowjones.com)