The aim of this study is to help identify the policy implications for Brazil arising from the impact of disruptive technologies on national industries. The report is based on an international review of programmes, mechanisms and initiatives put in place to support the generation, diffusion and deployment of advanced technologies in industry.
Five opportunity areas for effective policy design and implementation have been selected as being particularly relevant for the purposes of the project “Industry 2027 and Disruptive Innovations: Risks and Opportunities for Brazil (I2027)”. While the Policy Links study team did not join the I2027 project from the start, the five opportunity areas explored in this study were selected under the guidance of the I2027’s project team taking into consideration emerging findings from their work. Another key source of validation were inputs from key stakeholders collected during the workshop “Políticas públicas internacionais para tecnologias disruptivas e apresentação dos resultados da pesquisa do Projeto Indústria 2027”, organised in Brasilia in December 2017, in the framework of the 19º Diálogos da MEI.
An initial list comprising over sixty international programmes was reviewed and, from these, twelve cases were selected for further analysis. The selected case studies include programmes from China, Denmark, Germany, Ireland, Singapore, Sweden and the United States.
The five opportunity areas for effective policy design and implementation that appear particularly relevant to Brazil are as follows:
- Agency coordination and formation of a common national vision around new technologies. Many of the challenges related to the development, diffusion and deployment of emerging technologies are systemic in nature. Technologies may have a cross-cutting impact in a wide range of industries and firms. Internationally, there is increasing emphasis on the need to enhance the coordination of actors, networks and institutions. This includes better integrating technical expertise, and research and development infrastructure in order to promote innovation more effectively. Programmes and institutions that facilitate close interaction and sharing of insights between laboratory-based researchers, manufacturing engineers, equipment manufacturers, and user industries, are receiving increasing attention. Examples of international efforts to create national frameworks of cooperation and communication, include the creation of inter-agency working groups (to provide visibility of how individual efforts contribute to national goals), the publication of national technology plans (to ensure synergies between sources funding similar technology domains), and the establishment of coordination functions in national innovation agencies (to provide foster linkages and provide national visions).
- Scale-up and “manufacturability” of emerging technologies. Ensuring that advances in technology made in a laboratory make their way into industrial applications is fraught with challenges. The path to successful commercialisation requires that technologies function wellat large scale, and that the products are produced at industrial scale. Internationally, a central concern for governments is the design of institutions, programmes and initiatives aimed at ensuring that research output is developed, demonstrated and deployed in industry. One key driver is the need to ensure “value for money”. There is increased pressure from central governments and treasury departments to ensure that, in times of budget constraints, countries are able to capture value from their investments in science and innovation. The review of the international experience reveals that a number of countries are stepping up investments in applied research centres and pilot production facilities focused on taking innovations out of laboratories and into production increasing recognition that technology scale-up from concept to reality. There is increasing recognision that the scale up and ‘manufacturability’ of emerging technologies requires the right combination of tools and facilities, such as advanced metrology, real-time monitoring technologies, analysis and testing, shared databases, and modelling and simulation tools. This includes demonstration facilities such as test beds, pilot lines and factory demonstrators that provide dedicated research environments with the right mix of tools and enabling technologies, and the technicians to operate them.
- SME capability-building. Many firms, in particular small and medium-sized enterprises (SMEs), are unable to exploit the opportunities offered by new technologies. Even when those technologies are readily available in the market, firms fail to take advantage of them to update their products and processes. Internationally, there seems to be increasing recognition that the effectiveness of efforts to build SMEs capability is affected by the extent to which support institutions are spread across regions in the country, the network of other actors these institutions partner with, and the number of firms that they are able to engage with. The international experience also reveals that policy efforts to support SME capability go beyond R&D, ranging from “soft support” (such as the provision of information and support to create industrial networks around common interests) to “hard support” (hands-on support through activities such as training, contract research and expert advice). Some of the programmes analysed, for example, offer firms the possibility to access a range of consultancy services ranging from human resources and financial management to technical solutions development. Such services are provided by qualified providers, such as universities and research centres spread across countries. Another example is the support for the technological upgrading of SMEs by promoting the secondment of research scientists and engineers to local firms through government-supported industry attachment programmes.
- R&D collaborative networks. Not all firms have the capabilities to engage in R&D. A large proportion of firms do not have the time, capacity or funds to partner with universities or research organisations. The lack of engagement of firms in R&D and innovative activities represents a risk to long-term competitiveness in advanced industries that require continuous innovation. The international experience reveals increased policy attention to the promotion of collaboration among firms and institutions through R&D networks. This responds to a number of needs: engaging more firms in R&D (including SMEs), forming multidisciplinary teams, ensuring aligned investments in technology areas that depend on one another, and ensuring critical mass by bringing together financial resources. All too often, progress in advancing the functionality of new application technologies and efforts to enhance the functionality of novel production technologies are carried out in isolation. However, advances in technology may have an impact in different sectors and, as such, R&D networks can help to exploit opportunities for collaboration among sectors. The review also shows the importance of industrial networks, involving SMEs and large firms, for eliciting information about national opportunity areas. Such networks can help to identify the areas where policy action might be required. Some of the programmes analysed are specifically focused on building stronger cooperation between small firms and large companies by funding collaborative projects. Similarly, some of these programmes provide SMEs with limited engagement in R&D practical support in the tasks of articulating relevant projects, and identifying partners and sources of funding.
- Skills development in disruptive technologies. The deployment of key enabling technologies can lead to significant benefits in terms of productivity and economic growth. However, in order to tap into the potential of emerging technological trends, it is critical to nurture skills and education and training systems at a pace that matches that of technological diffusion. In this respect, skills are given central importance in national policy agendas around the world, given that advances in new technologies require workers with new multidisciplinary competencies, combining different types of knowledge and skills. Although the overall impact of digital technologies on employment in terms of displaced jobs and net job creation is still under debate, emerging technologies are likely to displace manual repetitive jobs, while creating new jobs that would demand new skills. These trends impose challenges on both employees and employers. Efforts are being made by governments to implement comprehensive strategies for skills development, including awareness-raising, mentoring and training on digital skills for different career stages. Collaboration between public research centres and industry has led, for example, to the definition of industry-led curricula focusing on engineering subjects and the creation of skills development programmes based on the replication of state-of-the-art manufacturing facilities to provide the right environment for quality training. In addition, new vocational training programmes are being created, designed around emerging technologies and adapted to the particular needs of SMEs.
While the set of opportunity areas discussed in this report is by no means exhaustive, it does highlight key areas where policy efforts can have a significant impact in enhancing Brazil’s innovation performance. Additional opportunity areas may be relevant, however, for supporting industrial innovation in Brazil, and might require further analysis. What the project does is showcase an analytical approach that could be replicated for other areas.
Further analysis may be required to fully assess the innovation constraints of the Brazilian economic system in order to identify additional relevant opportunity areas for policy design and implementation. Additional in-depth analysis might also be required to improve the understanding of contextual factors underpinning the effectiveness of particular approaches adopted in other countries. Further work to compare and contrast approaches to programme evaluation is required.
Finally, it is important to note that the report presents only a small selection of case studies, which are not put forward as suggestions regarding particular approaches that Brazil should adopt. Instead, they have been selected because they illustrate a variety of policy approaches, addressing opportunity areas that are of relevance to Brazil, which can stimulate debate and inform policy thinking in the country. They also provide a useful context for what international competitors are doing.
To conclude, the report highlights that the ability of nations to translate new technologies into high-value production within their economies depends on how the science and engineering base is integrated in the domestic industrial system. A weak connection between science and industry could constrain the potential of new technologies and the economy’s ability to innovate the next generation of high-value manufacturing products. To compete effectively, therefore, national economies require industrial systems that can respond to emerging high-value industrial opportunities with the right combinations and clusters of technological R&D, skills, institutions and infrastructure.