Brazil - Issues in Science and Technology Development

Document of The World Bank FOR OFFICIAL USE ONLY FILE COPY CONFIDENTIAL Report No. 4819 (a) -BR BRAZIL ISSUES IN SCIENCE AND TECHNOLOGY DEVELOPMENT January 27, 1984 Projects Department Latin America and the Caribbean Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. BRAZIL ISSUES IN SCIENCE AND TECHNOLOGY DEVELOPMENT Table of Contents Page No. BASIC DATA i GLOSSARY iii SUMMARY ............................................... 1 I. THE MAIN ISSUES ............................................... 2 A. Human Resources ........................................... 3 B. Institutional Issues ...................................... 6 C. Financing Pattern and Use of Funds for R&D Activities ..... 9 D. Management of Programs and Services ....................... 11 E. Effects of Trade and Industrial Policy on S&T Development.. 12 II. THE GOVERNMENT'S STRATEGY ..................................... 13 A. Strengthen S&T Development Agencies........................ 13 B. Implement Priority R&D Programs ........................... 14 C. Improve R&D Support Systems ............................... 15 D. Strengthen the Human Resources Development Base ........... 15 E. Develop Systems for Effective Technological Services and Delivering of R&D Results ........................... 15 III. THE BANK'S SECTOR LENDING STRATEGY............................. 16 A. Rationale for Bank Involvement ............................ 16 B. Short-Term Strategy ....................................... 17 C. Lending Operations ........................................ 18 D. Future Sector Work ........................................ 18 At the request of the Government of Brazil, a reconnaissance mission visited Brazil in May/June 1982 to ascertain major issues and options in the further development of science and technology (S&T) in Brazil and identify activities for potential World Bank assistance. Based on an analysis of the mission's findings, a draft S&T Sector Policy Issues Memorandum was prepared and reviewed within the Bank. The issues portion of the present report appeared originally in that memorandum (10/25/82, by Mr. Hyung-Ki Kim). The draft paper was then discussed with the Brazilian authorities during the follow-up mission in November 1982, and subsequently used as a basis for identifying projects in the S&T sector. Mr. Hyung-Ki Kim (Consultant) carried lead responsibility for preparation of this report. This report makes no pretense to make a comprehensive assessment of relations between science and technology and industrial development. Rather, it focuses on general issues, particularly those involving the education and research subsystems, which the government seeks urgently to address. LIST OF ANNEXES Page No. I. Tables 1. Percentage Distribution of Researchers at 20 Research-Performing Institutions by Qualifications, 1981 2. Percentage Distribution of Brazilian Researchers 21 by Region, 1981 3. Numbers of Fellowships Granted by CNPq and CAPES, 1975-79 22 4. Sources of Funds for Research and Development in Selected 23 Countries 5. Approved Sources of Funds for FINEP and FNDCT, 1980-81 24 6. Allocation of FUNAT Resources by Programs, 1979-80 25 7. Allocation of FUNAT Resources by Functions, 1979-80 26 8. Use of Funds for Research and Development in Selected 27 Countries 9. R&D Expenditure by 10 Major State Enterprises in Brazil 28 10. Selected State Agencies and Institutes for Technological 29 Research and Development 11. Institutions Performing Research in Brazil 30 12. Institutions Performing Research by Sectors or by 31 Principal Subsectors of the Basic National Plan for Scientific and Technological Development, 1981 13. Institutions Performing Research by Districts, 1981 32 14. Percentage Distribution of Brazilian Researchers 33 by Fields, 1981 15. Total Enrollments in Undergraduate and Graduate 34 16. Percentage Distribution of Graduate Courses by 35 Major Areas of Specialization, 1980-81 17. Brazil: Balance of Payments in Technology Trade, 1965-79 36 II. Selected Coordinating and Executing Mechanisms within the National System for Science and Technology Development ....................................... 37 III. Chronogram of Main Events in Brazilian Science and Technology Policy ............................................ 40 IV. Selected References ............................................ 42 - i - BASIC DATA SOCIAL AND ECONOMIC 1970 1980 Population 93,139,057 119,070,865 Literacy Rate (Age 5 or above) 61.56% 68.72% School Enrollment Primary Level 15,894,627 21,473,100 Secondary Level 1,003,475 2,519,122 Tertiary Level 425,478 1,225,557 Completion of Courses Primary Level 406,236 904,722 Secondary Level 225,913 464,451 Tertiary Level 64,049 187,973 Postgraduate Level not available 40,209 Gross Domestic Product In Million Cruzeiros 208,300.8 26,440,647.6 (1981) In Million US$ 45,680.0 284,277.5 (1981) Distribution of National Income by Sectors: Agriculture 10.1% 12.1% Manufacturing 35.9% 31.9% Services 54.0% 56.0% SCIENCE AND TECHNOLOGY (1982) Number of Researchers 8,232 (1975) 32,508 (1982) Distribution of Researchers by: Discipline: Exact Sciences 14.4% Engineering 18.7% Agriculture 17.7% Health 24.2% Social Sciences and Humanities 25.0% Districts: Southeast 67.2% Northeast 15.1% South 14.0% North 2.5% Central-West 1.2% - ii - 1970 1980 Types of Institutions: Education 51.0% Productive Sector 22.3% Research 14.7% Government 6.9% Others 5.1% Number of Courses at Postgraduate Level Masters Level 505 (1975) 736 (1981) Doctoral Level 176 (1975) 285 (1981) Number of Persons Engaged in Postgraduate Studies at Local Institutions: Masters Level 20,617 (1975) 35,426 (1981) Doctoral Level 1,728 (1975) 4,783 (1981) Number of Persons Completing Postgraduate Courses (at domestic institutions) Masters Level 2,171 (1975) 4,574 (1981) Doctoral Level 138 (1975) 483 (1981) National Expenditure on Science and Technology Cr$ (Billion) 36.4 (1979) 220.2 (1982) US$ (Billion) 1.35 (1979) 1.27 (1982) Distribution of Financial Resources for R&D by Source: National Federal Treasury 66.1% State Treasury 11.6% Productive Sector (Public) 13.6% Productive Sector (Private) 6.8% Other Financing Entities 1.9% by User Institutions: Government 32% Education 16% Productive Sector 52% Balance of Payments in Technology Trade (1979) Receipts (in US$ Million) 264 Payments (in US$ Million) 782 Source: Datos Basicos de Ciencia-e Tecnologia, 1983. Prepared by Nucleo de Analyses Estatisticas/CNPq. GLOSSARY ABIPI - Brazilian Association of Industrial Technology Research Institutes ABNT - Brazilian Association of Technical Norms BNDES - National Bank for Economic and Social Development CAPES - Coordenacao de Aperfeicoamento de Pessoal de Nivel Superior (Coordinating Agency for the Further Training of High-Level Personnel) CCT - Conselho Cientifico e Technologico (Council of Science and Technology) CNPq - Conselho Nacional de Desenvolvimento Cientifico e Tecnologico (National Council for Scientific and Technological Development) FBQI - Brazilian Institute for Industrial Quality FINEP - Financiadora de Estudos e Projetos (Agency for the Financing of Studies and Projects) FNDCT - Fundo Nacional do Cientifico e Tecnologico (National Fund for Science and Technology) FUNAT - Fundo Nacional de Tecnologia industrial (National Fund for Industrial Technology) FUNTEC - Programa de Desenvolvimento Tecnologico, do Banco Nacional de Desenvolvimento Economico e Social (Technological Development Program of BNDES) INT - Instituto Nacional de Tecnologia (National Institute of Technology) INMETRO - Instituto Nacional de Metrologia, Normalizacao e Qualidade Industrial (National Institute of Metrology, Technical Norms and Industrial Quality) INPI - Instituto Nacional de Propriedade Industrial (National Institute of Industrial Property) MEC - Ministerio de Educacao e Cultura (Ministry of Education and Culture) MIC - Ministerio da Industria e Comercio (Ministry of Industrya and Commerce) SEPLAN - Secretaria de Planejamento da Presidencia da Republica (Planning Secretariat of the Presidency of the Republic) - iv - SEPS - Secretaria de Ensino de Primeiro e Segundo Grau (Secretariat for Primary and Secondary Education) SESU - Secretaria de Ensino Superior (Secretariat for Higher Education) SNDCT - Sistema Nacional de Desenvolvimento Cientifico e Tecnologico (National System for Scientific and Technological Development) STI - Secretaria de Tecnologia Industrial (Industrial Technology Secretariat) SUMMARY Main Issues i. The current Basic National Plan for Scientific and Technological Development (1980-85) has two broad objectives: (a) to develop scientific capacity through improving the quality of, and continuing and expanding, research and development (R&D) activities; and (b) to encourage technological autonomy. In pursuing these policy objectives, the greatest challenge now facing Brazil is not just to add to resources, but to manage them better while promoting the productive sector's active participation. The report identifies several problems that threaten to hold back the further development of science and technology (S&T) in Brazil: (a) The stock of scientific and technological manpower is either inadequate or ill-matched to the country's needs; moreover, the educational system which should be relied on is itself weak and poorly adapted to build up this stock of manpower; (b) coordination among the agencies that make up the National System for Scientific and Technological Development (SNDCT) is weak; (c) the amount of mney Brazil spends on R&D activities is low in relative terms, even among newly industrializing countries such as India and Korea; (d) S&T development is poorly managed partly due to the inadequate user-involvement, particularly in the productive sectors; and (e) the effects of the current trade and industrial policies (including industrial property administration) on S&T development are unclear. Government and Bank Strategies ii. In order to alleviate the problems facing the S&T sector, the government has developed a strategy which would: (a) strengthen agencies involved with S&T development; (b) implement priority R&D programs; (c) improve R&D support systems; (d) strengthen the human resources development base; and (e) develop systems for effective technological services and delivery of R&D results. iii. At the present stage of S&T development, the government's strategy is an appropriate and timely one for the advancement of S&T in particular, as - 2 - well as.for Brazil's overall socioeconomic development. This strategy should receive the support of World Bank lending. Such attention would help materially to maintain the relevance and efficiency of the National System for Scientific and Technological Development. The activities which merit support are the following: (a) improvement of science education at lower levels of educational institutions; (b) development of selected postgraduate programs in science and engineering; (c) implementation of several high priority national R&D programs; (d) strengthening of cross-sectoral R&D support services; (e) formulation of strategies to strengthen and develop user-oriented, often user-financed, technological service and delivery systems; (f) organization and implemention of a series of independent policy-related studies to (i) elucidate the key factors that condition the behavior of productive sectors vis-a-vis technology development; (ii) elaborate the appropriate role of government; and (iii) assess the basic infrastructural needs for technological services; and (g) studies on the state-of-the-art in some branches of technology- intensive industries, such as microelectronics, agricultural machinery and pharmaceuticals, and their technological requirements. iv. In the short term, the Bank should concentrate on strengthening the interactive function of SNDCT by undertaking tasks (a) through (e), plus studies on (f) and (g). By doing so, many possible new areas of Bank involvement could unfold. I. MAIN ISSUES Overview 1.01 Scientific and technological development has been a subject of public policy in Brazil for many years. 1/ This policy has brought about a large number of institutions of education, research and engineering at the federal and state levels and in the public and private sectors. The last 15 years have seen an enormous expansion in the number of people with scientific and technical education as well as a huge increase in physical facilities. 1/ Annex III shows the evolution of major S&T institutions and policy instruments. -3- The problems now facing the country's policy-makers concern the more efficient use of this capacity to serve the objectives of socioeconomic development. 1.02 Brazil's current S&T policy is embodied in its Basic National Plan for Scientific and Technological Development (1980-85). The Plan's two objectives are: (a) to continue to develop scientific capacity through improving quality of, and continuing and expanding, R&D activities; and (b) to become technologically autonomous. Technological autonomy is the capacity to select and generate the most adequate technology among the options available, in addition to promoting its effective absorption, while giving special emphasis to long-term socioeconomic criteria in the decision-making process. 1.03 In order to carry out the Plan, Brazil's policy-makers must consider the main issues facing the S&T sector. The problems confronting the sector are caused by the following types of issues: human resources, institutional, financial, managerial and trade and industrial policy. These issues are discussed in sequence below. A. Human Resources 1.04 The most acute issue in the S&T sector is the lack of human resources to meet Brazil's R&D needs. There is an inadequate stock of scientists, and those who exist are located primarily in southern Brazil. There are insufficient higher educational opportunities, and the quality of education is low. Moreover, the training potential of Brazilian institutions is underutilized. Inadequate Stock of Scientists 1.05 Compared with countries at a comparable stage of economic development, Brazil has fewer scientists engaged in R&D per million of population. Its figure of 208 scientists (including social scientists) and engineers engaged in R&D in 1978 compares with 285 in Argentina (1980), 3,991 in Israel (1978) and 418 (excluding social scientists) in the Republic of Korea (1979) (See Annex I, Table 1 for the distribution of researchers at research-performing institutions in Brazil by qualification). 1.06 Brazil has relatively few people with scientific and technical skills related to its vast natural resources and its agriculture, and relatively limited training facilities in these fields. Agricultural engineering, aquaculture, biochemical engineering, exploration geophysics and mineral technology (and mineral economics), materials science, chemistry and related engineering, systems enginering, and oceanography are all weak. In oceanography, the Interministerial Commission on Ocean Resources reported that there were only 11 holders of the Ph.D. in geological oceanography, 7 in physical oceanography, and 6 in chemical oceanography. Among the basic sciences, chemistry is known to be weak, failing to provide sufficient interactions with biological, physical and engineering activities. Inappropriate Geographical Location 1.07 Scientists and technologists are concentrated in the southern part of Brazil (Annex I, Table 2). Scientists and engineers are scarce in other parts of the country where there are pressing needs for such manpower, for instance, in areas of forestry, agriculture (including agricultural engineering), mineral resources, health, and applied social sciences. Lack of Educational Opportunities 1.08 The lack of educational opportunities at all levels makes it very difficult to provide an efficient and equitable foundation for the long-term development of human resources for S&T. Brazil's achievement in tripling enrollment in university education in the 1970s is a considerable one: postgraduate enrollment grew at 31% per year, and undergraduate enrollment by 12% per year. However, enrollment in basic education expanded at a mere 4% per year (compared with a population growth rate of 2.2% per year). Thirty percent of children aged 7-14 are not in school. Basic education is generally of poor quality, especially in introducing students to science and technology; teachers' salaries are unattractive; and dropout and repetition rates are high in areas where there is a desperate need for good broad-based education. 2/ The system of university entrance examinations, whether conducted on a state-wide or university-wide basis, retains a major influence on secondary education. Many secondary schools (whose enrollment expanded at 11% a year in the 1970s) prepare students for university rather than seek to provide a comprehensive education. Furthermore, at university and even secondary levels the better-equipped and staffed federal and state institutions continue to be filled with students from the upper middle and high social strata. This forces many equally or more able students from the lower income groups to resort to expensive private institutions of debatable quality. Low Quality of Education 1.09 The threefold expansion of undergraduate enrollment during the past decade, combined with a low retention rate of full-time faculty, has adversely affected the quality of university education. Many postgraduate courses now need to remedy the deficiencies of undergraduate training. Measures taken by the government, with respect to evaluation and accreditation, have been limited in scope for lack of institutional capacity. The mandatory evaluation every five years of accredited undergraduate courses by the Federal Council of Education has not been fully implemented. As a result, the universities have not been alerted to the Council's concern about poor educational quality. An attempt to improve undergraduate education by instituting different arrays of postgraduate courses has had some success, but has been limited in scope. Many of the state and private universities, including several of the most prestigious universities in the south, have had financial difficulties. As a result, they have been obliged either to forego major investments in buildings and teaching facilities for the past several years, or to continue to rely heavily on part-time teaching staff. 1.10 In order to improve science teaching at lower levels of education, and in conjunction with the policy of the Ministry of Education and Culture (MEC) to make institutions of higher education more responsive to the needs of lower levels of the education system, CAPES (Coordinating Agency for the Further Training of High Level Personnel) has shown an interest in supporting 2/ See "Brazil--Basic Education Subsector Memorandum: Major Issues," Report No.4473-BR, July 29, 1983. - 5 - science education in secondary and primary schools. This support has involved both research and human resources development. This move is desirable, but it is a new departure for CAPES, and will require adequate agreement and cooperation from all parties if it is to be effective. Both CAPES and the State Secretariats of Education clearly need to work more closely with the Secretariat for Primary and Secondary Education (SEPS), the Secretariat for Higher Education and the Ministry's Center for Development and Technical Support in Education (CEDATE). Valuable lessons can be drawn from a number of cases, including the project for science teacher training centers and the Program of Ex ansion and Improvement of Teaching at Intermediate Level (PREMEN). S/ Because CAPES has the institutional capacity to evaluate university resources, both physical and human, it seems appropriate that it be given the mandate to promote science education in general. This would involve improving teaching methods and establishing teacher training capability at selected institutions and other resource centers, as necessary. Constraints on Postgraduate Education 1.11 Despite the spectacular growth in postgraduate education, from 33 Masters and Doctoral courses in 1966 to 1,021 in 1981, and an enrollment of over 40,000 students, the Brazilian postgraduate system still faces several delicate and potentially critical issues: / (a) postgraduate programs differ widely in quality (as evidenced by the recent CAPES evaluation); (b) postgraduate education is, in many instances, separated from undergraduate education in terms of courses offered, faculty appointments, access to facilities, and administration; (c) financial support for maintaining established programs or starting new ones is uncertain; and (d) a multi-year support system is needed rather than the present two-year grant system administered by FINEP or the single-year commitment envisaged by CAPES. 1.12 The policy of the Ministry of Education/CAPES to establish nuclei for postgraduate education and research in universities, mostly in the form of Pro-Reitoria de Pesquisa e Pos-Graduacao, has been effective in building up selected postgraduate programs on the basis of merit or perceived need. It has enabled the sponsoring agencies to channel support without going through long, drawn-out university routines. However, postgraduate programs have remained isolated from overall university administration. This duality of administration has had a mixed reception from university rectors. The issue at hand is not, therefore, the lack of effectiveness or the efficiency of the present approach, but rather whether such an approach can be sustained 3/ Six science teacher training centers were set up in 1965 in the capital cities of the following states: Sao Paulo (CECISP), Minas Gerais (CECIMIG), Bahia (CECIBA), Rio Grande do Sul (CECIRS), Guanabara (CECIGUA), and Pernambuco (CECINE). 4/ About 90% of all postgraduate courses are being offered by publicly-funded institutions (federal universities and colleges, and state universities). - 6 - and whether it is adequate to meet the growing national need.for high level S&T manpower. 1.13 CNPq (The National Council for Scientific and Technological Development) and CAPES have run in-country and overseas fellowship programs since their founding in 1951 (Annex I, Table 3). Concerned staff of the two agencies have consulted informally to avoid duplication or to decide on compatible levels of support, but there remains an inherent danger of duplicating each other's efforts. Though the status quo generally satisfies the S&T and academic communities, this uncoordinated approach should be evaluated, particularly since both institutions may suffer from it. An outright merger might not be the correct solution. However, it would be a positive step if there were broad lines of understanding between the two entities in order to make their efforts more complementary and better focused. Underutilization of Training Potential 1.14 A few of the public research institutes, such as those in areas of basic science that come under CNPq, run postgraduate degree programs in their fields of expertise. 5/ Other institutes have enormous potential to train various levels of S&T manpower, in addition to their mandated research functions. For example, the National Institute of Metrology, Technical Norms and Industrial Quality (INMETRO), with its array of facilities in metrology and instrumentation, could offer much needed training for technicians in instrumentation and control. Efforts to nurture training at well-established S&T institutions in Brazil are at best scant. Degree programs at the French Petroleum Institute (IFP) and Masters' programs at the American company of A.D. Little, are just two such examples in advanced countries, one based at a quasi-public institute, the other at a private firm. Even if modest in scope, the pooling of physical and intellectual resources by well-established R&D institutes and nearby universities can form the basis for an invisible but mutually beneficial "graduate university." Such an approach could easily be used by professional societies and trade associations and by universities or other levels of the education system. Industrial standards, quality control, computer-aided design (CAD)/computer-aided manufacturing (CAM), technology licensing negotiations, patents information search, etc., could well be taken up by private institutes and societies such as ABNT, the Brazilian Association of Technical Norms, and other manufacturing associations. Continuing education programs in Brazil are undertaken on an ad hoc basis, failing to tie the individual initiatives and potentials of research institutes, professional societies, and industrial associations to those of educational institutions. B. Institutional Issues 1.15 The science and technology sector is also plagued by institutional issues within the National System for Scientific and Technological 5/ In 1981, CNPq institutes conferred 66 Masters degrees and 15 Doctorates; the numbers enrolled in their programs were 386 and 94, respectively. - 7 - Development (SNDCT). 6/ S&T policy coordination is uncertain; there is a lack of coordination Ef planning and budgeting; and the financing mechanisms for university research and education are ineffective. These deficiencies within the system are discussed in sequence below. Uncertain S&T Policy Coordination 1.16 The appointment of SEPLAN's (the Planning Secretariat) new Deputy Secretary-General in charge of S&T in May 1982 brought to the surface a long simmering debate on the coordination of the nation's S&T policies and programs. The subsequent resignation of the incumbent, for reasons unrelated to S&T policy, has, however, generated a new wave of concern as to the future policy coordination. This is a delicate debate in which outsiders are ill-equipped (if not ill-suited) to participate. The discussion as to whether or not SEPLAN should fill the post or strengthen CCT of CNPq instead, is of cardinal importance for S&T development in Brazil, since its outcome will invariably condition the policy framework within which resources are allocated and activities implemented. Lack of Coordination of Planning and Budgeting 1.17 The dichotomy that exists between planning and budgeting mechanisms makes it extremely difficult for planning agencies to translate their policy recommendations into action. Though CNPq is responsible for S&T policy, planning and coordination, the major source of financial resources for the Basic National Plan for S&T Development, FNDCT, is administered by the Agency for Financing Studies and Projects (FINEP). 7/ This makes CNPq's task of coordination virtually impossible. There are several other important funding mechanisms for S&T activities, such as FUNAT (National Fund for Industrial Technology) and FUNTEC (Technological Development Program of BNDES), over which CNPq has little influence (see Figure 1 and Annex II). 1.18 Coordinating resource allocations with policy decisions is, in theory, the responsibility of the Council of Science and Technology (CCT),to 6/ The SNDCT was formally created by decree No. 75.225 of January 14, 1975, as a national network of both federal and state agencies and institutes. Its activities, inlcluding division of labor among key institutions, are organized and coordinated by SEPLAN through the Council of Science and Technology (CCT) of CNPq. The main instrument for coordinating the SNDCT activities is the Basic National Plan for Scientific and Technological Development whose chief financing mechanism is the National Fund for Scientific and Technological Development (FNDCT). The FINEP (Agency for Financing for Science and Technology) administers FNDCT. Both CNPq and FINEP are constituted as foundations to enjoy autonomy and flexibility in operation, but come under SEPLAN's general jurisdiction. 7/ FINEP, through FNDCT, has been the principal financial supporter of S&T activities in Brazil, including R&D for productive firms, and establishment (including buildings and equipment) and operations of postgraduate programs at academic institutions, as well as infrastructural development of selected government institutes. - 8 - Figure 1: Key Fede-ral Science and Technology Poliev and Funding Agencies in Brazil FEDERAL GOVERNMENT SC.ENCE ANO TECHNOLOGY BUOGET MF MIC (Miniszy c MEC SEPL.AN (Ministry of Financ*l (Minimuy of Educvat an> (in:<stry of P!annhing industry anld Commerce) FUNA, =ter .3% (Bane= ca INP,' -.,Braø FUNAT UNNEV INT CNPQ FINEP SNOF (FNCT - ather) (FUNTEC 1A~rw' widtch prcoarianal to budget anlocations Source: Sergio C. 'rindade, :"echnoog Develo=:en: in De,7lojrinz Counr.es: The Case of ?r:vata R&D Institutions iB Bzazil,' R&D anaen:, vol. 11, No. 2, 1980, -. 30. - 9 - which CNPq contributes the chairmanship and the secretariat. 8/ The issue of the division of responsibilities has generated much emotional discussion in the S&T community. The debate has centered mainly on the prospective role in SNDCT of SEPLAN, CNPq, FINEP and, to a lesser extent, CAPES. SEPLAN formed a task force in late 1982, with representatives from the two main S&T societies, to work on the clear delineation of these agencies' major activities. The need to reinforce planning and to coordinate S&T professional activities was underscored by all members, providing CNPq with a renewed mandate. A proposal that FINEP relinquish all its institutional support programs was discussed, but not agreed to for two principal reasons. First, the institutional support programs have made it easier for FINEP to deal with the other end of the spectrum of S&T activities, namely, development and commercialization. Second, CAPES, which is expanding its programs of institutional support (particularly for postgraduate programs, as noted above) cannot quickly assume responsibility for FINEP's programs either financially or technically. Lack of Financing Mechanisms for University Research and Education 1.19 FINEP's proposal to change its style of operations, from funding unsolicited project proposals to designing its own projects, aroused intense apprehension on the part of the academic community. The academic community feared that no suitable substitute for institutional support would be found among public agencies. CAPES has begun to take over FINEP's original role, though on a much smaller scale. The dilemma now is how to synchronize the phasing out of FINEP and phasing in of CAPES so that the new system can be flexible and innovative. The assumption by CAPES of postgraduate accreditation, on behalf of the Federal Council of Education, plus its long-standing relationship and rapport with the academic community, put CAPES in a strategic position to address the issues related to the further development of postgraduate education and research. Its relative autonomy and longer-term commitment to selected programs ought not be jeopardized by overdependence on the Ministry of Education's exclusive funding. C. Financing Pattern and Use of Funds for R&D Activities 9/ 1.20 Brazil steadily increased its expenditure on R&D during the 1970s, from the equivalent of 0.24% of its GNP in 1970 to 0.55% in 1980. Both in absolute and relative tetms, the rise is significant, but the share is still 8/ CCT is composed of 32 members, as established in Article 8 of Decree 75.241 of January 16, 1975, modified by Decree 77.353 of March 30, 1979, with 19 permanent members (ex-officio) and 15 members appointed by the President of the Republic. The ex-officio members are: President and Vice President of CNPq; President of the Brazilian Academy of Sciences; Superintendent of the Institute of Planning (SEPLAN/IPEA); Secretary- General or the heads of the sectoral agencies of S&T in the ministries of industry and commerce, agriculture, health, communications, education and culture, interior, mines and energy, transport, external affairs, and finances; President of the National Bank for Economic and Social Development (BNDES); representatives of the Armed Forces General Staff; and President of FINEP. 9/ Major funding agencies and their financing mechanisms for R&D activities in Brazil include FINEP/FNDCT, STI/FUNAT, BNDES/FUNTEC, and the Bank of Brazil's FIPEC (see Figure 1, and Tables 5, 6, and 7 of Annex I). - 10 - below those of the OECD and of other newly industrializing countries. Most OECD countries use 1.0-2.5% of GNP in this way; the share in India is 0.66% (1980-81), and that in Argentina is 0.9% (1979) if social science areas are excluded. In absolute terms, Brazil currently spends about US$1.3 billion or about US$10 per capita per year on R&D and related activities. 1.21 About two-thirds of the total funds for R&D (excluding expenditures on imports of technology related to services) are supplied by the federal government, which used 2.2% of its budget for R&D in 1979-81. Compared with most other countries for which comparable data are available, the share of government is large in Brazil (Annex I, Table 4). Indeed, the share is much larger than the 48.6% shown, since the financing agencies derive at least half or more of their funds for R&D directly from the federal treasury. 1.22 The contribution made by the Brazilian productive sector, which includes the state enterprises, was about 20.4% in 1980, which is very low by international standards. Correspondfng figures are 47% in the-US (1979), 72% in Japan (1978), 45.5% in Korea (1979), and 63.8% in Yugoslavia (1977). About a fifth of the federal funds for R&D are directed to "market oriented" private and state enterprises. In 1975, the latest year for which there is an estimate for the private sector, private firms committed resources for R&D that amounted to only 0.02% of their total sales (compared with 1.5% in France, 1.6% in Federal Republic of Germany, and 1.9% in the US). Notable exceptions can be found among firms in the computer industry, which is being protected from foreign competition. 1.23 The flow of funds for R&D from sources to users is shown in Annex I, Table 8. Most government S&T funds go to other government agencies and institutes, universities, and state enterprises. Such a distribution of funds has an inherent disadvantage in that, to be most useful, R&D generally needs to be closely influenced by the potential users of the results. Role of State Enterprises 1.24 The fact that the Brazilian state enterprises together claim over 11% of the federal R&D budget as well as over one-third of the financing agencies' resources for R&D makes them the major force in technological development (Annex I, Table 9). These enterprises control most of the country's intermediate goods sector (e.g., oil and petrochemicals, iron and steel, power generation, telecommunications, railways) on which many private firms depend. They are: (a) the largest purchaser of goods and services in the country; (b) the main market for domestic engineering services; (c) the largest importers of foreign technology, including foreign consulting and engineering services; (d) the largest recipients of the federal government's financial support for R&D other than the university system; and (e) the largest employer of R&D personnel, other than the university system. 1.25 Many are questioning the role of state enterprises as leaders of technological innovation and the purpose of the state enterprise system. For this reason, it is of cardinal importance for Brazil to ascertain how well - 11 - the state enterprises react to the challenge of technological innovation and how rapidly they can impart their acquired experience and expertise to the private sector. Scope for Changing Financing Patterns 1.26 A recent decline in real budgetary resources throughout the entire system for scientific and technological development has prompted Brazilian planners to (a) seek ways of stimulating the private sector and productive enterprises to fund training and R&D; and (b) review whether FINEP should continue to finance the majority of the productive sector's ordinary scientific and technological activities. Efforts should be made to increase the R&D funded by state productive enterprises, which at present draw heavily for this purpose on federal or other public funding agencies. The potential of fiscal and financial incentive schemes for increasing R&D by private enterprises should also be reexamined. D. Management of Programs and Services 1.27 Many of the major Brazilian S&T agencies have extensive experience in developing and managing programs. What is new to them, however, is the organization and management of major multi-year national R&D programs, often cutting across the boundaries of scientific disciplines and functions that come under the purview of several different agencies. 10/ Examples include CNPq's Acoes Programadas, such as the Chemistry and Chemical Engineering Program, Biotechnology Program, and Geoscience and Mineral Technology Program, and CAPES' Science Education Program. There is a danger here of the "Christmas tree" style of organization, which tries in each program to encompass everything under a discipline-oriented national R&D program. These concerted action programs contain elements dealing with the strengthening of common deficiencies in the R&D support infrastructure (i.e., information and documentation services, maintenance of instruments, supply of chemical reagents and essential consumables, and mechanisms for utilization of R&D results). Redundant investment would be reduced by introducing linkages between and complementarity, among these concerted action programs. 1.28 The Brazil national system for S&T is particularly weak as regards technological services and delivery systems for the use of basic S&T services, which include: 10/ For successful examples of these, one can look to the recent experiences of advanced countries, notably France, West Germany, and Japan. The current French approach in developing seven major strategic areas and four key technologies under "programmes mobilisateurs" and "programmes de developpement technique" is one such example. The ongoing German Research Society's (DFG) priority research program is another. The Japanese Government's elevation of highly "experimental programs" to the status of a "national project," or its participation in select research associations, may hold lessons. However, from a management point of view, the stage at which Brazil will find itself in the near future is vastly different from that of installing scientific and technological infrastructure. - 12 - (a) scientific and technological-information services; (b) techno-economic services to productive sectors in particular, ranging from R&D to marketing of R&D results and products; (c) technical services related to quality control and industrial standards (including safety), equipment maintenance and instrument calibration; (d) training services in new production methods, e.g., computer-aided design and manufacturing (CAD/CAM); (e) industrial extension services; (f) testing services; (g) private R&D institutions; (h) venture capital; and (i) mechanisms for pooling resources among firms. 1.29 The greatest challenge now facing Brazil in its research and development activities is how to provide cross-sectoral support services better, which would help to manage R&D's scarce financial and human resources rather than simply add more resources. A number of measures could help significantly to increase efficiency by: (a) improving collection of domestic and international S&T information and data bases, in particular, more adequate basic statistics on S&T activities, including R&D in the private sector; (b) ensuring timely supplies of consumable materials necessary for R&D; (c) ensuring maintenance and calibration of equipment and instruments, and reliable supplies of spare parts; (d) providing support personnel, particularly laboratory technicians, whose scarcity at present greatly reduces the working efficiency of scientists; (e) providing for inter- and intra-national communication, by travel or correspondence; and (f) arranging for soliciting the views of researchers for decisions which have major implications for S&T. E. Effects of Trade and Industrial Policy on S&T Development 1.30 The effects of trade and industrial policy on S&T development are unclear. Reconciling the demands of technological autonomy with those of a sound balance of payments and the need to interact with developments at the frontier of technology is not an easy task. The balance of payments in technology trade is shown in Annex I, Table 4. Brazil's royalty payments for - 13 - foreign technology amount to roughly 3% of its exports, which is a much larger share than is spent by most newly industrializing countries (about 0.5% in Korea), though Japan spent about 2% of its export earnings in this way in the 1970s. 1.31 It is not clear how Brazil's export performance or its general economic development are being affected by the regulatory regime for foreign technology and patents. Some aspects of the trade regime, as well as policies and measures related to such areas as microelectronics, computers, and computer software have had significant effects in spurring new industries, some as spin-offs from university laboratories. However, their overall impact on the efficiency or competitiveness of users of such goods and services in Brazil is not yet known. The present policy may need to be reexamined to see if it does not effectively deter the initiatives of smaller private firms from establishing competitive industries using the best possible technologies. These are the enterprises which can ill-afford long and involved bureaucratic approval procedures for the introduction of foreign technologies. II. THE GOVERNMENT'S STRATEGY 2.01 In order to alleviate the problems facing the S&T sector, the government has developed a strategy which would: (a) strengthen agencies involved with S&T development; (b) implement priority R&D programs; (c) improve R&D support systems; (d) strengthen the human resources development base; and (e) develop systems for effective technological services and delivery of R&D results. These objectives are discussed in sequence below. A. Strengthen S&T Development Agencies 2.02 The Third Basic Plan for Scientific and Technological Development ("the Plan"), covering 1980-85, emphasizes the continuous growth of scientific capability and greater technological autonomy. To this end, the Plan would strenthen SNDCT agencies involved in S&T development, i.e., SEPLAN, CNPq, FINEP, CAPES and STI (the Industrial Technology Secretariat). 2.03 The Plan would institute an array of S&T policy instruments to make the SNDCT more functional and participative in (a) S&T policy planning, and (b) the implementation of the broadly defined priority S&T programs. As compared to the previous plan (1976-80), the current strategy places more emphasis on improving SNDCT's performance, through continued upgrading of manpower and support services than on further infrastructural investment. 2.04 Within the broad framework of the Plan, CNPq has assessed, with the participation of scientists, technologists and entrepreneurs, issues and potential in various fields of S&T and its application to socioeconomic development. These studies culminated in the form of Avaliacao and Perspectivas. Programmed actions in some 20 priority areas (Acoes Programadas en Ciencia e Tecnologia) were then formulated based on these studies (see the list of Acoes Programadas in Annex IV). 2.05 Enhancing capacities of SEPLAN, CNPq, FINEP and CAPES would be accomplished by more clearly defining their roles. An interagency task force (formed by SEPLAN with representatives from SEPLAN, CNPq, FINEP, and CAPES, and later expanded to include representatives from the two most - 14 - representative organized scientific societies) has been grappling with the problem of defining the activities for these key agencies in the light of perceived needs of scientific and technological communities and institutional capabilities. FINEP has performed quite creditably in meeting the infrastructural development needs of R&D institutions, as well as in supporting the technological development efforts of the productive sectors. CAPES, on the other hand, has established its institutional strength in dealing with support for postgraduate program development, including evaluation, and for training of higher level manpower. Apart from policy planning and coordination in scientific and technological development, CNPq's operational competency has been in making grants for individual scientific research and for fellowships, and in providing R&D support services. 2.06 The division of these key agencies' responsibilities presents several questions: (a) Does not the strenghening of CNPq require that it be given power over resource allocation, which continues to be administered by FINEP and SEPLAN? (b) Why should FINEP abandon its institutional support program, which has been so successful, when CAPES has yet to build up its institutional capability, not to mention the requisite financial resources, for administering such a program? (c) Should FINEP concentrate more on applied R&D work so that the productive sector becomes a central concern in the FINEP operation? (d) Should the institutional support program be transferred eventually to CAPES? (e) Does CNPq have the appropriate structure to carry out its broad responsibilities, involving the coordination of the nation's efforts in S&T through CCT, and the fostering of R&D activities, involving individual research in particular? B. Implement Priority R&D Programs 2.07 In consultation with the relevant agencies and institutes, CNIPq has begun implementing some of the 20 priority national R&D programs (para. 2.04) in various fields of science and engineering (including agriculture) which are known to have high socioeconomic relevance. Some of the programs, e.g., the Chemistry Program, are being implemented to achieve the broad objectives of building up human resources, of linking concerned institutes in a network, and of attempting to resolve constraints in the common service facilities, such as supply of chemical reagents, spare parts, equipment maintenance and information services. The idea that CNPq should formulate priority R&D programs is relatively new, but it is long overdue. The CNPq decision to evaluate these priority R&D programs through the same peer review system was the right one, as such a system can most effectively dispel any possible misunderstanding on the criteria for grant decisions. Organizing R&D efforts on the basis of need is certainly a necessary task which CNPq, at long last, has begun to undertake. - 15 - C. Improve R&D Support System 2.08 One of the critical deficiencies in the R&D support system in Brazil has been the inadequate provisions for supply of spare parts, chemical reagents, laboratory technicians, equipment maintenance, and flow of S&T information. For example, a survey by CNPq showed that only four or five out of some 45 mass spectrometers in Brazil are in operation, largely because of inadequate provisions for maintenance and/or lack of technicians. CNPq is explicitly trying to resolve these fundamental and recurrent problems in the course of implementing the high-priority national R&D programs (e.g., in chemistry, biotechnology, and geosciences and mineral technology). D. Strengthen the Human Resources Development Base 2.09 The Ministry of Education and its agencies have begun to strengthen the human resources development base through: (a) extending a public appeal by the Minister of Education to all higher education institutions in Brazil to search for ways and means of improving basic education; (b) improving postgraduate education through CAPES' evaluation and promotion of centers of excellence in fields of national importance; (c) increasing formal and non-formal degree training of higher level S&T manpower (through the CAPES in-country and overseas fellowship programs) to meet the needs of education and research institutions; (d) improving teaching facilities at federal universities throughout Brazil (assisted by three IDB loans); and (e) launching a major science education project through CAPES, involving a number of universities in different states, and state education secretariats, to work on improving science education at primary and secondary levels. E. Develop Systems for Effective Technological Services and Delivery Of R&D Results 2.10 The Secretariat for Industrial Technology of the Ministry of Industry and Trade (STI/MIC) has been charged with the responsibility for promoting the development of industrial technology, including renewable energy sources. In addition to building up the basic technological infrastructure, e.g., metrological systems (legal, scientific, and industrial), industrial property and technical standards, STI has undertaken several new initiatives: (a) commissioning studies for assessing the state-of-the-art in several priority industrial sub-sectors, such as farm machinery and pharmaceuticals; - 16 - (b) developing a national network of industrial R&D institutes as a major nodal system for technological extension services to productive firms; (c) establishing a venture capital company funded by STI/MIC to facilitate the commercialization of the R&D results coming out of the STI funded R&D institutes, such as the National Institute of Technology (INT), FTI, and INMETRO; (d) introducing a new favorable salary structure, different from that for government employees, for scientific and technical staffs at such institutes as INMETRO and INT to recruit and/or retain competent staff; (e) restructuring of R&D institutes, INT and FTI in particular, to undertake more focused areas of priority R&D needs, based on their latent comparative advantages, such as mandating FTI to concentrate on biotechnology and rare metals, while INT would undertake new manufacturing technologies such as CAD/CAM; and (f) creating a new Sub-Secretary for Information at STI to work on developing industrial technology information services. Given the historical background, this was an important decision, affirming the value of using foreign technology in parallel with diffusing local technologies. 11/ 2.11 Increased collaboration of STI and its affiliated institutes with such non-governmental organizations as the Brazilian Association of Industrial Technology Research Institutes, ABIPI (Annex I, Table 10), the Brazilian Association of Technical Norms (ABNT), and the Brazilian Institute for Industrial Quality (FBQI) is the right direction to take in developing appropriate technological services and delivery systems. It will improve the relevance of the work for private entrepreneurs. However, there are still vast areas where further collaboration is necessary and desirable. III. THE BANK'S SECTOR LENDING STRATEGY A. Rationale for Bank Involvement 3.01 The need for the Bank to assist in promoting scientific and technological development in Brazil is much more acute in relation to the policy framework than to physical infrastructure. This assistance might most usefully concentrate on the following: (a) assessment of effectiveness and efficiency of the current policy framework for S&T development; 11/ One of the institutional innovations introduced in the initial years of STI was the creation of a very active Technology Information Center (CIT) at the National Institute of Technology (INT), with a peak of over 100 staff in 1973. This was dissolved in 1975 by the new Secretary of STI on grounds that diffusing foreign technologies was inconsistent with the nationalistic policy direction pursued by Minister Severo Gomes. - 17 - (b) improvement of planning and management capability for S&T activities; (c) improvement of inter-institutional linkages; (d) development of S&T capability, human resources, in particular, more closely related to Brazil's natural resources and emerging needs; (e) introduction of policies conducive to private sector research, development and engineering, including the establishment and operation of technological services institutes; (f) enhancement of the relevance of institutions or programs to Brazilian requirements; (g) improvement of social equity, or reduction of regional inequalities through S&T capability building and/or S&T intensive projects such as producing biomass-based fuel; (h) improvement of federal-state cooperation or public-private sector cooperation; (i) reduction of overhead or recurrent costs of S&T activities and introduction of cost recovery schemes; (j) improvement of the rate of utilization of physical facilities (including equipment); and (k) provisions for systematic evaluation of ongoing projects to learn from experience. 12 In order to support the government in implementing its S&T aevelopment strategy, the Bank should explore with Brazilian authorities how it could best assist federal and state governments to create a favorable climate in which non-governmental entities and private entrepreneurs can function more viably. While there are many things that the public sector ought to undertake in building up the basic capability, the need to link installed scientific and technological capability with users is paramount. In addition, one of the key lending objectives should be to help the Brazilian authorities to become aware of the issue of the potential danger inherent in the current technology licensing regulation of effectively limiting the choice of technology on the part of users. This is highly sensitive issue, and it deserves to be examined by the Brazilians. B. Short-Term Strategy 3.03 In the light of the preceding analysis and the government's stated 'objectives, the Bank in the short-term should aim to support the government's multi-pronged, but integrated, efforts to: (a) improve the SNDCT; (b) strengthen national capacity to formulate a long-range strategy; - 18 - (c) implement high priority national R&D programs (such as those in chemistry, biotechnology, geoscience and mineral technology), to help build up the national capacity to mobilize requisite expertise and experiences of both public and private institutes; (d) develop a demonstration program to improve primary and secondary science education, including establishment of "science centers" in cooperation with concerned universities and state secretariats of education; (e) strengthen R&D support services, involving provisions for supply of chemical reagents, spare parts, equipment maintenance, and S&T information; (f) study technological services and delivery systems in Brazil, with a view to identifying major policy and institutional constrants; and (g) develop existing or new postgraduate programs to help remedy the uneven distribution of institutional capability. C. Lending Operations 3.04 A first S&T project within the framework of the-proposed strategy could be ready for presentation to the Bank's Board during FY85, since the concerned Brazilian agencies have been working on several clearly identified components. Subsequent projects could be forthcoming, depending on the outcome of the first project, and the results of several proposed subsector studies. In order to ensure that the Brazilian agencies together make the key decisions affecting SNDCT, including S&T resource allocation, the first project should take the form of a sector loan. After all, the essence of the proposed first project lies in developing the capability to manage systems. Subsequently, the Bank should extend its support for technological infrastructure, and particularly user-oriented technological services, including the delivery of R&D results to potential users. This can be accomplished, in part, through developing sub-sector projects, for example in industrial technology infrastructure, agricultural machinery, chemical processing industries, or energy conservation (Annex I, Table 6). D. Future Sector Work 3.05 Further sector work involving industrial technology development is necessary to provide the background on which future S&T projects can be based. Such sector work should be able to elucidate key factors responsible for technological choice and the parameters within which productive firms act for technological development. The key factor, however, is for the relevant Brazilian agencies and institutions to initiate such sector work. This could - 19 - be done by using a mechanism similar to that for drawing up the Acoes Programadas, with the active participation, where appropriate, of such agencies as IPEA, the National Institute of Economic and Social Planning and commissioning of independent studies to non-governmental institutes. 12/ The subjects to be covered should include documentation of the Brazilian experiences in various aspects of S&T development, particularly those related to the effectiveness and efficiency of financial, fiscal, and institutional policy instruments. These instruments could be devised and deployed by the government for the development of S&T-based industries, in general, and the technological development, in particular. 12 In 1971, IPEA produced two pioneering studies on Brazil's technological research institutes, including the patterns of demand for technological research on the part of industrial firms. They were: (a) Potencial de Pesquisa Tecnologica no Brazil (Rio de Janeiro, IPEA, 1971) by Francisco de Almeida Biato, Eduardo Augusto de Almeida Magalhaes e Maria Helena Pope de Figueiredo; and (b) Pesquisa Tecnologica no Brazil: Analise de Cinco-Institutos Officials (Rio de Janeiro, IPEA, 1971). Since then, no major study on science and technology has been undertaken by IPEA. ANNEX I Page 1 of 17 -20 - Table 1: Percentage Distribution of Pesearchers at Pesearch-Performing Institutions by Oualifications, 1981 Non-Degree Master's Dbctnral Post- Nature of University Specialization Degree Degree Doctoral Institutions Graduates Courses Iblders Iblders Studies Total Research Institutes 33.25 13.33 41.55 10.93 0.94 100 Fducational Institutes 17.72 12.58 34.96 26.55 8.19 100 Productive Firms 47.45 31.67 16.88 3.18 0.82 100 Goverment Orgnizations 45.1 22.25 24.87 4.45 2.62 100 Source: E.I. Paulinyi, As Instituigoes Txecutoras e Pasquisa no Brasil, Pevista Brasileira de Tecnologia, 1982 v. 13, n.4, p. 53 ANNEX I Page 2 of 17 - 21 - Table 2: Percentage Distribution of Brazilian Pesearclers by Pegion, 1981 Exact Agricultural Health Sodal Region Sdences Sdences Engineering Sdences Sdences South 12 10 13 18 14 Southeast 73 72 56 67 68 Central West 0 1 4 1 1 Northeast 14 15 23 10 16 North 1 2 4 4 1 TOTAL 100 100 100 100 100 Sources: NAE/CIE/APJ/CPq, Boletim CNPq de Estatistica, n. 4 (1982) ANNEX I Page 3 of 17 -22 - Table 3: Nunbers of Fellowshipe Granted by QFlq and CAPES, 1975 - 79 CNPq CAPES Total Master's Ibctoral Master's octoral Master's Actoral Year Iewl Level Total Iewl Level Total leel Level Total 1975 1,258 88 1,346 2,335 108 2,443 3,593 196 3,789 1976 1,713 153 1,866 3,726 209 3,935 5,43 362 5,801 1977 1,955 181 2,136 5,015 566 5,581 6,970 747 7,717 1978 2,278 290 2,568 5,436 617 6,053 7,714 907 8,621 1979 2,485 342 2,827 6,088 974 6,862 8,573 1,116 9,689 Source: ANNEX I Page 4 of 17 - 23 - Table 4: Sources of Funds for Research and Development in Selected Countries (Fercentages) Financing Government Productive AgencLes External Country (Federal & local) Sector (incl. Uiv.) Sources Total Brazil (1979) 48.6 6.1 42.3 a/ 3.0 100 USA (1979) 49.8 46.6 2.6 - 100 Fiance (1978) 58.4 41.6 - - 100 Italy (1977) 37.7 15.1 41.7 5.6 100 Japan (1978) 28.0 71.9 0.1 - 100 Federal Republic of Germany (1979) 49.2 50.8 - - 100 a/ lbre than half of the resources allocated by different public financing agencies or mecanisms are derived fran t1e Federal Treasury. Source: E.I. Paulinyi, Indicadores de CeT; Canparagoes, Revista Brasileira de Tecnologia, 1982 v. 13, n.2, p. 63 ANNEX I Page 5 of 17 - 24 - Table 5: Approved Sources of Funds for FINEP and FNDCT, 1980 - 81 1980 1981 No. of Amount No. of Amount Sources Projects Cr$ million % Projects Cr$ million % FNDCT 175 6,638.3 66 335 13,087.1 51 FINEP 134 3,445.5 34 216 12,689.7 49 Direct 62 2,373.8 23 131 30 Financing 72 1,071.7 11 , 81 5,003.1 19 Agent TOTAL 309 10,083.8 100 551 25,776.8 100 Source: FINEP 1981 Relatorio. ANNEX I Page 6 of 17 - 25 - Table 6: Allocation of FNAT Resources by Programs, 1979-80 (1980 Cr$ '000) 1979 1980 Number of Number of Prograns Subprograns Amount Subprograns Amount Bianass: Research and Technological Developnent 43 957,231.1 55 953,137.6 Energy Conservation - - 6 65,558.6 Support for Technological Developent in Industrial Sector 23 616,989.8 31 636,358.8 Pollution Prevention 1 2,489.9 3 3,500.1 Total 67 1,576,710.8 95 1,658,555.1 Source: MIC/STI Pelatorio de Atividades da Secretaria de Tecaologia Industrial 1979/80, Brasilia 1981, p. 70. ANNEX I Page 7 of 17 -26- Table 7: Allocation of FUNT Resources by Functions, 1979-80 (1980 Cr$ '000) 1979 1980 Avount % Share Amount % Share Basic Research - - Development 460,858.6 29.2 660,961.5 39.8 Laboratory scale 276,430.0 17.5 394,490.6 23.8 Pilot plant scale 83,772.9 5.3 224,438.3 13.5 Demrnstration/prototype 77,035.2 4.8 42.032.6 2.5 Basic engineering 23,620.5 1.4 - Detailed engineering - - Infrastructure 681,450.8 43.2 585,895.1 35.3 Equipment and installations 65,435.4 4.1 231,312.9 13.9 Human resources 153,717.6 9.7 45,316.7 2.7 Orgnizational 462,247.8 29.3 309,255.5 18.6 Services and Extension 308,396.3 19.6 118,180.0 7.1 Technical assistance 68,344.5 4.3 27,315.1 1.6 Technological assistance 240,051.8 15.2 90,864.9 5.5 Dcumentation and Information 15,623.6 0.9 16,476.3 9.9 Bibliography - - Dissemination 15,623.6 0.9 16,476.3 9.9 StUies and Investigation 110,431.5 7.0 227,042.2 13.7 Techno-Econmics 107,929.0 6.8 227,042.2 13.7 Statistics 2,502.5 0.2 - TOAL 1,576,710.8 100.0% 1,658,555.1 100.0% Source: SrI ANNEX I Page 8 of 17 - 27 - Table 8: Use of Funds for Research and Teelopment in Selected Countries (Percentages) Productive Country Government Uhiversity Sector Others Total Brazil (1979) 31.9 15.9 52.2 - 100 USA (1979) 13.4 9.6 71.2 5.8 100 France (1979) 40.7 - 59.3 - 100 Italy (1977) 25.4 15.5 59.9 - 100 Japan (1978) 13.6 19.5 64.2 2.3 100 India (1972) 91.8 a/ - 8.2 - 100 Federal Republic of Gerany (1979) 21.2 17.3 61.4 - 100 Portugal (1978) 67.0 18.0 13.0 2.0 100 a/ Includes the share of university. Source: E.I. Paulinyi, Indicadores de Cet; G=enragoes, Revista Brasileira de Tecnologia, 1982 v.13, n.2, p.63 ANNEX I Page 9 of 17 - 28 - Table 9: R&D Expenditure by 10 Major State Enterprises in Brazil (1982 Cr.$ billion) 1979 1978 1. Nuclebras 7.3 1. Petrobras 7.0 2. Petrobras 7.3 2. Telebras 6.3 3. Telebras 7.1 3. Nuclebras 4.7 4. Eletrobras 6.6 4. CVRD 2.8 5. Embraer 3.0 5. Eletrobras 2.6 6. Sidebras 2.9 6. Sidebras 2.3 7. Cesp 2.5 7. Embraer 1.5 8. Fepasa 0.5 8. Cesp 1.4 9. Cetesb 0.5 9. Cobra 0.8 10. CVRD 0.3 10. Copel 0.6 Source: SEPLAN/CNPq, Setor Produtivo Estatal; Dispendios em Ciencia e Tecnologia 1979/82 (Brasilia: CNPq, 1982) p. 129 ANNEX I Page 10 of 17 - 29 - Table 10: Selected State Agencies and Institutes for Technological Research and Development States Name of Agencies or Institutes Sao Paolo Instituto de Pesquisas Tecnologicas - IPT Minas Gerais Fundagao Centro Tecnologico de Minas Gerais - CETEC Pernambuco Instituto Tecnologico de Pernambuco -ITEP Parana Instituto de Tecnologia do Estado do Parana - TECPAR Santa Catarina Fundagao do Ensino da Engenharia em Santa Catarina - FEESC Ceara Nucleo Tecnologico do Ceara - NUTEC Rio Grande do Sul Funda4ao de Ciencia e Tecnologia - CIENTEC Bahia Centro de Pesquisas e Desenvolvimento do Estado - CEPED Sergipe Instituto de Tecnologia e Pesquisas de Sergipe Alagos Empresa de Recursos Naturais do Estado de Alagoas - EDRN Rio de Janeiro Fundagao de Tecnologia Industrial - FII ANNEX I Page 11 of 17 - 30 - Table 11: Institutions Performing Research in Brazil, 1981 Nature of Institutions Number Research Institutesl! 74 Educational Institutions2/ 91 Productive Enterprises3/ 112 Government Organizations4/ 126 Others5/ 30 TOTAL 433 1/ Includes foundations, centers, and government laboratories whose primary purpose is research. 2/ Mostly higher education institutions plus some secondary level institutions which perform technological research. 3/ Includes both local and foreign firms in Brazil producing goods and/or services. 4/ Government organizations whose primary purpose is not research. 5/ Mainly foundations whose primary purpose is not research. Source: E.I. Paulinyi, As Instituiqoes Executoras de Pesquisa no Brasil, Revista Brasileira de Tecnologia, 1982 v. 13, n.4, p. 51 ANNEX I - 31 - Page 12 of 17 Table 12: Institutions Performing Research, by Sectors or by Principal Subsectors of Basic National Plan for Scientific and Technological Pevelopment, 1981 No. of Principal No. of Sectors Institutes Subsectors Institutes Energy 184 Ethanol 70 Industry 151 Chemical 39 Agriculture 118 Livestock 31 Education and Culture 112 Cultural 62 Mining 91 Research 29 Source: E.I. Paulinyi, As Instituigoes Executoras de Pesquisa no Brasil, Revista Brasileira de Tecnologia, 1982 v. 13, n.4, p. 54 ANNEX I - 32 - Page 13 of 17 Table 13: Institutions Performing Research by Districts, 1981 States Number Rio de Janeiro 89 Sao Paulo 87 Minas Gerais 35 Federal District 33 Rio Grande do Sul 27 Bahia, Parana 17 (each) Pernambuco 14 Santa Catarina 12 Ceara 9 Piaui, Rio Grande do Norte 8 (each) Para. Amazonas 7 (each) Alagos, Amapa 5 (each) Maranhao, Sergipe 4 (each) Mato Grosso do Sul, Mato Grosso 3 (each) Acre, Espirito Santo, Rondonia 2 (each) Institutions whose operations cover more than one state 21 TOTAL 433 Source: E.I. Paulinyi, As Instituigoes Executoras de Pesquisa no Brasil, Revista Brasileira de Tecnologia, 1982 v. 13, n.4, p. 52 ANNEX I - 33 - Page 14 of 17 Table 14: Percentage Distrihition of Researchers by Field Exact Social Year Sciences Ergineerirg Agriculture Fealth Sciences Total Brazil 1980 14 18 19 24 25 100 USA 1977 29 18 18 10 25 100 Japan 1979 24 44 8 20 4 100 Source: E.I. Paulinyi, As Institiioes Executoras de Pesquisa no Brasil, Revista Brasileira de Teenologia, 198 v. 13, n.2, p. 65 ANNEX I Page,15 of 17 Table 15: Total Enrollments in Undergraduate and Graduate Programs, 1975 - 81 Graduate Year Undergraduates Masters Doctoral Total 1975 967,000 20,150 1,735 22,245 1976 1,042,000 24,214 2,041 26,255 1977 1,137,000 28,555 2,977 31,532 1978 1,267,000 30,105 3,526 33,635 1979 1,298,00 32,767 3,841 36,608 1980 1,345,000 34,190 4,419 38,609 1981 1,393,000 35,426 4,783 40,209 Rate of Growth 1975 - 80 6.82 10.75 20.66 11.66 1978 - 81 3.02 5.57 10.70 6.13 Sources: NAE/COE/APJ/CNPq, Boletim CNPq de Estatistica, n.12 (1982) - 35 - ANNEX I Page 16 of 17 Table 16: Percentage Distribution of Graduate Courses by Major Areas of Specialization, 1980 - 81 Exact Biol/Health Agricultural Social Year Sciences Engineering Sciences Sciences Sciences Total 1980 15.5 11.3 33.9 10.2 29.1 100 a/ 1981 15.2 11.1 34.1 9.2 30.4 100 b/ a/ 1007 = 982 courses b/ 100% = 1,021 courses Sources: IAE/CDE/APJ/CNPq, Poletim CIPq de Estatistica, n.9 (1982) - 36 -ANNEC I Page 17 of 17 Table 17: BRAZIL: Balance of Payments in Technology Trade, 1965 - 79 (US$ Millions) Receipts (a) Payments (b) (a/b) 1965 - 42 - 1966 5 46 10.9 1967 13 63 20.6 1968 9 70 12.9 1969 9 91 9.9 1970 44 104 42.3 1971 40 132 30.3 1972 53 154 34.4 1973 84 166 50.6 1974 109 21- 51.4 1975 135 311 43.4 1976 133 362 36.7 1977 186 513 36.3 1978 222 591 37.8 1979 264 782 33.8 Source: J. Tavares, Jr., A Crise dos Anos 70 e a Politica Tecnologica, Jornal do Brasil (5/April/1981) Caderno Especial, p.2 ANNEX II - 37 - Page 1 of 3 SELECTED COORDINATING AND EXECUTING MECHANISMS WITHIN THE NATIONAL SYSTEM FOR SCIENCE AND TECHNOLOGY DEVELOPMENT Coordinating Principal Areas Mechanisms Executing Agencies Overall Science and Technology Policy Planning and Coordination CCT CNPq Administration of National Fund for Science and Technology Development (FNDCT) FINEP/SEPLAN FINEP International Cooperation in Science and Technology DCT - MRE CNPq Science and Technology Information and Documentation CNPq IBICT/CNPq Foreign Science and Technology Information International Transfer of Technology MCI/STI INPI Industrial Technology Development CTI STI/INT/FTI Administration of Technology Development Fund (FUNAT) CTI STI Metrology, Technical Norms and Industrial Quality CONIMETRO STI/INMETRO/PBNT Informatics (Computers) CSN SEI Space Activities and Research COBAE CNPq/INPE Nuclear Energy Research and Development CNEN Nuclebras/IEN Environments SEMA SEMA Ocean Resources Research and Development CIRM MME, MEC, MIC, MM Aeronautics Research and Development DEPED - MA CTA, EMBRAER Minerals Research and Development DNPM/YME DNPM, CETEM, CDRD, CPRM Agricultural Research COMPATER EMBRAPA Agricultural Extension COMPATER EMBRATER Petroleum CNP 'ME, Petrobras/ CENPES Energy Conservation MIC/STI STI/INT 3- ANNEX II Page 2 of 3 CEME - Centro de Medicamentos (Center for Medicinal Compounds - Ministry of Social Security and Welfare) CENPES - Centro de Pesquisas e Desenvolvimento, da Petroleo Brasileiro S.A. - PETROBAS (R&D Center for PETROBAS) CEPEL - Centro de Pesquisas de Energia Eletrica CEPLAC - Comissao Executiva do Plano de Recuperacao Economico - Rural de Lavoura Cacaueira (Executive Commission of the Cacao Plan) CETEM - Centro de Tecnologia de Minerais (Mineral Technology Center) CIRM - Comissao Interministerial dos Recursos do Mar (Interministerial Commission on Ocean Resources) CNEN - Comissao Nacional de Energia Nuclear (National Commission for Nuclear Energy) CNP - Conselho Nacional de Petroleo (National Petroleum Council) COBAE - Comissao Brasileira de Atividades Espaciais (Brazilian Commission for Space Activities) COMPATER - Comissao Nacional de Pesquisa Agropecuaria e de Assistancia Tecnica e Extensao Rural (National Commission for Agricultural Research, Technical Assistance and Rural Extension) CPRM - Companhia de Pesquisas de Recursos Minerais (State Company for the Prospection of 'ineral Resources) CSN - Conselho Nacional de Seguridade (National Security Council) CTI - Comissao de Tecnologia Industrial (Commission on Industrial Technology) CVRD - Companhia Vale de Rio Doce (Rio Doce Valley Company) PCT-NRE - Departmento de Cooperacao Cultural, Cientifica e Tecnologica, do Ministerio das Relacoes Fxteriores (Department of Cultural, Scientific and Technological Cooperation - Ministry of External Affairs) - 39 - ANDTEX II Page 3 of 3 DEPED/MA - Departamento de Pesquisa e Desenvolvimento - Ministerio da Aeronautica (Department of Research and Development - Ministry of Aeronautics) DNHET - Departmento Nacional de Meteorologia (National Department of Meteorology) DNPM - Departmento Nacional de Producao Mineral EMBRAPA - Empresa Brasiliera de Pesquisa Agropecuaria (Brazilian Enterprise for Agricultural Research) EMBRATER - Empresa Brasileira de Assistancia Tecnica e Extensao Rural (Brazilian Enterprise for Technical Assistance and Rural Extension) FTI - Fundacao de Tecnologia Industrial (Foundation for Industrial Technology) IBICT - Instituto Brasileiro de Informacao em Ciencia e Tecnologia (Brazilian Institute of Science an Technology Information) IEN - Instituto de Engenharia Nuclear - NUCLEBRAS (Institute of Nuclear Engineering of NUCLEBRAS) INPE - Instituto Nacional de Pesquisas Espaciais (National Institute of Space Sciences) MM - Ministerio da Marinha (Ministry of Navy) MME - Ministerio das Minas e Energia (Ministry of. Mines and Energy SEI - Secretaria Especial da Informatica (Special Secretariat of Informatique) SEMA - Secretaria Especial do Meio-Ambiente (Special Secretariat of Environments) SNICT - Sistema Nacional de Informacao Cientifica e Tecnologia (National System for Scientific and Technological Information) SUDEPE - Superintendencia de Desenvolvimento da Pesca (Fisheries Development Authority) - 40 - ANNEX III Page 1 of 2 CHRONOGRAM OF MAIN EVENTS IN BRAZILIAN SCIENCE AND TECHNOLOGY POLICY 1920/1950 Creation and implantation of R&D institutions in the ara of engineering and sciences: INT-Instituto Nacional de Tecnologia, 1921 IPT--Instituto de Pesquisas Teenologicas de Sao Paulo, 1934 CTA--Centro Teenico Aerospacial, 1954 ITB--Instituto Tecnologico da Bahia ITERS-Instituto Tecnologico do Rio Grande do Sul ITEP-Instituto Tecnologia de Pernambuco 1951 Creation of two organizations for the development of human resources for science and technology (S&T): CNPq--Conselho Nacional de Pesquisas Capes--Cordinacion de Aperfeicoamento de Pessoal de Nivel Superior 1964-1967 Creation of organizations for the financing of S&T policy: Funtec (BNDE)--Fundo de Desenvolvimento Tecno Cientifico Finame (BNDE)-Fundo de Financiamento para Acquisicao de Maquinas e Equipamentos Industriais (1964) Funat (INT)--Fundo de Amparo a Tecnologia (1967) Finep (BNDE)--Financiadora de Estudios y Projetos (1965) 1968 PED-Programa Estrategico de Sesenvolvimento--has first explicit government policy for S&T 1969 FNDCT--Fundo Nacional de Desenvolvimiento Cientifico e Teenologico 1970 Creation of Caped--Centro de Pesquisa e Desenvolvimento da Bahia 1971 Emphasis on S&T in IPND (First National Development Plan) Setting up institutionalization of FNDCT/Finep scheme Creation of INPI-Instituto Nacional de Propriedade Industrial Creation of Cetec--Centro Tecnologico de Minas Gerais Finame transformed into BNDE subsidiary 1972 Creation of STI/MIC--Secretaria de Tecnologia Industrial of the Ministry of Industry and Commerce Institutionalization of SNDCT--Sistema Nacional de Desenvolvimiento Cientifico y Tecnologico Linkage of CNPq with the Ministry of Planning (Seplan_, which gave it advisory status for S&T planning - 41 - ANNEX.III Page 2 of 2 1973 Approval of PBDCT--First Basic Science and Technology Plan (effective 1973/1974) 1974 Restructuring of CNPq and integration into Seplan Restructuring of Capes Creation of Conmetro--Conselho Nacional de Metrologia, Normalizacao e Qualidade Industrial Creation of BNDE subsidiaries for equity participation in national industry: Embramec (Mecanica Brasileira S.A.) Fibase (Financiamentos e Participacoes) Ibrasa (Investimentos Brasileiros) 1975 Reformation of SNDCT Establishment of Sector Systems Creation of NAIS--Nucleos de Articulacao com a Industria (Coordinated by Finep) 1976 Creation of Fipec--Fundo de Incentivo a Pesquia Tecnico-Cientifica (Banco do Brasil) Approval of PBDCT II (effective 1975-1979) 1977 Creation of FTI--Fundacion de Tecnologia Industrial 1980 Approval of PBDCT III (effective 1980-1985) 1982 Creation of the Office of Deputy Secretary-General for Science and Technology at SEPLAN - 42 - ANNEX IV Page 1 of 2 SELECTED REFERENCES Claudio de Moaura Castro & Fernando Spagnolo, "Science and Scientists in Agriculture: The Brazilian Case," a Paper presented at IASEI Tercer Seminario International de Investigacion Educativa, Ajijic, Jalisco, Mexico, February 1982. CNPq, Legislacao Brasileira para o Desenvolvimento Industrial e Tecnologico (prepared by Eury Pereira Luna Filho, a legal counsel of CNPq), 1979. CNPq, II PBDCT - II Basic Plan for Scientific and Technological Development, 1976-1980. CNPq, III PBDCT - III Basic Plan for Scientific and Technological Development, 1980-1985. CNPq, "Sector Produtivo Estatal, Dispendios em Ciencia e Tecnologia-- 1979/82," 1982. CNPq, Acao Programada em Ciencia e Tecnologia (AP) Agroindustry and Agricultural Engineering Animal Production Vegetable Production Urban Development, Habitats and Sanitation Education Health and Nutrition Labor Capital Goods Consumer Goods Instrumentation Chemical Industries, Petrochemicals & Pharmaceuticals Basic Metallurgical Industries and Metallic Intermediate Products Non-Metallic Intermediate Products, Cement, Cellulose and Paper Transport Mineral Technolopgy Informatics and Communications Energy Natural Resources - Soil Natural Resources - Hydric Natural Resources - Vegetable Natural Resources - Fauna Natural Resources - Fisheries Meteorology and Climatology Environments Scientific Development IDB, "Brazil: Project Report - Science and Technology Program," PR-785-A, December 6, 1976 - 43 - ANNEX IV Page 2 of 2 IBRC, "The Brazilian Machine Tool -ndustry: Patterns of Technological Transfer and the Role of the Government," by Flavio Rabelo Versian and Vania Lomonaco Bustos, August 1982 MIT, "Governmental Organization and Planning for Science and Technology in Brazil," Vol. I, April 1976, by Jennifer Sue Bond & K. Nagaraja Rao, Center for Policy Alternatives, MIT MIT, "The International Transfer of Technology to Brazil through Technology Agreements - Characteristics of the Government Control System and the Commercial Transactions," Vol. VIII, May 1976, by Shing K. Fung and Jose E. Cassiolato, Center for Policy Alternatives, MIT. MEC, National Plan for Graduate Studies, prepared by the National Council for Graduate Studies, 1976. Simon Schwartzman, "Struggling to be Born: The Scientific Community in Brazil," MINERVA, XVI, 4, 1978, pp. 545-580. Francisco Colan Sercovich, "Brazil as a Technology Exporter, with Sectoral Studies on the Steel and Alcohol Industries" (Final Report to IDB), April 1981. Sergio C. Trindade, "Technology Development in Peveloping Countries: The Case of a Private R&D Institution in Brazil," R&D Management, Vol. 10, No. 2, 1980. US National Academy of Sciences, "The Brazil Chemistry Program: An International Experiment in Science Education," 1979. UNCTAD, "Technology Issues in the Capital Goods Sector: A Case Study of Leading Industrial Machinery Producers in Brazil" (Study prepared by Fabio Erber at the request of the UNCTAD Secretariat), May 1982. MIC/STI, "Relatorio de Atividades da Secretaria de Tecnologia Industrial, 1979/80," Brazilia, 1981. SEI, Secretaria Especial de Informatica Boletin Informativo, No. 7, 1982. Alberto Pereira de Castro, "Knowledge Required to Enable a Country to Acquire Commercial Industrial Technology - Experience of a Country with an Intermediate Economy," The Technological Knowledge Base for Industrializing Countries, Proceedings of the US National Bureau of Standards/AID Seminar, Gaithersburg, Maryland, October 16-17, 1978. IBRD, "Brazil: Industrial Policies and Manufactured Exports," Report No. 3766-BR, July 2, 1982. - 44 - ANNEX IV Page 3 of 3 IBRD, "Brazil: Energy Issues and Prospects," Report No. 3424a-BR, December 10, 1982. IBRD, "Brazil: Staff Apprais1 Report, Second Agricultural Research Project," Report No. 3347a-BR, May 25, 1981. IBRD, "Brazil: Staff Appraisal Report, Alcohol and Biomass Energy Development Project," Report No. 3214-BR, April 22, 1981.