Brazil increases investment in technological innovation

The Web Summit Rio 2023, held recently in Rio de Janeiro, Brazil, saw over 20,000 attendees from more than 90 countries and regions, along with over 900 startups and more than 500 investors. They held in-depth exchanges on such topics as artificial intelligence (AI), data science, education, e-commerce, and climate change.

In recent years, Brazil has been increasing its investment in technological innovation. According to the Global Innovation Index 2022 released by the World Intellectual Property Organization, Brazil’s ranking has risen from 66th position in 2019 to 54th position in 2022.

In 2020, the Brazilian government formulated a national innovation strategy for the 2021 to 2024 period, which provides support for enterprise innovation from various aspects, including human resources, intellectual property protection, and market services. It also sets specific goals for such areas as employment in the innovation sector, programs for higher education institutions, and incentives for innovative culture.

Over 50 initiatives have been proposed under the guidance of this strategy, and have been funded and implemented by relevant institutions and departments of Brazil, including the Ministry of Science and Technology, the Ministry of Education, and the Ministry of Communications.

For instance, between 2021 and 2022, the agency for industrial development in Brazil allocated 7 million Brazilian Reais ($1 million) to provide consultancy services and financial support to small and medium-sized enterprises, aiming to drive their digital transformation.

Brazil is also encouraging corporate innovation through financial and tax policies. In a recent meeting with entrepreneurs, Luciana Santos, the Brazilian Minister of Science and Technology, stated that the Brazilian government is committed to expanding the coverage of a law introduced in 2005, which aims to incentivize Brazil’s private companies to increase their investment in research and development (R&D) and innovation by allowing eligible R&D expenditure to offset corporate income tax and other taxes. Currently, a new bill is under discussion in Congress, which aims to broaden the coverage of the law and benefit more companies.

In November 2022, the Rio de Janeiro government initiated an investment of nearly 40 million Brazilian Reais to transform an old warehouse in the city into a technology center that spans 10,000 square meters, and is capable of accommodating 400 startups. Companies in the center will enjoy a preferential tax rate of 2 percent for municipal services tax. It is expected to create between 5,000 and 10,000 job opportunities. Eduardo Paes, mayor of the city, said that the government will establish a public fund to attract technology- and innovation-oriented companies, with the aim of transforming Rio de Janeiro into the innovation capital of Latin America.

A specialized organization has been set up to support small- and micro-enterprises in Brazil, to encourage startups’ participation in technological innovation. It helps companies find partners and obtain financial support. Additionally, the organization has established an award for futuristic startups in the state of São Paulo, known for its concentration of innovative enterprises. In 2023, 103 startups were awarded, covering such fields as biotechnology, the circular economy, and AI. The head of the center mentioned that these award-winning startups are closely linked to complex technologies that have long R&D cycles, and serve as examples for the innovation of other startups.

"Enabling technology and innovation to serve the country's reindustrialization is a top priority for the Brazilian government and an urgent need in modern society," Santos said, adding that Brazil will continue to support technological innovation through various means in the future, strive to transform the outcomes of technological innovation into products and services, and constantly improve the living standards of the Brazilian people.