Shifts in Innovation Patterns: Brazil's Move to the Technological Frontier

Friday, June 24, 2016: 9:00 AM-10:30 AM
830 Barrows (Barrows Hall)
Paola Perez-Aleman, McGill University, Montreal, QC, Canada
Flavia Chaves Alves, Federal University of Rio de Janeiro, Rio de Janeiro, Brazil
We argue that current efforts to learn and upgrade in Brazil have involved a shift from an initial focus on “catching-up” in existing mature industries and products, to a new phase that emphasizes innovation at the technological frontier. This shift has entailed, as expected, functional upgrading in value chains as Brazilian firms move into more research and development. More importantly for our discussion, there is a shift to becoming innovators in emerging technologies where there is not yet a defined leader in advanced economies. This shift challenges our common frameworks that emphasize an analysis of developing countries’ upgrading as “catching up” to what exists in established industries and technologies in advanced countries.

In the dominant view, technologies are acquired from advanced country multinationals and then assimilated and adapted by developing countries. In this process, innovation in developing countries involves acquisition, assimilation, and improvement of products developed by multinationals of advanced economies. Discussions on learning and upgrading usually refer to product and process innovations in which “latecomer” firms enter mature industries, such as automobiles and electronics. The studies show upgrading as a shift from low to higher value added activities through constant improvement. While the existing literature has allowed us to capture imitation, creative upgrading, and leapfrogging, its focus on mature sectors in manufacturing has failed to capture other important dynamics happening today in developing countries.

In the current context, “trading places” also involves a move by emerging economies into areas where technologies are being developed, that is, a move into frontier innovation. In this sense, innovation occurs in parallel in both emerging and advanced economies. This change in innovation patterns has implications for state policy, and the strategies of local firms and multinationals. In the case of Brazil, our paper shows how the government has directed policies and investments to move into emerging technologies for which there are not yet technological leaders. Specifically, we will analyze Brazil’s efforts to foster innovation in the bio-based industry, catalyzing local firms’ efforts to create new technologies while affecting R&D location strategies.