Brazil's main challenge in innovation policy is to encourage the business sector to engage in
productivity-enhancing innovative activities. At 1% of GDP, R&D spending (both public and private) is
comparatively low by OECD standards and is carried out predominantly by the government. Most scientists
work in public universities and research institutions, rather than in the business sector. Output indicators, such
as the number of patents held abroad, suggest that there is much scope for improvement. Academic patenting
effort is being stepped up and should be facilitated by the easing of restrictions on the transfer and sharing of
proceeds of intellectual property rights between businesses and public universities and research institutions.
Innovation policy is beginning to focus on the potential synergies among science and technology promotion,
R&D support and trade competitiveness. To be successful in boosting business innovation, these policies will
need to be complemented by measures aimed at tackling the shortage of skills in the labour force; this shortage
is among the most important deterrents to innovation in Brazil, particularly against the backdrop of a widening
gap in tertiary educational attainment with respect to the OECD area.
