International Seminar on Innovation and Development under Globalization: BRICS Experience Financial Innovation Discussion Cristiane Garcez Trivandrum, 19 August 2009

NON-REIMBURSABLE ALLOCATION VENTURE CAPITAL FIXED INCOME / VENTURE CAPITAL  Closed-End Mutual Funds and Equity  Direct Equity  Criatec Program TECHNOLOGICAL INNOVATION FOCUS ON STRATEGY FOCUS ON PROJECT INNOVATIVE CAPITAL FUNTEC Technology Fund 2009 Focus: Renewable energies, Environment, Health, Electronics, New Materials and Chemistry PROSOFT, PROFARMA, PROTVD, PRO-Aeronautics and Pro-Engineering SECTORALS BNDES CARD  For micro-, small and medium sized companies  Among the products are: Conformity certification and assessment, innovation, technological development and IP services The BNDES Innovation Policy

Funding to Micro, Small and Medium-Sized Enterprises 51% growth in 2008 Number of operations grew 43% reaching 100,000 operations The BNDES disbursements to Micro, Small and Medium-Sized enterprises in R$ billion Source: BNDES

Local Production and innovation Systems New way to look, think and formulate policies that include players as well as production and innovation activities with different dynamics and paths, from the most intensive in terms of knowledge to those that use internal or traditional knowledge with different sizes and functions, deriving from the primary, secondary and tertiary sectors, operating locally, nationally or internationally Useful approach to boost the potential of policy efforts, redirecting them to the territory and to the interactions among stakeholders to encourage learning, innovation and competition processes solid fostering of local development

Local Production Systems and regional development as the BNDES’ priorities 1. Support to structuring projects and their surrounding areas, mainly in developing regions, in order to disseminate and foster development, by encouraging: Enhancement of Local Production Systems and adding value to goods and services locally produced; and Commitment of large and medium companies to locally-integrated socio-economic and institutional development 2. Support for state plans that emphasize integrated development of marginalized areas 3. Individual or collective support for Small and Medium-sized Enterprises 4. Support for federal programs, small production programs and collective low-income projects

The BNDES’ strategy towards Local Production Systems Creation of the Office and Committee for Production and Innovation Systems and Regional Development in November 2007 Main Purposes Obtain sector insights and bring the BNDES’ operational areas together Contribute to incorporating a systemic vision and priority to regional development Propose new policies to support production systems, as well as regional and local development

7 The BNDES’ strategy towards Local Production Systems Mapping and policies for Local Innovation and Production Systems (LIPSs) Main Purposes Consolidate knowledge on identification and mapping of Local Production Systems in 22 Brazilian states (Redesist) Design and analyze balance of payments across the states Assess existing support policies and provide means to design and improve policies for LIPSs in Brazil

8 Main Remarks Financing of industrial innovation in India - Sunil Mani -Government targets on innovation are quite high -“..the government targets the expenditure on S&T about 2% of GDP” -Concentration -“concentration in high and medium technology based industries”; -“most of the research grants are addressed to public sector enterprises or individual researches”; and -“Tax incentives are mainly significant for big firms and also has several limits government targets the expenditure on S&T about 2% of GDP”

9 Two Question Marks Financing of industrial innovation in India - Sunil Mani How to use instruments available and new ones on a creative way to promote the innovation within a new, systemic and broader model? What is the relevance of local and territorial aspects in innovation and development financing?

10 Cristiane d´Avila Garcez Office for Local Production and Innovation Sistems and Regional Development

11 Annex BNDES Performance

Areas of Activity Innovation To support investments promoting technological innovation and competitiveness. Infrastructure Access to electric energy, telecommunications, urban transport, water supply and sanitation, increasing the offer of services ahead of demand to avoid harm to economic growth. Productive structure To increase industry production capacity. To make industry and service sectors more effective. To prioritize small and medium-sized companies. To support international business of Brazilian companies. Exports To promote external sales and reduce imports. Technological investments to increase content value of consumer goods. Preferential trade relations with Mercosur and other South-American neighbors. Social inclusion Conditions and stimuli to intensify social benefits are established for the concession of BNDES credit.

Clients The BNDES’ clients are: 1)Private individuals, domiciled and residing in Brazil; 2)Legal entities under Brazilian law (national or foreign control), established with head office and administration in Brazil; 3)Direct and Indirect Public Administration in the Federal, State, Municipal and Federal District areas. The financial support lines and programs offered by the BNDES serve the investment needs of companies of any size and sector that have been set up in the country. Partnerships with financial institutions that have agencies established around the country facilitate the dissemination of credit, enabling micro, small, medium-sized enterprises access to the BNDES’ resources.

Financing of Complete business projects Machinery and equipment Export of goods and services Equity Investment Stocks and debentures Venture Capital Seed Capital Funds Private Equity Funds Main Credit Lines

BNDES approvals and disbursements Source: BNDES *accumulated in 12 months up to May Disbursements to industry (R$ 37 bn) and infrastructure (R$ 35 bn) had a 17% and 10% growth, respectively, over the amount accrued in 12 months up to May 2009 – part of a anti- cyclical policy 1 R$ = US$ 1.85