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Brazil bets on innovation to promote economic development, boost corporate production

IDB loan will support Finep’s efforts to strengthen innovation in strategic sectors, increase MSMEs modernization and foster technological endeavors growth

The Inter-American Development Bank (IDB) has approved a $1.5 billion conditional credit line for investment projects (CCLIP) to support Brazil’s efforts to boost corporate productivity through more private investments in innovation and more dynamism in its national innovation system.

The financing includes an initial operation of $703.6 million for the “Innovation for Growth” program to be executed by Financiadora de Estudos e Projetos (Finep), which is associated with the Ministry of Science, Technology, Innovation and Communications (MCTIC, after its Portuguese initials). Of the total amount of the initial operation, the IDB will provide $600 million and Finep $103.6 million.

The IDB is committed to support Brazilian Government efforts to build a solid road to development levels that are both sustainable and inclusive in the long term. “Innovation for Growth” comes at a critical time for Brazil’s economy and aims at creating an innovation-based growth strategy to help revert the economic decline of recent years.

The program will tackle key challenges such as low levels of private investment in innovation, low complexity of the production structure, and lack of entrepreneurial drive. It also aims to promote financing for innovation in strategic areas identified by the National Science, Technology and Innovation Strategy.

It consists of four main components. The first is support for seven priority strategic sectors: chemical industry, mining and mineral transformation, advanced biofuels, agroindustry, food and beverages, information technology and communication, healthcare, and metal-mechanics. The program will finance innovation projects with reimbursable and non-reimbursable contributions to corporations and with non-reimbursable contributions to science and technology institutions.

The second component seeks to promote the modernization of micro-, small- and medium-sized enterprises with innovation potential by boosting their access to technology. There will be an ad-hoc open window for the projects, which will be indirectly financed by Finep through development banks and agencies with regional- or state-level approval.

The third component aims to support technology oriented innovating projects by supplying early-stage financing to help them cross the so-called “death valley” and advance to the final stages of product development, access to market, and/or enhancement of their production scale.

The fourth component will finance experimental initiatives of open innovation, as well as prospection studies and technological roadmapping in priority sectors. It will also strengthen Finep’s institutional ability to promote knowledge and evaluate the impact of its interventions.

The program will help Finep reinforce its role as the main public agency for the advance of science, technology and innovation in Brazil. Established in 1967, its mission is to implement Federal Government activities aimed at promoting the development of state-of-the-art technologies that foster the country’s competitiveness at a global level, and to act as a catalyzer for social and economic progress. Finep also finances initiatives across the whole spectrum of the technology innovation, basic research, applied research, product development, and innovative processes and services chain.

About the IDB

The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.

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