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UNESCO SCIENCE REPORT Industry must embrace innovation to remain internationally competitive. Renato Hyuda de Luna Pedrosa and Hernan Chaimovich This laboratory uses desalination to convert ocean water into drinking water. It is situated in Bertioga, in the State of São Paulo. Photo: © Paulo Whitaker/Reuters 210
8 . Brazil Renato Hyuda de Luna Pedrosa and Hernan Chaimovich Brazil INTRODUCTION Economic downturn could jeopardize recent gains Brazil’s economy has experienced a severe downturn since 2011, after almost a decade of growth and a short-lived recovery from the 2008–2009 global financial crisis in 2010 (Figure 8.1). This economic slowdown has been triggered by weaker international commodities markets, on which Brazil is highly dependent, coupled with the perverse effects of economic policies designed to fuel consumption. The latter eventually caused government spending to overtake revenue by a large margin: in 2014, Brazil had a primary deficit of over 0.5% of GDP for the first time in 16 years; this deficit has helped to push annual inflation rates to over 6% since 2013. Brazil’s economy stagnated in 2014 (0.1% of GDP growth) and the outlook is even worse for 2015, with the Ministry of Finance forecasting in April this year that the economy would contract by 0.9%. Since her re-election in November 2014, President Dilma Roussef has overhauled national macro-economic policies. The new Minister of Finance, Joaquim Levy, has put in place, or proposed, a series of measures to cut spending and increase tax revenue, with the aim of obtaining a primary surplus of 1.2% in 2015. 1 Interest rates have been raised twice since the November election (to 12.75%) to try to curb inflation, which hit 8.1% for the 12-month period ending 1. Given the difficulties in getting support from Congress for the fiscal policies proposed by Minister Levy, the target for primary surplus was reduced to 0.15% of GDP in July 2015. Recent forecasts put the contraction in GDP at 1.5% or more for 2015. in March 2015. To make matters worse, the giant statecontrolled oil company, Petrobrás, is currently fighting a crisis tied to poor management and a kick-back corruption scandal. The latter has taken a political turn, with the implication of several prominent political figures. At the end of April 2015, Petrobrás finally published its annual report for 2014, in which it acknowledged losses of over 50 billion reals (R$, circa US$ 15.7 billion), R$ 6 billion of which were related to the corruption scandal. It is against this economic and political backdrop that Brazil is striving to maintain the momentum of reforms to its national innovation system, including innovation in social policies. Social inclusion progressing more slowly The downturn in the economy is starting to rub off on social inclusion, which had been one of Brazil’s success stories, especially during the commodities boom up to 2010 when Brazil essentially managed to eliminate hunger and extreme poverty and, thereby, narrow the income gap. Between 2005 and 2013, unemployment rates fell from 9.3% to 5.9% of the population. More recent data suggest that this growth cycle may already be at an end. According to the Social Panorama on Latin America published by the United Nations’ Economic Commission for Latin America and the Caribbean (ECLAC, 2014a), Brazil reduced poverty rates by one-third between 2003 and 2008 but progress slowed from 2008 to 2012 and stagnated in 2013. Preliminary data even suggest that extreme poverty may Figure 8.1: GDP per capita and GDP growth rate for Brazil, 2003–2013 15 000 GDP per capita in constant 2011 PPP$ GDP growth rate 6.1 12 000 5.7 5.2 7.5 8 7 6 5 9 000 4.0 3.2 6 000 2.7 2.5 4 3 2 Chapter 8 3 000 1.1 1.0 1 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 -0.3 -1 Source: World Bank’s World Development Indicators, May 2015 211
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UNESCO SCIENCE REPORT Towards 2030
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Published in 2015 by the United Nat
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Report team Director of the Publica
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UNESCO SCIENCE REPORT A closer look
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Foreword Irina Bokova, Director-Gen
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