Industrial innovation declined in Brazil in 2023, says IBGE

Vitor Abdala, reporter for Agência Brasil - The share of Brazilian industries that innovated in products or processes stood at 64,6% of the total number of companies in 2023. According to data from the Innovation Survey (Pintec) 2023, released this Thursday (20) by the Brazilian Institute of Geography and Statistics (IBGE), the percentage is lower than those recorded in 2022 (68,1%) and in 2021 (70,5%).

"We consider an innovative company to be one that, in 2023, launched a new or substantially improved product or a new or substantially improved business process. The data shows that we've been observing a decline since 2021," explains IBGE researcher Flávio José Marques Peixoto.

The rate of innovation increases with company size. In 2023, for example, 73,6% of companies with 500 or more employees demonstrated innovation. The percentage dropped to 70,8% when analyzing only companies with 250 to 499 employees, and to 59,3% for companies with 100 to 249 employees.

Considering the type of innovation, 34,4% of companies innovated both in products and in business processes, while 16,6% only innovated in processes and 13,6% only innovated in products.

Regarding innovative products, 68% were new only to the company (i.e., they were already used in other companies in the market), 27,6% were new to the national market (used in other countries, but not in Brazil) and 4,4% were innovations for the global market.

Regarding business processes, 31,7% were focused on work organization; 29,4% on the production of goods or provision of services; 27,9% on marketing; 27,6% on information processing and communication; 25,7% on management practices or external relations; 18% on accounting and administrative operations and 17,2% on logistics, delivery or distribution.

Among innovative companies, 32,9% collaborated with other companies or consumers to develop their innovations. Most collaborations were with suppliers (27,1%), consultants (22,3%), customers (20,2%), and science and technology infrastructure (19,9%).

Cooperation was also observed with other companies in the group (12,4%), start-ups (9,9%) and even competitors (3,2%).

Difficulties - Among innovative companies, 47,6% encountered problems or obstacles to innovating in 2023, therefore below the percentages for 2022 (47,9%) and 2021 (59,1%). 

"Companies have always faced problems and obstacles in their innovation, whether they are innovative or not. In the case of innovative companies, several factors hinder them, including problems in their innovation process. In the case of non-innovative companies, these issues often prevent innovation from being realized," Peixoto highlights.

In 2023, the main difficulties faced were economic instability (44,2%), limited internal resource capacity (42,1%) and increased competition (41,4%).

Problems such as changes in strategic priorities (37,6%), low demand attractiveness (36,9%), technological limitations external to the company (36,4%), difficulty in establishing partnerships (34,8%) and difficulties in obtaining public support (33,9%) were also identified.

Among non-innovative companies, 21,7% encountered problems and obstacles to innovating, below the 28,3% in 2022 and the 33,9% in 2021. The main reasons given were economic instability (21,2%), low attractiveness of demand (19,2%) and increased competition (19%).

According to the IBGE, 36,3% of innovative companies used public support to innovate, less than the 39% in 2022. Among the instruments used by these industries in 2023, the following stand out: tax incentives for research and development (R&D) and technological innovation (26,4%), exclusive financing for machinery and equipment used to innovate (10,5%) and financing for R&D projects (6,5%).

"Innovation activities involve both risks and certainties, and sometimes public support helps to mitigate these risks, especially in the long term," the researcher emphasizes. 

“From 2022 to 2023, practically all instruments saw a decrease, except for the tax incentive for R&D and technological innovation, that is, the use of the Lei do Bem, which saw a small increase from 26,2% to 26,4%.”

The IBGE survey also showed that innovative companies were interested in using public support but ultimately decided against it. Among the main interests were tax incentives for research and development (R&D) and technological innovation (29,7%), exclusive financing for machinery and equipment used for innovation (25,8%), and financing for R&D projects (22,5%).

Research & Development - The IBGE also conducted a survey of industries that invested in R&D in the country. In 2023, the percentage was 34,3%, slightly below the previous rate (34,4%), but above that of 2021 (33,9%).

“Among smaller companies, there was an increase in the incidence of companies with 100 to 249 [employees] that carried out R&D, from 25,3% [in 2021 and 2022] to 26,5% [in 2023], but there was a very reasonable drop in large companies [over 500 employees], which has been falling since 2021 [when the percentage was 56,3%], now reaching 50,3%”, highlights Peixoto.

The sectors with the most companies investing in R&D were pharmaceuticals and pharmachemicals (67,8%), computer, electronic and optical equipment (66,9%) and chemical products (63%). 

On the other hand, the activities with the lowest rate of R&D expenditure were leather, travel goods and footwear (15,6%), textile products (14,3%) and wood products (10,3%).

According to IBGE, 53,1% of innovative companies invested in R&D in 2023, above the percentages in 2022 (50,6%) and 2021 (48,1%).

Regarding future expectations, 59,1% of innovative companies that invested in R&D planned to maintain their expenditures in 2024, 37,4% intended to increase them, and only 3,5% intended to reduce them. For 2025, 49,1% intended to increase them; 48,8% intended to maintain them; and 2,1% intended to reduce them.