Brazil: Economics, White Elephants and Black Swans

Brazil is attracting increasing attention for its economic potential in the decades ahead. Think Tanks suggest its future relies on technological innovation. But will its fate be more to do with white elephants and black swans?

A Guardian report [August 2010] outlines an exciting future for Brazil’s economy:

Dr Gilberto leads Brazil’s National Institute for Space Research (Inpe). His claim turns a piece of standard economic theory on its head. Nations develop their economies by moving up the value chain, away from churning out commodities and towards manufacturing, say the textbooks.

China mass manufactures at rock-bottom prices, with the consequence that over the past two decades the cost of manufactured goods has fallen fast, while demand has pushed up the cost of the commodities used to make the goods. This leads Camara to his slogan: “Brazil – the natural knowledge economy”. He describes this as applying knowledge and technology to commodities to boost their value, and reels off examples: biofuels, in which Brazil leads thanks to its sugar cane ethanol and growing biodiesel production; renewable energy, and climate change – Brazil’s Amazon is vital to the planet’s health. “Brazil’s natural knowledge economy offers more opportunities for internal [national] research than our manufacturing industry,”


The Knowledge Economy

A Demos (think-tank) report argued in 2008 that Brazil is a ‘natural knowledge-economy’ where the intertwining of knowledge, skills and innovation with environmental and other natural assets holds the key to competitive advantage. But in Europe, Brazil’s innovation capabilities are even less well understood than those of its ‘BRIC’ counterparts, China and India. This report assesses the prospects for science and technology-based innovation in Brazil over the next ten years. And it suggests how the UK and Europe can scale up collaboration with its new centres of excellence. This report forms part of The Atlas of Ideas, a research programme on the new geography of science and innovation. The project was conducted in partnership with the Centro de Gestão e Estudos Estratégicos (CGEE) in Brazil.

The Atlas of Ideas

According to Demos,

In May 2007, the United Arab Emirates launched a $10bn foundation to create research centres in Arab universities. In Brazil, a consortium of 80 organisations has teamed up to invest $3 billion in biotechnology. In Qatar, a gleaming 2,500 acre ‘Education City’ is now home to international campuses of five of the world’s top universities. Wherever in the world you look, new entrants are reshaping the landscape for science and technology-based innovation. But what do these changes mean? How should policymakers and business leaders respond? And how do we strike the right balance between competition and collaboration? In early 2007, Demos published a series of reports on science and technology-based innovation in China, India and South Korea, and the prospects for closer collaboration with the UK and Europe. The second phase of The Atlas of Ideas included projects on the future of innovation in Brazil, flows of highly skilled migrants to the UK, low carbon innovation in China, and the development of a landmark study of innovation in the Islamic World.

Technological Change, Think Tanks, White Elephants and Black Swans

Forecasting is difficult, as the old joke goes, especially about the future. Forecasters like other humans have blind spots. Politicians seem open to the promise of technology as a silver bullet for desired change. The realities of technological forecasting is that a gulf exists between the potential and the realization of visionary dreams. That has not prevented strategy gurus from offering prescriptions for regional development. The approach has not been without its critics

Experience with large-scale technological projects is that they often become white elephants (expensive and inconvenient and with little practical value). Sometimes exploration is accompanied by dreadful unexpected consequences of the unpredictable (Black Swans).

More Modest Steps into the Future

Steps towards change require multiple more micro-level actions which mobilise natural resources including people. In the UK, the new government pins its hope on a concept labelled The Big Society, which is about devolving power away from centralized government. Liberating creativity of organisations even of societies seems a promising approach. In Europe examples can be found of ways in which students become their own tutors. Business Schools can work with international organisations to support international goals. There are opportunities as well as threats; tigerish gains as well as elephantine blunders to be made.

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One Response to Brazil: Economics, White Elephants and Black Swans

  1. Brazilian automakers make vehicles will be flexible with gasoline and ethanol blends. Ethanol from sugar cane in Brazil has been created in the twenties and thirties, with the introduction of the car. Output fell by the wayside until the seventies when oil again threatened. At that time ninety-seven percent of ethanol produced in the United States is from corn. There are no current plans to produce ethanol from sugar cane or beet sugar in the United States.

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