The New Economy and the Challenges Facing Emerging Countries: The Case of Brazil

The paper discusses the implications for Brazil - an emerging (latecomer) economy, characterized by socio-economic, historical and institutional particularities - facing the new paradigm of economic and social development based on knowledge capital and innovation. The paper elaborates on the way Brazil reacts to the challenges facing the rapid changes related to the new pattern of economic growth, by examining indicators related to the so-called new economy (investment in R&D as a proportion of GDP; number of patents granted; investments in physical capital and knowledge capital, among others), comparatively vis-à-vis some developing economies as the other BRICS member countries.

Data on knowledge capital and innovation, in particular, show that the country is ranked in a lower position not only in relation to the developed countries but also to its peers.  The country’s innovation performance shows mediocre results as the main innovation model is based on the use of imported machinery and equipment.

The paper’s argument concerning the country’s poor performance regarding the setting up innovative companies results from a specific developmental path characterized by the lack of an embedded institutional framework capable of supporting the requirements of the new context. The argument follows that this incapability in great part is due to the country’s model of industrialization based on the import-substitution, oriented to the home market and favored by strong protectionism.

The conclusion is that the country needs a series of reforms that will not be easy to implement.