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26 th April 2007

Micro and Small Enterprise Development, innovation and public policy 2nd. International Workshop of the BRICS Project Ana Arroio Federation of Industries of Rio de Janeiro and RedeSist aarroio@firjan.org.br. 26 th April 2007. Myths. MSE are not enterprising MSE do not innovate

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26 th April 2007

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  1. Micro and Small Enterprise Development, innovation and public policy 2nd. International Workshop of the BRICS Project Ana Arroio Federation of Industries of Rio de Janeiro and RedeSist aarroio@firjan.org.br 26th April 2007

  2. Myths • MSE are not enterprising • MSE do not innovate • MSE are not competitive

  3. A question of size • Brazilian Micro and Small Enterprise • We are women, hear us roll – gender and MSEs • The Second Economy • Mapping innovation in Brazilian MSME • Innovation overview • Innovation co-operation • Public support for innovation • Innovation protection methods

  4. Firm size - classification Annual gross income: • Micro firm: annual gross income equal or inferior to US$ 201,981.4386 • Small firm: annual gross income superior to US$ 201,981.4386 and less than US$ 992,981.4580. Number of people employed: • Micro firm: I) in industry and construction: 19 employees II) in commerce or service, 9 employees • Small firm: I) in industry and construction: 20 to 99 employees II) in commerce or service, 10 to 49 employees

  5. Distribution of firms, occupied personnel, wages and other remuneration according to number of personnel employed, Brazil, 2004 Source: IBGE, 2005

  6. Firm closure

  7. Exports Source: SEBRAE, 2005a, using information consolidated by the Central Bank statistical institution FUNCEX *“Special Micro and Small”, is a category used by FUNCEX that comprises firms with less than 100 employees but that have exports that are over US$ 2500.

  8. Sustainable economic development The most dynamic states in terms of exports are not concentrated in the wealthier south and south-east of Brazil, as might be expected, but rather in the rich forest land of the northern states. Exploitation of natural resources is the main source of advantage for these enterprises, leading to issues concerning sustainable economic development and potential environmental impacts.

  9. Gender and MSEs Source: IBGE/PNAD, 2001, consolidated by Melo and Sabbato, 2002.

  10. Informal sector enterprises Source: IBGE, ECINF 2003.

  11. Mapping innovation in Brazilian MSME • Industrial Survey of Technological Innovation, PINTEC, is the soundest statistical basis for the analysis of MSME innovation efforts in Brazil • Profile by enterprise size and the structure by sector are the main factors influencing the rate and the pattern of innovation in the industries of each country. • Limitations: • Innovation data is limited to the industrial sector • information regarding cooperation in both PINTEC and CIS3 is limited to formal partnership agreements.

  12. The Surveys – overall results • Total Sample: 72 thousand industrial companies in 2001; 84.3 thousand in 2003 • Number of companies which altered their products or processes grew from 22.7 to 28 thousand, leading to an innovation rate of 33.3% for the period 2001-2003 • Increase in the total national industry innovation rate, from 31,5% to 33%, occurred particularly in firms occupying 10 to 49 people. • Rate of innovation in micro firms grew from 26,2% to 31,1% • Micro firms represent 80% of the firms researched in PINTEC 2003

  13. Proportion of firms that implemented innovations, Brazil 2000 - 2003 Source: IBGE, 2005.

  14. Innovation co-operation Source: IBGE, 2005.

  15. Public support for innovation Source: IBGE, 2005.

  16. Innovation protection methods Source: IBGE, 2005.

  17. Barriers to innovation • 45.4% firms experienced difficulties that caused innovation projects to be seriously delayed or abolished • Main obstacles: • high innovation costs - 79.7% • excessive economic risks - 74.5% • scarcity of financing sources - 56.6% •  lack of information on technology - 35.8% • inability to adjust to regulations or standards - 32.6% • lack of information on markets - 30.5% • Lack of interaction with other firms or institutions - 29.6% • inadequacy of external technical services - 25.9% • lack of qualified personnel - 13%

  18. Policies – Finding a Common Ground • Financing innovation efforts • Education – Development of Capabilities and Educational System • Entrepreneurship & Entrepreneurial culture • Support services • Simplification of Bureaucracy

  19. Questions • Dynamics of policies that foster innovation in small firms? • And in Local Innovation and Production Systems? • How to grasp and measure informal co-operative practices? • What other indicators that also comprise intangible aspects of local processes of learning and innovation? • how do issues related to women’s and other “minorities”, rights and needs differ according to local social, economic and cultural realities? How can these needs best be included in development plans?

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