Brazilian Policies on
Cluster Development
Institutional background, technical design
and some lessons learnt
Renato Caporali
PhD on Economic Development
University of Paris
SME’s exports evolution
Some figures about SMEs exports
• SMEs represent 62% of the Brazilian exporting
enterprises;
• In 2011, 11.858 SMEs exported US$ 2 billion - less than
1% of the total Brazilian exports;
• The average amount of exports per enterprise is
US$ 170.000.
Some figures about SMEs exports
• But exporting SME’s were already 11.800 in 2006;
• It means that no real progress has been achieved in
total number of SME’s exporting …
• … while during the period from 2002 to 2008, the growth
rate of SME’s exports surpassed 10% per year.
Brazilian concept of
Micro and Small enterprises
• The Law of Micro and Small Enterprises (2006)
defines:
– Micro enterprises: annual sales up to US$ 180,000
– Small enterprises: from US$ 180.000 to US$ 1,800,000
Export’s data from SMEs
• A quite diversified agenda : 5 main items cover only 14%
of the total exported ;
• Sectors which export most :
– Micro: Precious stones, garment, auto-parts, and furniture.
– Small: furniture, shoes, auto-parts, marble and granite, wood.
• Latin America is the main destination, corresponding to
25% of SME’s exports.
A low level of internationalization
• Brazil’s SMEs show a low level of internationalization.
• An expression of :
– low grade of economic development of most SMEs;
– SME’s low level of integration to international value chains;
– And the size of the country.
The Brazilian policies for SMEs
• Brazil has made strong advances in the development of
policies for Micro and Small companies;
• In 1990: creation of SEBRAE, the Brazilian Support
Service for Micro and Small Enterprises, with annual
budget of US$ 1,5 billion.
• Brazilian law excludes medium enterprises from the
public policies for small businesses.
The Brazilian policies for clusters:
first steps
• In its first decade, SEBRAE concentrated on building a
network of external consultants, creating methodologies
to stimulate entrepreneurship culture, and a toolbox of
management skills for small companies.
• In 2000, SEBRAE started considering it own self as
responsible for structural development initiatives.
• Clusters Policy was launched in 2001-2002.
– first attempt on Industrial Policy since the 80’s.
• In 2004, the Annual Budget Plan established 60% of the
annual budget to be spent in collective actions.
The brazilian clusters development
policy
• Policy started studying international experience: mainly
Italy, France and Spain.
• With support of Interamerican Development Bank basic
methodologies for the development of clusters have
been created.
• By 2006, some evaluations demonstrated impressive
results.
• The policy then became an economic, political and
intellectual fashion.
– This “fashion consensus” would charge its price later on.
The brazilian clusters development
policy
• In 2007, more than 300 clusters were receiving resources
to support common/joint initiatives.
• The Government created the Brazilian Agency for
Promotion of Exports –APEX (2002).
• APEX stimulated export consortiums, mainly to
overcome the scale limit of small companies.
• The results were negatively affected by legal constraints
and cultural issues.
Basic elements of Brazilian
clusters policy
• The clusters intervention methodology articulates a mix of
entrepreneurial education, access to technology and
market information, collective interactions and
institutional networking for technical services;
• Intense access to market fairs, attempts to reduce
information gaps on technology and information assimetry
in credit solutions.
• Resources are mostly spent to subsidize such initiatives.
The Brazilian clusters : the origin
• Most Brazilian clusters were born from :
– (i) strong currency devaluation;
– (ii) high level of unemployment of the 80’s Brazilian structural crisis.
• A “survival entrepreneurship” productive system.
• Almost all of them were consolidating comparative advantages when the
economy entered a phase of currency evaluation and declining levels
of unemployment (from 2004 until now).
Some macroeconomic issues
• From 2001 to 2010, wage levels (Unit Cost of Labor) have grown,
in dollars, more than 200%;
• Just from 2010 to 2013: 17% more !
• The protection effect of a devaluated currency disappeared.
• Brazilian Manufacture exports stagnated after the 2008 crisis;
• And in the last 2 years they began to decline.
• In this context, cooperation networks created could not perform
miracles.
A first essential lesson
• A first important lesson: cooperation networks, in
conditions of strong currency overvaluation, are not
capable of reversing macroeconomic trends.
• Costs on labor force, energy, and industrial inputs remain
the basis of economic competitivity for sectors not
knowledge based...
• … which happens to be the greatest part of SME’s clusters.
A first essential lesson
• To be totally effective, clusters policies – as industrial
policies in general – must be followed by real exchange
rate policies
• as China and India have shown over the last decades.
• If it is not possible to have active exchange rate policies,
watching costs evolution closely become decisive.
Elements for an evaluation
• Nevertheless, a comparison on clusters maturity before and
after projects demonstrates impressive results.
– Take a look at: www.sigeor.sebrae.com.br
• SIGEOR : “Result Oriented Management System”
Elements for an evaluation
– Business models were modernized ;
– Management tools were disseminated ;
– Technology evolution was accelerated ;
– Entrepreneurial interaction on a higher level.
The Brazilian clusters development
policy
• Unfortunately, a comprehensive evaluation of Brazilian
cluster policy, as a modality of industrial policy, has not been
pursued.
• And a shift towards productive chain approach was induced after the
launching of the Industrial Policy of 2006;
• Just by when the first clusters projects were being completed.
• Abundant data have been produced by evaluating tools, but
systematic data analysis has not yet been accomplished.
• So, evaluation remains at the level of case by case;
• Let’s check a couple of cases.
Some results from clusters projects
• Cluster of Santa Rita de Sapucaí municipality
• Specialization: Electro-electronic products.
• Project Objective: to promote the access to
international markets to 55 enterprises participating in
the project.
• Actions:
– 130 courses and training activities;
– 5 participations in market fairs;
– 2 technical missions abroad;
Some results from clusters projects
• This cluster has structured various clusters projects, over
the last 10 years;
• Global exports from the cluster of Santa Rita;
•
•
•
•
2006 : US$ 5.7 million;
2009 : US$ 7.8 million;
2010 : US$ 7.6 million – the project starts
2012 : US$ 12.4 million – end of the project.
Some results from clusters projects
• At the end of the project, started with 15 exporting
enterprises, 33 out of 55 launched exporting activities.
– In 2010, 15 SME’s participating exported US$ 1.4 million;
– In 2011, 22 SME’s participating exported US$ 2,7 million;
– In 2012, 27 SME’s exported US$ 3.1 million (+ 90% over 2010).
Some results from clusters projects
• Project: Internationalization of the Productive Chain of
Petroleum and Gas
• Objective: to promote exports and international business
(transference of technology, joint-ventures and
partnerships);
• 187 SME’s participating
Some results from clusters projects
• Actions for the Internationalization of SME’s from the
petroleum and gas productive
– 30 courses and training;
– 18 international missions gone abroad;
– 12 international missions brought to Brazil;
– 180 entrepreneurial diagnosis;
– 9.500 hours of consulting services provided;
– 2 market studies achieved;
Some results from clusters projects
• Exports in:
– 2008 : US$ 189 million
– 2010 : US$ 650 million
• Joint-ventures of EU$ 5.0 million established.
Elements for an evaluation
• Of course, there are many projects with less
impressive results…
• … but Brazilian experience does suggest that
clusters projects produce positive results.
• Because knowledge, technical solutions and
market information do make the difference.
Some lessons learnt
(1)
• The problematic of “capture by leading groups”
remains relevant…
– … but working with the avant-garde is inevitable.
• Need to overcome excessive anxiety for
immediate results.
• A definitive lesson: clusters development are
medium to long term initiatives:
– 5 years to produce irreversible results.
Some other lessons learnt (2)
• SME’s entrepreneurs are avid for knowledge;
• A policy to accelerate entrance to the knowledge
economy!
Some lessons learnt (3)
• It is a huge challenge to make institutions
(government, universities, technological centers) to
envisage the potentialities of SME’s emerging
sectors;
– Institutions must understand themselves as an
institutional tissue responsible to promote
entrepreneurial development.
Some lessons learnt (4)
• In consequence, one of the hardest challenges is
institutional coordination.
• Cooperation networks require significant shifts on
normal mental models;
• But, within the clusters, cooperation must be seen as
a result to be produced, not a starting point.
Some lessons learnt (5)
• The “Eastern lesson”: perseverance !
• Consistent evolution is connected to knowledge and
attitudes: more money may not produce more results.
• Time management must be closely monitored : there must
be a political sensibility for timing issues.
• That means: the timetable of actions is one of the problems
of the project, something to be managed and not a passive
variable.
Clusters projects are one of the most democratic
forms of industrial policies !
rcaporali.56@gmail.com