Determinants of Innovation in Brazil: an Empyrical Analysis of the Period 2011-2021

Empirical studies regarding the determinants of innovation in developing countries, including Brazil, have demonstrated the negative impact of high inflation rates on the economic capacity. However, the recent Brazilian experience clearly shows that stabilization, in and of itself, is not capable of recovering the investment rates. With this in mind, this study’s goal is to answer, with the help of econometric simulation models, the questions: (i) what are the key-drivers to assess the Brazilian economy?; and (ii) what are the key-factors to be considered when investments are made, particulary in innovation? To answer the questions we evaluated the impacts of macro-economic variables on private investments, using a strategic bias and a long term vision plan. The estimates demonstrate empirical crowding-in evidence of public investments in innovation over private investments as a real impact to productivity. As for public invetsments (non-infrastructural) we suggest that the crowding-in impact dislocates private investments. All these indicators were obtained as presented in the therory, with the exception of the real interest rates variable (r), in which we observed that the coefficient is positive and insignificant in the estimated equation.