Brazil might be enjoying the dubious privilege of a “full employment recession,” yet two years into its worst-ever economic downturn, the creation of new high-quality jobs remains a priority in an economy where unskilled posts in industry or agriculture have traditionally predominated.
Startups play a significant role in creating value-added employment opportunities for the more highly educated – especially postgraduate and even postdoctoral specialists in hi-tech fields such as IT, engineering and consulting.
In this respect the returns on public sector investments in science and technology-based startups are not to be computed solely by the value of the intellectual property generated, or the corporate taxes paid by successful young businesses.
Job creation comes high up the list of social and economic benefits from startups. So the more than 28,000 jobs created in the ecosystem surrounding just one of Brazil’s top universities, provides validation for investments made by research funding councils in applied science breakthroughs that in turn lead to patents.
These investments from public sector bodies are especially important in a country like Brazil, where the nascent private equity and venture capital industries (although active since the mid 1980s) remain highly risk-averse, and still look toward the government agencies for leadership.
So it’s no coincidence that the state that’s most active in applied research funding and finance for early stage technical enterprises, is also the centre of the nation’s startup industry. Approximately 72% of all Brazil’s registered companies are small and medium enterprises (SMEs). And the great bulk of them are located in São Paulo State. Of these companies, a significant proportion are grouped around the University of Campinas (Unicamp).
For example, Unicamp has almost 600 startups in its immediate environs, of which 485 are active, generating over R$3 billion in annual revenues, and employing 28,889 people. These jobs are the real cherries in Brazil’s somewhat lacklustre job market.
Of the startups in the Unicamp cluster, one third focus on IT, 19% in engineering and 28% in consulting–related activity.
The findings were revealed at a recent event for startups, and researched by Unicamp Ventures, a unit of the university. Unicamp itself has a portfolio of patents seeking partners (view by clicking here) in fields such as high-efficiency power lines for electric grids; thermal resistant disposable cups; and low toxicity nanoparticles for treatment of bowel and other cancers in ways that are less invasive than traditional chemotherapy.
Examples of businesses already generating employment in the Unicamp cluster include CrowdPet, a “lost and found” app for identifying household pets in the town of Vinhedo in São Paulo state, which uses animal recognition software named SciPet that was developed at the University of Campinas. A similar venture – named Via FAUNA – tracks incursions onto roads and highways by animals – whether escaped farm livestock or wild creatures.
In fact the University of Campinas has made a detailed study of the dynamics of startup activity in São Paulo state. Prof. Sergio Salles-Filho, of Unicamp’s Department of Science Policy and Technology (DPCT), published a detailed study of 214 of the almost 1,800 funding projects supporting small businesses that received R$360 million over a 20 year period.
The PIPE programme from the São Paulo Research Foundation (FAPESP) is Brazil’s longest-operating startup support mechanism and the nation’s most prestigious. It uses ring-fenced funding from São Paulo state tax revenues to stimulate further economic development.
According to Salles-Filho: “The effect has been very positive. We analysed almost 250 companies and we saw how the investment had helped to them offer goods and services to the marketplace. As well as exporting these goods and services, the companies made new technology available for society, in the process generating both jobs and financial returns. This brought development to the local community and also helped to transfer knowledge accumulated inside universities, outwards to society. That is a truly worthwhile investment, with positive impacts both from the economic and social perspective. According to our way of measuring these investments, the money has been extremely well spent.”
Obviously, new high tech jobs – let alone new jobs — represent only a pinprick in the overall employment data. However, things do seem to be going the right way for Brazil at last. There were 163,000 new jobs created in the first half of 2017, as compared with a loss of almost half a million positions between January and May 2016. IBGE, the statistics agency, shows overall employment rose by over one million in the third quarter of 2017.
According to measurements of the Brazilian Institute of Geography and Statistics (IBGE), in the third quarter of 2017 alone more than 1.06 million jobs were created in Brazil, and from those more than 524,000 people have left the ranks of the unemployed. Employee real aggregate income rose 3.9% in the third quarter of 2017 in comparison to the same period of 2016. OECD forecasts for 2018 show employment rising again and unemployment retracting. These projections corroborate the predicted end to Brazil’s drawn-out crisis and — perhaps — a regaining of economic confidence.
More information about the Campinas tech cluster by clicking here: en.inova.unicamp.br