Oil sector and technological development: Effects of the mandatory research and development (R&D) investment clause on oil companies in Brazil

Abstract

The commodity boom at the turn of the millennium spawned growing interest in development strategies based on natural resources. The Brazilian government introduced a groundbreaking contractual clause to force oil companies to invest into research and development (R&D) 1% of gross revenues from large oilfields, with the aim of fostering technological development. To analyze the impacts of the R&D clause, we conducted 73 in-depth interviews with key informants from the oil sector. We also carried out a survey of 156 project coordinators. Our findings suggest that the R&D clause has strengthened the contribution to technological development by the national oil company, meanwhile involving new actors. The R&D clause has also boosted scientific research, technological capabilities, and innovation. However, it had a minor impact on fostering the relations between oil companies and service companies, and technology-based firms have played only a minor role.

Natural resource funds for innovation in emerging countries: an assessment of the Chilean experience

“…In this context, NRFs are increasingly being used to finance the development of national technological capabilities (Collier et al , 2009; Collier and Laroche, 2015; Iizuka et al , 2017; Mancini and Paz, 2018). Within the Latin American context, some studies have analyzed NRFs in general (Iizuka et al , 2017; Machado and De Medeiros, 2019), but the empirical evidence regarding innovation-oriented NRFs is still very limited, among other things because it constitutes a more recent phenomenon.…”

Support services in the extractive industries and the role of innovation

“…R&D spending was used in numerous studies as a proxy for innovation. For example, Bilbao-Osorio and Rodriguez-Pose (2004) and Mairesse and Mohnen (2004) find that R&D expenditures explain changes in innovation and productivity in Europe; using surveys of oil and gas firms, Mancini and Jose Paz (2018) show that R&D spending produces a positive impact on innovation activity in the extractive industry in Brazil. In what follows below, we will use R&D expenditures as a proxy for innovation to argue that the value of support services has close links to both output levels in mining and the oil and gas industries as well as innovation.…”