Perfil da Base Industrial de Defesa Brasileira Analise e Visao Geral

Brazilian Industrial Defense Base Profile Rev Carta Inter Belo Horizonte v 15 n 3 2020 p 204231 204 Brazilian Industrial Defense Base Profile Perfil da Base Industrial de Defesa do Brasil DOI 1021530civ15n320201054 Ariela Diniz Cordeiro Leske1 Thauan Santos2 Abstract This paper aims to present an overview and analysis of the Brazilian defense industrial base IDB Based on the Brazilian Industrial Defense Base Mapping and its eight segments ABDIIPEA 2016 our main contribution is to provide the first national and comparative analysis between these sectors since there is a lack of knowledge in the literature on the Brazilian defenserelated companies scenario Focusing on the analysis of the international insertion of these companies into the global industry through international trade we analyze defenserelated companies based on i personnel and average salaries ii innovative and investment profile iii share of export iv main destination countries v technological intensity of exported products vi main obstacles when looking for external markets and vii main export support instruments Despite the limitations in terms of data among the main conclusions stand out that each segment has a specific profile faces and responds differently to market barriers and in general its innovative profile is still focused on process what may limit the competitiveness of companies Keywords Brazilian Defense Industry Industrial Defense Base Defense Economics Brazil Defense 1 Doutora em Economia da Indústria e da Tecnologia pela Universidade Federal do Rio de Janeiro Professora Adjunta do Programa de PósGraduação em Segurança Internacional e Defesa da Escola Superior de Guerra Rio de Janeiro Brasil arielaleskegmailcom ORCID httpsorcidorg0000000249953940 2 Doutor em Planejamento Energético pelo Instituto Alberto Luiz Coimbra de PósGraduação e Pesquisa de Engenharia Professor Adjunto do Programa de PósGraduação em Estudos Marítimos da Escola de Guerra Naval Rio de Janeiro Brasil santosthauangmailcom ORCID httpsorcidorg0000000240014322 Artigo submetido em 03032020 e aprovado em 17062020 Copyright This is an openaccess article distributed under the terms of a Creative Commons Attribution License which permits unrestricted use distribution and reproduction in any medium provided that the original author and source are credited Este é um artigo publicado em acesso aberto e distribuído sob os termos da Licença de Atribuição Creative Commons que permite uso irrestrito distribuição e reprodução em qualquer meio desde que o autor e a fonte originais sejam creditados Ariela Diniz Cordeiro Leske Thauan Santos Rev Carta Inter Belo Horizonte v 15 n 3 2020 p 204231 205 Resumo Este artigo tem como objetivo apresentar uma visão geral e uma análise da base industrial de defesa BID brasileira Com base no Mapeamento da Base de Defesa Industrial Brasileira e em seus oito segmentos ABDIIPEA 2016 nossa principal contribuição é fornecer a primeira análise nacional e comparativa entre esses setores uma vez que há um desconhecimento na literatura sobre o cenário das empresas brasileiras relacionadas à defesa Com foco na análise da inserção internacional dessas empresas na indústria global por meio do comércio internacional analisamos empresas relacionadas à defesa com base em i pessoal e salários médios ii perfil inovador e de investimento iii participação na exportação iv principais países de destino v intensidade tecnológica dos produtos exportados vi principais obstáculos ao buscar mercados externos e vii principais instrumentos de apoio à exportação Apesar das limitações em termos de dados dentre as principais conclusões destacamse que cada segmento tem um perfil específico enfrenta e responde diferentemente às barreiras de mercado e em geral seu perfil inovador ainda está focado em processos o que pode limitar a competitividade das empresas Palavraschave Indústria de Defesa Brasileira Base Industrial de Defesa Economia de Defesa Brasil Defesa Introduction In order to expand the consumer market defense companies seek to export their products in addition to acting in the commercial market in some cases export is actually a necessary condition for their survival Therefore this paper aims to describe the profile of exports of companies related to national defense identify the relevant factors of exports in this area and what are their main weaknesses in the Brazilian defenserelated companies We use data published by the Brazilian Industrial Defense Base Mapping ABDIIPEA 2016 Eight segments are considered namely light and heavy weapons and ammo and explosives A electronic systems and command and control systems B military naval platform C nuclear propulsion D military ground platform E military aircraft platform F defenseoriented space systems G and equipment for individual use H These segments will be analyzed jointly in terms of the following factors related to exports i personnel and average salaries ii innovative and investment profile iii share of export iv main destination countries v technological intensity of exported products vi main obstacles when looking for external markets and vii main export support instruments Brazilian Industrial Defense Base Profile Rev Carta Inter Belo Horizonte v 15 n 3 2020 p 204231 206 The paper will be structured as follows first and after this brief introduction there will be a section that presents the empirical review on international trade in the defense sector with a particular focus on exports Then there will be a brief description of the Brazilian defense industry based on the Brazilian Industrial Defense Base Mapping Next we present the data on the Brazilian Industrial Defense Base IDBs international insertion Finally we show some conclusions and reflections on the nature profile and challenges faced by the Brazilian defense industries International trade and some aspects of defense area When it comes to international trade it is often interesting to analyze the issue from a regional perspective Within the scope of regional South American initiatives the Union of South American Nations UNASUR stands out especially for giving much relevance to the area of defense due to the South American Defense Council CDS We particularly emphasize the importance of UNASUR in relation to increased regional demand the stimulus to Brazilian exports of certain companies operating in the defense sector and the internationalization of some of these companies Although its creation has contributed to the complexification and overlap of South American security and defense structures Villa e Bragatti 2015 the CDS advanced significantly in the field of confidence and cooperation measures in defense industries and technologies in the region Souza 2016 Pagliari 2015 contributing to the deepening of the regional integration process Martinez e Lyra 2018 Since its creation in 2008 seeking to overcome the mistrust existing in the region and to incorporate the defense sector as an harmonic pillar to facilitate the process of regional integration Arredondo 2017 the CDS constitutes itself as an instance of consultation cooperation and defense coordination Abdul Hak 2013 Its decisions were taken in consensus and respect for the diversity desires values and traditions of each member state they were only declaratory without a legally binding nature Santos 2018a therefore it was not an operational alliance along the lines of the North Atlantic Treaty Organization NATO As its main objectives the CDS proposes i to consolidate South America as a zone of peace the basis for democratic stability and the integral development of its Ariela Diniz Cordeiro Leske Thauan Santos Rev Carta Inter Belo Horizonte v 15 n 3 2020 p 204231 207 peoples as a contribution to world peace ii to build a South American defense identity which takes into account subregional and national characteristics and which contributes to strengthening the unity of Latin America and the Caribbean LAC and iii to generate consensus to strengthen regional defense cooperation Aranguiz 2013 One of the central points of the CDS is the possibility of resumption of the defense industry considering the complementarity of the production chain and the scale amplitude Thus in seeking to rearticulate a Defense Industrial Base IDB with a South American foundation the CDS presents the possibility of working on the construction of a South American defense industry with a broad market driven by state orders and with the participation of companies in their countries Padula 2015 However given the recent breakdown of UNASUR and CDS after 2018 Fuccille 2018 Santos Rodrigues e Leite 2019 as well as the relevance of Brazil with regard to the defense budget expenditure and investments in South America Rezende 2016 the focus of this paper will be only on the case of the Brazilian defense industrial base Therefore in this section the intention is to narrow and tie the relationship between international trade exports innovation and internationalization of companies and then to specifically analyze the Brazilian IDB case According to the classic theories of international trade trade between countries should focus on their comparative advantages whether absolute or relative In the early decades of the twentieth century the Heckscher 1991 and Ohlin 1991 models indicated that the factor endowment of each economy would determine its exports and imports However in the 1970s Chamberlian hypotheses of product differentiation economies of scale and monopolistic competition emerged overcoming the simplified models that assumed pure and perfect competition and often ignored market failures In the new trade theory Helpman 1981 Krugman 1981 NorthSouth trade was associated with traditional comparative advantages determined by the intensity of factors of production and with interindustry trade whereas NorthNorth trade would be based on economies of scale and product differentiation being associated with intraindustry trade In general exports are considered as a factor that can contribute to economic growth either through the direct effect on the GDP or through an increase in the scale of production and productivity Balassa 1978 Balassa 1985 Delgado Brazilian Industrial Defense Base Profile Rev Carta Inter Belo Horizonte v 15 n 3 2020 p 204231 208 Fariñas e Ruano 2002 Cuaresma e Wörz 2005 This increase can derive from learning through interaction with producers and consumers resulting in the use of new technologies and greater productivity in a process called learningby exporting Salomon e Shaver 2005 The learningbyexporting process also seems to be influenced by the technological intensity of the companies The greater the technological intensity the greater the learningbyexporting Fernandes e Isgut 2005 Besides countries with more experience produce and export goods with high technological content Catella e Gonçalves 2011 On the one hand companies can start the export process based on successful innovations in the domestic market Internal success can stimulate the company to enter the international market Vernon 1966 On the other hand there is the possibility of companies that export have also a greater tendency to innovate since exporting leads to process innovations increasing productivity Álvarez e García 2008 Damijan Kostevc e Polanec 2010 Also the improvement of the size of markets and the induces of the knowledge spillovers are effects that can be appropriated by successful innovators Vernon 1966 Aghion e Howit 2009 Aghionet al 2018 Grossman e Helpman 1989 Consequently the larger and more productive companies would be even more likely to innovate and consequently to export Melitz 2003 Caldera 2010 Raiher Carmo e Stege 2017 Lo Turco e Maggioni 2014 SuárezPorto e GuisadoGonzález 2014 In this sense firmtechnological resources can be an important factor for international competitiveness Rodríguez e Rodróguez 2005 Technological advances and delays can be considered critical for international competitiveness in medium and high technology goods Dosi Lechevalier e Secchi 2010 Dosi Pavitt e Soete 2009 with differences in products and production processes being central to the competitive process thus increasing the likelihood of insertion into international markets Dosi Grazzi e Moschella 2015 Atkeson and Burstein 2010 suggest that the product innovation can offset a change in trade costs having a substantial impact on heterogeneous firms exit export and process innovation decisions That product innovation has an important moderating effect on the positive association between exports and productivity Cassiman e Golovko 2011 For Becker and Egger 2013 there is significant bias of the impact of product and process innovations on exports The result was particularly large for firms with only product or process innovations as compared to firms that did not innovate Ariela Diniz Cordeiro Leske Thauan Santos Rev Carta Inter Belo Horizonte v 15 n 3 2020 p 204231 209 The exchange rate depreciation can be also an important part of growth accelerations and may improve welfare if there is a market failure that affects the tradables sector more than the nontradable sector Hausmann Hwang e Rodrik 2005 Rodrik 2007 In some cases it has been observed that export growth can be preceded by significant exchange rate depreciation because it tends to facilitate the commercialization of new products and entry into new markets Freund e Pierola 2012 When it comes particularly to defense sector there are some peculiarities especially after the Cold War when the international arms market experienced a dramatic structural change Anderton 1995 Until the end of the Cold War the states political regime whether it was democratic or not was a common concern It is suggested that postcold war policies have not mattered Perkins e Neymayer 2002 since democracies have not been as altruistic or ethical as they have claimed in recent years Akerman e Seim 2014 23 Still after the Cold War the conflicts have presented smaller proportions and for that reason it is possible to observe greater relevance in the trade of small arms Kinsella 2011 The defense international trade is even surrounded by a dichotomy in terms of political decision importing or producing domestically Levine et al 1997 Regardless the choices it is indeed necessary to allocate a significant amount of resources The imports do not require longterm commitment nor do they contribute economically job creation and industrial training or reduce subordination in the global arms transfer and production system Krause 1995 The national production requires constant investment in RD and productive incentives in addition to purchases that must be made by the State at least initially Santos 2018b Leske 2015 2018 The second case offers some positive externalities such as encouraging industrial production in higher valueadded sectors and skilled labor The model tested by Levine et al 1997 show some variety of arms control policies that can increase welfare including coordination price transparency and common arms export policy It is worth noting that the international arms transfer system has changed in many levels after the end of the Cold War with its overall volume reduced mainly because of the strong decline in exports of the Soviet Union USSR and its successor states Brzoska 2004 GarciaAlonso e Levine 2007 The arms market has become more diverse both in terms of supplierrecipient relationships and of the types of weapons used Buyers with financial resources bought expensive weapons predominantly from the United States US and Western Europe while Brazilian Industrial Defense Base Profile Rev Carta Inter Belo Horizonte v 15 n 3 2020 p 204231 210 the others bought old weapons and small arms Even the donations which were very common during the Cold War were reduced Brzoska 2004 However more recently Villa and Weiffen 2014 highlight that the increase in arms spending cannot be understood if one does not consider the coexistence of a stable power balance in a regional security governance as well as the desire of emerging states to increase their regional or global roles Among the consequences the reduction in this market is the reorganization of productive structures Many international companies closed merged or were incorporated consolidating the industry and consequently concentrating production on few companies and further narrowing the economically viable segments Dunne 1995 Exports in the United Kingdom UK for instance decreased by 50 in the late 1990s resulting in significant losses for gross domestic product GDP and reallocation of resources in alternative occupations Sharp 2005 A recent study indicates that exporting countries tend to reduce their military budgets Pamp e Thurner 2017 Other benefits can come from a greater insertion in the international market such as firms will progressively become more efficient less dependent on public procurement and innovation policy support as well as more prone to knowledge sharing and interfirm collaboration Blom Castellacci e Fevolden 2014 With this consolidation developing armsproducing countries remain dependent on imports of sophisticated critical subsystems and little transfer of the knowledge necessary to go beyond simple reproduction or copying of weapons took place Krause 1992 More developed countries have then increased their military technological advantages compared to developing countries Brzoska 2004 reinforcing a market structure in which the roles of technology and knowledge producers and importers are clearly defined and relatively static Consequently this scenario implies in companies whose innovative processes are characterized by imitation and incremental innovations Freeman e Soete 2008 contributing only marginally to the reintegration of these countries in this international trade As a result commercialization and differentiation in the international arms market imply that economic and military power are becoming closer reinforcing the status of inequality between developed and developing countries in international trade in defense Fonfría and DuchBrown 2014 stress the role of technological issues when analyzing the performance of exports of the Spanish defense industry between 2003 and 2008 The authors argued that more intense exporters of defense Ariela Diniz Cordeiro Leske Thauan Santos Rev Carta Inter Belo Horizonte v 15 n 3 2020 p 204231 211 material are more productive and consequently more involved in export and technological activities However the intense regulation and political intervention in the trade related to defense products tends to generate additional costs and coexist with a parallel trade of military products This latter factor may cause traderelated studies in this area to be underestimated Finally it is important to highlight the difficulty of adequately analyzing indicators on production and trade In terms of secondary data the Stockholm International Peace Research Institute SIPRI and the Military Balance IISS are usually the most viable Only the former is freely accessible but its data are aggregated by country except for the information available on the top 100 companies in the area In this sense the next section wishes to contribute providing a more detailed information regarding the production and foreign trade of Brazilian companies that supply defense products The Brazilian IDB What does the Mapping show Mapping features The Brazilian Industrial Defense Base Mapping is the first effort undertaken in Brazil with the objective to size and know the microdata related companies that provide defense products The mapping was elaborated between 20142015 by the National Agency for Industrial Development ABDI and the Institute of Applied Economic Research IPEA in addition to eight Brazilian specialists contracted for this research and the results were published in 2016 This was carried out to better understand companies related to national defense The purpose of the research was to identify companies that supply defense products and their main characteristics such as their size employees profile and the share that defense plays in these companies As each segment was analyzed individually and with some autonomy and particularity here we intend to carry out a joint and common analysis allowing an overview of the Brazilian IDB constituting the main contribution of this paper to the specialized literature The number of companies analyzed is based on data from the Annual Social Information Report RAIS 20032011 and differs from the number of companies that gave rise to data on international insertion 20032013 as well as from those that constitute the sample of innovation data 20002011 This mismatch between Brazilian Industrial Defense Base Profile Rev Carta Inter Belo Horizonte v 15 n 3 2020 p 204231 212 the periods analyzed is due to the lack of existing data Data provided by RAIS and Research of Technological Innovation PINTEC have different collection periods since RAIS is an annual research and PINTEC is carried out every 3 years Despite the discrepancy between the collection periods these are the only data available to companies in the selected area In relation to the primary data there is also a reduction in the sample due to the number of companies that have responded to the questionnaires carried out by the specialists A synthesis of the Brazilian IDB Table 1 shows the number of companies selected to compose the sample by segments The segments with the largest sample are F aircraft 343 and C naval 336 followed by B electronic systems 123 and G space systems 98 respectively The segment with the lowest number of companies is A weapons ammo and explosives 22 86 of the selected companies were picked up by RAIS and over the period the number of captured companies increased by an average of 27 between 2003 and 2011 while the total number of employed personnel increased by an average of 79 over the same period Table 1 Number of defenserelated companies employed personnel and average salary 20032011 Segments3 Number of companies Number of Companies at RAIS Employed personnel Higherlevel personnel Average salary R 2003 2011 2003 2011 2003 2011 2003 2011 A 23 15 16 4888 6561 17 22 274400 410100 B 130 73 100 7778 16229 38 48 420400 457600 C 355 259 324 46170 92214 3 5 292600 338800 D 34 23 28 2443 3987 22 21 304700 403100 E 48 27 40 12479 23896 17 28 410500 437900 F 362 241 312 16013 26946 18 25 285100 318600 G 104 71 84 3632 6852 30 42 311300 369000 Total 1056 709 904 93405 176685 2299000 2735100 Mean 15086 10129 12914 13344 25241 207 273 328429 390729 Source Own elaboration based on ABDIIPEA 2016 share of total in order to convert reais R to US dollars US use the exchange rate values in Appendix 13 3 Light and heavy weapons and ammo and explosives A electronic systems and command and control systems B military naval platform C nuclear propulsion D military ground platform E military aircraft platform F defenseoriented space systems G and equipment for individual use H Ariela Diniz Cordeiro Leske Thauan Santos Rev Carta Inter Belo Horizonte v 15 n 3 2020 p 204231 213 Regarding the profile of employed personnel there is a significant concentration in the naval segment C which represents 522 of the total in 2011 As a result this segment has the lowest percentage of workers with a higher level 50 and the second lowest average salary R 338800 Then it is possible to conclude that the percentage of employed personnel in different segments of the Brazilian IDB with a higher level is well above the national average While some segments reach 48 B and on average higher level personnel represent 273 the national average according to the IBGE 2013 is only 15 of the total employed personnel Between 2003 and 2011 there was an increase of 35 on average in the share of personnel with higher education but the average salary increased only 20 Despite a relatively small growth rate the average salary at the Brazilian IDB is still higher than the national average which according to IBGE 2014 was only R 194300 in 2012 In order to investigate the relationship between the companies and the national defense questionnaires were sent to the companies that made up the sample of the mapping4 Only the electronic systems and command and control systems B and nuclear propulsion C segments have defense as their main market since the other segments carry out most of their sales in the commercial market ABDIIPEA 2016 This is one of the main findings of this paper since Brazil has different policies and fiscal instruments directed to defense companies that in fact are actually supplying more commercial market rather than defense market itself The innovative profile of the companies that compose the sample can be observed from the data of the Research of Technological Innovation PINTEC and are presented in Table 2 PINTEC seeks to capture some indicators on innovation in the country and provides a series of data on the innovative process of national companies through a crosssection following the conceptual aspects proposed in the Oslo manual IBGE 20115 Due to financial costs associated with the analysis of all national companies the survey was carried out by sampling 4 The maximum percentage of responses was observed in the arms and ammo segment A where 30 of the companies previously selected responded to the questionnaire In the ground platform segment E only 10 of companies responded Overall only 17 of companies answered the questionnaire on average 5 Regardless of the progress made in PINTECs methodology it still relies on traditional indicators leaving aside some qualitative and often specific indicators to sectors and companies making them the target of criticism about their real ability to capture important systemic aspects Brazilian Industrial Defense Base Profile Rev Carta Inter Belo Horizonte v 15 n 3 2020 p 204231 214 Table 2 Defenserelated companies that innovated and their investment in innovation PINTEC 20002011 Segments Companies at PINTEC Innovative Companies Investment in innovation R Investment rate 2000 2011 2000 2011 2000 2011 2000 2011 A 9 8 8 5 2023200 5902400 50 39 B 17 30 13 24 20914200 27415700 44 05 C 75 142 46 71 24541300 62834000 38 18 D 9 10 5 6 5111600 3548300 62 22 E 7 17 6 13 5613200 274645800 31 33 F 42 81 31 39 44539800 143438300 73 93 G 8 22 6 15 985400 16716600 113 66 TOTAL 159 288 109 173 1037287 534501100 Mean 27 48 164 247 14818390 76357300 59 39 Median 13 24 8 15 5613200 27415700 50 33 Source Own elaboration based on ABDIIPEA 2016 The investment rate in innovation which represents how much companies invest in innovation in terms of its sales revenue was on average 59 in 2000 but decreased to 39 in 2011 There was a significant drop in the D nuclear propulsion segments 4 pp B electronic systems 39 pp and C naval platform 2 pp If we consider only domestic research and development RD investment its average as a function of company revenues was 19 while the national average as a whole was 084 IBGE 2011 Therefore despite its reduction in the proportion invested the group of companies related to the Brazilian IDB still presents a more innovative profile than the national industry average which is in line with the higher level of employed personnel and then its average salary in the Brazilian IDB Among the mapping companies on average only 19 were analyzed by PINTEC The segment with the largest participation in PINTEC was the naval platform C in which from an initial list of 355 companies only 142 were part of PINTEC in 2011 The space segment G was the smaller segment with only 21 in the same period Between 2000 and 2011 the number of companies analyzed by PINTEC increased 85 among those making up the sample Due to such increase it is hard to identify if the increase in the number of companies that innovated was due to the amount of companies itself or if companies that already have been part of the research started to innovate Ariela Diniz Cordeiro Leske Thauan Santos Rev Carta Inter Belo Horizonte v 15 n 3 2020 p 204231 215 The innovative profile is also captured by PINTEC see Table 3 For sample data product innovation was implemented by about 10 more companies than those implementing process innovations over the period Between 2000 and 2011 there was a reduction in the number of companies in the weapons A and ground platform E segments that introduced product innovations The fact that the naval segment C has a larger sample within PINTEC ends up reflecting the number of companies that introduced innovations in general Table 3 Innovative profile of defenserelated companies PINTEC 20002011 Segment Year Product Process Product and process TOTAL Total New to the company New to the national market Total New to the company New to the national market A 2000 10 4 6 9 4 5 7 26 2011 5 2 3 5 4 1 3 13 B 2000 17 8 9 11 5 6 8 36 2011 28 11 17 20 12 8 20 68 C 2000 51 25 26 46 30 16 27 124 2011 72 36 36 72 53 19 49 193 D 2000 7 4 3 7 2 5 4 18 2011 8 3 5 7 5 2 6 21 E 2000 26 13 13 8 5 3 6 40 2011 14 5 9 15 10 5 13 42 F 2000 26 13 13 25 13 12 15 66 2011 31 12 19 38 26 12 25 94 G 2000 7 2 5 6 3 3 5 18 2011 15 5 10 16 7 9 13 44 Source Own elaboration based on ABDIIPEA 2016 Since it influences exports product innovation has been shown to be relatively more important than process innovation Dosi Grazzi e Moschella 2015 In this sense defenserelated companies are acting jointly towards a better international insertion although still relatively low if we consider the selected sample Despite the fact that most of the segments of this sample operate in the commercial market according to the companies perception the spinoff 27 has been slightly higher than spinin 22 On average 27 of respondents argued to have developed technologies for military purposes and then used in the commercial market IPEAABDI 2016 Brazilian Industrial Defense Base Profile Rev Carta Inter Belo Horizonte v 15 n 3 2020 p 204231 216 In this context in a summarized and partly conclusive way the mapping data indicates that the Brazilian IDB operates in a dual perspective Dagnino 2008 Despite the fact that they operate mostly in the commercial market defenserelated companies are able to meet the specific demands of the defense sector This is fundamental in a country like Brazil where the demand for military products is low and unstable This characteristic of demand is a result of the countrys not involving in wars in its recent history and the large concentration of the Ministry of Defense MD budget in personnel expenditures Matos Fingolo e Schneider 2017 Another consequence of the low demand of the national armed forces is the importance that the exports assumed besides expanding the commercial consumer market they can also help maintain a minimum production capacity for defense Therefore the next section will present different data on the export of defenserelated companies in Brazil The International Insertion of the Brazilian IDB Defenserelated companies exports profile Between 2003 and 2010 the number of companies that exported grew slightly In the segments of arms A and nuclear propulsion D more than half of the companies exported Notwithstanding in others such as electronics B and space G the percentage was below 30 Therefore Table 4 shows that international insertion of these firms is still limited since the number of companies that export is on average as high as 40 Table 4 Share of export by defenserelated companies 20032010 Year 2003 2004 2005 2006 2007 2008 2009 2010 A 59 59 53 59 59 71 65 65 B 18 22 18 23 22 21 24 26 C 28 26 27 32 30 34 38 37 D 38 35 38 32 47 35 41 53 E 31 33 35 42 33 40 44 42 F 19 20 20 27 27 25 29 29 G 14 18 16 19 17 18 20 24 Source Own elaboration based on ABDIIPEA 2016 Ariela Diniz Cordeiro Leske Thauan Santos Rev Carta Inter Belo Horizonte v 15 n 3 2020 p 204231 217 Table 5 shows the top 10 destination countries of defenserelated companies export between 2008 and 2013 It can be seen that the top 10 accounted for 665 of the destination of exports 2008 and reached 847 2013 indicating a greater dependence on these markets and a reduction in the diversification of the main partners In 2013 the main destinations were the US 383 Argentina 180 and Venezuela 61 totaling US 46454 billion Among the other countries with significant share of exports in 2013 stand out the UK 19 Italy 18 Azerbaijan 17 and Colombia 16 Table 5 Top 10 destination of defenserelated companies export 20082013 Countries 2008 2009 2010 2011 2012 2013 US 386 311 199 214 239 383 Argentina 158 147 287 305 180 180 Venezuela 08 15 22 13 27 61 Ireland 22 51 China 27 63 62 92 133 50 Chile 31 17 34 41 49 35 Kenya 27 23 Brussels 17 00 00 00 03 23 Mexico 21 13 15 41 48 22 South Africa 18 21 21 19 16 19 Others 335 412 360 272 256 153 Total millions 789960 553940 601310 684190 733870 744410 Mean millions 2469 1846 2148 2138 2224 2401 Median millions 1203 774 960 763 502 918 Source Own elaboration based on ABDIIPEA 2016 These top 10 countries comes from different natures i regional integration and strategic environment ii international cooperation southsouth cooperation SSC and iii historical trade relationships In the first case Latin American countries in general stand out such as Argentina Venezuela Chile and Mexico in the second case it arises from particularly international cooperation arrangements such as BRICS China and South Africa finally the third case is due to Brazils historical trade tradition with top five partners such as the US and the EU In the first two cases it may be associated with the narrowing or the search for closer approximation with countries of the Global South through Brazilian foreign policy BFP in the period in question Brazilian Industrial Defense Base Profile Rev Carta Inter Belo Horizonte v 15 n 3 2020 p 204231 218 With regard to its foreign policy agenda Brazil has also avoided hard power strategies for example by renouncing nuclear weapons while joining the Nuclear NonProliferation Treaty NPT Carranza 2017 This nature of Brazilian foreign policy differs from the case of arms production in Asia which is heavily influenced by concepts of technonationalism which views autarky selfsufficiency in armaments as serving not only national defense needs but also as maximizing national political strategic and economic autonomy Bitzinger 2015 453 In terms of quality data are more encouraging Data on the technological intensity of exported products shows that these tend to be higher valueadded products The Organization for Economic Cooperation and Development OECD classifies the industrial sectors based on the level of technological intensity in the 34 countries that make up its base OECD 2015 Through the technological intensity indicator industrial sectors are classified into four levels high mediumhigh mediumlow and low Hatzinchronoglou 1997 OECD 2011 Table 6 shows how it applies to defenserelated companies Table 6 Value exported from defenserelated companies based on technological intensity of exported products in millions of dollars 20082013 Segment Year Total exported value High intensity Medium high intensity Medium low intensity Low intensity Non industrial A 2008 2840 50 2788 00 01 00 2013 4251 10 4227 07 05 02 B 2008 299 195 99 03 02 00 2013 580 316 256 05 03 00 C 2008 21212 337 19387 1299 152 37 2013 15824 502 13983 1029 285 26 D 2008 153 15 134 04 00 00 2013 259 07 226 26 00 00 E 2008 15841 257 14023 1400 161 00 2013 14073 75 13050 911 34 03 F 2008 60962 58588 1412 780 183 00 2013 55363 52813 1795 663 92 01 G 2008 536 26 445 62 03 00 2013 291 95 160 33 03 00 Source Own elaboration based on ABDIIPEA 2016 Ariela Diniz Cordeiro Leske Thauan Santos Rev Carta Inter Belo Horizonte v 15 n 3 2020 p 204231 219 When it comes to technological intensity of the exported products the highest value generated is related to the mediumhigh intensity products and the evolutionary behavior has been positive in the analyzed period as expected for the defense industries Comparing the sector to the average profile of Brazilian exports this result seems more encouraging Several authors analyzed data of the Brazilian foreign trade according to the technological intensity and the result differs considerably from those found in the Brazilian IDB Mapping Based on the data the balance of the value of products with mediumhigh intensity was negative and in general the products of greater prominence are those of low technology and nonindustrial De Negri 2005 Pereira Porcile e Furtado 2001 Torezani e Campos 2013 Vogel e Azevedo 2015 As mentioned before medium high and high technological intensity products allow companies to be more competitive which may allow a better international insertion Dosi Lechevalier e Secchi 2010 Dosi Pavitt e Soete 2009 Difficulty in accessing the international market In the questionnaire used in the Brazilian IDB Mapping IPEA 2016 companies were contacted in 2015 in a survey about the obstacles they faced while seeking insertion in foreign markets Table 7 summarizes the results for all segments under analysis Among the main difficulties related to the international market evaluated as very high and high importance there are industrial protection in destination countries 78 unfavorable exchange rate 69 and internal bureaucracy 66 respectively In this market it is common to have some protection to the companies in destination countries However companies do not benefit from the same or similar policy in the case of Brazil In addition unfavorable exchange rates and bureaucracy are identified as problems that reflect structural weaknesses and macroeconomic policy in the country so they are not necessarily linked to the endogenous difficulties faced by companies andor the particularities of the defense sector itself Analyzing the segments individually we realize that each one faces different obstacles but it is noticed that the percentages indicated above are strongly influenced by the aircraft F space G and naval C segments Brazilian Industrial Defense Base Profile Rev Carta Inter Belo Horizonte v 15 n 3 2020 p 204231 220 Table 7 Identified obstacles by Brazilian defenserelated companies when looking for external markets 2015 Obstacles Importance Very high High Medium Low Very low Unfavorable exchange rate 33 37 28 2 1 Port and airport costs 31 33 17 13 5 International freight costs 18 33 23 22 5 Domestic transportation costs 16 26 34 19 6 Technical barriers of potential buyer countries 11 31 37 18 2 Lack of information on potential buyers laws 13 19 48 17 3 Lack of credit 27 34 29 9 1 Lack of credit insurance guarantees 29 35 23 11 2 Domestic bureaucracy 36 31 19 11 3 Brazil is not associated with defense products 15 29 43 11 2 Brazilian price is not competitive with similar foreign companies 23 37 27 13 1 Brazilian qualitytechnology is not competitive with similar foreign companies 11 19 39 22 10 Brazilian governments from other countries support their companies more than the Brazilian government does 48 30 19 3 1 Brazilian company is not able to exhibit products at international fairs abroad 19 17 28 27 8 Source Own elaboration based on ABDIIPEA 2016 In the segment of electronic and command and control systems B for example port and airport costs lack of credit and guarantees stand out while in the military naval platform segment C the outstanding obstacles identified by companies were the public support for foreign competing companies domestic bureaucracy and unfavorable exchange rate On the other hand the military ground platform segment E highlights that the main barriers are domestic bureaucracy and lack of guarantees while the military aircraft platform F and defenseoriented space systems G segments stress the role of government support to foreign companies domestic bureaucracy and unfavorable exchange rate In this way it can be concluded that among the main obstacles identified by Brazilian defenserelated companies are macroeconomic domestic and industrial domestic and international variables Ariela Diniz Cordeiro Leske Thauan Santos Rev Carta Inter Belo Horizonte v 15 n 3 2020 p 204231 221 According to CNI 2018 in 2008 82 of Brazilian commercial companies interviewed stated that the exchange rate would be the main obstacle to exports Airport and port costs came in second place with 415 followed by customs bureaucracy 387 and international freight cost 34 respectively More recently in 2018 airport and port costs appear first in the survey 51 while unfavorable exchange only appears in seventh place The difficulty in offering competitive prices 434 and fees charged by consenting bodies 419 were in second and third place Thus there is a significant change in the obstacles identified by defense and other Brazilian companies since the category port and airport costs ranked in fourth places 310 and difficulty in offering competitive prices in the seventh 230 Public instruments of export support Export support policies can be an important tool to boost sales abroad In the scope of the Brazilian IDB mapping the instruments of support provided by the Brazilian Development Bank Exim BNDES Exim Drawback and BNDES Export Financing Program PROEX were analyzed Table 8 shows that Drawback has been the most widely used incentive for companies However it can be observed that in relation to the sample the number of companies that used some of these instruments is very low and that there is only a small increase between 2003 and 2007 Table 8 Export Support Instruments used by selected companies Year BNDES Exim Proex Drawback A B C D E F G A B C D E F G A B C D E F G 2003 3 1 2 5 1 4 1 7 5 38 2 7 22 6 2004 1 1 3 2 1 5 1 5 9 9 39 2 8 24 9 2005 9 4 2 2 5 2 2 1 6 7 49 5 10 25 8 2006 4 3 3 2 4 1 3 2 1 8 9 50 3 10 30 9 2007 7 2 2 4 3 2 6 2 9 9 45 2 12 30 9 Source Own elaboration based on ABDIIPEA 2016 The drawback is a support instrument that exempts tax companies from imported components and other inputs incorporated into the final product destined for products to be exported This instrument is particularly relevant in Brazilian Industrial Defense Base Profile Rev Carta Inter Belo Horizonte v 15 n 3 2020 p 204231 222 the Brazilian case given the high volume of imports at all levels of the national aircraft industrys production chain for example Generally the scarce connection between the companies and the instruments of support can be an indicator of a policy failure at least in the adhesion to the needs of the companies Companies may have or not knowledgeaccess to these instruments or the instruments themselves may not be adequate to the needs of these companies In any case if there is a policy and in turn it does not reach important companies strategically it is possible that there is a failure in the interaction between companies and government This is because public support has historically been critical to the productive and innovative success of defense companies even in the case of private companies greatly contributing to the insertion in the sector and obtaining significant plots in this market According to Conca 1997 there have been times in the history of the Brazilian defense industry when the institutional inefficiency was responsible for its failure Karp 1999 Final remarks Analyzing the defense industry and the defense market is challenging mainly because the availability of data is often limited In Brazil there was still no publication that generally presented the profile of defenserelated companies The Brazilian IDB mapping published by ABDIIPEA in 2016 constitutes an effort in this sense and offers a first approximation of these companies although from a sectorial perspective without necessarily analyzing the defense sector as a whole Then this paper sought to make a conclusive and comparative synthesis of the mapping something that has not been done at the moment of its conclusion and to date besides we have critically analyzed the sectors showing their main differences Even though some data were outdated due to the lack of official and academic data our main contribution was to analyze the photograph of that moment in view of the lack of continuous data dissemination for this specific group of defenserelated companies In this sense it was first observed that each segment has a specific profile and consequently a joint analysis mitigates or even omits the perception of some differences between them It is then believed that trying to fit the general profile of the Brazilian IDB may be useful to help understanding its limitations and critical issues Ariela Diniz Cordeiro Leske Thauan Santos Rev Carta Inter Belo Horizonte v 15 n 3 2020 p 204231 223 When it comes to international insertion of the Brazilian IDB it is possible to conclude that the selected sample points to positive factors in relation to its competitiveness Companies had an increase in the number of personnel with a higher level and an average salary higher than the national average Among the companies analyzed by PINTEC more than 70 made innovations in the analyzed period Product innovations were slightly higher than innovations in process The products exported are mediumhigh and hightech The main destination of defenserelated companies are countries in the immediate region of Latin America Argentina Venezuela Chile and Mexico and countries related to international cooperation arrangements such as BRICS China and South Africa as well as from historical trade traditions US and EU and The main barriers to insertion are on average more related to structural and macroeconomic issues rather than to internal business conditions Despite limitations in terms of data and time period analyzed which cannot complete or exhaust the subject it was possible to draw an initial and general profile of the industry detailed by different segments and to define relevant issues that need further analysis such as personnel profile technological innovation profile destination markets and types of financing One of the main features of the defense products market are its barriers so it is not surprising that this was the main difficulty pointed out by companies This difficulty could be overcome by offering innovative products However the innovative profile is still focused on process and shows weakness in product innovations This feature may limit the competitiveness of companies In the same line the fact that exports are mainly destined for South American countries neighbors and Mercosur partners without involvement in conflicts corroborates the difficulty of inserting the products of Brazilian companies operating in the defense area Among the possible related issues that come from this debate there are challenges of political and economic nature which require greater debate and transparency in the defense sector in general and in the case 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