Porto Digital

Porto Digital is an initiative in Recife to foster technological innovation in the northern region of Brazil. Recife is the capital of the state of Pernambuco in the Northeast region of Brazil. The city is the ninth ^[1] largest in the country and has one of Brazil’s biggest technological parks, Porto Digital or “Digital Port”. Even though the city has gained some notoriety due to the 2014 FIFA World Cup.

History

Porto Digital was created in July 2000 ^[2] as a result of a joint effort of the Pernambuco state government, private sector and the Inter-American Development Bank(IDB). Most of the funding for the creation of the Porto Digital Science Park came from the privatization of CELPE,^[3] the state’s electricity company. The companies and incubators that form the Science Park are mostly housed in buildings most of which warehoused sugar in colonial times. Porto Digital hosts C.E.S.A.R., the most innovative R&D institute of Brazil, according to a Federal Government assessment in 2004. The Science Park was evaluated as the largest of Brazil in 2005 by AT Kearney and won in 2007 the prize of the best Brazilian Science Park, given by the Brazilian Association of Science Parks and Business Incubators (ANPROTEC).

Government investments

The local and federal government do not directly pool resources in order to invest in the park, they offer however a certain amount of fiscal incentives to its companies. The biggest ones are a discount of up to 60 per cent on the ISS, a sort of municipal services tax and the "Lei de Informática" (Leis 8.248/91, 10.176/01 e 11.077/04) which concedes reduction of the IPI taxes for companies which develop hardware and automation solutions. In a country with one of the world’s most onerous tax systems, fiscal incentives are a game changing and decisive factor for the success of a tech hub in the region. The incentives are not only tax reductions but also labor incentives: by reducing bureaucracy and costs involved in the process of hiring new workforce.

Government funding

The lack of real government funding for the tech hub is mainly due to lack of long-term planning strategy to foster the technological sector of the region. A program similar to Ohio’s Third Frontier could not only benefit the region but the whole country. Ohio’s Third Frontier showed an unprecedented large scope of financial support at different key sectors of Ohio’s economy. The public sector dollars are very important in creating momentum in a very short amount of time, which would not necessarily happen so fast with exclusive private sector rounds of investment. Two key aspects of the Third Frontier program are the outside match requirement (government funds must be matched by another funding source). The second factor in the process is the validation and recommendation options for allocation of resources. This work alongside the private sector produces high standards of professionalism and transparency in the process.

Third Frontier has also been able to measure its success through metrics such as job creation and the increase in productivity and quality in existing jobs. The most similar program to Ohio’s Third Frontier is the Start-up Brasil program implemented by the Brazilian federal government. Start-up Brasil was created by the Ministry of Science, Technology and Innovation (MCTI) - in order to provide support to emerging technology-based companies and to strengthen their connection to accelerators. The funds made available by the federal government for the program allow up to R$200,000 in direct investment for selected startups. Start-up Brasil focus on domestic companies, that have been incorporated for less than four years. International companies can also apply for the program as long as they incorporate in Brazil within a certain timeframe. Even though the accelerators act as third party evaluators by selecting and mentoring startups for the program, there is no outside match requirement (government funds do not have to be matched by another funding source).

Corporate partnerships

Business incubator and innovation center Recife Center for Advanced Studies and Systems (C.E.S.A.R) is the largest business of Porto Digital and works as a flagship company of the technological park. One of the reasons for the success of the Digital Port is the high-skilled workforce delivered by the Center of Informatics (CIn) of the Federal University of Pernambuco, (UFPE). Sergio Cavalcante, CEO of C.E.S.A.R is also a professor at CIn, which shows a healthy and close relationship between industry and academy. An entrepreneurial spirit is also cultivated in the university through an “Entrepreneurship Project” Course “Projetao”, which helps students develop innovative ideas and turn them into products. Many of the products developed on this course grew to be real products sold by real startups. One success story is that of In Loco Media (previously UBee) which developed an accurate indoors location app. The company offers a mobile Ad-network powered by its indoor location technology and boasts to be the largest Brazilian mobile advertising company. Porto Digital is a research development center for international clients like Fiat Chrysler Automobiles.^[4]

How the Porto Digital works

The strategy of Porto Digital includes 10 year plans. Its vision and main objective is to be the best environment in the country for disruptive innovation and entrepreneurship on IT related areas and also on creative industries. Porto Digital intends to be a vital asset for the economical development of the state of Pernambuco and to be an anchor for the sustainable development of the region. The first strategic goal is to have, on 2020, 20000 highly qualified professionals employed and the aggregated value of 400 innovative enterprises. To achieve these goals, Porto Digital develops 40 articulated projects on 6 strategic areas:

1. Increase the capacity of Porto Digital to attract new investments and to strengthen the competitiveness of the businesses installed on the technological park;

2. Integration of the Porto Digital with other sectors of the economy which lack appropriate technological support;

3. National expansion and internationalization of Porto Digital;

4. Strengthening of the image and brand of the technological park;

5. Actions to promote social, economic and environmental susteinability;

6. Strengthening of the technical and managerial capabilities of the Porto Digital.

Governance

The private organization responsible for running Porto Digital is a non-profit organization called the Porto Digital Management Unit (NGPD) and was entrusted by the government to be a flexible option to govern the technological park. NGPD not only runs Porto Digital but also tries to forge ties with other institutions which also promote social and economic development in the region. Its management structure is based on an Administrative Council, with 18 members. These members represent the firms installed in the park, other companies with ties to the Porto Digital, the state government, UFPE university and Recife City Hall. It is the Council’s responsibility to decide policies and strategies which enable and promote Porto Digital’s development. The Council also has the freedom to appoint a board of directors of the NGPD comprising a president, a director of innovation and business competition and an executive officer. The NGPD’s permanent technical staff members all have degrees in fields related to innovation, information technology, project management, urban planning, etc.

References