Innovation Policy in an Emerging Economy: How Regional and Technological Disparities Moderate the Effects of a National Law

Abstract

The Innovation Law, enacted in Brazil in 2004, laid the regulatory and institutional foundations for the national innovation system, aiming to promote closer interaction between universities, research institutions, and industry. However, nearly two decades after its implementation, its influence on the national innovation system remains largely unexplored from an empirical perspective. This study examines the law's influence on the number of patents filed by Brazilian residents, considering the moderating role of regional disparities and state-level inventive activity. Using a Poisson regression model with panel data from 1997 to 2023, the results indicate that the law, in isolation, did not have a significant influence on the number of patents. However, its influence was partially positively moderated in the Northeast region and negatively in the Southeast and South regions. Additionally, the inventive activity at the state level exhibited an inverse moderating effect, suggesting that less developed innovation systems may benefit more from such regulations and reinforcing the need for adaptive policies tailored to regional specificities. These findings contribute to the literature by highlighting the importance of contextual factors in the effectiveness of innovation policies and providing insights for regulatory improvements and regional development strategies, especially in an emerging economy.