Rising Powers and Interdependent Futures

By Alec Waterworth

Ilha do Fundao is an island complex constructed in the Guanabara Bay north of downtown Rio de Janeiro in Brazil. The island’s transformation reflects broader trends of technological and industrial development and also some of the challenges seen in Brazil in recent years. For fifty years, Ilha do Fundao was home to CENPES (the primary research and development centre of Petrobras, Brazil’s massive semi-public oil and gas company), and to the Federal University of Rio de Janeiro’s (UFRJ) Institute for Graduate Studies and Research in Engineering (COPPE). Yet, large areas of this mostly artificial island had laid empty. Today, that has changed. Ilha do Fundao is now also occupied by technology centres from nine leading companies in the global oil and gas industry and is emerging as a cluster of innovation in the oil and gas sectors. I have visited the island several times over the last two years in order to interview the actors in this emerging industry cluster. As a technology manager at CENPES told me during my most recent visit, “a new world has been created”.
General Electric’s US$100m research centre on Ilha do Fundao, opened in late 2013
Ilha do Fundao’s makeover has centred around the university-owned technology park in the south of the island. Next door to this is the university’s business incubator, which has expanded from one multi-firm building to three. A thirty-minute walk from the technology park takes you to CENPES and in between this lies COPPE. COPPE and CENPES have a long history in collaborating together: Over the last fifty years, COPPE has been instrumental in establishing Petrobras as a technology leader in the exploration and production of oil and gas, and most recently, as a specialist in deep and ultra-deep water technologies. “There has always been an exchange of knowledge. […] Petrobras has never worked completely alone,” said one of my interviewees at Petrobras. “Petrobras not only used their knowledge, it shared knowledge … so the university [could] help us.”

Technological and innovation capabilities on the island are now further enhanced with the arrival of new residents on the island, including Schlumberger, Baker Hughes, Halliburton, FMC Technologies, Siemens, BG Group, General Electric and Vallourec. These firms have invested heavily in the area, establishing large and expensive R&D centres. For example, FMC’s 20,000 square metre facility cost around US$25million to build. Why there? FMC hopes to tap into the university campus, to create a collaborative environment and enable access.

Yet, despite these new R&D investments, operational challenges remain. As yet, cooperation between the new companies on the island is still weak. Several companies identified this as a source of concern. Perhaps with strong relationship already built by Petrobras, it is hard for newcomers to forge links with local academics. But there may be other reasons. These issues will be examined in an academic paper in preparation this year which addresses the motivations of foreign multinational enterprises in Brazil in locating in industry clusters, how they participate in those clusters, the extent to which the collaborative efforts of such firms are inhibited by barriers to entry, and the implications for industrial innovation in Brazil. 

Alec Waterworth is a doctoral student with the Manchester Institute of Innovation Research, Manchester Business School, The University of Manchester, UK, and a researcher with the Project on Emerging Technologies, Trajectories and Implications of Next Generation Innovation Systems Development in China and Russia (ES/J012785/1). Alec is completing his doctoral research on path dependence, path renewal, and the evolution of innovation in Brazil’s petroleum sector. For further information, contact: alec.waterworth@postgrad.mbs.ac.uk