Figure 8 also presents data on publicly-funded research priorities to achieve energy and environment objectives as part of their overall central government R&D budgets. Of available developing countries, Mexico allocates the greatest share of its total R&D budget to environmental technologies, at slightly over 10 percent, with most expenditures in areas other than clean energy technologies. At the other end, the Russian Federation provides the least relative support of available developing countries, with 2% of its R&D budget on environmental technologies. It is noteworthy that other available ECA countries are not at the bottom of the table, with Estonia, Czech Republic, Slovenia, Poland, Slovakia, Belarus and Hungary all devoting a higher share of their R&D budget to energy and the environment than the US and Russia. Box 4 provides a more detailed breakdown of green R&D expenditures in Brazil in 2010, making the case that Brazil‘s levels of expenditures relative to total R&D are not in line with the comparative advantage of its natural capital, constraining an otherwise more rapid national green growth.

**<u>Box 4: Brazil‟s green R&D expenditures – more than government budget, more than renewable energy</u>** Comparable data to Figure 8 highlight that Brazil‘s government green R&D budget in 2010 was U$300 million out of a total government R&D budget of $15.8 billion, or 1.9%, placing Brazil in percentage terms at the bottom of the table, below US and Russia and only slightly above Israel. However, government outlays on R&D were only 42% of total green R&D expenditures in 2010, with business outlays (split 56% versus 44% across private and state-owned businesses) accounting for the remaining 58% of total green R&D expenditures of $716 million (which account for 2.6% of total R&D expenditures, in turn accounting for 1.2% of GDP in 2009).

The allocation of total green R&D expenditures is 45% towards renewable energy and 55% towards other environmental areas, with a breakdown of the latter into productive uses of biodiversity and protection of ecosystems (32% of total green R&D expenditures) and ̳greener agriculture‘ (23%). A further disaggregation of R&D expenditures across these three areas reflects underlying comparative advantages, namely: (1) for renewable energy, biofuels account for 82% of the total, with hydro and biomass accounting for a further 6.4 and 4.4%; (2) for biodiversity and ecosystems, natural cosmetics account for 36% of the total, with atmospheric ecosystem protection, sustainable resource extraction and energy efficiency accounting for a further 21.2, 9.5 and 6.9%; (3) for greener agriculture, sustainability of agricultural production and biotechnology account for 30 and 27% of the total, with agricultural zoning and integration of productive value chains accounting for a further 9.0 and 7.8%. But although these expenditures on R&D have yielded impressive research outputs, the link between research outputs and commercializable patents remains weak: while Brazil leads in sugarcane research with 300 scientific articles on Thomson Reuters‘ ISI Web of Science (with the US almost three times fewer and China at 30 in 2008), China and the US lead Brazil in accumulated sugarcane patents with the EPO over the 2006-2010 period, with 175 for China, 18 for the US, and only 5 for Brazil.

Frischtak claims that these levels of expenditures in R&D and patent results are in stark contrast with the diversity, scale and potential of natural assets available in Brazil. What is needed, according to Frischtak, is a national consensus around the establishment of a clear strategy and work program that finances and creates broader science and technological and regulatory capabilities in Brazil aimed at better stimulating R&D and frontier innovation towards a pattern of growth driven by the sustainable productive use of these green assets. The detailed breakdown of green R&D expenditures data is an essential input into the debate towards achieving such a national consensus. Source: Frischtak (2011), and an average 2010 exchange rate of 1.76 Reals to the US dollar (IFS, IMF).

In contrast to the supply-push of government R&D funding, **patents** were initially devised as a decentralized demand-pull self-selection mechanism, allowing those who believe they are the most likely to succeed to risk their own resources for the ̳prize‘ of a period of exclusivity during which they can set product prices, with the quid pro quo of full disclosure of the knowledge to other researchers. In practice, significant public funding of R&D, both to public and private entities, typically accompanies the own19