An enemy truck rumbling through the countryside does not know what has hit it. A Brazilian Embraer Super Tucano swoops out of the clouds, its target finder zeroes in on the truck, and the two-seater turboprop fires both its 50-calibre guns.

“Let’s go back once again,” the pilot says through the intercom, beginning another strafing round. After finishing off the truck, a “smart bomb” is dropped on a nearby barn – a possible hiding place for insurgents or drug traffickers.

The truck driver never knew what hit him – because nothing did. The truck was not driving through the wilds of Afghanistan but the peaceful, lush farmland of Brazil’s São Paulo state near Gavião Peixoto, site of the factory where Embraer, the world’s third-largest commercial aircraft manufacturer, makes the Super Tucano light attack aircraft. This unarmed sortie was just a test flight to show some of the capabilities of a remarkable new Brazilian export.

At first glance, this small air-force turboprop trainer adapted to fight against lightly armed insurgents or drug cartels seems an unlikely candidate to showcase Brazilian innovation, especially at Embraer, which is known for building large jet aircraft.

But Embraer is now pushing to sell 20 Super Tucanos to the US military – the first such contract for the Brazilian company with the world’s most powerful air force – and also to export the aircraft around the world . And the example of this unassuming aircraft is one that could prove instructive for other Brazilian industries at a time when strong currencies and an over-dependence on commodities are threatening their survival.

As Ruchir Sharma, head of emerging markets at Morgan Stanley Asset Management, warned in a recent paper in Foreign Affairs magazine, too much of Brazil’s recent prosperity has rested on commodity prices, which are beginning to drop. “If Brazil does not take steps to diversify and boost its growth, it may soon fall with them,” he wrote.

Brazil has some innovation strongholds – aside from Embraer, these include the national oil company Petrobras; Vale, the iron ore miner; and the state-owned agricultural research organisation Embrapa. 

The problem is that the culture of innovation is not widespread. Brazil’s share of global research and development spending remained virtually flat at about 1.5 per cent between 1996 and 2007, according to “Fostering Innovation in Latin America”, a recent report by the OECD and business school Insead. The report places the country below India, at 1.8 per cent, and China, which increased spending from 2 per cent to 9 per cent during the period.

“What you have is a relatively large country but one that is relatively poorly educated [and] that is trying to move up the value chain,” says Alfredo Behrens, professor of global leadership at the FIA business school in São Paulo. Brazil churns out a small number of highquality graduates and postgraduates while the majority of the population lacks a tertiary education.

He argues that much Brazilian innovation in recent decades owes its existence to the country’s former military regime, which ruled from the mid-1960s to the early 1980s. Whatever their failings as politicians, the generals’ strategic mindset led, for example, to Brazil’s ethanol programme, with most of the country’s car fleet now capable of running on the biofuel. The generals supported Embrapa, which developed a new soya crop to withstand conditions in the Brazilian outback, leading to a boom in soya production.

This culture of innovation has not spread widely beyond national champions such as Embrapa, however – with some notable exceptions such as banking. This is partly because of a lack of ambition; opposition from big competitors abroad (the Super Tucano US Air Force contract, for example, is in limbo after a lawsuit from American manufacturer Hawker Beechcraft); and Brazilian companies’ inability to sell themselves overseas. The country’s tendency towards protectionism has also hindered the creation of globally competitive industries.

“The industrialists have grown up under protection,” says Prof Behrens. “For instance, they will say: ‘What sells here? Beer? Easy, we’ll put the tariffs up and only sell Brazilian beer.’ ”

Brazilian companies seeking more government protection to help them survive a strong currency could learn much from Embraer. Although fostered by the military regime, the company blossomed only after its privatisation in 1994.

In Latin America it has set the bar for innovation through its use of “reverse outsourcing”.

The company shares the risks of projects with large suppliers, which in exchange receive a percentage of the returns on the venture. This means not only that Embraer has to raise less upfront capital but that its non-Brazilian partners become interested stakeholders in the success of these programmes.

This “best-in-breed” approach to outsourcing, under which it seeks the finest components no matter where they are made, is the reason Embraer has become the biggest commercial aviation manufacturer in the world after Boeing and Airbus, says Richard Aboulafia, analyst at the Teal Group, a defence and aerospace consultancy.

It is also why similar national aircraft industry programmes in China and elsewhere have struggled – they have prioritised buying from compatriots over quality.

For a Brazil similarly obsessed with buying Brazilian – the country recently increased taxes on imported cars based on their level of domestically produced components – this should be a sobering lesson.

“Since 1960, there is exactly one company that has entered the top of the global aircraft industry and that’s Embraer,” says Mr Aboulafia.

The Super Tucano, he says, was almost an “afterthought” in Embraer’s strategy. The aircraft was designed as a trainer in 1978, and the first armed model was built in 1999. But it was not until December last year that the project reached its zenith with the order of 20 aircraft for use in Afghanistan by the US Air Force. Although this was cancelled by the US military for internal reasons, it remains an invaluable stamp of approval. Now Embraer is exporting the Super Tucano to air forces ranging from Colombia to Indonesia.

The project is only the beginning of Embraer’s new, fast-growing defence programme, under which it is building sophisticated border surveillance systems and a new transport military aircraft – the KC-390.

Mr Aboulafia warns, however, that Embraer needs to be careful that it does go back to the future with its renewed focus on defence. Being a government project, the KC-390 could over-emphasise local content – a trap that Embraer should know to avoid.