from the business sector (relative to GDP). Business research expenditure is likely to contract from 2015 onwards until the economy shows signs of recovery. Even the most optimistic analysts do not expect this to happen before 2016. Fixed capital investment in Brazil is expected to decline further in 2015, especially in the manufacturing sector. This trend will certainly affect industrial research spending. The Petrobrás crisis is expected to have a major impact on investment in R&D, since it alone has accounted for about 10% of the country's annual fixed capital investment in recent years. The cuts to the federal budget announced in 2015 and other austerity measures should also affect government spending on R&D. Almost all of non-government expenditure on R&D comes from private firms (private universities performing only a fraction of it). Between 2010 and 2013, this expenditure declined from 49% to 42% of domestic expenditure on research, according to preliminary government data. This trend is likely to last for some time. The business sector will, thus, have no chance of devoting 0.90% of GDP to R&D by 2014. Brazil's GERD/GDP ratio remains well below that of both advanced economies and such dynamic emerging market economies as China and, especially, the Republic of Korea. At the same time, it is quite comparable to the more stagnant developed economies such as Italy or Spain and other major emerging markets like the Russian Federation. It is also well ahead of other Latin American countries. Industrial research Trends in innovation activity Between 2001 and 2010, there was a sharp decline in the share of research personnel employed by the business sector, from 40% (2001) to 26% (2010). This is contrary to the trend observed in most developed and major emerging countries. It partly reflects the expansion of research in higher education and partly the anaemic growth of industrial R&D. According to a 2014 survey by the UNESCO Institute for Statistics of innovative manufacturing firms in 65 countries, 85% of Brazilian firms are still at the stage of acquiring machinery, equipment and software to enable them to innovate. Among the other BRICS countries (Russian Federation, India, China and South Africa), the percentage varies between 64% and 71%. Some 17% of Brazilian firms conduct research and development in house, according to the survey, compared to 19% of Russian firms, 35% of Indian firms, 54% of South African firms and 63% of Chinese firms. Brazil