From Industry Protection to Industry Promotion:
IT Policy in Brazil
AUTHORS LISTED ALPHABETICALLY:
Antonio José Junqueira Botelho
Pontifica Universidade Catolica do Rio de Janeiro (PUC-Rio)
email: abotelho@alum.mit.edu
Jason Dedrick
Kenneth L. Kraemer
Center for Research on Information Technology and Organizations (CRITO)
University of California, Irvine
email: jdedrick@uci.edu, kkraemer@uci.edu
Paulo Bastos Tigre
Universidade Federal do Rio de Janeiro (UFRJ)
ptigre@ie.ufrj.br
ABSTRACT
There has been a great deal of discussion about the factors behind success and failure in the global computer industry. Some argue that industrial success is a function of liberal economic systems and open markets leading to optimum resource allocation. There is, however, plenty of evidence showing that no country has become an important player in this industry without some level of government support. Thus, a more useful question to ask is what are the environmental variations - actors, opportunities, infrastructure and other resources available - iterating with industrial policies that facilitate industrial development in different national contexts. The interaction between IT policy, industrial structure and the global environment is critical. At the national level, this requires substantial coordination, organizational change and institutional partnerships. No country has been successful in developing such an industry in isolation, given the need for technology, sharing, trade and investment.
Among developing countries, Brazil pioneered in implementing government policies to promote the entrance of national enterprises into selected segments of the computer industry. This included the creation of a ``greenhouse" to nurture locally-owned companies, protecting them from direct imports and competition with world industry leaders in a relatively large and fast-growing internal market. As a result, by the end of the 1980s Brazil had a set of diversified IT corporations with significant presence in the local market. By the early 1990s the protectionist policy began to be dismantled, in a context of increasing globalization and economic liberalization. Facing external competition, most firms disappeared, were sold out to foreign technology partners or other firms, or shifted into specialized niches or less competitive segments than hardware production. The content of locally-manufactured components and technology in IT production declined sharply.
Although liberalization has had negative consequences for Brazil's domestic computer industry, especially for hardware and components production, it has led to lower prices for computers and telecommunications services. This has stimulated dramatic growth in computer use and the spread of the Internet, which have produced benefits for computer users through increased productivity. Also, it has stimulated new jobs in software and information services, helping to compensate for the loss of jobs in the hardware sector.