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Computer Industry Policy in Brazil

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Brazil Computer Industry Policy

The Computer Industry Policy
The "informatics" policy started in the late 1960s and early 1970s as an effort to develop a Brazilian personal computer (with the USP's Engineering School working on hardware and the PUC-RJ on software, and with support from the navy and the Finep). Technology was to be transferred to a state-owned corporation, Brazilian Computers and Systems (Computadores e Sistemas Brasileiros--Cobra), and to private firms owned by Brazilians. With the development of personal computers, a policy was devised that restricted this new market to Brazilian firms but allowed for the continuous presence of multinational corporations, particularly in the area of mainframe computers. Congress approved the policy in 1985. The central tenet of the legislation was the strict ban, for seven years, on the import of microcomputers and on the establishment of foreign firms producing microcomputers and software. The Computer Technology Center (Fundação Centro Tecnológico para Informática--CTI) was established in 1983 to encourage the development of scientific and technological research in the computer sector. A national office for the computer industry, the Special Secretariat for Informatics (Secretaria Especial de Informática--SEI), was established in Brasília. It had the power to control the import of equipment and components, to set targets for increasing Brazilian participation in joint ventures with foreign firms working in Brazil, and to decide about government purchases of computer equipment.

The policy was conceived not only to limit the small computer market to national firms but also to stimulate the local production of products and components, which was part of a broader policy of import substitution. Both Brazilian and multinational firms were required to increase the share of domestic content in their products. This requirement boosted the development of local competence but also led to higher costs and a loss of competitiveness, given the lack of scale in the local market. This strategy of mandatory high percentages of local components in all items, including disk drives and printers, contrasts with that of South Korea, for example, which concentrated on a few components, such as monitors, where the local industry could compete internationally in terms of quality and price.

To protect the local industry, the government introduced mechanisms to prohibit the transfer of technologies that were similar to ones being developed or that already had been developed by Brazilian companies. This policy was applied to both hardware and software, and Brazilian firms developed emulators of MS-DOS and Unix computer operating systems for the local industry. As a result, companies that could bypass this legislation and get the original software were in a better position than those that remained attached to much less advanced local products.

This protectionist policy was very controversial and drew strong opposition from the United States government and multinational firms, in the name of free trade. It also drew opposition from Brazilian firms and corporations that thought their access to high technology had been curtailed. Supporters argued that the policy generated technological competence in Brazilian firms and created employment for researchers and engineers at little cost to industry or Brazil. Detractors argued that the whole industrial sector suffered from restrictions on access to state-of-the-art electronics and, more generally, that Brazil was delayed in entering the microcomputer culture. In practice, the civilian government under Sarney did not invest in research and development for the computer industry, and a large part of that industry remained limited to the assemblage of microcomputers with imported components. A few firms have specialized in some market niches (such as bank automation) and, after 1992, entered into associations with multinational corporations for the development and distribution of international microcomputer brands in Brazil.

Data as of April 1997



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