Overview

The Brazilian IT Market is small in comparison to United States and the European Union. The government has made many efforts to encourage growth in this area. (See National ICT Policy). There is a rich history of government intervention that has worked to both help and hinder growth.

History

In the early 1980s, Brazil, wishing to become a major player in the IT production market, created heavy import barriers. By raising tariffs over 100%, the government successfully removed competition from the Brazilian IT market. This was an effort to encourage growth inside the country, sometimes called an "infant industry". "The 1980s are referred to in the economic literature as the "lost decade," characterized by high inflation and economic stagnation. The lack of external finance and investment pushed the country into further protectionism in order to keep a trade surplus." (20)

In the early 1980's Brazil and Taiwan had similar per capita income. In 1988 Taiwan opted for free trade while the Brazilian Congress imposed high tariffs to protect its infant electronic industry. Over the years, Taiwan has flourished and Brazil's electronic industry was destroyed because the high tariffs kept investment out of Brazil.

By the early 1990s, Brazil was far behind the Information Age and decided to remove the strict tariffs. The period that was lost left Brazil struggling to compete with the rest of the world in technological innovation. The Information Technology products being produced in the country were antiquated when compared to the products being sold in the rest of the world. Every year that passed, Brazil was falling further behind in technological progress.

Supporters of this policy do not argue that the companies created inside of Brazil could not compete with the "Asian Tigers".  However, the supporters do believe that the major investment into the Information Technology industry by the government was well worth it.  Even if the country did not succeed in becoming as large as the Asian markets it did see some investment and growth from that period.

At the time, the infant industry theory was a common solution to creating an attractive industry inside a country.  A few Asian countries, such as Taiwan and Singapore, took the opposite approach.  Today, it is very clear that Taiwan and Singapore are ahead of Brazil in the technology production market. Today the after effects can still be seen. (20)

Facts and Figures

** World Bank 2001
* World Bank 2002

Market Information

In 1998 a survey was completed which indicates that Brazil’s IT market reached $13.3 billion. Hardware accounted for 51% of the market, followed by professional services with $5 billion and software responsible for the remaining market. (20)  This is not a very large sum of money when compared to many of the other industries in the country.  But it must be understood that Brazil is a resource rich country.  Overwhelmingly the country makes its money off of export its many natural resources to the developed nations.

There was an article published by Internet Society that explains Latin America's role in the Information Technology market. “The objective conditions and people’s perceptions of the Net are changing throughout the [Latin American] region. The worldviews and lives of millions in the region are being transformed by the Net...Latin American Internet market is witnessing a simultaneous explosion of activity in basic access, mass portal, vertical portal and e-tail sectors.” (38) The article then goes on to talk about the massive market for advertising dollars.  I would estimate that the focus on advertising was a part of the dot com buzz and not a true estimation of the market's value.

Sources

(9) Brazil Boasts 14 Million Online”, The Big Picture Geographics , http://cyberatlas.internet.com/big_picture/geographics/article/0,,5911_2205881,00.html. May 14, 2003.

(20) “Center for Research on Information Technology and Organizations”, University of California , Irvine , http://repositories.cdlib.org/cgi/viewcontent.cgi?article=1073&context=crito . 1999.

(37) "Brazil Data Profile", The World Bank, http://devdata.worldbank.org/external/CPProfile.asp?SelectedCountry=BRA&CCODE=BRA&CNAME=Brazil&PTYPE=CP. August 2003.

(38) Rao, Madanmohan. "Emerging Markets, Pockets of Excellence: India in a Global Internet Economy", Internet Society, http://www.isoc.org/oti/articles/0401/rao2.html. 2001.