Overview

Brazil has been a technology producer for many years now.  Before the country opened its doors to privatization the country tried to create an infant industry to product technology equipment.  After privatization became possible in the early 1990s, the doors opened to Foreign Direct Investment.  Once money started to flow from overseas, Brazil became a producer of technology equipment for countries in more developed world.

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)

Hardware Production

There was a paper written in 1995 by Maria-Ines Bastos about Telecommunications in Brazil.  This paper made reference to production of telecommunications equipment at the time the paper was published.  This was not long after privatization became the norm for Brazil. (44)  This shows that well before the boom the country was being targeted as a good place to send Information Technology production.  As it is well known today, Brazil never became the large production facilities like many of the Asian countries.  However, unlike many other developing nations, Brazil at least has some of the market share.

An example of hardware production is the Lucent Technologies plant in Campinas.  This plant produces cell phone technologies including cell sites.  This location was selected from due to its proximity to Sao Paulo, great transportation facilities, and the research and teaching institutions in the area. (45) (See IT Geographics for more information on clusters in Brazil.)

Software Outsourcing

Brazil has been considered one of the better countries for US companies to outsource software development. Part of this is due to the great education of the IT professionals in Brazil. Brazilian programmers have a reputation for following strict programming processes that are often skipped or overlooked by many US firms. Adhering to these processes creates a more robust process with detailed documentation and commented code. (10)

Although Brazil has some strong points with regard to software development, there are some major drawbacks as well. Perhaps the biggest drawback to selecting Brazil as your outsourcing location is the cost. Brazilian software programmers are more expensive than Indian or Chinese programmers. There is also a much smaller pool of fluent English speakers.

Sources

(10) Horowitz, Alan. “Brazil: It's a sleeping giant with a tradition of high-quality software.”, Computer World http://www.computerworld.com/managementtopics/outsourcing/story/0,10801,84869,00.html. September 15, 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.

(44) Bastos, Maria-Ines, "Telecommunication Industry in Brazil: Public-Private Relationship and Technology Development", The United Nations University, http://www.intech.unu.edu/publications/discussion-papers/9503.pdf. April 1995.

(45) "Lucent Technologies Inaugurates Manufacturing Facility in Brazil", Lucent Technologies,  http://www.lucent.com/press/1298/981215.cob.html. December 15, 1998.