Appendix 3 National ICT Approaches: Selected Case Studies


Building on a legacy of technological capabilities and an early emphasis on ICT infrastructure, Brazil is positioning itself to participate more fully in the global network economy. The Brazilian Government has emphasized controlled privatization and deregulation in order to provide the business sector with an environment in which it can grow and adapt quickly to the changing economic and business climate, while at the same time still be subject to competition. The recently-launched Information Society Program is a first step in making technology-based services and job creation available to every citizen. Public-private partnerships are helping to identify innovative solutions to overcome barriers to universal access, such as the high-cost of personal computers and lack of financing options for low-income citizens.

Policy: Brazil began its pioneering approach to leveraging ICT for development in the 1980s, when it began implementing policies to promote the development of national enterprises in selected segments of the computer industry. By the end of the decade, a set of diversified IT corporations with significant presence in the local market had been built.

In the 1980s, a so-called market reserve policy was established to create a "greenhouse" environment to nurture locally-owned companies and protect them from import competition attracted to Brazil's relatively large and fast-growing market. This policy initially focused on mini-computers and was later expanded to include micro-computers. By restricting technology transfer agreements, the government encouraged companies to undertake R&D locally. The government also restricted the importation of technology when local capabilities were available, so local firms developed their own products based on reverse-engineering or in-house design.

As the country proceeded to building on this strong base of technological capabilities and infrastructure, the 1990s brought accelerated growth in the ICT sector. The government began abandoning protectionist policies and opening its economy. The first step was a constitutional amendment abolishing the telecommunications monopoly, followed by legislation to allow private enterprise to bid for cellular licenses. This process of privatization and deregulation resulted in dramatic improvements in the quality, service and price of phone services. In 1995, Brazil opened the telecommunications sector to private investment, and also announced a plan for achieving open Internet services in the country.

Infrastructure: Although the network infrastructure in Brazil has been developing rapidly in recent years, it is still very uneven in scale and scope. The relatively high levels of public sector investment in telecommunications undertaken by Telebras, a public holding company, during the 1960s and 1970s, had come to a standstill by the 1980s as the state reduced spending in order to meet payments associated with the debt crisis. This under-investment was reversed in the 1990s by privatization and deregulation policies that led to rapid development of the ICT infrastructure. However, access to this infrastructure was not advancing at the same pace. Ehile, the Brazilian business triangle—that includes São Paulo, Rio de Janeiro, and Minas Gerais—has high-capacity fiber, virtual private networks, and bandwidth on par with that of the United States and Europe. Much of the countryside, on the other hand, has no access at all.

Through its Universal Access Plan, the government is seeking to subsidize the provision of infrastructure to geographically complex and low-income areas. Last year, Brazil's postal service also launched Porta Aberta, or Open Door, a project that gives the public free access to Internet kiosks, but only in selected post offices in São Paulo and Rio de Janeiro.

Enterprise: The establishment of open and free-market policies has contributed to the creation of a business-friendly environment. FDI reached a record US$30 billion in 1999 and was expected to climb by another US$30 billion in 2000. Most of the investment has been channeled into telecommunications. The attempt to influence ICT development through tax breaks has resulted in a five-fold increase in R&D in just two years. In addition, Brazil's participation in free trade agreements like MERCOSUR has opened up the country's access to other markets. Brazil is poised today to become a major production center. It offers a large market, manufacturing capabilities, installed industrial base and access to other South American markets. Several major computer hardware firms have located regional production centers in Brazil, and this has slowly begun to attract component suppliers as well as major parts distributors and specialized contract manufacturers.

Human Capacity: Due to low levels of general literacy and the prohibitive cost of computers, computer literacy skills are below target levels. As such, technology training and skills development are priority areas for the Brazilian government. The Information Society Program allocates funding for the expansion of Internet infrastructure, the interconnection of all public libraries, and the creation of thousands of community access centers throughout the country. It is expected that the availability of ICT, in conjunction with relevant IT training programs and the availability of new low-cost computers will inevitably promote more technology users among the general population. The shortage of IT knowledge workers also poses a challenge, and is an area on which Brazil will need to concentrate further in order to continue its development progress.

Content and Applications: The private sector has played an important role—providing affordable Internet access and relevant Portuguese content to meet local needs. Brazil's biggest online service, UOL, boasts 5.1 million registered users accessing its 19 million pages from more than 100 Brazilian cities. UOL is the most visited Portuguese language site and enjoys an audience that establishes it as one of the most frequently visited sites in the world—surpassing sites like Disney and CNN.

Recent collaborative efforts have produced innovative and successful applications in electronic commerce and e-government. In December 1999, the first online coffee auction was held for 10 high-quality Brazilian coffees. While Brazilian coffees are normally sold at prices below the New York benchmark price, the auctioned coffees commanded an average price of 73 percent higher than the benchmark. A similar joint venture between a maker of household cleaning products and the country's leading free email company is offering web access through computer kiosks in supermarkets. Government has promoted Internet-based applications as well; eight out of ten people received income tax forms through the Internet in 2000.

Strategic Compact: Strategic collaboration between public and private sector organizations has been instrumental in Brazil's Information Society Program and other specific initiatives. For example, international computer manufacturers such as IBM, Hewlett-Packard, Compaq and Acer stand to gain substantially from a government program to increase PC penetration with the development of a prototype for low cost PCs (US$200-250 per PC). Indeed, the low-cost PC formula is a result of a study in which all the major computer companies participated on how to reduce the cost of PCs in Brazil. To support the program, the government will provide loans to lower income households to purchase the computers.


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