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Growth and Impacts in Brazil

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Paulo Bastos TigreJune 2001In Brazil, high inflation rates and public policies for local information technology development encouraged the early adoption of electronic data interchange (EDI), especially in the banking industry.Since the early 1970s, Brazil has developed capabilities both in production and use of information technologies. Mexico and Brazil are the only Latin American countries with a substantial IT hardware production. However, Brazil produces mostly for the inIn Brazil, Internet infrastructure is heterogeneous. While there are islands of high-speed links in major cities, most parts lack adequate ISPs and reliable connections.Despite the slowdown in investment estimated for 2001, Brazil continues to be the primary focus for Internet and other new economic investment in Latin America, because of its lead in e-commerce. Private equity investment in the Brazilian “new economy” mIntroductionNational EnvironmentPopulation and DemographicsTABLE 1Demographic Indicators for BrazilEconomy and WealthTABLE 4Wealth Indicators in the AmericasHuman ResourcesCountryTelecommunications infrastructureInformation technology infrastructureSince the early 1970s, Brazil has developed capabilities both in production and use of information technologies. Prior to liberalization in the early 1990s, Brazil had a larger and more technologically advanced domestic IT industry, which produced a wideTABLE 16IT Infrastructure in the AmericasInternet infrastructureInternet Infrastructure in the AmericasFinancial ResourcesUse of credit cards, debit cards and stored value cardsTable 22 shows sectors of both receivers and investors. While the financial sector is the major investor (about 40 percent of cases), Internet sites are the main receivers (54 percent of cases). It can be noted that investment strategies include horizontSource: Basques, M.F.D (2001).Business Environment and ReadinessNATIONAL POLICYPolicy InstitutionsMinistry of planningXEnabling policiesElectronic governmentInformation and Services: The goals of this electronic government project are to provide universal access to public services and more transparency to government actions, achieve more efficiency in the use of information technology, and integrate the commProcurement: Federal and state government procurement through the Internet is saving millions and supporting transparency in public goods and services supply management. The federal government estimates that US$ 900 million in “common goods and servicesTaxes: The technologies underlying e-commerce offer significant opportunities for improved taxpayer services. The Brazilian tax system is progressively moving online. In 2001, 90 percent of the income tax declarations received by the Federal Tax AuthoritIndependent committees working in cooperation with government, universities and business direct some Internet diffusion programs. These include:E-commerce PolicyE-COMMERCE DIFFUSIONTABLE 27E-Commerce in the AmericasRegional and Institutional FactorsReferencesThis research is part of the Globalization of E-Commerce project of the Center for Research on Information Technology and Organizations (CRITO) at the University of California, Irvine. The research is supported by a grant from the U.S. National Science Foundation (CISE/IIS/CSS). The project in Brazil is also supported by a grant from the National Council for Science and Technology Development (CNPq). Globalization and E-Commerce: Growth and Impacts in Brazil June 2001 Paulo Bastos Tigre Universidade Federal do Rio de Janeiro Center for Research on Information Technology and Organizations (CRITO) University of California, Irvine 3200 Berkeley Place Irvine, CA 92697-4650 http://www.crito.uci.eduGlobalization and E-Commerce: Brazil 12-01 2Summary • In Brazil, high inflation rates and public policies for local information technology development encouraged the early adoption of electronic data interchange (EDI), especially in the banking industry. • The process of Internet development in Brazil was somewhat similar to the NSFNet program in the United States. The National Research Network (RNP) began operating a national backbone in 1991, and in 1996 it became available for commercial purposes. • As elsewhere in the Americas, the diffusion of electronic commerce has been growing fast in Brazil. Internet active users range, according to different sources, from four to six million. Brazil is the largest Internet user in Latin America, with an estimated share varying from one-third to one-half of total users. • Brazilian business has high expectations about the potential of e-commerce. Thousands of new start-up dot.coms and existing businesses are now creating web-based services. • Population attitude towards the Internet is also very positive. Computers are considered the second most desired consumption item after cars. However, poverty and poor income distribution restrict diffusion rates. • Macroeconomic policies and regulatory changes in the 1990s have played a positive role for e-commerce development. Mainly, they increase both supply and demand for telecommunications services, especially with business-to-business (B-to-B). • Brazil is the fifth most populated country in the world; more than 80 percent of its population is living in cities, and 49 percent of Brazilians are aged 24 years or younger. These factors may play a positive role in Internet diffusion. • The Brazilian economy has been growing at a relatively slow pace as compared to its historical growth rates, since inflation control became its highest priority in economic policy. Brazil ranks third in the Americas in GDP value. However, in per capita terms, it falls behind the top five wealthiest countries in Latin America. • As elsewhere in the Americas, Brazilian sector distribution of employment shows an increasing role of the service sector. About 55 percent of the labor force is now working in services, while employment in manufacturing represents only 12 percent. • Micro and small firms provide 35 percent of total employment while large firms employ 45 percent of the total registered workforce. Taking into account that informal workers, who represent more than one-half of total Brazilian workers, are mostly in small firms, the role of large firms is probably overestimated. • Education levels increased substantially in the last decade. Primary education was almost universalized (95.7 percent) and


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