Why did infant industry protection fail to develop a competitive computer industry in Brazil?

In my opinion, not only the fact that the computer industry was the wrong one to receive protection but also it was protected for too little. As the videos clearly explain, Brazil is not the top country to have computers as its main industry. I believe a better industry to protect in brazil would be the agriculture industry and this is based solely on the fact that the country is not technologically advanced enough alone. Protection of infant industries is really good for the country but bad for competition and a threat to the free market. As the industry progresses on its own it doesn't have any motivation to move faster or be better and it becomes stagnant or falls behind other industries.

Brazil, the third-best advanced industrial sector in the Americas with diversified industries ranging from automobiles to computers and many more. The protection Act was legalised to protect and grow as well as encouraging the patronising of locally made computers. The infant industry protection was not successful to develop a competitive computer industry due to many factors explained below. Firstly, I think the computer industry was not the right sector for the country to protect because the cost involved in producing computers in Brazil was higher as compared to their neighbouring countries like the United State of America. Though Brazilians are capable of making computers, one should also consider the time, energy and resources(labours) involve in its production. Over here the issue of comparative advantage(David Ricardo,1817) comes in: A country can produce a good or service at a lower opportunity cost than another country. Brazil will be better off to focus in the sector where they have much strength like the sugar plantation where they are well-vex in that(introduced to them by their colonial master, Portuguese in the 16th century). They can have an exchange or trade deal with other countries who cannot produce sugar at a low cost like the U.S.A. With this regard, both countries can enjoy an absolute advantage benefiting the two countries involved. Another factor has to do with preferences. Nowadays, most people all over the world like to purchase top brand name computers like dell, Microsoft Surface, Lenovo, Apple MacBook.HP, etc. Since they have low prices on high quality, speed and good visual performance which all help consumers to get value for their money. Brazil is also not left out of buying computers outside their country if the product (computer) does not meet their performance or requirement as well as purpose then they will eventually also follow suit. Due to the qualities possessed by foreign computers the demand for them will be higher, thereby collapsing the locally made ones. Technology plays an important role in the making of computers. The tech behind computers is developed over the century, not just a few years. For instance, U.S.A (invented its first computer in 1860) has the technical know-how as well as china which is not the same as Brazil. The infant computer industry of Brazil will be a relative disadvantage to highly technological advancement countries over time because they cannot compete with the external market and also lack the requisite skills, knowledge and experience in computer technology. Moreover, I also believe that the materials for making computers, in general, became very difficult to procure. Besides the material cost were also hiked making it difficult for the industry to continue to operate. Such materials included, crystalline semiconductors, plastics, lead, alloys, copper wire and cabling, different metals etc. In the nutshell, it would be ineffective for Brazil to continue to shield the computer industry because it will be imprudent also do the economy more harm than good.

Free trade is the economic doctrine, opposed to protectionism, which advocates the non-intervention of the state in international trade, allowing the flows of goods to be governed by the advantages of each country and the competitiveness of companies. The discussion about free trade and protectionism has existed for centuries. On one side are those who say that releasing trade barriers will improve the quality of life of all countries, and on the other, those who say that protectionist policies are essential to advance towards economic development. History shows a paradox. The developed countries that today defend free trade achieved their development based on policies that today would be accused of being protectionist by themselves. As early as the 19th century, the German economist Friedrich List observed this behavior and called it “kicking the ladder”. This expression, which was later popularized by Ha-Joong Chang, refers to the fact that developed countries used a set of instruments to achieve their development and once they were successful, they prohibited other countries from using it. In this way they ensured their supremacy. However, this is not just a debate from the past. Contradictorily, developed countries, despite their free trade rhetoric, have continued to use protectionist policies while promoting free trade for the rest of the world. If we look at the trade policies of Europeans in the 17th and 18th centuries, we are talking about mercantilism that aims to minimize imports and maximize exports. The goal of mercantilism is to concentrate as many precious metals as possible in one country. At the end of the 18th century, ideas began to change, especially with the publication of Adam Smith in 1776 «Recherches sur la nature et les causes de la richesse des nations » attaquant le mercantilisme. The change of ideas does not necessarily begin in Scotland, but also in France with the Physiocrats. There is an ideological trend that leads to an opening to freer commercial relations between nations. A first effort appeared in 1786 when England signed a treaty of commerce and navigation with France based on free trade. We will soon see that this free trade agreement is displeasing French industrialists because French industry is in very bad shape. The information technology (IT) software and services industry in each country is the result of the conjunction of historical and institutional factors particular to the environment where it was born. Its development trajectory is expressed in a specific model that is difficult to emulate by other countries. Each model is made up of a set of heterogeneous elements, such as government institutions, academia and the market, and the interactions between them. The review of the conditioning factors and characteristics of industrial policy, S&T and software and IT services in Brazil in three different periods: the birth of the information technology industry and the institutionalization of the market reserve (1964 to 1992), in the second part; the period of policy liberalization (1992 to 2002), in part three; During the validity of the market reserve policy, two government bodies were responsible for its formulation and implementation: the Electronic Processing Activities Commission (Capre), linked to the Ministry of Planning, made up of bureaucrats and representatives of the research community; The case study of Brazil revealed that the argument does not stand valid as the micro-computer industry failed to develop up to its potential i.e., it was not at par with the international market. Even though the industry had developed since 1971, the legal prices of peripherals and computers were still higher than international standards making the industry less competitive. By studying the positives and negatives of the infant industry argument and analysing the case of the Brazilian computer industry, it can be concluded that employing protectionist trade policies creates market distortions which ultimately do not bring about an increase in national welfare.

Probably, I need to agree with Ha-Joon Chang's view. Developing countries should apply policies of protectionism to selected industries. Nevertheless, such a policy should be long-term, focused on the balance of value and quality of products of enterprises in such industries. The situation with the development of a competitive computer industry in Brazil is very similar to the situation with the development of the automotive industry in Ukraine. For 30 years, the Ukrainian government has made and continues to make attempts to resume its successful development. For this purpose, various protectionist measures were applied (soft loans, reduced duties on the import of components, etc.). However, so far there is no desired result. The Ukrainian car market is considered one of the most promising in Europe. However, Ukrainians do not want to buy Ukrainian cars. Exports of Ukrainian cars also have small volumes. In the current context of world trade liberalization (WTO should be mentioned), the actions of various international economic obligations of governments of developing countries, it is very difficult for such governments to implement a successful policy of protectionism. Such a policy can be effective in those areas where the country has resource advantages. For example, today in Ukraine it is agriculture (potential of natural resources), IT-industry (human capital), etc.

As I generally know, Brazil is well known for its agricultural field. I think that this industry shall have received more attention. The computer industry was wrongly chosen. Even though the power of digitalization is very popular, the industry of its devices is not a lottery ticket for any country. Not any country can gain a considerable economic development if they risk betting on a not so calculated option. America for example can bet on the computer industry because the area is well-developed from its digital point of view. But Brazil's lottery ticket is more based on agricultural harvests, on varied mineral resources than on a computer industry.